Eloise notes

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U.S. lawmakers fret as Cuba oil drill plans advance

But the assurances did not completely convince senators at a Capitol Hill hearing that the United States would be prepared to respond to a worst-case oil spill scenario in waters controlled by its long-time Communist foe.The government is evaluating the safety and emergency plans of Repsol YPF, which plans to explore for oil in the Gulf of Mexico after a Chinese-made rig arrives later this year, said Michael Bromwich, head of the U.S. Bureau of Safety and Environmental Enforcement.The development is a delicate environmental issue for the United States as BP's oil blowout in the Gulf last year remains fresh in the minds of U.S. coastal residents. Drilling is also banned off Florida's coast.It is also a sensitive political issue because if there was a spill, U.S. technology might be prevented from being quickly deployed due to the long-running trade embargo with Cuba."The question is, are we going to get caught in some kind of political tangle that keeps us from bringing to bear the best response capability needed?" Jeff Bingaman, chairman of the Senate Energy Committee, told reporters after the hearing.Bingaman said he has long supported an end to the U.S. trade embargo on Cuba that requires U.S. companies to obtain licenses to work in Cuba and use U.S. technology there.Tuesday's hearing did not explore that issue, although one senator said the embargo was the elephant in the room."It seems like there are some policies that we have that are sort of 'Cutting your nose off to spite your face' that may be worth looking at," said Bob Corker, a Republican.'BETTER THAN NOTHING'U.S. Coast Guard officials and the drilling regulator will inspect Repsol's rig when it reaches Trinidad and Tobago on its way to Cuba, Bromwich said."It's not optimal," Bromwich told senators. "But this is a lot better than nothing."The rig, called Scarabeo 9, is owned by a unit of the Italian oil company, Eni SpA. Repsol, in partnership with Norway's Statoil and India's ONGC, plans to drill at least one well off Cuba.Repsol, which also has assets in the United States, has been cooperative with the U.S. regulator, Bromwich said."We can't obviously direct Cuba to impose our standards, and so really our exclusive vehicle is through the operator," he said.The U.S. Justice Department is investigating whether it could hold Repsol liable in the event of a spill in Cuban waters, he said.If there were a spill, government licenses needed for U.S. companies to help "would be granted very, very quickly," Bromwich said.But the only U.S. company to currently have a license to assist with a spill was skeptical, and said more flexibility would help with emergency planning for the Repsol project."I know of no expedited process today," said Paul Schuler, chief executive of Clean Caribbean and Americas."I would want to see that institutionalized, formalized because my experience is not the same," Schuler told Reuters.POLITICS OF CUBACuban exiles oppose any U.S. involvement in the Cuban project, which they argue will support the Communist regime."I am deeply disappointed that the Administration is playing a role in it, rather than working to stop it," said Cuba-born U.S. Representative Ileana Ros-Lehtinen, chairman of the House Foreign Affairs committee, in a statement.Florida is the most populous of the presidential swing states and a key battleground for the 2012 vote. Obama won the state in 2008.Cuba believes it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated the reserves at 5 billion barrels.

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Behind the scenes at UBS

Emma Thomasson and Edward Taylor tell the inside story of UBS’s turbulent week in today’s second special report “How a rogue trader crashed UBS.” UBS chief Oswald Gruebel’s decision to resign after the bank said a rogue trader lost as much as $2.3 billion was not just a response to the immediate crisis. It was also an admission that the bank’s latest scandal has effectively undone all his efforts over the past two years to lobby against tougher bank regulations. The alleged rogue trades have killed any remaining ambitions UBS might have to compete with the titans of Wall Street. They also cast a huge shadow across the entire industry and make tough new regulations far more likely, as the 67-year-old hinted in a memo to staff after he quit. “That it was possible for one of our traders in London to inflict a multi-billion loss on our bank through unauthorised trading shocked me, as it did everyone else, deeply. This incident has worldwide repercussions, including political ones,” he wrote. After a round of job cuts, the recent events sparked some gallows humor in the banking world. As one senior banker in Zurich put it: “The joke going around is that Gruebel didn’t need to sack 3,500 people to save 2 billion. He could have just sacked ONE.” UBS had only recently started to win back the trust of its wealthy private banking clients after risky bets on subprime mortgages came close to felling it in the financial crisis of 2008, as this graphic shows:

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Sberbank seeks loan of up to $2 bln despite mkts

Sources told Reuters this week that Sberbank, which was looking to price the new deal at a margin similar to VTB's $3.13 billion loan in July, is unlikely to get such a price given weak markets.VTB's record loan carried a margin of 130 basis points (bps) over LIBOR, at parity with Russian state development bank Vnesheconombank's (VEB) three-year, $2.45 billion deal in April.The euro-zone debt crisis has raised the premium demanded by lenders, especially as European banks are strapped for cash as they face calls to recapitalise."I hope we will realise the plans we set for ourselves," Gref said on Friday. He did not disclose the margin Sberbank is ready to pay for the loan.

