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Edo students record mass failure in NECO exams

Edo students record mass failure in NECO exams

Edo State students
have recorded another mass failure in the November/December 2010 NECO
examination, results from the National Examinations Council (NECO) has
shown.

Out of the 25
subjects taken by students from the state, none of the participating
students had up to 50 per cent pass mark in the examination set for
graduating secondary school students.

This has raised
concern among relevant parties, with teachers and parents trading
blames as to who is responsible for the poor academic performances of
students in the state.

Those who spoke to
NEXT on the development attributed the cause of the mass failure to
many factors, including lack of qualified teachers, particularly in
private schools, and the premium they place on money. Others include
lack of reading culture among the students, and loss of societal
values. Owners of private schools were also indicted in the mass
failure of students, as many of them have turned their schools to
‘miracle centres’, where students easily indulge in examination
malpractices after paying high fees to the school owners.

Solomon Osarenren,
who teaches Mathematics in a private school in Benin City, blames lack
of seriousness on the part of the students, lazy approach to study, and
lack of infrastructure in the schools, as some of the factors
responsible for the decline in the performance of the students.

“So long as
students attach more importance to mundane things and spend more time
surfing the Internet and watching movies, it will be difficult for them
to excel in their studies. After all, students of those days performed
even better than students of today, even without those infrastructures
that are in schools of today,” Mr Osarenren said.

An educationist,
Roland Asoro, who decried the rate of mass failure in examinations in
the state in particular and the country at large, advised the
government to take proactive steps to address the trend. He called for
regular training and re-training of teachers, as well as the provision
of learning aids in the schools.

Mr Asoro also
admonished parents and guardians to supervise and regulate activities
of their children at home, with a view to making them more responsible
and serious.

Some parents,
however, said that the bulk of the blame should not be attributed to
them alone. They argue that teachers are also responsible for the poor
performance of students in external examinations.

A parent, Osarobo
Asemota, whose child attends one of the private schools in Benin City,
argued that teachers can only give what they have academically.

According to her,
many of the teachers, especially in some private schools, lack the
minimum qualifications required. She also called for consistency in the
educational policies of government.

“We want all
concerned to urgently address this ugly development. If things continue
the way they are, ten years from now, the country may inherit half
baked workforce,” Ms Asemota said.

When contacted on phone, special assistant on education to Governor
Oshiomhole, Alli Sule, said: “We are still studying the result at the
ministry level. We shall come out with our position later.”

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Former Benue governor accuses politicians of election fraud

Former Benue governor accuses politicians of election fraud

Following the
perceived irregularities that characterised the conduct of the National
Assembly elections in Benue State, the immediate past governor of the
state, George Akume, has called on Senate President David Mark and the
former national chairman of the Peoples Democratic Party (PDP),
Barnabas Gemade to return the people’s mandate to the rightful owners.

Speaking in his
Makurdi residence yesterday, Mr Akume revealed that Messrs Mark and
Gemade did not win senatorial elections in their respective senatorial
districts given the declining popularity of their party, the PDP. He
alleged that the incumbent member of the House of Representatives for
Makurdi/Guma federal constituency, Emmanuel Jime and Iorwase Hembe of
Vandeikya/Konshisha federal constituency stole the mandate of the
people and they should return same.

According to Mr
Akume, the PDP in the state disregarded the warning of security
operatives and were responsible for the violence in the state during
the national assembly election.

“PDP introduced unprecedented violence but the ACN supporters voted for their candidates overwhelmingly,” he observed.

He lamented that a
32-year-old Aondongu Abuku was killed at about 11am on the election day
at NKST Anakaa polling unit in Logo Local Government, claiming
knowledge of those alleged to have participated in the killing.

Mr. Akume argued
that electoral materials were not sent to other polling units in
Oturkpo, adding that in Ado and Obi local governments, no election was
conducted. He, therefore, urged the Independent National Electoral
Commission, INEC to nullify the election in those places.

The former governor
called on the INEC Chairman, Attahiru Jega to remove the State Resident
Electoral Commissioner, Nasir Ayilara, stressing that the ACN in the
state has vowed to fight and reclaim its mandate until the last person
was dropped. “We cannot be threatened or intimidated,” he declared.

