LONDON—Banco Santander SA is preparing to sell a nearly 8% stake in its Chilean business, the latest in a string of moves in which the Spanish bank is raising concerns among investors.

Source: Santander, WSJ reporting

Reuters       A Santander bank branch in Rio de Janeiro

The move in Chile comes as Santander, widely viewed by many investors and analysts as one of Europe’s strongest lenders, also has unveiled plans to sell 8% of its Brazilian unit; the deals could raise a total of about $3.5 billion. It also sold a slice of its U.S. auto-loan unit last month for about $1 billion and made a recent offer to exchange some of its outstanding bonds, raising about €600 million ($809 million). The goal is to strengthen the Spanish bank’s capital cushions.

The efforts highlight how Santander and other European banks are scrambling to raise capital without taking steps such as reducing dividend payments or selling new shares at distressed prices.

Santander has several reasons to raise capital. European banking regulators last month instructed it to come up with at least €5 billion in new funds. The bank also is a contender to buy a nationalized Spanish savings bank, which could require additional capital.

But the terms and timing of Santander’s moves are raising eyebrows in the investment community. Analysts have expressed surprise that the bank is selling chunks of two of its prized Latin American businesses. And the bank’s debt-exchange plan, intended to drum up less than €1 billion in fresh capital, is on such unfavorable terms that it prompted a group of British insurance companies that are some of the major holders of this debt to band together to complain.

“There is only one thing they can do easily” to raise capital, said Andrea Filtri, an analyst at Mediobanca SpA. “You sell a piece of your crown jewel. It’s the only thing you can sell.” Santander previously had indicated it wanted to eventually reduce its stake in the Brazilian unit to about 75%. But the timing surprised analysts because the Brazilian’s unit’s stock is down more than 40% in the past year.

The bond exchange “was odd from an investor point of view. You don’t really expect an exchange like that, except in stressed situations,” said Andrew Lim, an analyst at Banco Espirito Santo in London.

In Madrid on Tuesday, Santander’s stock fell 2.7% to €5.24, and is down 33% this year.

Santander is one of many banks across the euro zone that is selling assets and deleveraging amid the bloc’s debt crisis. On Tuesday, Germany’s Deutsche Bank AG said it is exploring alternatives for its asset-management business. French bank Société Générale SA recently announced plans to sell parts of its asset-management and specialized finance divisions, and BNP Paribas SA said it would sell about €70 billion of assets.

Santander has long said that it is one of Europe’s best-capitalized banks. It had a core Tier 1 ratio, a measure of a bank’s financial health, of 8.12% at the end of the third quarter, according to the bank, compared with a general 9% requirement under new European rules.

A Santander spokesman said the recent actions are part of Santander’s plan to increase core capital to 10%, without changing its dividend or tapping the market.

But Santander’s corporate structure has made some analysts and investors nervous. The Madrid bank runs subsidiaries in countries including the U.S., U.K. and Brazil. Each of those units has stockpiled large quantities of capital. Santander’s operations in its home country, however, are another story, according to analysts at UBS and Barclays Capital. Based on Santander’s overall capital levels and the amounts it is holding in individual foreign subsidiaries, Santander’s Spanish operations, which are embedded in the parent company and aren’t part of a separate legal entity, appear to be running on relatively thin capital levels, the analysts said.

At the end of last year, 49% of Santander’s total risk-weighted assets were housed in the parent company, but just 27% of the bank’s overall core Tier 1 capital was located there, according to a report by UBS analysts. By contrast, Brazil accounted for 16% of its risk-weighted assets and 36% of Santander’s total capital. The U.K. business was home to 14% of assets and 20% of capital.

A handful of banking analysts estimate that the core Tier 1 capital ratio of Santander’s Spanish operations is as low as 4%. That is well below the levels that regulators in most countries require of banks.

“If we were to disregard the differences in accounting principle across geographies, Santander’s capital allocation would appear to be skewed towards Brazil and U.K.,” wrote UBS analysts in a March research note. “Businesses such as domestic banking, wholesale banking in Europe and consumer finance…appear to be bearing nearly half of the groups [risk-weighted assets] and with only a fourth of its Core Tier 1″ capital.

A Santander spokesman said analyst calculations are incorrect because they don’t take into account definitions of capital and calculations that vary from country to country. He said the Spanish business has a Tier 1 ratio of about 10%, well above regulatory minimums. He declined to provide a breakdown of the Spanish business’s assets or details of its capital holdings.