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Singapore university seeks to break hold of credit-rating goliaths

* Run on not-for-profit basisBy Rachel ArmstrongSINGAPORE, Oct 14 (Reuters) - In a small lab, tucked away in the depths of a Singapore university campus, a team of researchers and their computers calculate the credit ratings of about 50,000 companies.Relying just on public data and stock price movements for their analysis, the project's founder, professor Jin-Chuan Duan, is confident their system can provide a more reliable guide to a company's credit risks than the commercial rating agencies.A confident claim, but a growing number of the system's 800 users are banks and fund managers, utilizing it to help guide their own internal credit risk systems."It offers a very transparent and objective approach to estimating the credit rating of companies," said Benjamin Wong, a senior risk analyst at a UK bank."I'm not sure a single bank could do what they've done in terms of collecting the data, assembling the research capabilities, and having the technology to do the calculations on such a large volume of companies."BORN OUT OF FRUSTRATIONThe idea was born in March 2009, out of frustration at the debate surrounding credit rating agencies in the wake of the financial crisis."It occurred to me that just criticizing the rating industry and going about the conventional way of regulatory reform is never going to go anywhere, so I was asking myself is there something more constructive I could do?," said Duan, the director of the National University of Singapore's Risk Management Institute.An evangelist for revolutionising the way credit rating agencies operate, Duan believes the private sector model, where agencies are paid by the issuers to rate their products, is flawed."Credit ratings should be viewed as a public good and part of infrastructure," he said."The natural way to achieve this is for a knowledge enterprise to do it."So that's what Duan did, allocating S$7 million ($5.5 million), part of a grant provided to his institute by Singapore's central bank, to fund a free-to-use credit rating service for four years.He and his team of around 30 researchers built the system using data from Reuters and Bloomberg terminals on companies listed across Asia, Europe and America.They designed models to calculate the probability of a company reneging on its debts, shaped by analysis of previous corporate defaults.NO MORE AAAsRather than issuing the well known alphabetic ratings like AAA, the system produces a numerical probability instead. For example it estimates that the recently rescued Franco-Belgian lender Dexia SA has a 3.4 percent probability of defaulting in the next two years -- low but still five times the European financial sector's average probability of 0.7 percent.The big-three credit rating agencies -- Moody's , Standard & Poor's and Fitch Ratings -- have defended their lettering system as a useful shorthand understood across the finance industry.But Duan is among the many critics who believe debt should be assigned a more precise credit rating."In the political polling sphere during election time we tell people the points and margin of error in a poll and TV viewers don't have a problem understanding, so it should be possible in the financial sphere," he said.COMPETITIONIt's not the first time someone has tried to give the big three agencies and several local players a run for their money. Following the financial crisis, Wall Street analyst Meredith Whitney, entrepreneur Jules Kroll and research firm Morningstar Inc are among those who have ventured into the ratings space.What distinguishes the university's offering is it's not out to make money and welcomes outside contributions that will improve its model."As we are not for profit, we are happy to invite people to participate with us in a Wikipedia-type spirit of development," said Duan, adding that they don't register intellectual property rights for the project, nor do they take corporate donations.It's this approach that is one of the big winners with the industry. With banks under more pressure than ever from the regulators to provide a thorough explanation of their approach to risk management, they need a credit rating system with a public methodology they can test for themselves."They (the institute) are transparent in their methodology and in disclosing the performance of their ratings," said Wong at the UK bank."For the credit rating agencies, a rating decision is made based on a committee approach, so it can be quite subjective."That's not to say the system's not got its limitations -- it can only rate publicly listed companies and lacks the access to issuers that the big rating agencies have.But Duan believes their system, based as it is on quantitative analysis of previous defaults, will provide a scientific benchmark for banks and regulators to test other credit rating systems against.Asked what the commercial players have made of their offering, he says they have initially been rather defensive but come round once they realise they are not facing financial competitors."Once we've made it clear we're here to create scientific competition, we're not here to create business competition they start to feel a bit more comfortable with it," said Duan.

