BNP stops withdrawals from 3 funds

BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't "fairly" value their holdings after concern over US subprime mortgage losses roiled credit markets, according to a report by Bloomberg.

The funds had about 2 billion euros ($2.76 billion) of assets on July 27 including 700 million euros in subprime loans rated AA or higher.

The Paris-based bank said today that it will stop calculating the net asset value for the funds - Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia.

"The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP Paribas said in the statement.

The bank joins Bear Stearns and Union Investment Management GmbH in stopping fund redemptions.

Most borrowers haven’t hedged external borrowings

Many Indian companies that have gone in for foreign currency loans believe the rupee will appreciate further against the dollar and have not hedged against the opposite, according to the treasury head of a domestic financial institution. That is especially true of companies that raised less than $10 million (Rs40.6 crore) in overseas loans, adds the treasury head, who did not wish to be identified.

This is despite steps taken by the finance ministry to slow down foreign currency inflows and curb the appreciation of the rupee. The finance ministry on Tuesday issued new, more stringent norms on external commercial borrowings (ECBs).

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Stir against organized retail set to go national

Wal-Mart Stores Inc., the world’s largest listed retailer, has just announced its India plans. Unorganized retailers across India will mark that and the entry of other large retailers on Thursday by burning effigies of the CEOs of Wal-Mart and others, closing some wholesale markets and shops and holding demonstrations in the first wave of nationwide protest against them.

The protests, asking large firms to “Quit Retail,” in India’s 60th year of Independence, in a twist on the famous “Quit India” slogan that Indians used to end British rule, also coincides with the anniversary of that movement. It will bring together an eclectic group of small retailers, hawkers, farmers, wholesalers and trade union activists.

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Govt to ask SC to revisit ruling on back-offices tax

The issue of taxing Indian back offices of foreign companies refuses to go away with the government planning to ask the Supreme Court to revisit its July decision that ruled that US investment bank Morgan Stanley would not have to pay tax in India on global income earned on account of the firm’s captive back-office unit in the country.

The ruling will have a bearing on the around 110 captive back offices that exist in India that serve parent companies, including Standard Chartered Bank, Fidelity Investments and ABN Amro.

“We are filing a review petition (in the Supreme Court). We had presented quite a bit of evidence which is not there in the judgement,” said an official of the income-tax department, who did not wish to be identified.

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RIL plans power foray for retail biz

The Mukesh Ambani-owned Reliance Industries Ltd (RIL) plans to set up captive power generation capacity of around 4,000MW at an investment of Rs12,000 crore to supply power to the 6,000 outlets that its subsidiary Reliance Retail plans to open.

The Anil Dhirubhai Ambani Group, managed by Mukesh Ambani’s brother Anil Ambani, claims that this violates an existing non-compete agreement between the two business groups.

“The first of these captive units will be set up in Maharashtra,” said an RIL executive, who did not wish to be named.

The captive power units will have a unit size of around 400MW each and will generate power at a tariff of Rs2.60 per unit. RIL is in talks with Siemens Corp., Alstom, Mitsubishi Heavy Industries (MHI) and General Electric for setting up the power generation units.

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