The news came from VTB first deputy president and Chairman Yury Soloviev who spoke to Vedomosti business daily. Russia’s 20th richest man according to Forbes, Suleiman Kerimov also invested in VTB equities. In 2011 during the SPO the companies he controls invested $500 million in the state-owned bank. According to Soloviev, one of Kerimov’s companies – Millenium – has increased its share in VTB, however the exact amount of investment hasn’t been revealed. Around 55 percent of the new shares sold in VTB’s capital raising were purchased by the sovereign wealth funds of Qatar, Norway and Azerbaijan. According to an unnamed source of Vedomosti newspaper Norges Bank Investment Management invested $700 million, while Qatar Holding LLC and the State Oil Fund of Azerbaijan (SOFAZ) invested $500 million each. Brazilian BTG Pactual and China Construction Bank have reportedly also purchased VTB equity worth $100 million each. VTB’s secondary public offering was held between May 6 and May 22. New shares were distributed among a narrow circle of 10 institutional investors and private shareholders. A total of 1245 investors purchased VTB stocks in the first two weeks. Nine deals accounting for 86% of the placement have been concluded in the last two days. The bank attracted a total of 102.5 billion roubles ($3.3 billion) of investment. … Read More
For Zuckerberg, a Big Payout From Facebook Stock
Mark Zuckerberg, co-founder and chief executive of the world’s largest social network, exercised options worth more than $2 billion after its public offering, according to a company filing, and sold about half the shares to pay taxes. … Read More
VTB decides on $3.21bn SPO
The Russian government currently holds 75.5 percent of the bank, and has mandated that its stake remains above 60 percent.VTB has not yet announced who will broker the sale, but news agencies have speculated the offering will be run by Citi Bank, JPMorgan, and Deutsche Bank.The number of authorized shares stands at 14 trillion, and it has issued 10.46 trillion, and will not be issuing the remaining shares, less than a third. To issue the shares, VTB doesn’t need to hold a shareholder meeting, only the green light from the supervisory board.The new share sale will be decided by the bank’s supervisory board on Friday, Vedomosti reported, citing a source close to VTB.The bank, investors, and government will focus on the current stock price. Vedomosti’s source said a discount is possible as it is common international practice, but doubts the discount would exceed 5 percent.The share sale will help the bank raise capital which will enable it to make engage in more business and loan transactions. The sale is also part of the bank’s drive to privatize state assets and reduce the Kremlin’s overall stake in businesses. As of April 26, 2013, VTB had more than 104,000 shareholders.First Deputy Prime Minister Igor Shuvalov oversees privatization, and has declined to comment on the VTB public offering.VTB was the first Russian bank arrange an Initial Public Offering in 2007, raising $8 billion and setting an international banking IPO record at the time.In 2012 assets increased by 9.2 percent, but VTB saw an overall profit drop of 4 percent, a smaller drop forecast by analysts.Net income declined to 85.8 billion roubles ($2.7 billion) from 89.4 billion roubles in 2011, the bank told Bloomberg in a statement on April 24.The net interest margin rose 4.2 percent this year, and gross loans increased 10.8 percent to 5.1 trillion roubles ($160.5 billion).VTB’s exit from CyprusThe investment bank has lost its confidence in the Cypriot economy, and is pulling the plug on its local subsidiary, Russia Commercial Bank, which currently holds about $2 billion in deposits, VTB Chairman Herbert Moos has said.VTB will wind down its Cyprus operations and transfer the majority of the loan portfolios, a report said on Thursday.”We don’t believe that it will return to the status quo,” Moos told Vedomosti.Moos doesn’t foresee any losses in the transfer from Cyprus to other subsidiaries. … Read More
What Worries Small Business: Uncertainty and ObamaCare
Small business owners aren’t
exactly hopeful about the future of the economy. According to
a
survey published earlier this month by the Chamber of
Commerce, 79 percent say the U.S. economy is on the wrong track.
The small business owners surveyed have lots of worries: 77 percent
think higher energy prices are an immediate threat to their
business, 52 percent think the tax code should be less complex, and
78 percent say they are concerned about federal debt and deficits.
At the top of the list for the last two years, though, have been
generalized concerns about economic uncertainty. In April, however,
that changed: the requirements posed by ObamaCare are now the
biggest concern for small business.
