Pay cuts or workforce cuts?

500 senior employees of CLSA, the Asia focused brokerage arm of Crédit Agricole, have accepted to have a voluntary pay cut. They had chosen this reduction between 3 reductions: 15 per cent, 20 per cent or 25 per cent. Most of them have chosen the higher reduction (25%) for 2009. The forgone salary will be repaid plus a bonus in few time.

CLSA has already used this method in 2003, when its trading income suffered during the Sars Crisis.

The aim of this reduction is to maintain staffing levels in a situation of financial crisis and to reduce expenses.

Maybe is one solution before the final one which could be a cut in their workforce. If this principle is quite simple, why last week Goldman Sachs had announced a 10% cut jobs (3260 jobs)?

I think that the crisis is almost too strong to reduce the wages. Maybe in few days, CLSA will follow the same way that Merrill, Barclays, Goldman Sachs and others…or file bankrupt? 

French banks saved by €10.5 bn bailout?

French banks have accepted the 10.5 bn euro bailout of the government in exchange for guarantee on lending to households and firms. Officially, these 10.5bn are going to help the economy but in reality it's for saving the french banks. 

The 10.5bn is divided into 6 french banks: 

- Credit Agricole with 3bn

- BNP Paribas with 2.55bn

- Societe Génèrale with 1.7 bn

- Crèdit Mutuel with 1.2bn

- Caisse d'Epargne with 1.1 bn

- Banque Populaire with 950 million

One week ago, Crédit Agricole annouced in a statement that the bank is really strong and in good health. CA also said that "CA doesn't need any help". 

In the same way, BNP Paribas, which appears like the most strongest bank in France, has accepted one bit of chesse...

It's a compleate paradox because french banks want to show that they are solid, but in reality when the government proposes a bailout, all of these "solid banks" accept...

Is it strange, isn't it? 

My best place to live in 2009

The Economist Intelligence Unit worked on an ingenious model for measuring and comparing the quality of life in different countries. The worldwide quality of life index was calculated in 2005 for 111 countries based on factors like:

-       Material wellbeing (GDP...)

     - Health

-       Political stability and security

-       Family life

-       Community life

-       Climate and geography

-       Job securities

-       Political Freedom

-       Gender equality

The best place to live in 2005 was Ireland. At the 7th rank, we can find Iceland, at the 13th rank the USA and the United Kingdom at the 29th rank.

Nowadays, the situation has changed and Ireland is going to recession, Iceland is completely bankrupt and the US is the heart of financial crisis.

So what are your predictions concerning 2009? 

Caisse d’Epargne affected by a trading loss of €600 million

One of the third largest savings banks lost 600 million on equity derivates due to several traders when the market crashed last week. These traders have been fired because they have taken unauthorized positions.

On the investor’s relations web site, only one statement announces the lost. A brief one that begins by the actual unfavourable situation in the market that has caused a loss of 600 million. The company says that this loss has been denounced thanks to usual control procedures made by the group. Caisse d’Epargne, 9 months after Kerviel, wants to reassure these customers by putting in light its assets of more than €20bn. The loss, according to this statement, would not impact its financial solidity of affect the customers.

On the web site, it is hard to find more about this story. The statement says that the people concerned by this loss have been fired and others moved to other positions.

It is funny to see how the bank wants to keep secret this statement: on the main news, we have a link concerning the last statement of the company (which talks about this loss) but no title, nothing alarming.

The part concerning investor’s relation is more focused on the next merger concerning Caisse d’Epargne and Banque Populaire. Indeed, French state encourages banks to combine each other to fight again financial crisis. Both of them are the main shareholders of Natixis. On the web site, this news is put in light.

But, like a story already known, (after Sociétè Génèrale), Finance Minister Lagarde said “I’m particularly frustrated and discouraged by this event” “this loss doesn’t come at the best moment”. Members of the banking commission are examinating all trading activities.

Caisse d’Epagne does not want to alarm more the investors and hopes this story does not affect his brand image and his confidence. In fact, I think that this story comes at the best moment; because the financial economy is more focused on others think more important.

8 days in a luxury place, with sunshine and colleagues

When a chairman and its workers decide to take some fresh air, we think that they take fresh air to think about future strategy and how to increase profit. All incentives are very profitable for all the companies and the place is very important. When you choose a good resort with all services your workers can breathe and de-stress. But I have a funny story or an ironical one, depend on your point of view…

The 17 of September AIG has wangled an $85 billion emergency loan from the Fed (and directly from Amercican taxpayers). In return for the loan, the government received warrants to purchase up to 80% of AIG. 

10 days after, the world’s largest insurance company spent $400 000 on a lavish corporate retreat at one of the best California’s resorts ‘St Regis resort in Monarch Beach’.

The team spent $140,000 on rooms, $150,000 on meals and drinks, $25,000 on spa treatments and $6,939 on golf.

In the same time, American economy suffers, most of people are losing their jobs, homes and health insurance and all the central banks try to save the “world”.

To finish, the Federal Reserve Board has authorized the FED to borrow securities from certain regulated US insurance subsidiaries of AIG ($37.8 billion).

Most of people are less concerned by the crisis and arrive to take some fun…