Royal Dutch Shell is pulling some of its funds out of European banks over fears stirred by the Eurozone’s mounting debt crisis, according to reports. The company’s chief financial officer, Simon Henry, told The Times newspaper that Shell is cutting back its exposure to European credit risk in the worst-hit economies and putting a higher price on doing business with the region’s peripheral nations. “There’s been a shift in our willingness to take credit risk in Europe. The crisis has impacted our willingness to afford credit,” Mr Henry is quoted as saying. Asked whether Shell regarded risk as different in Germany compared with some of the Eurozone’s southern and heavily indebted members, he said: “We differentiate between different credit risk.” Mr Henry is cited as saying that the Anglo-Dutch oil major would rather deposit $15bn of cash in non-European assets, such as US Treasuries and US bank accounts, The Telegraph reports.
Amazon will overtake Wal-Mart as the world’s biggest retailer by 2020 amid a fundamental shift in the world’s shopping habits, according to Andy Bond, the former chief executive of Asda. Highlighting a “period of vast change”, Mr Bond said the online retailer would come to eclipse Wal-Mart, Asda’s US owner. Amazon currently has a market value of $106bn (£68bn), compared to Wal-Mart’s $252bn capitalisation. In an interview with The Daily Telegraph, Mr Bond also warned of up to a decade of economic pain for UK consumers, branded pay for some top company directors “gratuitous”, and threatened to inflame the milk industry row by calling for supermarkets to do more to help farmers.
International Airlines Group (IAG), British Airways’ parent company, is considering buying a small stake in its embattled partner American Airlines to protect their alliance. Willie Walsh, IAG’s chief executive, revealed in an interview that the tactic could be used to deliver “additional strategic value” for BA and its Oneworld global airline alliance. A cross investment could also act as a poison pill for any rival attempt to lure American away from Oneworld, which would be potentially damaging for IAG. Delta Airlines is reported to be considering a bid for American, which would almost certainly result in it joining Delta’s SkyTeam alliance – leaving a hole in IAG’s lucrative North Atlantic route network. The prospect of IAG’s stake building has arisen due to the financial problems at AMR, American’s parent company. AMR filed for Chapter 11 bankruptcy protection in November and is currently seeking an agreement with creditors to reduce its debt burden, The Telegraph writes.
Australia’s giant liquefied natural gas (LNG) projects could be delayed or cancelled because of their spiralling costs, analysts have warned. A pipeline of $200bn worth of LNG projects has been sanctioned that, if built as planned over the next five years, would turn Australia into one of the world’s biggest gas exporters. But soaring wages and construction costs, as well as a strong Australian dollar, have made the hugely complex projects even more challenging. Chevron said ten days ago that it was reviewing the costs of its Gorgon LNG scheme, Australia’s biggest resource project in which Shell has a 25% stake. When the American energy company gave it the go-ahead almost three years ago, costs were estimated at $37bn, but a senior executive told The Times of industry speculation that put the final cost at $100bn. Chevron will provide details about the revised costs towards the end of the year.
A new pan-European stock exchange for entrepreneurs is being planned by NYSE Euronext to plug the gap in funding for small companies and help them raise money from investors more easily. The exchange – dubbed the “Entrepreneurs’ Exchange” by NYSE Euronext – will facilitate fundraising via issues of bonds as well as equity. Companies would carry out both initial public offerings of shares and initial bond offerings, and even a “Pre-IPO” of convertibles, that is investments that would in time convert from bonds into equities. The new exchange, which will be carved out of existing Euronext and Alternext markets, is the latest attempt by policy makers and exchange operators to boost corporate growth following the financial crisis, The Financial Times says.
Fears of a protracted recession will intensify today amid signs that Britain’s manufacturing engine room is running out of steam. Publishing its latest SME trends survey, the CBI said sentiment among small- and medium-sized manufacturers had deteriorated, while output had fallen for the first time since autumn 2009. The business lobby group, which polled hundreds of firms across the UK for the quarterly report, warned of a “challenging” domestic backdrop, uncertainty over the Eurozone and a “broader loss of momentum” in the global economy. There were a couple of brighter spots, though, with firms expecting output to be broadly flat in the coming quarter. Many respondents are also sticking with their plans to take on additional staff, The Scotsman says.