A pay increase of A$234,000 ($252,000) at the height of the global financial crisis made Reserve Bank of Australia Governor Glenn Stevens one of the world’s highly-compensated central bankers.
The raise was agreed on by the bank’s board in October 2008 following a review by PricewaterhouseCoopers and the ending of performance bonuses, according to correspondence between the central bank and Treasurer’s office obtained by Bloomberg News under a Freedom of Information request.
Stevens’s 2010 total compensation was A$1.05 million, with an A$805,000 base salary that was 61 percent more than European Central Bank President Jean-Claude Trichet’s and four times that of Federal Reserve Chairman Ben S. Bernanke. Stevens was one of seven central bank chiefs from around the world to receive an ‘A’ grade in a September 2009 Global Finance Magazine survey for navigating their economies through the world’s worst financial crisis since the 1930s.
“Given the national significance of the governor’s position, the Board’s Remuneration Committee, and the board itself, discharges its responsibilities in this area in a disciplined manner,” Donald McGauchie, chairman of the remuneration committee and a member of the board until last month, wrote to Treasurer Wayne Swan explaining the decision.
Trichet, Shirakawa
Spokesmen in the Reserve Bank and Treasurer’s office declined to comment on the correspondence when contacted by Bloomberg News yesterday. Australian offices and markets are closed for the Easter holiday today.
Trichet was paid 367,863 euros ($537,300) last year, 2 percent more than his 2009 salary, according to the ECB’s annual accounts published in March. Bernanke earned $199,700, while Bank of Japan Governor Masaaki Shirakawa’s salary, at 34.4 million yen ($419,410) for the year to March 31, fell 1.5 percent from a year earlier.
Remuneration for Japan’s central bank governor has declined 10.8 percent over the past 10 years as the country grappled with deflation.
Stevens’s salary still trails that of Hong Kong Monetary Authority Chief Executive Norman Chan, who earned HK$7.5 million ($965,000), plus HK$868,000 in benefits last year, according to the HKMA’s annual report published yesterday.
Australia was one of the few economies to skirt the global recession as Stevens slashed the overnight cash rate target to a 50-year low of 3 percent. As the economy rebounded, he raised rates in seven quarter-percentage-point steps from October 2009 to November last year to 4.75 percent, the highest in the developed world.
Surpassing Gillard
The Reserve Bank forecasts Australia’s economy will expand 4.25 percent this year, driven by a mining investment boom and record job growth that helped spur the nation’s currency to the highest level since it was freely floated in 1983 cash advance flexible payments.
“The Australian economy overall has performed very well,” said Edwin Truman, a former director of the Fed’s international- finance division. “It was only mildly affected by the crisis.” The central bank “moved quite aggressively quite early in terms of liquidity support,” he said.
While central bank salaries “can be a political issue like everybody else’s in the financial sector,” the pay increase may be difficult to roll back for Stevens’ successors, said Truman, who’s now a senior fellow at the Peterson Institute for International Economics in Washington. “It’s hard for someone to say ‘I’m not worth that much,’” Truman said.
Stevens’s salary is more than double that of Prime Minister Julia Gillard’s base pay of A$355,264. In correspondence with McGauchie, Swan suggested the governor’s remuneration was too high.
In a letter dated Sept. 15, 2010, Swan said that in the future the Reserve Bank’s Remuneration Committee should “discharge its powers with an emphasis on ensuring that salaries are adjusted to be in line with community expectations of senior officials’ remuneration.”
Swan, in the letter, also said he was advised of the October 2008 decision to increase the governor’s salary in September 2009, “nearly one year after” the move.
Correspondence
The correspondence also included a letter to Swan from Jillian Broadbent, a central bank board member on the remuneration committee, expressing “serious concerns about the possibility that responsibility for the remuneration of senior officers of the Reserve Bank be moved away from the bank’s board.”
She said the current practice, adopted to address the acute staffing difficulties that the bank experienced in the 1980s as personnel were lured by higher-paying jobs in the finance industry, worked “very well” since it was established by then- Treasurer Paul Keating.
Under that framework, it recognized that the relevant comparisons for Reserve Bank remuneration aren’t mainstream government agencies but government business enterprises and other financial institutions.
“Attracting and retaining top financial talent into government in Sydney is a challenge,” she wrote in the letter dated Sept. 17, 2010. “Salary levels and the quality of the bank’s officers are interdependent.”
Swan, in a press conference earlier this month, said he understood community concern related to the governor’s salary, describing the issue as a “matter that’s before the government.”
Regulators have shut down a small bank in Illinois, lifting to the number of U.S. bank failures so far this year to 27 after 157 succumbed in 2010 to the gutted economy and mounting bad loans.
The Federal Deposit Insurance Corp. have seized Western Springs National Bank and Trust, in Western Springs, Ill., with $186.8 million in assets and $181.9 million in deposits. Heartland Bank and Trust Co., based in Bloomington, Ill., will assume the assets and deposits of the failed bank no fax payday advances.
In addition, the FDIC and Heartland Bank and Trust have agreed to share losses on $100.8 million of Western Springs National Bank and Trust’s loans and other assets.
The failure of Western Springs National Bank is expected to cost the deposit insurance fund $31 million.
The maker of Robert Mondavi wine and Svedka vodka says it had a profit of $279.8 million for its fourth quarter, reversing a year-ago loss, as it saw stronger wine sales in North America.
Constellation Brands said Thursday its revenue edged up 1 percent to $715.3 million. A double-digit rise in North American wine sales helped offset the impact of the divesture of much of its Australian and British wine business. Spirits sales rose 3 percent.
Net income equalled $1.32 per share. A year earlier, the company lost $51 million, or 23 cents a share, on sliding sales of spirits and beer and lingering weakness in the North American wine market.
Excluding items, the Victor, N.Y., company earned 35 cents per share. Wall Street expected 26 cents, according to FactSet.
Japan’s government said the cost of the earthquake and tsunami that devastated the northeast could reach $309 billion, making it the world’s costliest natural disaster on record.
The extensive damage to housing, roads, utilities and businesses across seven prefectures (states) has resulted in losses of between 16 trillion yen ($198 billion) and 25 trillion yen ($309 billion), according to a Cabinet Office estimate Wednesday. That could drag the economic growth rate down by 0.5 percent this year.
The losses figure is considerably higher than other estimates. The World Bank on Monday said damage might reach $235 billion. Investment bank Goldman Sachs had estimated quake damage of as much as $200 billion.
If the government’s projection proves correct, it would top the overall losses from Hurricane Katrina. The 2005 megastorm that ravaged New Orleans and the surrounding region cost $125 billion, according to the Insurance Information Institute.
Japan’s estimate does not include the impact of power shortages triggered by damage to a nuclear power plant, so the final figure could be even higher. It also leaves out potential global repercussions.
“The aftermath of the tragic events in Japan will obviously alter the domestic economy,” said Takuji Aida, an economist at UBS Securities Japan, in a report. “However, Japan’s position in the global economy is such that there must also be some transmission of the shock to other parts of the world.”
The 9.0-magnitude quake and tsunami on March 11 laid waste to Japan’s northeastern coast, killing thousands of people and triggering a crisis at a nuclear power plant. Tens of thousands of people living near the plant were evacuated.
Utilities have imposed power rationing, many factories remain closed and key rail lines are impassable payday loans.
Toyota Motor Corp., the world’s No. 1 automaker, has halted auto production since March 14 because of difficulty securing components, including rubber parts and electronics. By Sunday its lost production will reach 140,000 cars.
The company said Wednesday it will delay the launch of the Prius hybrid minivan in Japan due to disruptions in parts supplies.