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State security parades two for plotting human sacrifice

State security parades two for plotting human sacrifice

The Federal Capital
Territory (FCT) command of the State Security Service (SSS) paraded two
men in Abuja yesterday for allegedly abducting and attempting to use an
eight-year-old boy, Lokoja Abeshi, for money rituals.

The legal officer
of the command, Tom Aniefiok, told journalists while parading the
suspects – Jonah Jabah, a palm wine tapper, and Alhaji Mamman, both
35-year-old residents of Garaku in the Kokona local government area of
Nasarawa State – that Master Abeshi had been staying with the chief
suspect, Mr Jabah, before he lured him to Abuja.

The suspects
allegedly told the young boy they wanted to enroll him in a school in
the city and the unsuspecting boy did not have any premonition that
they wanted to harm him.

Mr Aniefiok said
the two suspects had owned up to the crime and would soon be handed
over to the police for further investigation and prosecution.

He advised members
of the public to take proper care of their wards and devote more time
to them in order to avoid such occurrences. He also urged members of
the public to promptly report such matters to the relevant security
agencies.

“On the 13th April
2011, the FCT command of the State Security Service (SSS), acting on a
tipoff, arrested two suspected ritualists at Durumi II, Garki, Abuja.

“The suspects,
namely Jonah Jabah and Alhaji Mamman, abducted one Lokoja Abeshi (a lad
of eight years) with the aim of sacrificing him for money ritual; one
Muhammed G. Ibrahim, who tipped off the service and in whose residence
the suspects were arrested, stated that the suspects brought the boy to
his residence to be sacrificed for money ritual,” said Mr Aniefiok.

Blame the boy

Mr Ibrahim, a
Muslim cleric, reportedly told the two men that he only prays for
people with problems but does not do rituals. He also reportedly told
them he was going to assist them by getting somebody to help them and
thereafter alerted the service. This led to the arrest of the two
suspects.

“One of the
suspects, Jonah Jabah, who claims to be the boy’s uncle, resides at
Garaku, Kokona LGA of Nasarawa State; he blamed his bad luck and
misfortune in life on the lad (Lokoja). Hence he resolved to sacrifice
the boy,” Mr Aniefok said.

Mr Mamman told
newsmen that he led Mr Jabah to the supposed ritualist when he told him
that the boy had a “bad spirit” and “needed prayers.” On his part, Mr
Jabah said he was a palmwine tapper and also owns a supermarket in his
village. He said the boy, whom he described as being “just like my
pikin,” had been staying with him since he was born.

Mr Jabah said he
had earlier taken the boy to several spiritualists when he learnt that
the boy used his powers as a member of a secret cult to scuttle his
supermarket and palm wine-tapping business.

He said it was when he could not find the solution he needed that he
contacted his friend, Mr Mamman to take him to a mallam who will help
him use the boy to perform the money rituals. He said Lokoja’s evil
powers were what led to his decision to use the boy for money making
rituals to salvage his situation.

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Navy prepares for forthcoming election

Navy prepares for forthcoming election

Ahead of next
week’s governorship and state House of Assembly elections in Delta
State, the Nigerian Navy Ship (NNS) Delta yesterday carried out a small
exercise for its marines.

Over 15
ready-to-deploy naval vehicles, aided with navy helicopter, ‘Augusta
09’, high-speed cruising yacht, and two marshal-class gunboats were
among the equipment rolled out for action in the Delta waterways.

The fleet would be
used on 26th of April, 2011 to assist the Independent National
Electoral Commission (INEC) in ensuring the smooth governorship and
state House of Assembly elections, the Commanding Officer of the unit,
Henry Babalola, said.

Mr Babalola, who
led other senior naval officers, said the exercise was directed by the
Chief of Naval Staff (CNS) to check the preparedness of the Navy for
the election.

“The operation
today is to assure the citizenry that we are ready to provide an
enabling environment for the successful conduct of the gubernatorial
and House of Assembly, as well as National Assembly that were postponed
in some states,” he said.