The situation strikes some analysts and investors as potentially risky. At a recent conference and in small investor meetings, Santander executives have fielded questions about the Spanish business’s capital levels, according to people familiar with the matter. The concern is that its bad loans are rising and there might not be enough capital on hand to absorb those losses. The bank generally is restricted by local regulators from moving large amounts of capital from its subsidiaries to the parent.

It is unclear how much of the bank’s recent money-raising efforts will be devoted to boosting the Spanish unit’s capital levels.

The bank’s recent debt exchange was seen as a warning shot to bondholders that they will be asked to swallow losses in banks’ efforts to boost capital. The bank could book a €640 million gain from the exchange, according to analyst estimates.

The exchange allows lower-ranked bondholders to turn in bonds for new senior instruments with a lower coupon but a firmer and shorter maturity date. Analysts calculated the implied price on the old debts was only about 83% of par.

—Christopher Bjork contributed to this article.

Write to David Enrich at david.enrich@wsj.com

NOVEMBER 23, 2011

By SARA SCHAEFER MUñOZ and DAVID ENRICH

Associated PressBrazil’s President Dilma Rousseff speaks in the capital Brasilia during the launching ceremony of ‘Plano Brasil Maior’, a governmental plan to strengthen the country’s industrial sector.

The measures, which were outlined by President Dilma Rousseff in a speech in Brasília, the country’s capital, come as Brazil posted a sharper-than-expected drop in industrial output during June.

Brazilian industries produced 1.6% less in June than in May, government data showed, burdened by high interest rates, a flood of inexpensive goods from China and a currency, the real, that has surged more than 40% against the dollar since early 2009.

“We must protect our economy, our productive forces and our jobs,” Ms. Rousseff said.

She added that the new measures would improve tax, credit and hiring conditions for the sectors that have been most affected by the so-called currency war.

Since last year, Brazil has used that term to criticize monetary policies in the U.S. and other developed markets that have depressed the value of the dollar and other major currencies against those of many fast-growing emerging markets, including Brazil’s real.

Among the new steps unveiled, the government extended up to $16 billion in payroll-tax cuts to manufacturers—including textile, footwear and software producers.

The cuts, which were cast as a pilot project through the end of next year, could be extended to include other sectors further into the future, the government said.

Ms. Rousseff also extended various subsidized loan programs made available through the country’s national development bank and announced a program that will favor Brazilian products in government purchasing.

The new “Buy Brazil” policy will allow the government to pay as much as 25% more for local products than for similar foreign goods, in particular when purchasing health, defense, communications and high-tech equipment.

Industry leaders welcomed the steps.

However, they said that deeper and more-permanent reforms are necessary for Brazil to overcome hurdles that historically have kept the cost of business high—from towering interest rates to rickety infrastructure to corruption. Until the recent appreciation, Brazil’s manufacturers counted on a cheap real to help them overcome such handicaps.

The measures “are positive, but not enough to rescue industry from its stranglehold,” said Robson Andrade, president of Brazil’s National Confederation of Industry.

The overall benefit from cutting the payroll tax, for example, could be limited, as the government moves to recoup the revenue through sales taxes in order to fund the recent massive run-up in government spending.

“They’re not lowering the final tax burden,” said Felipe Salto, an economist at Tendencias, a consultancy in São Paulo. “The government needs that money to finance the increased spending.”

While the measures should provide short-term relief for some sectors, economists say they will do little to enhance Brazil’s competitiveness as a whole.

“How am I helping Brazil by buying Brazilian products, even if they are inferior and more expensive than foreign goods?” asked Márcio Garcia, an economist at the Catholic University in Rio de Janeiro.

“That doesn’t foster efficiency,” he said.

—Matthew Cowley and Jeffrey T. Lewis contributed to this article.

AUGUST 3, 2011  By PAULO PRADA

http://online.wsj.com/article/SB10001424053111904292504576484462829851504.html

MANAUS, Brazil — US ex-president Bill Clinton urged Brazil to push to get global climate change talks unblocked by getting key trade partners, the United States and China, to curb greenhouse gas emissions.

“You cannot create a sustainable future for Brazil alone; you have got to convince enough other greenhouse gas emitters, including the US and China, your two biggest trading partners, to go with you on this,” said Clinton, in a speech to Brazilian business executives in this sweltering city in the heart of the country’s Amazon basin region.

