Morning business news - March 28Thursday 28 March 2013 12.23
NO MAJOR BANK RUN EXPECTED IN CYPRUS TODAY - The Cypriot stock exchange is remains closed today, extending a near two week shutdown until after the easter break next week. Cypriot banks, however, are reopening just days after a renewed bailout saw the planned closure of one of its number with a significant haircut for large depositors and the burning of senior bondholders.
Lorcan Roche Kelly, Chief Europe Strategist with Trend Macrolytics, says it is likely there would be no major bank run today. "Because this is only affecting depositors over €100,000, the number of people affected is much smaller than it might have been otherwise. It is inconvenient for smaller depositors who can only take out €300, but how much crisis there will be I'm not sure," he says.
Mr Roche Kelly says the comments by Eurogroup president Jeroen Dijsselbloem that the Cyprus bailout might become the template for future bailouts were the right comments, but at the wrong time. "Europe has to get away from the idea that taxpayers will forever bailout banks. If it's done elsewhere, it increases the risks for depositors with cash over €100,000. But it should make smaller depositors feel safer in their banks,'' he states.
On increasing volatility returning to the euro zone, Lorcan Roche Kelly says a general sense of unease has settled in at this time of year since the crisis began. "We haven't seen the situation change for Ireland as yet, but we may end up getting caught up in it. The banks are trying to attract large deposits. If they're seen as being at risk from a haircut, the depositors will put them elsewhere, perhaps in non-euro zone banks,'' he says.
MORNING BRIEFS - The planned merger of American Airlines and US Airways moved one step closer yesterday after the plan was approved in a US court. AMR - the parent of American - has been bankrupt since November 2011. It must now construct a formal restructuring plan incorporating the merger that meets court and creditor approval before the airline can emerge from bankruptcy. The merger plan was unveiled last month and it will result in the creation of the world's biggest airline.
*** Global food prices have dropped in the last few months, due to lower demand and better supply, according to the World Bank Food Price Index. The Bank did warn however that - although they have come down - prices remain close to the record highs reached last year. It also stresses that high food prices are pushing the world's poorest people towards "undernutrition" and obesity.
*** British camera specialist Jessops - which went bust three months ago - is to reopen after entrepreneur Peter Jones decided that their was life left in the company. Six stores will re-open this week with up to 30 more to follow next month. In its new guise, the business will be more competitive on price in the low-margin digital camera market, tackling online rivals, while also pushing for a bigger share of the high-end camera market.