“The show of force
is a directory given to us by the CNS as part of our statutory duty to
help INEC in critical areas such as use of naval helicopters to convey
materials to areas that are not accessible by land and to escort INEC
boats to take materials to the riverine communities,” Mr. Babalola
said.

The commanding
officer of NNS Delta said the Navy was committed to providing adequate
security in the waterways to safeguard the electoral materials and INEC
personnel.

“All the naval
fleets paraded during the flag-show would be deployed for consistent
patrol of the waterways as part of its statutory function to provide
security for the polls on water and land, as well as check influx of
people in the waterways during the elections,” he further said.

Mr Babalola also
said there is heavy security arrangement for Delta State, saying
besides its consistent patrol of the waterways, the NNS Delta would
contribute a platoon to aid the Joint Task Force (JTF) in its
‘Operation Restore Hope’ as well as a ready-to-deploy standby platoon
in case of emergency.

“Every of our
fleets and personnel would be on election duty and we are looking at a
strength of almost 1700 personnel ready-to-be deploy on that day,” he
stated.

Closed waterways

He further said two
marshal-class boats would patrol the Escravos waterways while its
capital ships, ‘NNS Zaria and NNS Ogulawaba’ would be rolled out to
patrol the sea to check influx of foreigners sneaking into the country
during the election.

The commanding
officer said one of the fastest boats on the NN fleet, Marshal-class
boat and another power gunboat, Papa 219, would be rolled out in
addition to deployment of more personnel for consistent patrol of the
waterways in the state.

He added that
throughout the period of the election, movement would be restricted in
the waterways to check influx of people in the waterways.

“We would keep
patrolling the waterways to dominate it and prevent illegal activities.
The no movement order on land is also applicable on the waters as from
8am. We will not expect to find people or persons moving on the
waterway at this time. The curfew will be strictly enforced on the
waters until the end of it all and anybody find moving at this time
would be arrested and release after the elections,” he said.

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Former minister rebukes Oyo leaders for endorsing candidate

Former minister rebukes Oyo leaders for endorsing candidate

The former minister
of justice and attorney-general of the federation, Richard Akinjide,
told the Ibadan Elders Forum yesterday to stop inciting other sections
of Oyo State against the state governor, Adebayo Alao-Akala.

Mr Akinjide, who
led other members of the Ibadan elders of the People’s Democratic Party
(PDP) to address journalists in his Idi-Ishin residence on Thursday,
was reacting to the forum’s adoption of Abiola Ajimobi as the
governorship candidate of the Action Congress of Nigeria (ACN) in Oyo
on Wednesday.

The forum, in a
press conference, declared their total support for Mr Ajimobi, saying
he is the only viable candidate among the options available for the
people of the state to choose as their leader for the next four years.

They chronicled a
litany of allegations against the incumbent Adebayo Alao-Akala, the
PDP’s candidate, as well as Rashidi Ladoja, a former governor of the
state and the Accord Party candidate, to explain why they are not fit
for the post.

While Mr Ladoja’s
sins border on an alleged lack of popularity of his party in the state,
Mr Alao-Akala was accused of disrespecting the traditional institution
and misappropriating state resources, among other wrongs.

But as the nation
prepares for the governorship election coming up on Tuesday, the PDP
elders say the Ibadan Elders’ Forum was wrong both in its assessment of
the candidates and its open support for the ACN flagbearer. According
to them, the attack against Mr Alao-Akala was nothing but an attempt to
call the dog a bad name in order to hang it.

Political opponents

They maintain that
the desperate ambition of the group to always produce the governor of
the state is antithetical to the tenets of democracy and the realities
of the 21st century.

“The truth of the
matter is that the hoopla over Akala’s performance is borne out of a
general feeling of the Ibadan Elders’ Forum, who has the myopic belief
that no one else from any other part of Oyo State other than Ibadan can
be the governor,” Mr Akinjide, himself an Ibadan elder, said.

“A mental incursion
round the states of the federation reveals that out of the 36 state
governors in Nigeria, 28 out of them are not indigenes of the capital
city of their states. Nearly all the states’ chief executives hail from
small towns and villages. Even the late Bola Ige, the governor of the
old Oyo state, was from Esa Oke. Moreover, there is a subsisting
doctrine that every geo-political zone of Oyo State has a legitimate
right to produce the governor.”