Brazil “can build on the success that you have had, if you can solve some of the difficult problems in a way that the people of Brazil feel good about… you can break the barrier that kept us from getting an agreement in Copenhagen,” Clinton added.

The former US president lauded Brazil’s ability to curb by 75 percent its deforestation of the Amazon, which made the country at one point a leading contributor to global warming.

Talks in Cancun last November 28-December 11 yielded a rallying call to cap warming to two degrees Celsius (3.6 Fahrenheit) but split badly over the future of the UNFCCC’s Kyoto Protocol, whose first round of emissions-cutting pledges expires at the end of next year.

Brazil needs to unblock climate talks: Bill Clinton

(AFP) – March 26, 2011

Brazil and the U.S. can work together on a number of issues, but must also be honest in their disagreements, Rousseff said.

Brazil is concerned about the “acute effects” of the global financial crisis, and about some of the steps taken by the U.S. government, Rousseff said.

Still, Rousseff also said she welcomed the “enormous effort” taken by Obama to “recover the vitality of the American economy.”

Brazil and the U.S. need to build a relationship “of equals, however different they may be,” Rousseff said.

-By Matthew Cowley, Dow Jones Newswires; +55 11 3544 7082; matthew.cowley@dowjones.com

MARCH 19, 2011, 12:11 P.M. ET

http://online.wsj.com/article/BT-CO-20110319-700934.html

Minister Edison Lobao says Brazil has repeatedly been invited to join OPEC.

He did not say Tuesday which OPEC members were making the invitations, which began in 2009 after Brazil announced discoveries of huge offshore oil reserves.

Lobao says the government is not dismissing the idea of joining OPEC. But it is studying the production limitations that might be placed on Brazil if it joins.

Brazil’s offshore reserves are thought to hold at least 50 billion barrels of oil, making it one of the largest finds in recent decades.

Brazil official says studying OPEC invitations – Bloomberg.

Feb 8, 2011 3:24 PM ET Tue Feb 08 20:24:13 GMT 2011

Trailing badly in the polls, opposition contender Jose Serra has honed in on ethics charges against front-runner Dilma Rousseff and her political party as his best bet of avoiding a humiliating knockout in the first round of voting on October 3.

Those allegations are dominating media coverage and took up most of a televised debate on Sunday night as Rousseff denied wrongdoing and accused Serra, who appears to be on the last legs of a long political career, of desperate tactics.

“He wants to win this campaign dirtily because he is unable to convince the Brazilian people,” a confident Rousseff said in the debate.

Apparently coasting to victory on the coattails of massively popular President Luiz Inacio Lula da Silva, Rousseff is unlikely to be derailed by the scandals unless a “smoking gun” emerges linking her directly to any wrongdoing.

Former Sao Paulo state governor Serra accuses Rousseff and her leftist Workers’ Party of having illegally accessed tax records of his daughter and opposition members in search of potentially damaging information.

A new scandal erupted last weekend when news magazine Veja published accusations a former Rousseff aide who is now Lula’s chief of staff, Erenice Guerra, was involved in a kickback scheme for public works contracts run by her son’s consulting firm.

The so-called tax scandal has been rumbling on for weeks as evidence of new violations emerge in the media but has yet to resonate with voters.

A new poll released on Tuesday showed Rousseff widening her lead, putting her on course to win with a crushing 58 percent of votes in the first round on October 3.

MEDIA DELUGE

“We’re going to get a deluge of media coverage on this … it does increase the odds that it goes to a second round but I still think she’ll get a first-round victory,” said Christopher Garman, a political analyst at Eurasia Group in Washington.

A key reason why the mudslinging over tax records is not having an impact on polls may be that only about 15 percent of Brazilians pay income tax and therefore have little understanding of the scandal, he said.

Residents in the interior of northeastern Pernambuco state were mostly clueless about the issue when questioned by a reporter from O Globo newspaper, as quoted in a story on Sunday.

“I don’t know what a tax privacy code is, but I’m following it on TV,” said Edmilson Felix da Silva, a 50-year-old plowman. “For me, this is just being done to hurt Dilma.”

Still, the government moved to address the issue on Tuesday, saying it was tightening controls over tax office employees’ access to private financial data.

Every access to personal tax data would have to be justified and people would have the option in their tax statements of protecting their information, Finance Minister Guido Mantega told a news conference in Brasilia.