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UPDATE 1-China's lending, FX reserves growth slow

* Loans, M2 growth slow as Beijing keeps monetary policy tight (Adds details, quotes)By Langi Chiang and Koh Gui QingBEIJING, Oct 14 (Reuters) - China's foreign exchange reserves grew at a surprisingly tepid clip last quarter to $3.2 trillion after the stockpile suffered a drop of nearly $61 billion in September on an outflow of speculative funds and a skidding euro.Data also showed China's bank lending and money growth cooled more than forecast in September, suggesting Beijing kept monetary policy on a tight leash in the month to contain price pressures."Particularly in September, there was a big drop in stock markets, global investors repatriated some money from emerging countries including China," said Banny Lam. "But this is temporary."Although China's ballooning reserves are often seen as a sign of its growing wealth, some analysts say they underscore Beijing's problem of excess cash, which fuels price pressures.In a sign that inflation-wary Beijing kept monetary conditions tight in September, banks were shown to have lent 470 billion yuan ($73.6 billion) in yuan loans, lower than August's 548.5 billion yuan.Money and loan growth take centre stage in China's monetary policy as they are controlled by Beijing to manage inflation.The broad M2 measure of money supply, M2, rose 13 percent from a year ago, slowing further from 13.5 percent in August.That is the slowest pace since October 2001, and marked the sixth month in a row M2 growth came in below the government's own target for 2011 of 16 percent.Economists had expected foreign exchange reserves to hit $3.305 trillion at the end of September and expected loan currency loans of 532.5 billion yuan and M2 growth of 13.8 percent.Lending and money growth have slowed steadily this year as the People's Bank of China steered monetary conditions back to normal after unleashing an extraordinary surge in bank credit in 2009 to counter the global financial crisis.However, official lending data published by Beijing is not all encompassing.A thriving underground lending market that charges exorbitant rates has blossomed as lenders and borrowers look for ways to beat the rules and satiate firms' thirst for cash.Data out on Friday showed annual inflation eased a shade in September to 6.1 percent from August's 6.2 percent, but still within sight of three-year highs of 6.5 percent hit in July.Many analysts say elevated price pressures should deter Beijing from loosening policy reins anytime soon, although a slight relaxation including boosting lending to small firms is likely if push comes to shove.But any further policy tightening is also unlikely at this point. Data earlier this week showed China's exports growth slowing to seven-month lows as Europe's debt crisis chilled global demand.Since October 2010, Beijing has raised interest rates five times and banks' reserve requirement ratios nine times. ($1 = 6.382 Chinese Yuan)

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BofA names MacDonald head of equities, Asia-Pacific - memo

MacDonald, who had previously worked with Goldman Sachs Group Inc for 17 years, joined BofA last year.He was promoted to his new role after Yasuhiro Fujiwara resigned as co-head of global capital markets for Asia-Pacific last week, the memo said. Fujiwara was leaving to pursue personal interests after spending nearly 14 years with BofA, the memo added.A BofA spokesman confirmed the contents of the memo.Fujiwara and Michael Halloran were Asia-Pacific co-heads of global capital markets, with Fujiwara responsible for the equities business. Under the new arrangement, Halloran would head the Asia-Pacific fixed income business, the spokesman said.

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Abramson embraces top NY Times role -- and her puppy