Toyota spokesman Paul Nolasco said the automaker initially planned to roll out the Prius minivan in April. But the disaster has crippled suppliers and destroyed shops, forcing Toyota to postpone the launch.
Another Cabinet Office economic report released Wednesday underscored the new challenges facing Japan, which had been on the mend from a lull in growth late last year.
“The economy is moving toward recovery, but its self-sustainability is weak,” it said.
More broadly, the Japanese economy has been lackluster for two decades, barely managing to eke out weak growth between slowdowns. It lost its position as world’s No. 2 economy to China last year and is saddled with a massive public debt that, at 200 percent of GDP, is the biggest among industrialized nations.
The government reportedly plans to inject public money into banks to help support lending as companies rebuild. It may finance that from a fund of 11 trillion yen ($135 billion) that is still available under a law on emergency support to banks passed after the 2008 collapse of Lehman Brothers.
Tokyo also is working on plans to provide low interest loans of up to 10 trillion yen ($122 billion) to help companies recover from quake damage, according to a news report.
Swiss drug maker Roche Holding AG reported a 4 percent rise in full-year net profit to 8.89 billion Swiss francs ($9.52 billion) Wednesday, as currency swings and severance pay depressed earnings.
Sales fell 3 percent to 47.47 billion francs last year.
Growth in sales of Roche’s anti-cancer drugs such as Avastin, Rituxan and Herceptin were unable to compensate for the anticipated drop in sales of influenza treatment Tamiflu, and the surge in the Swiss franc compared to other currencies.
“The group results are solid despite an increasingly challenging market environment,” Roche chief executive Severin Schwan was quoted as saying in a statement fast payday loans.
The Basel-based company, which reports earnings only for the half year and full year, said it expects health care reforms in the United States and European austerity measures to dampen growth in 2011.
To mollify investors, Roche indicated it would increase dividends and bring leading European CEOs including Paul Bulcke of Nestle, Christoph Franz of Lufthansa and Peter Voser of Royal Dutch Shell onto the board of directors at its next shareholders meeting.
A cyclone raced toward Australia’s flood-ravaged northeast Sunday, rattling nerves in a region that has already suffered billions of dollars worth of damage from a monthslong crisis.
Cyclone Anthony intensified to a Category 2 storm with winds of 80 mph (130 kph) and was expected to cross the Queensland state coast early Monday morning. The Bureau of Meteorology warned residents in coastal communities to brace for destructive winds and more flooding.
“You just think, can any more cruel blows land on Queensland and the nation? And unfortunately the answer seems to be yes,” Prime Minister Julia Gillard said. “We’re all made of tough stuff and we’ll get through this, but this is another big, cruel blow coming on top of what has been a summer of tragedy already.”
Heavy rains that began in November have caused massive flooding across Australia, killing 35 people and damaging or destroying 30,000 homes and businesses no faxing pay day loans. Brisbane, the country’s third-largest city and the capital of Queensland, was under water for days.
The federal government has estimated the cost of the damage is already at 5.6 billion Australian dollars ($5.6 billion) and likely to rise.
Forecasters are watching another tropical weather system developing in the South Pacific that could hit Queensland later in the week.
Queensland Premier Anna Bligh said disaster management officials throughout the state were on alert and evacuation centers were available if needed.
Former European Commission President Romano Prodi said Germany will ultimately ensure the survival of the euro, amid concern within Chancellor Angela Merkel’s coalition about the cost of rescue measures.
“At the end of the story there will be some basic agreement,” Prodi, also a former prime minister of Italy, said in an interview in Beijing today. “They go to the brink and they take a decision,” he said, referring to Germany.
Germany, with an unemployment rate at its lowest in 18 years, has been reluctant to bail out underperforming neighbors. At the same time, Merkel has indicated she may be easing her opposition to expanded measures as European finance chiefs start work on a revamped strategy for fighting the region’s debt woes.
The single currency weakened against 15 of 16 major counterparts today, declining to $1.3292 as of 8:21 a.m. in London.
