January 2022

18
Jan

Piraeus Bank Is Said to Explore Bid for HSBC’s Greek Operations

(Bloomberg) — Piraeus Bank is exploring a bid for the Greek operations of HSBC Holdings Plc, according to people familiar with the matter. 

The two banks have held talks, but no decision has been made, said the people, who declined to speak publicly as the information is private. 

HSBC has 15 branches in Greece and has operated in the country since 1981, according to its website. Under Chief Executive Officer Noel Quinn, the London-headquartered lender is pushing through a global restructuring that has already seen it offload retail operations in both France and the U.S. as it streamlines its operations outside Asia.

A spokesperson for Piraeus declined to comment. A spokeswoman for HSBC said in a statement the bank was conducting a strategic review of its Greek business. “No final decision has been taken and all options are being considered,” she said.

Piraeus is the second-biggest bank by assets in Greece and has reduced its non-performing exposure ratio to 16% at the end of September, down from 46% six months ago. The aim is to further cut the soured debt to lower than 3% in the medium term.

In April, Piraeus concluded a 1.4 billion-euro ($1.6 billion) share capital increase to boost its capital buffers. Billionaire investor John Paulsonsignificantly increased his holding through the capital hike, while the country’s bank recapitalization fund reduced its stake.

–With assistance from Paul Tugwell.

14
Jan

France’s Power Price Cap Will Cost EDF up to $9.6 Billion 

(Bloomberg) — The French government will ask Electricite de France SA to sell more power at a deep discount to protect households from surging wholesale electricity prices, a measure that will cost the state-controlled utility as much as 8.4 billion euros ($9.6 billion).

The unprecedented move, announced by Finance Minister Bruno Le Maire in an interview with Le Parisien published Thursday, is the latest decision by President Emmanuel Macron to tackle inflation and gain support of voters ahead of April’s presidential election as an energy crisis threatens to create havoc across Europe.

In a separate development, EDF said late Thursday that several of its nuclear power plants in France would be down longer than expected for repairs, prompting the company to slash its output forecast from reactors by 8%. The move threatens to drive up power prices as Europe is already facing a historic energy crisis.  

Also See: EDF Trims Nuclear Power-Output Forecast 8%, Citing Repairs   

The increase in electricity bills for households and very small businesses will be capped at 4% this year, when including 8 billion euros of tax cuts on electricity consumption, the minister said. Without the moves, prices would rise by 35% from Feb. 1.

Rivals of Paris-based EDF, which are already entitled by law to buy 100 terawatt-hours of the energy giant’s annual power output at a steep discount to current market prices, will be given the opportunity to buy another 20 terawatt-hours on the cheap, Le Maire told the newspaper. That will cost EDF between 7.7 billion euros and 8.4 billion euros, depending on market prices, the minister said.

The financial consequences for EDF Group can’t be precisely determined at this stage, and will depend on the market prices over the implementation period, the energy giant said in a Thursday statement.

‘Appropriate Measures’

EDF said it “will consider appropriate measures to strengthen its balance sheet structure and any measure to protect its interests.” The company withdrew its guidance for 2022 indebtedness, and said it will communicate again by Feb. 18 at the latest when it releases annual results.

The government decision means EDF, which tends to sell its power in advance, will have to buy back power at high prices to sell it back at discount to rivals. It’s even more costly, because an unusually high number of its nuclear reactors are halted for long maintenance or repairs. In its statement Thursday, EDF said it was cutting its 2022 forecast for French nuclear output by 30 terawatt-hours to between 300 and 330 terawatt-hours.

EDF will sell 20 terawatt-hours of electricity at 46.2 euros per megawatt-hour to rivals this year, on top of the 100 terawatt-hours it’s selling at 42 euros, according to details disclosed by the government after Le Maire’s interview.

That compares with a day-ahead price of French baseload power that closed at 228 euros per megawatt-hour in Paris Thursday.

France’s plan needs to be approved by the European Commission, since it may impact competition within the European Union. Le Maire told the newspaper he has an agreement on the measure with Margrethe Vestager, the EU’s competition commissioner.

To achieve the 4% cap — a pledge made three months ago when market prices much were lower — the government will also postpone a portion of the 2022 tariff increase over a 12-month period starting February next year, EDF said.

2
Jan

Europe Seeks Green Label for Certain Gas and Nuclear Projects

  • European Commission is designing sustainable investment rules
  • Draft EU taxonomy proposal sparks criticism from the Greens 

By Ewa Krukowska

(Bloomberg) — The European Union is planning to allow some natural-gas and nuclear energy projects to be classified as sustainable investments in a proposal that sparked immediate criticism from the Greens. 

The European Commission wants to give a temporary green label to gas projects that replace coal and emit no more than 270 grams of carbon dioxide equivalent per kilowatt-hour, according to a draft regulation seen by Bloomberg News. Such plants would have to obtain construction permits before the end of 2030, and have plans to switch to renewable or low-carbon gases by the end of 2035.

Nuclear energy could be classified as sustainable as long as new plants that are granted construction permits by 2045 meet a set of criteria to avoid significant harm to the environment and water resources, according to the draft, sent on Friday to EU national governments for review. 

“The Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future,” the EU executive arm said in a statement on Saturday.

The design of the EU investment classification system, known as taxonomy, is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition. The challenge is to ensure the decision on nuclear and gas gets political support, while avoiding the risk of greenwashing, or overstating the significance of emissions cuts.

Europe wants to reach carbon neutrality by the middle of the century under the Green Deal, a sweeping overhaul that aims to accelerate pollution cuts in all areas, from energy production to transport.

Yet for some lawmakers, investors and activists, classifying gas or nuclear projects as green would harm the entire sustainable investment rulebook.  

“Including nuclear power and gas in the EU taxonomy is like labeling a caged egg as organic,” said Michael Bloss, a German member of the Green group in the European Parliament. “Instead of channeling money into investments in the solar and wind industries, old and extremely expensive business models can now be continued under false guise.”

The taxonomy aims to guide investors to clean projects. The decision on whether it should include gas and nuclear power was delayed in April following criticism that such an addition could undermine the credibility of the system.

Giving a temporary green label to certain gas projects gas projects could facilitate investments in cleaning up coal-based heating systems in countries such as Poland. That’s an argument often raised by East European politicians.  

The inclusion of some nuclear energy projects would help attract private finance in nations from France to the Czech Republic, which plan to rely on atomic power in their transition to net-zero emissions.

The Commission is also planning to ensure a high degree of transparency to investors concerning gas and nuclear energy, introducing specific disclosure requirements for non-financial and financial undertakings. 

Member states and the Platform on Sustainable Finance have until Jan. 12 to provide feedback. The Commissions will then adopt the delegated act later this month. In the next step, it will be sent to EU nations and the European Parliament for scrutiny.

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