Tuesday World Business News 2

S Korea signs deal to import 
Russian gas via N Korea 
Agence France-Presse . Seoul 

South Korea has signed a deal to import Russian natural gas beginning in 2015 via a pipeline running through North Korea and across the heavily fortified border, the government said Monday.
  The Ministry of Knowledge Economy said Korea Gas Corp and Gazprom reached the initial deal in Moscow on the sidelines of a South Korea-Russian summit.
  Under the plan, Seoul will import 10 billion cubic metres (350b cft) of natural gas a year over 30 years, said Vice Energy Minister Lee Jae-Hoon.
  Lee, quoted by Yonhap news agency, said gas imports over the three decades would be worth a total of about 90 billion dollars.
  Another nine billion dollars would be used to build and operate joint petrochemical and liquefied natural gas plants in Russia’s Far East, with their products marketed abroad.
  The remainder would fund pipes built in North Korea.
  Lee said the plan proposed by Russia in February calls for gasfields in Siberia and the Far East to be linked by pipelines that will send fuel to Vladivostok.
  The piped gas would then be sent through North Korea to South Korea.
  ‘Russia will be tasked with building the pipelines and negotiating with North Korea,’ Lee said, adding that Pyongyang will likely agree to the proposal since it stands to earn 100 million dollars per year from it.
  Relations are currently frosty between the two Koreas. Pyongyang cut off most official contacts after a new conservative government in Seoul vowed to take a firmer line in cross-border relations.
  A six-nation nuclear disarmament deal is also deadlocked, with the North preparing to restart its plutonium reprocessing plant. Lee said the Korean and Russian firms are also considering ways to liquefy the natural gas and send it by ship to South Korea as a contingency plan, should complications arise in North Korea. 
Citi named in 100 best cos list 
Staff Correspondent 

Citi, a global financial services company, has been named in the 100 best companies list by Working Mother magazine for the 18th year.
  About 25 per cent of the top earners at Citi represent women. The company has established best practices at Citi with embarking on new initiatives like Global Women’s Initiative launched in 2008. The initiative was aimed at helping women network and mentoring each other. Citi also provides child-care centre facilities in different locations, said a press release.
  At Citibank Bangladesh around 20 per cent of the employees are women, including working mothers. Women also represent many senior positions at Citibank Bangladesh, including the management committee. 
Stock markets slump despite 
US bailout deal 
Agence France-Presse . London 