A stern warningMr
Akinjide declared that the forum failed in its bid to get Mr Ajimobi
elected in 2007, and will also fail this time as, he said, the members
lack the popularity to push a candidate to electoral success in the
state.

The senior lawyer
further warned that the Ibadan elders must borrow a leaf from other
equally successful senior citizens from other parts of the state who
have not dabbled into politics, urging them to clearly define their
stand.

“Henceforth, if the Ibadan elders fail to heed this advice, mud and
darts will fly in their direction and the respect and reverence usually
reserved for the elders in Yorubaland will henceforth elude them. They
will be treated strictly as political opponents,” he said.

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Post-election violence displaces 10,000 in Kano

Post-election violence displaces 10,000 in Kano

At least 10,000
people have been displaced in Kano State following the crisis that
engulfed some northern states shortly after last Saturday’s
presidential elections, the director general of the National Emergency
Management Agency (NEMA) has said.

Mohammed Sani-Sidi,
who led a Special Presidential Committee on the Plight of Displaced
People to the Kano State police commissioner, Dan’Azumi Doma, also said
not less than 100 people were arrested in connection with the crisis.

The NEMA boss, who
commended the swift response of security agencies in controlling the
situation, told the displaced people that the team was undertaking
on-the-spot assessment inspection of the trouble spots.

He assured them
that the government would continue to protect and provide basic need of
people in the Internally Displaced Peoples Camps (IDPCs) pending the
return of normalcy to the affected communities.

“President Jonathan
has directed that we should ensure you are adequately provided with the
basic needs as relief materials are being transported to various
locations to improve the condition and plights of innocent people,” he
said. “So far, many more trucks are being dispatched from our strategic
warehouses to meet the demand. However, from the preliminary reports by
response agencies, the crises were neither religious nor ethnic, so we
should be cautious of inputting sectional sentiments into this.”

No gatherings permitted

Mr Doma told the committee that though properties were destroyed and many injured, there was no loss of life in the state.

“There was no
single record of death from the recent incident in Kano and no single
corpse was deposited in the mortuary,” he said.

Mr Doma has,
however banned all forms of political gathering in the state, saying
the police would deal with anyone violating the order.

“No form of
political gathering, including rallies and campaigns would be condoned
until after the governorship election,” he said.

Mr Doma, who urged
leaders of political parties in the State to strictly abide by the
directive in the interest of peace and stability, said the action was
part of measures taken by the police to checkmate the spread of the
violence and reduce apprehension and anxiety among the people,
particularly those taking refuge at military and police barracks.

Mr. Doma also pleaded with parents to caution their children and wards against committing acts capable of breaching the peace.

“The Command and
indeed other security agencies have commenced investigation to
apprehend the sponsors and the brains behind the dastardly acts, no
matter how highly placed they are in society,” he said.

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Capital market needs market makers

Capital market needs market makers

The absence of market makers is stifling the growth and efficiency of the Nigerian capital market.

New chief executive officer of the Nigerian Stock Exchange (NSE), Oscar Onyema, has promised to reverse this trend by working with the capital market community to allow market makers play their role effectively.

Market makers are wholesale operators who create liquidity in the stock market by either buying shares when there is a glut, or selling shares when there is scarcity.

Speaking at the monthly breakfast meeting of the Nigeria South Africa Chamber of Commerce yesterday in Lagos, Mr Onyema said he would provide a level playing field for participants to operate within the rules.

“One of the things I have observed is that 20 per cent of the top securities account for about 80 per cent of the market,” he said.

He said the capital market was in need of market makers that would help to deepen it and improve liquidity.

Operational efficiency

“We will look at operational efficiency so that when you want to move a large chunk of stocks or bonds, you can do that easily without impacting on the price of the security. My vision is to position the Nigerian market as the gateway to the African frontier market,” Mr Onyema further said.

The Securities and Exchange Commission (SEC) in 2008 approved five brokerage houses to act as market makers. These include Vetiva Capital Limited; Value Capital Limited; Afrinvest Plc; Diamond Capital; Financial Market Limited; and Chapel Hill Dunham.

Since then, there has been no impact due to the market downturn and the absence of clear operational guidelines.

Mr Onyema said the absence of market makers was affecting market liquidity.

“How do we make sure that securities have a standing bid and offer at any point in time? How do we get market makers that have the right depth and knowledge to provide liquidity in our market place? That is what we are looking at right now,” he said.

The chief executive officer, who assumed office a fortnight ago, said his desire is to build the Nigerian capital market to be comparable to the best in the world in terms of product offerings, adding that his focus would be to encourage telecommunication and oil and gas firms to list on the Exchange.

According to him, apart from attracting new issues, there is also the need to create a deep and liquid market.

“Government would need to put in place policies that would attract investors. We would work with government to make investment friendly policies,” he said.

Business decision

President of the Chartered Institute of Stockbrokers, Michael Itegboje, said the issue of market maker status is a business decision that firms that have the capacity would have to make on their own.

According to him, it is not enough for SEC to appoint firms as market makers without the enabling capacity to perform that role.

“For this market to develop, it needs market makers but they need funds. SEC approved market makers, where are they? It is a business decision you have to take. Nobody can force you to be a market maker.

“You have to take that business decision and if you find out that you can’t, you have to leave,” Mr Itegboje said.

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OIL POLITICS: Shell’s fracking moves in the Karoo

OIL POLITICS: Shell’s fracking moves in the Karoo

There are some
words that those who develop dictionary software appear somewhat slow
to catch up on. One of such words is ‘fracking’. While the word is
still kept on the fringes of everyday discourse, the process it
describes is already pitting citizens against corporate power in North
America, Europe, and in Africa.

As the sound of the
name suggests, fracking has to do with fracturing. The New American
Oxford dictionary defines fracture as “the cracking or breaking of a
hard object or material … a crack or break in a hard object or
material, typically a bone or a body of rock…the physical appearance of
a freshly broken rock or mineral, esp. as regards the shape of the
surface.”

Fracking has
already raised serious problems in the United States and is being
questioned and resisted elsewhere. The nearest flash point is the
resistance to Shell in their efforts to engage in fracking in the
Karoo, South Africa. The community resistance in South Africa is
especially interesting in the sense that Shell has been confronted
there by their Nemesis: Ogoni activists displaced by their activities
in Nigeria.

In the case of the
plan by Shell for fracking in South Africa, they plan to bore holes 5
kilometres down into the belly of the earth in order to extract gas
trapped in a layer of shale stones. This is another signal that the age
of cheap oil is over.

Fossil fuels are
being sought for in increasingly less accessible locations such as
deep-water locations and in locations previously considered off limits
to extractive activities. As someone said, some of the processes can be
likened to a “societal scraping of the barrel.”

This process is not
exactly new, as it has been going on in the U.S.A. for decades,
according to some records. The causes of current anxieties are
primarily two-fold. Companies involved in this business have not
released the names and quantities of all the chemicals they use in the
fracking processes.

Secondly, the
process uses huge amounts of water, a serious concern in a season of
water scarcity. After pumping in huge volumes of water, about half of
this water is pumped out and the bubbles or gas are removed. The
wastewater with all its highly toxic dregs is then disposed of. The
question is whether this is handled in a manner that assures of safety.

According to the
experts, Shell’s “proposed exploration will apparently entail drilling
8 boreholes in each precinct (i.e. 24 boreholes in total) of up to 5
kilometre depth over a three-year period, extendable to nine years.

It appears that
each well will need between 0.3 million and 6 million litres of water
(i.e. a scenario of between 7.2 million and 144 million litres of water
required). Shell has been extremely vague as to its anticipated source
of water, with no concrete indication being given in the draft EMP or
in the public consultation meetings as to where the multinational
intends to source the requisite water from.”

While some people
argue that there are yet to be analyses showing actual water
contaminations related to chemicals used in fracking, there are several
confirming water contamination due to fracking processes.

For one, some of
the chemicals used in the process are known as carcinogens. The US
Environmental Protection Agency is examining the potential impacts on
drinking water of the various stages in the hydraulic fracturing
process. Such stages include when drillers mix water with chemicals and
sand and inject the fluid into wells in order to release oil or natural
gas.

