European Business News (EBN), 97-02-03

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From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated February 3 1350 CET

CONTENTS

[01] Nordbanken says it won't merge with S-E Banken

[02] Metallgesellschaft profits rise 70% in 1995/96

[03] Generale des Eaux mulls selling Canal Plus stake

[04] Alcatel, Dassault and Aerospatiale considering joint bid for Thomson

[05] US manufacturers report stable growth in January with few signs of inlation

[06] UK January PMI accelerates

[07] GAN needs 15 billion Franc ($2.85 billion) rescue package

[08] EU bars member states from using gold reserves to meet Maastrict criteria

[09] Veba and RWE name their telecommunications venture 'Otelo'

[01] Nordbanken says it won't merge with S-E Banken

According to a S-E-Banken spokeswoman the discussions were ended on S-E- Banken's initiative.

In a statement, Nordbanken said: ''Nordbanken and S-E-Banken have discussed a possible merger. These discussions have been brought to an end without result.'

Speculation about a possible merger between S-E-Banken and Nordbanken has been going on for some time but heated up after rival Handelsbanken bid 23 billion kronor ($3.17 billion) for mortgage bank Stadshypotek in December, making it the largest financial institution in the Nordic region.

''The discussions between the banks have been going on off and on for some time but have been most intense during the past month,'' said S-E-Banken spokeswoman Gunilla Wikman.

She added that there was no possibility of the talks being resumed again at a later stage. ''This is it, there won't be a merger.'

Swedish media reports had said a merger between S-E-Banken and Nordbanken, which is 59 percent state-owned, was imminent.

The end of merger talks left analysts uncertain about the government's next move.

However Finance Minister Erik Asbrink said the state's holding in Nordbanken was still for sale but that there was no timetable set.

Some analysts said the merger between the two banks had raised doubts in some quarters over the revenues of a merged operation.

Nordbanken posted a nine month operating profit of 5.7 billion kronor ($783 million) in 1996, an increase of 13% over the year earlier.

Last September 1996 Nordbanken proposed a five billion kronor share buy- back which reduced the government's holding to 59.4% from 65.5%.

S-E-Banken posted an operating profit of 4.42 billion kronor for the first nine months of 1996 compared with 2.06 billion the year before.

[02] Metallgesellschaft profits rise 70% in 1995/96

Metallgesellschaft said pre-tax profit in the year to September 30 rose to 292 million marks ($177.9 million) from 171 million marks.

The group, rescued from the brink of bankruptcy in 1994, also said its financial situation had improved in 1995/1996 with its equity capital ratio rising to 6.7 percent from 2.2 percent and bank debt falling further. Group sales fell to 15.8 billion marks ($ 8.96 billion) from 17.6 billion ($9.6 billion).

All subsidiaries made a positive contribution to profits in 1995/1996 and the decline in group sales was as planned, said MG, which has undergone a restructuring involving the sale of subsidiaries. MG said it had a successful start in the 1996/1997 business year, with pre- tax profit in the first quarter to December 31 rising 20 percent to 26.7 million marks.

Group sales in the first quarter rose to 3.8 billion marks from 3.4 billion.

[03] Generale des Eaux mulls selling Canal Plus stake

In a statement, the companies said the results of negotiations would be put before both companies' boards on February 6. The companies said the value or parities established for any share swaps would be based on the market price of the shares before February 1.

The companies declined to give details of the share swap negotiations. According to press reports, Generale des Eaux will sell its 20.4%-stake in Canal Plus for a reserved capital increase in Havas. Generale des Eaux would also buy a part of Alcatel Alsthom's 21.2%-stake in Havas.

The end result of the exchanges would give Havas a 43%-stake in Canal Plus and Generale des Eaux around a 30%-stake in Havas, making genrale Havas' principle shareholder.

On Friday, shares in Havas ended at 405.5 francs a share. Generale des Eaux shares ended at 708 francs and Canal Plus shares finished at 1182 francs.

[04] Alcatel, Dassault and Aerospatiale considering joint bid for Thomson

An Alcatel spokesman would not confirm further details that were reported in Monday's Les Echos newspaper. According to the paper, Alcatel would pay cash and Dassault and Aerospatiale would bring capital assets to the combined bid.

