Black Sea Grain Initiative extended

According to Saudi Gazette, the Black Sea Grain Initiative, a UN-brokered deal aimed at supplying markets with food and fertilizer amid global shortages and rising prices, exacerbated by the Ukraine war, was extended on Saturday, the day it was due to expire.

The announcement was made in a Note to Correspondents, released by the UN Secretary-General’s spokesperson’s office, which emphasized that the Initiative allows for the facilitation of the safe navigation for the exports of grain and related foodstuffs and fertilizers, including ammonia, from designated Ukrainian seaports.

Following the invasion of Ukraine by Russian forces in February 2022, the Initiative has been one of the few areas in which the Russian and Ukrainian governments have been able to reach agreement.

It came about in response to the sharp increase in prices for food and fertilizers around the world, Russia and Ukraine are the main suppliers of these products to world markets, and their ability to export was significantly curtailed once hostilities began.

Since the signing of the Initiative in July 2022, some 25 million metric tons of grains and foodstuffs have been moved to 45 countries, and the initiative has been credited with helping to calm global food prices, which reached vertiginous highs in March 2022.

Following the implementation of the Initiative, prices began to fall and, a year later, had dropped some 18 percent.

The deal was mediated by the UN and the government of Türkiye, which was thanked in the statement for its diplomatic and operational support, as part of the agreement, a Joint Coordination Centre (JCC) was established in Istanbul, to monitor the implementation of the Initiative.

The Note to Correspondents reaffirmed the UN’s strong commitment to both agreements, and described the Black Sea Grain Initiative, alongside the Memorandum of Understanding on promoting Russian food products and fertilizers to the world markets, as critical for global food security, especially for developing countries.

 

UBS takes over Credit Suisse

Moves by authorities to avert a global banking crisis appeared to have lifted market confidence on Monday as investors welcomed emergency dollar liquidity from top central banks and a historic Swiss-backed acquisition of troubled Credit Suisse by UBS Group.

In a package orchestrated by Swiss regulators on Sunday, UBS Group AG will pay 3 billion Swiss francs (US$3.23 billion) for 167-year-old Credit Suisse Group AG and assume up to US$5.4 billion in losses.

Major central banks, faced with the risk of a fast-moving loss of confidence in the financial system, also scrambled on Sunday to bolster the flow of cash around the world with a series of coordinated currency swaps to ensure banks have the dollars needed to operate.

The Swiss banking marriage is backed by a massive government guarantee, helping prevent what would have been one of the largest banking collapses since the fall of Lehman Brothers in 2008.

Financial markets staged a modest relief rally in Asia on Monday but are wary about a range of risks including contagion, the fragile state of US regional banks, and moral hazard.

"Policy makers will be hoping that the weekend's UBS buyout of troubled Credit Suisse will draw a line under recent market stresses," said Brian Martin, ANZ head of G3 economics in London.

Central banks were already facing the conundrum of how much is enough? in the face of resilient labour markets, given the lags with which their policy decisions affect economies. They now have a new conundrum, 'how much is too much?' for financial stability?

Pressure on UBS helped seal Sunday's deal.

"It's a historic day in Switzerland, and a day frankly, we hoped, would not come," UBS Chairman Colm Kelleher told analysts on a conference call. "I would like to make it clear that while we did not initiate discussions, we believe that this transaction is financially attractive for UBS shareholders," Kelleher said.

UBS CEO Ralph Hamers said there were still many details to be worked through.

"I know that there must be still questions that we have not been able to answer," he said. "And I understand that and I even want to apologize for it."

In a global response not seen since the height of the pandemic, the Fed said it had joined central banks in Canada, England, Japan, the EU and Switzerland in a coordinated action to enhance market liquidity. The European Central Bank vowed to support euro zone banks with loans if needed; adding the Swiss rescue of Credit Suisse was instrumental in restoring calm.

Problems remain in the US banking sector, where bank stocks remained under pressure despite a move by several large banks to deposit US$30 billion into First Republic Bank, an institution rocked by the failures of Silicon Valley and Signature Bank.

On Sunday, First Republic saw its credit ratings downgraded deeper into junk status by S&P Global, which said the deposit infusion may not solve its liquidity problems.

US bank deposits have stabilized, with outflows slowing or stopping and in some cases reversing, a US official said on Sunday, adding the problems of Credit Suisse are unrelated to recent deposit runs on US banks and that US banks have limited exposure to Credit Suisse.

The US Federal Deposit Insurance Corp (FDIC) is planning to relaunch the sale process for Silicon Valley Bank, with the regulator seeking a potential breakup of the lender, according to people familiar with the matter.

There are also concerns about what happens next at Credit Suisse and what that means for investors and employees.

UBS chairman Kelleher told a media conference that it will wind down Credit Suisse's investment bank, which has thousands of employees worldwide. UBS said it expected annual cost savings of some US$7 billion by 2027.

The Swiss central bank said Sunday's deal includes 100 billion Swiss francs (US$108 billion) in liquidity assistance for UBS and Credit Suisse.

Credit Suisse shares had lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tries to recover from scandals that have undermined confidence.

Under the deal with UBS, some Credit Suisse bondholders are major losers. The Swiss regulator decided that Credit Suisse bonds with a notional value of US$17 billion will be valued at zero, angering some of the holders of the debt who thought they would be better protected than shareholders in the takeover deal announced on Sunday.

(US$1 = 0.9280 Swiss francs)

 

 

UBS agrees to buy Credit Suisse

UBS has agreed to buy Swiss banking giant Credit Suisse after increasing its offer to more than US$2 billion, the Financial Times reported on Sunday, as authorities bid to stave off turmoil when the markets reopen.

Officials have been racing to rescue the 167-year-old bank, among the world's largest wealth managers, after a brutal week that saw the second and third largest US bank failures in history. As one of 30 global banks seen as systemically important, any deal for Credit Suisse could ripple through global financial markets.

At least two major banks in Europe are examining scenarios of contagion possibly spreading in the region's banking sector and looking to the Federal Reserve and the European Central Bank to step in with stronger signals of support, two senior executives with knowledge of the discussions told Reuters.

A person with knowledge of the talks earlier told Reuters that UBS sought US$6 billion from the Swiss government as part of a possible purchase of its rival. The guarantees would cover the cost of winding down parts of Credit Suisse and potential litigation charges.

One source previously said the talks were encountering significant obstacles, and 10,000 jobs may have to be cut if the two banks combined. The Swiss Bank Employees Association on Sunday called for the immediate creation of a task force to deal with the risk to jobs.

Swiss broadcaster SRF and other media reported that the government would hold an important press conference later on Sunday. They did not give any more details.

Credit Suisse shares lost a quarter of their value last week. The bank was forced to tap US$54 billion in central bank funding as it tries to recover from scandals that have undermined the confidence of investors and clients.

 

India-Bangladesh Friendship Pipeline

India-Bangladesh Friendship Pipeline is a bilateral energy project that has the potential to significantly enhance energy cooperation between Bangladesh and India.

The pipeline will provide Bangladesh with a reliable source of natural gas, improve energy security for both countries, and help support their efforts to achieve sustainable energy development.

The pipeline will boost economic growth and development in both countries by creating new business and investment opportunities in the energy sector. Hence, the India-Bangladesh Friendship Pipeline represents a new era of energy cooperation between India and Bangladesh and is expected to play a key role in supporting the bilateral relationship between the two countries for many years to come.

This is the first cross-border energy pipeline between India and Bangladesh, built at an estimated cost of INR 377 crore, of which the Bangladesh portion of the pipeline built at a cost of approximately INR 285 crore, has been borne by the Government of India under grant assistance.

The Pipeline has a capacity to transport one million ton per annum of High-Speed Diesel (HSD). It will supply High Speed Diesel initially to seven districts in northern Bangladesh.

The India-Bangladesh Friendship Pipeline is a bilateral energy project between India and Bangladesh that has the potential to significantly enhance energy cooperation between the two countries. It is significant for its interconnectedness since it goes through the border of Bangladesh and India.

It will also pave the way to regional integration in terms of energy as well. The pipeline will ensure stability in the energy domain of Bangladesh, which is expected to help meet Bangladesh’s growing energy demand and reduce the country’s dependence on imported fuel.

Besides, other regional actors will be benefitted from it also. Therefore, a new era of energy cooperation will be experienced.

A long-term deal for the pipeline sale of high-speed diesel from India to Bangladesh was signed by NRL and BPC in April 2017. The next year, in October, NRL and BPC agreed to a second, 15-year agreement for the sale of gas oil (diesel) to Bangladesh.

The India-Bangladesh Friendship Pipeline is seen as a significant step forward in the bilateral relationship between the two countries, particularly in the energy sector. Energy cooperation has been a key focus for both countries in recent years, as both Bangladesh and India face a growing demand for energy to support their respective economic growth and development.

The pipeline is expected to enhance energy security for both countries and help support their efforts to achieve sustainable energy development. All these are happening while the world is going through a surge of oil prices with a disruption in the supply chain for the ongoing Ukraine war. Over the next sections, the significance of the pipe and the way forward will be discussed.