Some 46 House of
Representative Democrats sent a letter to the Secretary of Interior in
which they stated, “communities across America have seen their water
contaminated by the chemicals used in the hydraulic fracturing process.”

Other concerns over
fracking plans have been raised in Canada and France. A report from the
Tyndall Centre in the United Kingdom, and an enquiry by the House of
Commons, has trailed the fracking business in that country.

The Tyndall Report
found a paucity of information on which to base serious analysis “of
how shale gas could impact on GHG emissions and what environmental and
health impacts its extraction may have; that there is a clear risk of
contamination of groundwater from shale gas extraction.”

Fracking folks have
enjoyed exclusion from regulation in the USA for years and are very
reluctant to accept accountability today. With Barack Obama’s intent to
accelerate the weaning of his country from heavy reliance on crude oil
imports, the shift to fracking seems good to some investors,
irrespective of its highly toxic and water-guzzling nature.

The exportation of
that anti-regulation operational latitude to other lands is meeting
serious resistance. The people of Karoo are basing their resistance,
among other things, on the indelible footprints that Shell’s operations
etched into the hearts, veins, and blood of the Ogoni.

The linkage between
the Ogoni and the Karoo deserves an applause as ordinary people rise up
to ask to know “what the frack is going on” and link hands across
political boundaries to globalise the struggle and hope for the
security of humankind in a globalised world.

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Gold breaks $1,500 as investors seek security

Gold breaks $1,500 as investors seek security

Gold shot up above
$1,500 an ounce on Wednesday for the first time ever, as worries over
the health of the global economy boosted the metal as a safe haven.

Spot gold hit a
high of $1,505.21 an ounce and was bid at $1,505.16 an ounce against
$1,493.90 in New York on Tuesday. U.S. gold futures for June delivery
rose $10.60 an ounce to $1,505.70.

Silver tracked gold
higher, extending a stellar performance that has seen the grey metal
outperform other precious metals this year. Silver hit a 31-year high
at $44.56 an ounce and was later bid at $44.51 against $43.89.

Gold prices are up
5 per cent in April and look set to extend gains as the metal’s appeal
as a haven from risk was boosted by talk that Greece may have to
restructure its debt and Standard & Poor’s threat to downgrade
America’s triple-A credit rating.

“There is still
going to be a lot of uncertainty over the strength of growth, in the
United States in particular,” said Macquarie analyst, Hayden Atkins.

“It looks like that
is going to be quite weak in the first quarter, so that may rattle a
few people. Then we have a critical policy point coming up with the
expected end of (the second round of) quantitative easing. There is
enough uncertainty floating around heading into the middle of the year
for people to stick with gold,” Mr. Atkins said.

While investors in
the United States and Europe are seeing the metal chiefly as a safe
store of value and a hedge against currency devaluation, stronger
inflation and rising consumer incomes in China and India are also
boosting demand there.

“The theme of
longer term higher inflation than we have seen in the last 10 years in
China is a pretty solid view, so gold is going to be an asset class
that is probably going to be more in favour in China than it has been
in the past,” Mr. Atkins further said.

China is the world’s second biggest gold consumer behind India, as well as being its biggest producer.

Rising oil, weaker dollar

In the short term,
losses in the dollar on Wednesday are supporting the precious metal
above $1,500 an ounce. The euro rose to a session high against the U.S.
dollar after an auction of Spanish bonds saw decent demand from
investors.

Weakness in the
dollar boosts gold’s appeal as an alternative asset and makes
dollar-priced commodities cheaper for holders of other currencies. Gold
priced in euros and sterling remained off recent highs on Wednesday.

Oil prices also
recovered, rising back toward the multi-year highs they hit earlier
this year as unrest in the Middle East and North Africa sparked fears
of a supply outage.

Higher oil prices
tend to benefit gold, both because they can boost commodities as an
asset class and lift interest in gold as a hedge against oil-led
inflation.

The gold:silver
ratio – the number of silver ounces needed to buy an ounce of gold –
meanwhile fell to its lowest since 1983 at 33.8.

“The last time
silver was this expensive in relation to gold was almost 28 years ago.
Both precious metals are still reaping the benefit of the news of
recent weeks and days,” said Commerzbank in a note. Platinum was at
$1,786.24 an ounce against $1,761.50, while palladium was at $753
against $726.95.Reuters

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Switzerland presses ahead with stricter bank rules

Switzerland presses ahead with stricter bank rules

The Swiss
government pushed ahead on Wednesday with plans to make UBS (UBSN.VX)
(UBS.N) and Credit Suisse (CSGN.VX)(CS.N) reach tough new capital
standards, saying the benefit to the economy outweighed costs to the
banks.

As it finalised
legislation to go to parliament, the Swiss cabinet said the general
thrust of a draft law it issued in December was unchanged, but it had
made a few minor changes following a consultation period.

Finance minister,
Eveline Widmer-Schlumpf, said Switzerland was compelled to take a
tougher line on bank regulation than other countries as UBS and Credit
Suisse were so big that any failure could bring down the small Alpine
economy.

“There will be
adjustment costs for the banks but all in all, the net effect will be
positive. I am convinced that the Swiss banking sector will be the
winner,” she told a news conference.

The government has
proposed both big banks will need an equity Tier 1 capital ratio of at
least 10 per cent, versus the 7 per cent minimum set under the Basel
III global standards, which will start to take effect in 2013.

Both UBS and the
powerful right-wing Swiss People’s Party (SVP) have warned the plan
risks making UBS and Credit Suisse less competitive, raising questions
about whether the rules might still be watered down during the
legislative process.

Ms Widmer-Schlumpf
rejected suggestions the government was rushing ahead with the
proposals, saying they had taken more than two years of consultation
since the Swiss government was forced to bail out UBS at the height of
the financial crisis.

She said the plans
had been broadly endorsed by experts and the banking industry –
including Credit Suisse – and said only the SVP and UBS had expressed
fundamental opposition.

Ms Widmer-Schlumpf
said the government addressed concerns raised by the SVP and others
about powers proposed for the FINMA regulator in a crisis, saying FINMA
would only intervene to impose an emergency plan if a failing big bank
did not do so.

Competitive disadvantage?

The government
proposed publishing a report on international developments every year
to address concerns about Switzerland forging ahead and Widmer-Schlumpf
said she expected other countries would enact similar regulations.

Jason Nason, spokesman of the Swiss Bankers Association, criticised the formulation of the review provision as too vague.

“The Swiss
authorities should clearly commit themselves to reviewing and adapting
the regulation should Switzerland’s two globally-active universal banks
find themselves placed at any serious competitive disadvantage,” Mr
Nason told Reuters.

Britain too is
considering capital standards more stringent than Basel III, though
these would apply only to big retail banks and its comparatively
lenient treatment of investment banks has provided ammunition to
opponents of the Swiss rules.

UBS chief
executive, Oswald Gruebel, has said the stiff Swiss standards could
force UBS to move units abroad. In response, Widmer-Schlumpf noted the
bank benefited from Switzerland’s other advantages such as low taxes
plus political stability.

Credit Suisse said
it wanted to study the proposal in detail before commenting but
referred to a recent interview by CEO, Brady Dougan, in which he
reiterated his broad support.

“I fear that people
may have forgotten what happened in 2008. The financial system needs to
be made more robust and secure,” he said, adding that he assumed
regulators elsewhere would also demand other global banks hold more
capital.

“If that is the case, we will see the emergence of a reasonable competitive landscape around the world,” he added.

Helvea analyst,
Peter Thorne, said the fear the rules would make Swiss banks
uncompetitive was “a gross exaggeration” but they would have to cut
their investment banking businesses.

“Implementation of
the rules should see CS and UBS downsize their investment banking
operations … and this should liberate capital, which is probably not
earning its cost of capital for the benefit of shareholders,” Mr Thorne
said.

The government said
parliament could vote on the matter before the end of the year so the
plans could come into force by the start of 2012 at the earliest, with
a transition period up to 2018 to allow implementation.

However, in a taste
of a likely heated debate to come ahead of Swiss elections on October
23, the centre-left Social Democrats and Greens both said they wanted
the proposals made still tougher, suggesting they may still be amended
or delayed.

Reuters

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