But just as she is starting in the top job at the Times, she has a new lighthearted book out about a surprising topic -- her passion for her puppy.If that seems incongruous for a woman known for serious investigative journalism and now charged with charting the future of "The Gray Lady," Abramson believes her energy raising "Scout" is a perfect counterpoint to the rigors of journalism."I don't want to say one is harder than the other. Journalism is something where experience and judgment help you do the right thing," she told Reuters in an interview. "A puppy's behavior is pretty unpredictable and isn't something you can control very easily."Published this week, "The Puppy Diaries: Raising a Dog Named Scout" continues Abramson's popular 2009 online pet column about the highs and lows of the first year with her English golden retriever. It's a book she feels almost wrote itself before she took up her executive editor job in September.Abramson, 57, is married with two children and an author of books about U.S. Supreme Court Justice Clarence Thomas and the women of Harvard Law. Her new book finds her wondering if she would be a fit dog mother again after her previous dog died.The book mentions some work colleagues and friends who shared her canine passion -- and others who expressed disappointment she agreed to write a dog column after being persuaded by its popularity."A part of my life is I am just a dog nut. And most of the people who work with me at the Times know that and doing the online column was fun. I did some real reporting for it," she said. "I had never really written anything that engaged people in such a personal way."While some might raise their eyebrows again with her new book, she said, "I don't worry about it too much."UNPREDICTABLE LIFEBesides some dog truths, the book offers readers a small glimpse of Abramson's life juggling work at the Times, a home in Connecticut, an apartment in Manhattan and her two children and marriage to a Harvard classmate.Her book offers advice about such pet issues as adoption or rescue, diets and training and is mindful of the tough economy."Whether you get an animal from a shelter or purchase a dog obviously deals with whether you are privileged and have money or not. I certainly don't assume that the audience for the book has unlimited resources to throw at raising a pet. So I am aware that I am lucky," she said.The book also mentions several personal accidents, including Abramson learning to walk again after being hit by a truck in New York's Times Square in 2007 to a hiking accident in 2010 which helped her bond with Scout."I have learned something that everybody knows inherently, and that is, life is just unpredictable," she said.On her new role at the Times, she said she will still bring what has always motivated her -- "the thrill of a good story."On the future of the newspaper, which like all newspapers has struggled to overcome declining advertising revenue, she still sees reliable news having a future."There is a tremendous thirst in society for quality news -- information that has been carefully analyzed and gracefully written and accurate," she said. "That isn't going to change. The more information that is out there, the thirst for reliable information gets even bigger."On life, her book ends with a quote by American humorist James Thurber, "Dogs are obsessed with being happy.""It is important to try and expose yourself in your life to things that are happy and I think there are few living beings that can make you happy quicker than a dog," she said.

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UPDATE 1-Glori Energy files for IPO of up to $115 mln

Oct 5 - Glori Energy Inc, which uses biotechnology to release oil trapped in reservoirs, filed with U.S. regulators on Wednesday to raise up to $115 million in an initial public offering of its common stock. The company said it planned to use the net proceeds from the offering for general corporate purposes, which may include the acquisition, restoration and operation of low-producing oil fields. The Houston-based company told the U.S Securities and Exchange Commission in a preliminary prospectus that Credit Suisse, UBS investment bank, Piper Jaffray and Robert Baird & Co were underwriting the IPO. Investment company GTI Group and Energy Technology Ventures -- a joint venture of General Electric Co GE.N>, ConocoPhillips and NRG Energy Inc -- are some of the biggest stakeholders of Glori. The company, which did not reveal how many shares it planned to sell or their expected price, intends to list its common stock on the Nasdaq under the symbol "GLRI". The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

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Nevada’s Big Bet

By Brian Grow What happens in Nevada, stays in Nevada. Literally. Especially when it comes to Nevada shell companies. That’s the gist of our latest special report in the SHELL GAMES series, “Nevada’s big bet on secrecy.” The story takes a close look at how changes to Nevada’s incorporation laws a decade ago have made it a haven for U.S. shell companies, as well as a hub for current executives of mass-incorporators who previously went to prison, in large part for using Nevada shell companies for illegal activities. The state’s liberal incorporation laws – which allow for nominee officers and directors and a higher degree of liability protection than any other state – are a magnet for questionable corporate behavior, it appears. “Nevada’s Big Bet on Secrecy” had some immediate impact: Ross Miller, Nevada’s Secretary of State, said in August that he planned to introduce a bill which would bar former felons from running mass-incorporators. In September, his office announced a new Corporate Ownership Fraud Task Force, in collaboration with the Internal Revenue Service and the Nevada Attorney General’s office, based in part on data contained in questions posed by Reuters. The data are sure to raise eye-brows. Reuters found four former felons who run or until recently ran three mass-incorporators in the state which have formed or represented more than 14,000 companies. Over 3,000 of those firms have been the subject of state and federal tax liens and civil judgements, or have been named in federal civil and criminal litigation. We also detailed a March study by two professors at the University of Virginia which shows that Nevada had the nation’s highest rate of financial restatements and fraud allegations or investigations involving publicly-traded companies on average each year between 2000 and 2008. What’s more the state is home to almost half of all publicly-traded shell companies tracked by financial consultancy Private Raise. Public shells have drawn fire for helping foreign firms access a backdoor to trading on U.S. stock exchanges, with less scrutiny from regulators and investors. Nevada’s reputation – via its gambling hub Las Vegas — for being an anything-goes oasis extends to the world of opaque corporate ownership, too Read the story in multimedia PDF format here. Here are the previous stories in the series:     A little house of secrets:   http://link.reuters.com/wug23s     China’s shortcut to Wall St: http://link.reuters.com/sep93s     Bonds that turned to dust:   http://link.reuters.com/vep93s And some video from Nevada: