Financial coach for housewives

Cee money polish builder rescue could spark eu concerns

´╗┐Poland's rescue of the country's biggest builder with a bailout that could total 250 million zlotys ($78 million) may have put Prime Minister Donald Tusk on a collision course with European Union authorities. While the sum is nowhere near the billions other EU nations poured into their banks after the global financial crisis, the European Commission could still decide the Polimex purchase was a form of illegal state aid, lawyers said. Polish state development agency ARP said this month it would buy up to a third of Polimex Mostostal, which was on the edge of a financial cliff over unprofitable motorway contracts."This sounds like a case that could attract close scrutiny by the Commission," said David Gabathuler, attorney at Allen & Overy in Brussels. "Builders are not an obvious target for state aid and it does not fit the normal state aid case where the company is of strategic importance."Poland's efforts to help Polimex highlighted an increasing willingness to intervene in the economy by a government that once prided itself with having a liberal, pro-business pedigree. Local media have reported that the government even lobbied banks to reach a deal over financial guarantees for Polimex to secure a life-saving contract last week.

Poland, which has been unloading state assets to boost state coffers while maintaining a grip on many firms it deems strategic, has said it must help Polimex because of its expected role in the modernisation of electricity providers. It also fears job losses that another collapse in the construction industry could bring just as the country is heading for economic slowdown. But, in the same breath, officials say Polimex's rescue made business sense. "The increase of Polimex Mostostal capital by ARP may be an investment that will allow for a significant return," treasury minister Mikolaj Budzanowski said last week. No other investor had emerged ready to invest in Polimex, which has lost $2 billion in market valuation in the past five years and faced November deadline talks with creditors over its 2.5 billion zlotys debt.

ALREADY IN TROUBLE? On Thursday, EU Competition Commissioner Joaquin Almunia said he was looking into another ARP purchase - that of an aircraft maintenance arm from loss-making airline LOT.

"We are verifying whether a private investor would have accepted the same conditions as the state has accepted.""Usually, the closer you are to bankruptcy, the bigger the likelihood that it is really state aid," said Allen & Overy's Gabathuler, who specialises in antitrust and state aid and has worked on cases involving east European companies. If the ARP deal goes through, Poland would become Polimex's biggest shareholder of a company whose roots reach back to 1945 when its predecessor was established to help in post-war reconstruction. Polimex was privatised in 1997. The government said five years ago it would push through ambitious privatisations, a programme which has become a key funding source in recent years to help keep a lid on borrowing. At the same time, it has become increasingly willing to play an active role in the economy, building up state champions in several industries and maintaining a grip on many companies listed in Warsaw. Most recently, in a bid to fend off a takeover bid by Russian group Acron, Poland stitched together a merger of chemical makers Azoty Tarnow and Pulawy to create Europe's No. 2 fertiliser maker.

China dec bank lending, money supply growth miss forecasts

´╗┐BEIJING Jan 15 Chinese banks made 482.5 billion yuan ($79.9 billion) worth of new yuan loans in December, lower than a forecast of 600 billion yuan and lower than the previous month's 624.6 billion yuan, central bank data showed on Wednesday. The broad M2 money supply rose 13.6 percent last month from a year earlier, the People's Bank of China said, missing the forecast in a Reuters poll of a 13.8 percent rise.

Outstanding yuan loans rose 14.1 percent from a year earlier versus forecasts for growth of 14.3 percent.

The central bank also said China's total social financing aggregate, a broad measure of liquidity in the economy, was 1.23 trillion yuan in December was unchanged from 1.23 trillion yuan the month before.

China's foreign exchange reserves, the world's largest, hit $3.82 trillion at the end of December from $3.66 trillion at the end of September. ($1 = 6.0412 Chinese yuan)