The pipeline, which costs INR 337.08 billion, would transport fuel from the state-owned Numaligarh Refinery (NRL) marketing terminal in Siliguri, West Bengal, to the Bangladesh Petroleum Corporation’s Parbatipur storage (BPC).

As per a senior NRL official who spoke to PTI under the condition of anonymity and was quoted by our New Delhi-based correspondent, the mechanical work on the bilateral project—which is being funded by India—was finished on December 12 of last year.

The 130-km IBFPL’s groundbreaking ceremony was held in September 2018 with the prime ministers of Bangladesh and India participating via video conference.

Markedly, Narendra Modi, the prime minister of India, and Sheikh Hasina, the prime minister of Bangladesh, reached an agreement to finance this pipeline in 2017 which has an annual capacity of one million metric tons. It is probable that the 130-km India-Bangladesh Friendship Pipeline (IBFPL), which will be used for cross-border energy transfer, will begin this year and there are efforts going on at the highest level of the governments.

Nasrul Hamid, the state’s minister of power, announced on January 16 that an experimental pipeline will begin bringing in fuel from India in June 2023. 126.5 km of the 131.5-kilometer pipeline is in Bangladesh, and 5 km is in India.

The pipeline will bring some major changes in the domain of cooperation between the two countries. The next sections will shed light on it.

Firstly, one of the key benefits of the India-Bangladesh Friendship Pipeline is that it will provide Bangladesh with a reliable source of natural gas, which is a cleaner and more efficient energy source compared to other fossil fuels like coal and oil.

This is expected to help reduce air pollution and greenhouse gas emissions in Bangladesh, which will have positive impacts on public health and the environment. Additionally, the pipeline is expected to help improve energy access and affordability in Bangladesh, particularly in rural areas.

Secondly, the pipeline will help enhance energy security for both countries by reducing the reliance on imports of fuel and other energy sources. The pipeline will provide Bangladesh with access to a reliable source of natural gas from India, which will help reduce the country’s dependence on imported fuel and improve its energy security. At the same time, the pipeline is also expected to help enhance India’s energy security by providing it with an opportunity to export its surplus natural gas to Bangladesh.

Thirdly, the India-Bangladesh Friendship Pipeline will boost economic growth and development in both countries. The pipeline will create new business and investment opportunities in the energy sector, particularly in the natural gas sector. This will attract new investment and create new jobs in both countries, which will help support their efforts to achieve economic growth and development.

Fourthly, the diversification of Bangladesh’s energy industry is aided by the import of diesel from India. Bangladesh’s current heavy reliance on natural gas as its main energy source makes it susceptible to changes in price and supply. Diesel’s inclusion in the energy mix gives the nation a more reliable and secure energy supply.

Diesel is a flexible fuel that may be used in a wide range of sectors, including industrial, transportation, and agriculture. Its import from India will not only increase the energy supply’s dependability but also lessen the nation’s reliance on a single energy source. Additionally, people and businesses in Bangladesh may pay less for energy because diesel is a very inexpensive fuel when compared to natural gas.

Finally, Bhutan and Nepal would also benefit from the pipeline project. The two nations will have the chance to take part in the regional energy market and have access to a reliable energy source. The BIBN region’s economy will grow and become more stable as a result of the regional integration of the energy industry. The pipeline project fits in with the region’s overarching goal of enhancing integration and connectivity in South Asia. The BIBN nations are trying to establish a unified and integrated regional energy market, which will increase energy security and stability for the area. The pipeline project will act as a catalyst for increased regional integration and collaboration in other fields including trade.

Since the pipeline project is a shining illustration of how close India and Bangladesh are to one another. The pipeline project will strengthen the already-established commerce and cultural exchanges between the two nations.

 

Pakistan: IMF assistance too near yet too far

There are no known reasons about what is causing delay in IMF Staff Level Agreement. According to media reports the Fund seeks assurances from the friendly countries for funding gap. It seems the program is near from the Government side but still too far from the IMF side.

In a week mired with political uncertainty, the movement at Pakistan Stock Exchange remained jittery. Furthermore, the IMF has set forth another condition regarding written assurances from friendly countries to fund balance of payment gap before the Staff Level Agreement (SLA). The ICBC has given assurance that it will provide another refinanced US$500 million loan in few days bringing total commercial loans refinanced up to US$1.7 billion.

Pakistan’s foreign exchange reserves inched by US$18 million to US$4.3 billion as on March 10, 2023, culminating to an import cover of less than a month.

The benchmark index closed the week at 41,330 points, down 1.11%WoW. Participation in the market increased, with daily volumes averaging 223.02 million shares during the week, from 209.24 million shares in the prior week depicting a gain of 6.6%WoW.