That’s hardly surprising given the tough choices many businesses
will have to face. Starting next year, companies with more than 50
employees will have to either provide sufficient coverage to their
employees or pay a per-employee fine.
Earlier this week, The Wall Street Journal reported on
several businesses choosing to pay the law’s penalty for not
offering insurance rather than comply with the law’s health
insurance requirements. In some cases, that means dropping
insurance for employees who already have it. The Journal
story profiled Rick Levi, an Iowa business owner who run a
cafeteria management service with 102 employees. Currently, he
spends about $140,000 each year insuring 25 of them in managerial
positions. But once ObamaCare kicks in next year, he expects to
drop coverage for those employees, and pay $144,000 in fines
instead. The alternative—complying with the law’s employer coverage
requirement—would cost an estimated $500,000.
Levi isn’t the only small business owner facing tough decisions
under the law. Last month, The New York Times
reported on a San Diego bakery struggling to decide how to meet
the law’s insurance requirements. Adding coverage for all of its
workers would cost about half of its profits. Raising prices to
cover the cost of insurance might make it uncompetitive with
smaller bakeries not subject to the fine. That’s why the bakeries
owners indicated they were considering reducing their 95 employee
firm down below the 50-person mark—firing some workers and
converting others to private contractors.
Other firms, meanwhile, don’t even know what sort of choices
they face under the law. Last month The Washington Post
profiled Virginia café owner Jody Manor, who employs 45 people—but
still doesn’t have clear information on how the law might affect
him, especially if he decides to expand. As the
Post ;reported: ;
If he brings in just five more, his business would soon be
subject to new minimum coverage standards under the 2010 law — and
he does not know whether his current health plan would meet this
threshold of coverage or how his premiums might be affected.
“These changes are less than a year away, and I still have no
information about how much our premiums are going to cost,” said
Manor, owner of ;Bittersweet Catering, Cafe and Bakery. “It
definitely gives me pause when thinking about adding another
location.”
Nearly three years after ;the health-care law ;was
passed, federal regulators have only recently begun to define its
terms. Major pieces of the overhaul, such as state-run exchanges
that will serve as marketplaces for qualified health insurance
plans, have yet to take shape, and several rules remain unwritten.
Consequently, the picture remains anything but clear for
small-business owners, some of whom have been warned that their
premiums may spike and that their current coverage may fall
short. ;
For employers like Manor, worries about ObamaCare and worries
about uncertainty are one in the same. ; … Read More
Federal court: ReDigi can’t re-sell ‘pre-owned’ digital music online
A US federal court has dealt a blow to a music website offering sales of “pre-owned” digital music, ruling that it violates copyright law by making illegal reproductions. The ruling released over the weekend by Judge Richard Sullivan came in a closely watched case in which Capitol…
ObamaCare Could Cost This Bakery Half Its Annual Profits—or Nearly Half Its Full Time Workforce
What sort of costs will
ObamaCare impose on small business owners? A New York
Times
story on San Diego bakery Baked in the Sun offers a
hint.
Under the law, employers with more than 50 employees must either
offer qualifying health insurance to all full time employees or pay
a fine of $2,000 per worker each year. Currently, Baked in the Sun
does not offer health insurance to 90 of its 95 employees, which
means that owners Rachel Shein and Steve Pilarski face a difficult
choice: They can offer health insurance to their employees and
figure out how to finance the additional cost; they can pay a fine
for not offering health insurance; or they trim their full time
workforce below 50 employees so that they can avoid both the cost
of offering insurance and the cost of the penalty.
Baked in the Sun’s owners estimate that the cost of offering
insurance will run about $200 per employee per month, or about
$216,000 per year to cover all 90 currently uninsured employees, of
which the employer will pay half and the employee would pay the
rest. Their annual revenues are $8 million, but because food
service is extremely low margin, only about $200,000 of that is
profit, meaning that financing the $108,000 employer half of the
additional coverage could cost them half of their yearly
profits.
Still, it’s clearly a more attractive choice than paying the
$2,000 per-worker annual fine, which would actually cost them more
than offering the insurance. According to the article, even with an
exemption for the first 30 employees, paying the penalty would
still cost about $130,000 a year.
