Fed revises test results
The Federal Reserve corrected errors in loan-loss estimates for banks and financial firms including Citigroup Inc in a stress test of capital under a hypothetical economic slump. The revised calculations do not affect capital ratios that determined whether the banks passed the tests, the Fed said on Friday in a statement. In Citigroup’s test, an estimate for losses on first-lien mortgages in a stressed scenario was decreased by US$400 million to US$8.9 billion, while the estimate for losses on other loans was increased by the same amount to US$4.8 billion. The Fed required financial firms with more than US$50 billion in assets to submit capital plans that would demonstrate whether the industry can withstand another crisis. Banks deemed strong enough were cleared to raise dividends and buy back shares.
Zurich loses millionaires
The region of Zurich, the home of Swiss banking, has lost nearly half its foreign millionaires two years after scrapping special tax breaks, official figures published on Friday showed. Of the 201 foreign residents who benefited from the tax breaks that the canton scrapped in early 2009, 97 have decamped to more favorable tax regimes, the region’s tax services department said. Those departures represent a loss of 12.2 million Swiss francs (US$13 million) in tax revenues last year, but that figure is more than recouped by the higher tax bills charged to the high-earners who decided to stay on. Switzerland has come under pressure from its neighbors — many of which have depleted state coffers — as well as from some of its own citizens over its flat rate tax system, which has attracted the wealthiest to claim residency there. Among them are celebrities such as musician Phil Collins and Formula 1 ex-champion Michael Schumacher.
Reduced borrowing sped up
Germany will speed up its plans to reduce new borrowing as it works to balance its budget by 2016, an official said on Friday. The federal government will reduce its new borrowing between next year and 2016 by about 27 billion euros (US$35 billion), to 45.6 billion euros from the previously planned73 billion euros, the senior official said. A robust economy has helped increase Germany’s tax intake, allowing the country to run up less new debt. Germany, which has Europe’s biggest economy, plans to balance its budget in 2016, when it expects to borrow only 1.1 billion euros, the official said. Germany borrowed 17.3 billion euros last year, down from 44 billion euros in 2010, and got its budget deficit down to about 1 percent of GDP — far below the often-flouted 3 percent limit for countries that use the euro. For this year, the official said, the government expects borrowing to increase to 34.8 billion euros.
Exxon ‘freezes’ contract
US energy giant ExxonMobil has told the Iraqi oil ministry that it has “frozen” its controversial contract with the country’s autonomous Kurdish region, a government official said yesterday. On Oct. 18, Kurdish authorities inked a deal with ExxonMobil for it to explore six areas in Kurdistan, but Baghdad regards as invalid any contracts not signed with the central government. The Kurdistan contract potentially put an Exxon contract with the central government in jeopardy. In January 2010, the Iraqi oil ministry completed a deal with ExxonMobil and Anglo-Dutch giant Shell to develop production at West Qurna-1, which is the country’s second-biggest field.