Other major news flows during the week included: 1) Saudi Arabia extended US$1.2 billion deferred oil payment facility till February next year, 2) GoP raised PKR26 billion through PIBs auction, 3) July-January LSM output declined 4.40%YoY, 4) Bank deposits were up 15%YoY to Rs22.9 trillion in February, 5) workers’ remittances for February post 5%MoM growth and 6) GoP announced plan to borrow PKR7 trillion from banks in three months.

Top performing sectors were: Woolen, Glass and Ceramics, and Sugar & Allied industries, while the least favorite sectors included: Miscellaneous, Close- End Mutual Fund, and Synthetic and Rayon.

Stock-wise, top performers were: YOUW, TGL, CEPB, DGKC, and BNWM, while laggards included: PSEL, NESTLE, FHAM, BAHL, and RMPL.

Flow wise, individuals were the major buyers with net buy of US$4.23 million, followed by Banks/DFI with net buy of US$1.06 million), while Insurance companies were major sellers during the week, with a net sell of US$2.08 million.

Any further development on the IMF front is likely to set the direction of the market. The recorded high inflation of 31.5%YoY in February 2023 is expected to remain a thorn in the country’s side, driven by hikes in tariffs along with Rupee devaluation. This may lead the market to another hike in upcoming Monetary Policy accouchement scheduled for April 04, 2023.

Moreover, the local currency has continued to slide against the US dollar with no certainty regarding its limit. With this backdrop, analysts continue to advocate scrips that have dollar-denominated revenue streams to hedge against the currency risk, which include the Technology and E&P sectors.

 

 

 

UBS examining takeover of Credit Suisse

UBS AG was examining on Saturday a takeover of embattled lender Credit Suisse that could see the Swiss government offer a guarantee against the risks involved.

The 167-year-old Credit Suisse is the biggest name ensnared in the market turmoil unleashed by the collapse of US lenders Silicon Valley Bank and Signature Bank over the past week, and its slide has fanned fears of broader banking problems.

To get the crisis under control, UBS was coming under pressure from the Swiss authorities to carry out a takeover, Reuters' sources said. Under the plan, Credit Suisse's Swiss business could be spun off, they added.

Credit Suisse Chief Financial Officer Dixit Joshi and his teams were meeting over the weekend to assess their options for the bank, people with knowledge of the matter said.

The bank's share price swung wildly this week, during which it was forced to tap US$54 billion in central bank funding, and Credit Suisse had lost a quarter of its market value by Friday night.

The mood in Switzerland, long considered an icon for banking stability, was pensive as executives wrestled with the future of the country's biggest lenders.

"Banks in permanent stress" read the front page headline of the Neue Zuercher Zeitung newspaper on Saturday morning.

Credit Suisse ranks among the world's largest wealth managers and is considered one of 30 global systemically important banks whose failure would cause ripples throughout the entire financial system.

In a sign of its vulnerability, at least four of Credit Suisse's major rivals, including Societe Generale SA and Deutsche Bank AG, have put restrictions on their trades involving the Swiss bank or its securities.

Goldman Sachs cut its recommendation on exposure to European bank debt, saying a lack of clarity on Credit Suisse's future would put pressure on the broader sector in the region.

Although the banking system was more robust than it was at the time of the financial crisis in 2008, a more forceful policy response is likely needed to bring some stability, Goldman analyst Lotfi Karoui wrote in a note to clients.

Already this week, big US banks provided a US$30 billion lifeline for smaller lender First Republic while US banks altogether have sought a record US$153 billion in emergency liquidity from the Federal Reserve in recent days.

This reflected funding and liquidity strains on banks, driven by weakening depositor confidence, said ratings agency Moody's, which this week downgraded its outlook on the US banking system to negative.

In Washington, focus turned to greater oversight to ensure that banks - and their executives - are held accountable.

US President Joe Biden called on Congress to give regulators greater power over the sector, including imposing higher fines, clawing back funds and barring officials from failed banks.

Some Democratic lawmakers asked regulators and the Justice Department to probe the role of Goldman Sachs in SVB's collapse, said the office of Representative Adam Schiff.

Banking stocks globally have been battered since Silicon Valley Bank collapsed, raising questions about other weaknesses in the financial system.

US regional bank shares fell sharply on Friday and the S&P Banks index posted its worst two-week calendar loss since the pandemic shook markets in March 2020, slumping 21.5%.

First Republic Bank ended Friday down 32.8%, bringing its loss over the last 10 sessions to more than 80%.

While support from some of the biggest names in US banking prevented First Republic's collapse this week, investors were startled by disclosures on its cash position and how much emergency liquidity it needed.