If they choose to offer the insurance, they have to find a way
to pay for it. Instead of dipping into their profits, the
Times notes that the owners could also hike their prices
by an average of about 4 percent, passing the costs along to their
buyers. But not only does that raise prices, it puts them at a
competitive disadvantage with other bakers who employee less than
50 people—and who thus do not have to provide coverage or pay the
penalty. “It’s ironic that our success meant we could grow,” Shein
tells the Times, “and now we will be competing against
smaller companies, with 50 employees or fewer, who will be able to
charge less per item because they don’t have the financial burden
of health insurance.”
Which is probably why Shein says she’s contemplating a more
drastic possibility: cutting her bakery’s full time workforce back
to fewer than 50 employees in order to avoid ObamaCare’s costs
entirely. Doing that, she says, would mean outsourcing some jobs
and eliminating others entirely, as well as converting some current
employees to independent contractors. ;
At the end of the article, Jody Hall, who owns a Seattle cupcake
shop, recommends that Shein simply go ahead and offer the coverage
and pay the price. Hall does not suggest how to finance the
coverage, but she does suggest that it will probably be more
affordable than Shein estimates, because not all employees will
take the coverage. As evidence, Hall points to her own business,
where she says only about half of employees take the coverage
offered. But Hall does not account for the fact that starting next
year, ObamaCare’s individual mandate also goes into effect, meaning
that employees who chose not to take coverage offered to them would
have to pay a fine. ;
But even if only half of Shein’s employees take the coverage,
that would cost her more than $50,000 annually, which would still
mean a large loss of profits or a noticeable hike in prices.
In other words, no matter what choice Shein and her co-owner
make, it won’t be pleasant. They ;can cut a large percentage of
their profits to pay for coverage, raise prices and potentially
lose business, or radically restructure their workforce to avoid
the law’s fines and requirements. The White House
once ;promised
that the health care law would “reduce the current burdens on small
firms and their workers.” I suspect Shein, along with other small
business owners facing similar choices, would describe its effects
differently. ; … Read More
Freddie Mac sues banks for Libor losses
Freddie Mac is suing morethan a dozen banks, including Bank of America, JPMorgan Chase, UBS,CitiGroup, Royal Bank of Scotland, and Credit Suisse for settingthe Libor low against the dollar to “both hide theirinstitutions’ financial problems and to boost their profits,”according to the complaint. The complaint was filed March 14 in USDistrict Court in the state of Virginia.“Defendants’ fraudulent and collusive conduct caused USDLIBOR to be published at rates that were false, dishonest, andartificially low,” Richard Leveridge, a Freddie Mac lawyerwrote in the complaint, which went public on Tuesday.The banks have not released any official comments regarding thelawsuit.Freddie Mac said it discovered the fraudulent lending rates whenBritain’s Barclays publicly came forward in the Libor scandal.Manipulation of the Libor rate is one of the largest scandals tohit the finance industry- over $300 trillion in loans, mortgages,and contracts are linked to the Libor rate.“To the extent that defendants used false and dishonest USDLIBOR submissions to bolster their respective reputations, theyartificially increased their ability to charge higher underwritingfees and obtain higher offering prices for financial products tothe detriment of Freddie Mac and other consumers,” the US-ownedcompany said in the complaint.Barclays, UBS and Royal Bank of Scotland were fined a total of$2.6 billion for manipulating rates, and more than a dozen banksare under investigation. In June 2012, Barclays paid £290 millionin fines to US and UK financial agencies.”We have an obligation to minimize losses to taxpayers so wefelt like we needed to preserve our claim, and that was the purposeof filing this individual suit,” a spokeswoman for Freddie Mactold the Wall Street Journal. The company is part of at least oneother class-action lawsuit regarding Libor, she said.The Freddie Mac lawsuit implicates the BBA “participated” in theLibor rigging scheme to ‘appease’ its member banks, many of whichFreddie Mac targets in its lawsuit.The British Banking Association (BBA) voted in February toformally transfer control of the London Interbank Offered Rate(Libor) in hopes of reviving the reputation of London’s lendingstandards.A spokesman for the BBA declined to comment.Freddie Mac hasn’t indicated precise damages it will seek incourt. … Read More