Dassault would contribute its electronic unit Dassault Electronique and Aerospatiale would put its missile and satellite operations into the consortium, the newspaper said. The French government owns 58% of Thomson- CSF, which is also traded on the French stock exchange.

[05] US manufacturers report stable growth in January with few signs of inflation

'It's not quite as optimistic as the December report,' Ore told reporters Monday. 'But it's very solid.'

In its January report released earlier Monday, NAPM reported that its composite index fell to 52.0% from a December reading of 53.8%. The January index was slightly weaker than most analysts' predictions.

rates were bid lower after the figures were released. Traders said T-bills were merely following the rest of the Treasury market.

One bill trader said the NAPM report eliminated the chance Federal Reserve policy-makers would tighten interest rates when they meet this week.

Still, he said, bills have limited upside potential: he expects the Treasury to announce Tuesday that it is increasing the supply of three- and six-month bills set for auction next Monday.

[06] UK January PMI accelerates

The Chartered Institute of Purchasing & Supply, which publishes the index, said the improvement in the PMI was driven by an increase in the rate of growth of new orders. It also said the prices index for January posted the largest monthly fall seen since August 1996. ''Rising domestic demand (especially for consumer goods) provided the main impetus behind the boost to order books,'' the CIPS said. ''Export demand, although subdued compared with the summer, continued to show modest growth.''

The CIPS said the overall rate of growth of output, having slipped over the previous three months, picked up in response to the strengthened order books.

The index is based on a weighted average of a wide variety of individual survey indexes including new orders, output, stocks of finished goods and prices. A reading above 50 indicates that the manufacturing economy is expanding while a reading below 50 indicates a general contraction. Members of the institute are responsible for spending 750 billion pounds of corporate money each year.

[07] GAN needs 15 billion Franc ($2.85 billion) rescue package

The report also said the government is looking for a candidate to take 30% of the company, before placing the remaining entity on the market.

The government is also seeking a candidate to take control of most of GAN's banking unit, CIC, Le Monde said. The paper didn't indicate its source in the report. An adminstrative council meeting is scheduled for Tuesday, Le Monde said.

The cost of rescuing GAN would be in addition to massive government bailouts for Credit Lyonnais and Credit Foncier in 1997, Le Monde said. The bailout plans, taken together, will likely weigh heavily on the government's budget in 1997, the paper noted. The French Finance Ministry had no comment on the report, saying that the GAN privatization is still under discussion.

[08] EU bars member states from using gold reserves to meet Maastrict criteria

In a series of decisions on national accounting standards just published, Eurostat said the transfer of gold sale income 'should be treated as a financial transaction.' It said this means the money 'cannot be recorded as a receipt reducing the deficit.'

Eurostat's announcement is part of an effort to clarify E.U. national accounting standards following concerns about several questionable decisions recently by E.U. governments in an attempt to meet Maastricht Treaty criteria for the single currency. The most prominent case, endorsed by Eurostat, was a large payment from France Telecom to the government. Eurostat's other rulings Monday included a decision that governments must treat the difference between the issue price and the redemption price of a zero coupon bond as interest that will be recorded when the bond matures.

Meanwhile, Eurostat advised that if a government issues a bond in several tranches but with the same coupon it will have to raise the issue price of the more recent tranches to provide the same yield to all holders of the bond. Regarding government interest rate swaps, Eurostat said only net payments of interest between the swap parties should be recorded. Therefore the impact of the swaps on the deficit would be limited to the difference between the interest flows that the two parties agreed to exchange.

On pension funds Eurostat said certain funds financed primarily on pay-as- you-go systems and to a lesser extent by capital funding have to be classified in the budget sub-sector as 'social-security funds of general government.'

[09] Veba and RWE name their telecommunications venture 'Otelo'

The two companies confirmed they would call the venture 'Otelo'. Veba and C&W formed an alliance in 1995 and last year agreed to bring RWE on board last year. But C&W now wanted to back out of the venture, London papers reported over the weekend.

Berliner Zeitung also said Veba was negotiating with Deutsche Telekom to end its complaint to the European Union about the German phone company's business phone rates. Veba would drop the complaint if Telekom agreed to lower rates Veba pays for connecting to the Telekom network.

Veba's complaint has been suspended until March 31, the paper said.

From the European Business News (EBN) Server at http://www.ebn.co.uk/

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