Global stock markets tumbled on Monday, despite a Wall Street bailout deal, as the ongoing financial crisis forced the state rescue of two key European banks.
  Asian and European equities suffered fresh losses as the tentative US agreement to rid the financial sector of toxic mortgage-related assets gave only a short-lived boost to sentiment.
  In Europe, Belgian-Dutch banking and insurance group Fortis sealed a government bailout, while Britain announced it would nationalise troubled mortgage lender Bradford & Bingley.
  Investors were unsettled by signs of widening problems in the banking sector. London’s stock market dived 2.51 per cent at 4,960.61 points in early deals, accelerating initial losses.
  Paris shares plunged 2.87 per cent to 4,043.74 points and Frankfurt tumbled 3.16 per cent to 5,871.64 points.
  Global central banks meanwhile pumped extra cash into the financial system as part of continued efforts to keep credit flowing.
  ‘Despite the US bail out plan now being committed to paper, there’s hardly a jubilant mood expected as the new trading week gets underway,’ said CMC Markets dealer Matt Buckland in London.
  ‘The fact the funds won’t be released in one lot but instead a series of tranches is certainly detracting from its appeal.
  ‘This, combined with the very visible scars of the credit squeeze ... will again weigh in sentiment,’ he added, in reference to the state rescues of B&B and Fortis.
  The European Central Bank announced a special 38-day euro loan to provide eurozone banks with more cash in a bid to balance conditions on extremely tense interbank money markets.
  German bank Hypo Real Estate was meanwhile granted a last-minute ‘multi-billion euro’ credit line from a consortium of German banks that allowed it to avoid declaring bankruptcy.
  Hong Kong share prices closed down 4.3 per cent on Monday, as banking giant HSBC bumped up its mortgage rate, sending property stocks tumbling, dealers said.
  Tokyo fell 1.26 per cent by the close, Sydney lost 2.0 per cent and Seoul dropped 1.35 per cent.
  There were still doubts about the proposed US financial rescue package, which needs to be approved by Congress and offers no guarantee of an end to the credit crunch that has ravaged global markets, dealers said.
  ‘In our view, while the ‘bailout plan’ reduces the risk of a systemic collapse, many downside risks remain — not least those related to a protracted slowdown in the global economy,’ said Barclays Capital analyst David Woo.
  ‘In addition ... the financial market turbulence is seriously affecting the European financial system as well.’
  He added: ‘The weakness in equities ... suggests the market is pessimistic about the likely effectiveness of the Treasury’s plan.’
  The US deal, announced just hours before Asian markets opened, is designed to mop up toxic debts from struggling banks and prevent further financial chaos that could tip the world’s largest economy into recession.
  The bailout, worth up to 700 billion dollars, would be the largest government economic intervention since the Great Depression of the 1930s, and aims to shore up an economy in the face of a severe housing slump.
  ‘We know that we are most likely to avoid a meltdown in the US financial sector, but what matters now is negative news from new regions,’ added Motomi Hiratsuka, a trader at BNP Paribas.
  With markets still skittish, the Australian and Japanese central banks pumped more emergency funds into the short-term money markets.
  US Treasury secretary Henry Paulson said the package ‘gives us the flexibility to unclog our financial markets and increase the ability of our financial institutions to deliver the credit that will help create jobs.’
  Democratic lawmakers warned US financial firms that they would be under stricter supervision from now on.
  ‘The party is over,’ said House Speaker Nancy Pelosi. ‘The era of golden parachutes for high-flying Wall Street operators is over. No longer will the US taxpayer bail out the recklessness of Wall Street.’
  The measures laid out in the bill include the immediate release of 250 billion dollars to enable the government to buy up troubled assets.
  The US president is authorised to approve a further 100 billion dollars, but the plan gives Congress a veto power over purchases above that limit and sets a ceiling for all purchases of 700 billion dollars.
  The deal on the rescue plan provided a modest boost to the dollar, while worries about problems at European banks weighed on the euro. 
ECB loans €120b in 38-day tender 
Agence France-Presse . Frankfurt 

The European Central Bank said Monday it had loaned eurozone banks 120 billion euros ($172b) in a special 38-day operation aimed at soothing extremely tense interbank money markets.
  The ECB had said earlier in a statement that ‘the special term refinancing operation will be renewed at least until beyond the end of the year,’ amid increased pressure at the end of the third quarter.
  ‘The ECB will continue to steer liquidity towards balanced conditions’ in an attempt to bring interbank interest rates in line with the bank’s own minimum rate, it added.
  Commercial banks usually lend and borrow cash on interbank money markets but these have almost completely dried up since the US market for high-risk, or subprime, mortgages collapsed more than a year ago.
  The ECB and other major central banks have thus been pumping hundreds of billions of dollars, euros, pounds and other currencies in the form of loans into such markets.
  On Monday, the ECB also rolled over one-day dollar loans to eurozone banks, renewing that operation for a total amount of 30 billion dollars (€20.8b).
  The dollars were obtained from the US Federal Reserve through a reciprocal currency agreement known as a swap, and allow eurozone banks to obtain the US currency directly from the ECB.
  Initially, the one-day loans were for 40 billion dollars, but the ECB reduced that amount last week, while extending other dollar loans to a period of one week.
  ‘Injections of dollar liquidity by the ECB, Bank of England and Swiss National Bank have highlighted the sizeable dollar exposures among European banks,’ Citibank analysts wrote on Monday.