The failure of SVB, meanwhile, brought into focus how a relentless campaign of interest rate hikes by the US Federal Reserve and other central banks, including the European Central Bank this week, was putting pressure on the banking sector.

Many analysts and regulators have said SVB's downfall was due to its specialized, tech-focused business model, while the wider banking system was much more robust thanks to reforms adopted in the years after the global financial crisis.

But a senior official at China's central bank said on Saturday that high interest rates in the major developed economies could continue to cause problems for the financial system.

 

ICC issues arrest warrants of Russian President

Piotr Hofmanski, President, International Criminal Court (ICC) said in a video statement Friday that an arrest warrant has been issued for Russian President Vladimir Putin for the alleged war crimes of deportation of children from Ukrainian occupied territories into the Russian Federation.

International law prohibits occupying powers from transferring civilians from occupied areas to other territories.

Hofmanski said the contents of the warrants would be kept secret to protect the identities of the allegedly abducted children.

“Nevertheless, the judges of the chamber dealing with this case decided to make the existence of the warrants public in the interest of justice and to prevent the commission of future crimes,” he said.

While the ICC’s judges have issued the warrants, it will be up to the international community to enforce them as the ICC has no police force of its own.

“The execution depends on international cooperation,” Hofmanski said.

While it’s unclear what type of international cooperation would lead to Putin’s arrest, Russia has made clear it has no intention of cooperating.

The Kremlin said earlier this week that it doesn’t acknowledge the ICC’s jurisdiction or authority.

“We do not recognize this court; we do not recognize its jurisdiction,” Kremlin spokesperson, Dmitry Peskov, told journalists in Moscow on Tuesday.

Peskov’s dismissal of the court’s authority came amid media speculation that ICC prosecutors would open two war crimes cases and issue several arrest warrants for those deemed responsible for the targeting of Ukrainian civilian infrastructure and for the mass abduction of children.

Besides seeking Putin’s arrest, the ICC on Friday also announced it had issued an arrest warrant for Maria Alekseyevna Lvova-Belova, the Commissioner for Children’s Rights in the Office of the President of the Russian Federation, on similar allegations.

The ICC said in a statement that both Putin and Lvova-Belova are allegedly responsible for the war crime of unlawful deportation of population (children) and that of unlawful transfer of population (children) from occupied areas of Ukraine to the Russian Federation.

The crimes were allegedly committed in Ukrainian occupied territory at least from February 24, 2022; the court said which marks the date of Russia’s invasion of Ukraine, which Moscow calls a special military operation.

The arrest warrants come about a year after ICC prosecutor Karim Khan opened an investigation into possible war crimes, crimes against humanity, and genocide in Ukraine.

Khan has said that, during four trips to Ukraine, he was looking at the alleged targeting of civilian infrastructure and crimes against children.

Ukraine’s Prosecutor General Andriy Kostin hailed the ICC’s decision in a statement on social media.

“The world received a signal that the Russian regime is criminal and its leadership and henchmen will be held accountable,” he said. “This is a historic decision for Ukraine and the entire system of international law.”

Andriy Yermak, Ukraine’s presidential chief of staff said the move was “just the beginning.”

There were no immediate comments from Russia following the ICC’s announcement.

On Thursday, a United Nations-backed inquiry accused Russia of committing numerous war crimes in Ukraine, including forcibly deporting children to Russian territory.

The ICC’s announcement came as Slovakia on Thursday announced that it would send its fleet of Soviet-era MiG-29 fighter jets to Ukraine.

With the move, Slovakia joined Poland, which on March 16 became the first NATO country to send its fighter jets to its embattled neighbor.

Ukraine’s leaders have repeatedly asked Western powers for fighter jets to help them in the fight against Russian forces.

Analysts say that neither Moscow nor Kyiv has air superiority in the skies above Ukraine, with the decision to send in the jets seen as a potential turning point in repelling Russia’s offensive.

Ukraine President Volodymyr Zelenskyy has repeatedly requested jet fighters, while Washington and other NATO allies have refused, citing concern about escalating the alliance’s role in the conflict.

Peskov downplayed the decision to send Polish and Slovak planes to Ukraine.

“In the course of the special military operation, all this equipment will be subject to destruction,” Peskov said. “It feels like all of these countries are thus engaged in the disposal of old unnecessary equipment.”

Poland, which considers Russia’s regional ambitions a threat to its security, has been one of Kyiv’s staunchest supporters since the conflict began.

Warsaw has already provided Ukraine with some 250 combat tanks and pledged dozens more last month, including advanced German-made Leopard tanks.