The euro enables Germany to accumulate trade surpluses because other EU nations can’t devalue their currencies as they did before the euro’s creation, according to Prodi.
Germany reported a 12.9 billion euro ($17 billion) surplus in November, the most recent month for which figures are available. China’s excess of exports over imports in December was $13.1 billion.
Hindering efforts to resolve the crisis would be “masochistic” or like committing “suicide,” said Prodi, chair professor of Sino-European dialog at the China Europe International Business School in Shanghai. Corporate Germany will “never permit” scrapping the euro, he added.
Greek Rescue
During the crisis, Merkel has held out against some rescue measures, stalling on an aid package for Greece to win stiffer budget-cutting conditions.
With elections this year in seven of Germany’s 16 states, she risks further alienating voters if she agrees to revamped rescue funds to fulfill her pledge to do “whatever is needed” to save the euro. Some coalition lawmakers have expressed concern at any attempt to bolster the EU’s bailout tools at the expense of German taxpayers.
Germany, as Europe’s biggest economy, is already the largest contributor to the EU’s 440 billion-euro bailout fund.
The economy is looking up
U.K. Chancellor of the Exchequer George Osborne will call on European leaders to bolster banks’ capital reserves and take tougher steps to reduce government deficits to help aid economic recovery.
The financial crisis that struck Ireland toward the end of last year is proof that Europe lacks credible plans to strengthen its banks, Osborne will tell politicians and economists in Paris today. That uncertainty is acting as a brake on the region’s economic recovery, he will say.
“On deficits, growth and banks, 2011 is the year Europe must put its own house in order,” Osborne will say, according to comments released by a Treasury official. “This means confronting the difficult issues holding back confidence and growth.”
The failure of European Union stress tests to restore confidence in the region’s banks was underscored last year when Ireland directed its two biggest lenders, both of which passed the tests, to raise additional capital payday loan online. Now, amid a widening European debt crisis, regulators from 27 nations are searching for ways to improve the tests, which will be repeated this year.
Osborne will also urge tougher steps to reduce government deficits amid high market interest rates in countries such as Greece, Portugal and Spain.
Writing in the Financial Times today, Osborne says European leaders need to put in place a “comprehensive package early this year” to address “continuing market concern” about sovereign debt.
“The eurozone must follow the logic of the single currency and stand more convincingly behind the euro,” Osborne writes in the newspaper.
The dollar weakened against the euro, trimming a yearly gain, as speculation global growth will pick up next year spurred sales of the U.S. currency.
The dollar fell against 13 of its 16 most traded peers after South Korea’s consumer prices rose more than forecast and following reports yesterday showing U.S. claims for jobless benefits dropped last week, businesses expanded and pending home sales climbed. The euro reached a two-week high after Chancellor Angela Merkel vowed to defend the common currency as “the foundation” of Germany’s economy.
“Maybe the U.S. data prompted pressure on outflows,” said Geoffrey Yu, a London-based currency strategist at UBS AG. “There’s a slight heading into risk again. We’ve seen a good deal of buying of Asian currencies against the dollar.”
The U.S. currency weakened 0.3 percent to $1.3345 against the euro as of 8:38 a.m. in London paydayloans. Since Dec. 31 last year the dollar has appreciated 6.9 percent against the European currency.
The dollar depreciated 0.8 percent against the Korean won to 1,126. The yen declined 0.3 percent to 108.50 per euro. The Japanese currency strengthened against the U.S. dollar for the 10th day to 81.36.
South Korea’s consumer prices rose 3.5 percent in December from a year ago, Statistics Korea said in Gwacheon today. The median estimate was for a 3.2 percent gain in a Bloomberg News survey of nine economists. The Institute for Supply Management’s factory index in the U.S. rose to 57.0 in December, the most since May, from 56.6 in November, economists said before the Jan. 3 report. A reading higher than 50 signals growth.
Powered by WordPress -- XHTML 1.0