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Business

Business Briefs

Hesse takes economic lead from Munich; banks send jobs east; Bertelsmann sells web concern; European Commission cautious of German recovery and Daimler shows confidence in Chrysler.

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Munich weaker than Hesse - but still pretty.

Hesse Bumps Munich

The German state of Hesse will displace Bavaria sometime next year as the state with the strongest economy, a study by the INSM research group said. This will move the state of Baden-Württemberg to third place, according to the group's prognosis. The INSM is affiliated with the Association of Metal Industry Employers and the Institute of German Economics (IW) in Cologne. In terms of economic dynamism – meaning states with strict privatization and deregulation policies - Saarland took first place, followed by Bremen and Hessen. Bavaria was in eighth place in the dynamism rankings. The only eastern state to make it above the middle of the pack was Saxony, in sixth place.

German banks seen sending jobs East

European banks will send tens of thousands of jobs to low-wage countries in the coming years, according to business consultants A.T. Kearney. By 2008, the leading financial institutes in Germany, Austria and Switzerland could save about €5 billion ($5.6 billion) by filling as many as 100,000 data processing, IT or call-center jobs overseas. The moves could result from pressure to lower administrative costs and – considering the banks' current low stock valuations – from fear of hostile takeovers. Large U.S. financial institutions have already shifted thousands of jobs to India, where personnel costs are only a fraction of that in the West. America is five to seven years ahead of Europe in such trends, according to Adreas Pratz, author of the Kearney study.

Bertelsmann reduces e-commerce holdings

German media giant Bertelsmann AG says it intends to sell its stake in e-commerce company Barnes & Noble.com to New York-based Barnes & Noble, Inc. for $164 million (€143 million), pending approval of the deal. The sale is part of Bertelsmann's strategy, announced in September 2002, to pull out of pure e-commerce in media products and to concentrate on its core business of world-wide book and music clubs.

EC expresses caution over Ifo report

Commenting on news from the Ifo institute's business climate index that the struggling German economy may be headed for a recovery this year following a rise for the third month running, a spokesperson for the European Union's executive arm expressed "cautious optimism."The European Commission has given a cautious welcome to the news,” the spokesperson said. “Nevertheless this indicator is still at a fairly low level." The Ifo institute, Germany's best-known economic think-tank, said that its closely-watched index rose to 89.2 points in July from 88.8 points in June. While it was lower than forecast, the figure was welcome news for Europe's biggest economy, which is in a technical recession after shrinking for two consecutive quarters.

Daimler commits to ailing Chrysler

According to a newspaper report, German auto giant DaimlerChrysler AG has no intention of selling its ailing U.S. Chrysler unit and remains committed to it, a company board member told Die Welt. "Chrysler belongs to us, just like Mercedes-Benz," said DaimlerChrysler board member Ruediger Grube. "The strategy that DaimlerChrysler has been following since the 1998 merger needs time, because we are dependent on the product cycles in the auto industry," Grube was quoted as saying. The world's fifth-biggest carmaker said last week its core profits sank by nearly two-thirds in the second quarter, hit by losses of €948 million ($1.1 billion) at Chrysler.