Mudslinging is likely to dominate the rest of the campaign as the media digs up new details on the allegations and Serra struggles to make headway with policy arguments in the face of Lula’s popularity and a briskly growing economy.

Last week Serra made a new pledge to raise the national minimum wage to 600 reais (225 pounds) a month, compared to the 538 reais planned by the current government, in what some analysts saw as a sign of desperation. Even a slight increase in the minimum wage could strain Brazil’s public finances, as pension payments are readjusted every time there is an increase.

Serra’s hope is that the whiff of scandal will give him enough of a bounce in the polls to take the election to a runoff on October 31. A similar scandal involving Workers’ Party officials trying to buy information about the opposition was seen as one factor preventing Lula from winning in the first round in the 2006 election.

“This is a subject that is important for democracy, because if they do this in the campaign, imagine them tomorrow,” Serra said during the debate.

By Stuart Grudgings

(Editing by Todd Benson and Jerry Norton)

Brazilian presidential candidate Jose Serra for the Brazilian Social Democratic Party (PSDB). Photographer: Mauricio Lima/AFP/Getty Images

Brazilian presidential candidate Jose Serra, trying to prevent a landslide defeat in next month’s election, is accusing his opponent’s party of using dirty tricks to gather private tax records of his supporters and family.

Serra, speaking to reporters in Sao Paulo yesterday, said the alleged breaking of bank secrecy laws by allies of President Luiz Inacio Lula da Silva resembled the “work of a gang.” He said the “crime” aimed to boost the candidacy of Lula’s hand- picked successor, Dilma Rousseff, and violated the constitution.

The former governor of Sao Paulo state stepped up attacks on Rousseff after the federal police began an investigation in July into whether tax officials leaked records of several people close to Serra, including his daughter Veronica and the vice president of his Social Democracy Party. The strategy is unlikely to erase Rousseff’s commanding lead, analysts said.

“The scandal is Serra’s life jacket to try to get to a second round,” said Andre Cesar, founder of Brasilia-based political risk firm CAC Consultoria. “But there is no evidence yet that the scandal has hurt Dilma’s campaign.”

The winner in the Oct. 3 vote must garner more than half of valid ballots cast to prevent a runoff against their closest rival four weeks later.

Rousseff widened her lead 2 percentage points to 50 percent, compared with 28 percent for Serra, in a Datafolha poll published Sept. 4. Green Party candidate Marina Silva had 10 percent, according to the nationwide survey of 4,314 people. The poll had a margin of error of 2 percentage points.

Tax Officials

The probe centers on whether local tax officials in Sao Paulo and Minas Gerais states, at least one of them alleged to be a member of Rousseff and Lula’s Workers’ Party, violated procedures and committed fraud while accessing the tax records.

Federal Tax Secretary Otacilio Cartaxo said Sept. 1 that someone forged Veronica Serra’s signature to access the records of the candidate’s daughter a year ago. So far, no political motive has been detected in the alleged wrongdoing, according to the tax agency’s internal auditor.

“Leaks happen, and they’ve always happened,” Finance Minister Guido Mantega, who oversees the tax agency, said Sept. 3. “We identify the source of the leaks, punish those responsible and then change the system. Unfortunately, afterwards, the lawbreakers find a way to beat the system and we have to improve the system again.”

Jose Eduardo Dutra, president of the Workers’ Party and head of Dilma’s campaign, wasn’t immediately available to comment when called by Bloomberg News today.

High Approval

Lula, who has a 79 percent approval rating after almost eight years in office, said at a campaign rally for Rousseff on Sept. 3 that Serra was resorting to “cheap tricks” to prevent defeat.

“When someone doesn’t know how to swim, they fall in the water and keep kicking until they drown,” Lula told supporters in Sao Paulo. “That’s what is happening to our adversary.”

Four days later, in a nationally televised campaign ad, he said attempts to slander his protege were a crime against Brazilian women.

Serra’s campaign didn’t immediately respond to an e-mail from Bloomberg News seeking comment.

Lula’s record reducing poverty and stabilizing Latin America’s biggest economy will overwhelm voters’ concerns about possible violation of secrecy laws, said Alexandre Barros, head of Early Warning, a Brasilia-based political risk firm.

Preserving Gains

“The bulk of Dilma’s voters are conservative, because they don’t want changes,” Barros said. “They are poor people who rose in life, who bought property and don’t want to lose what they gained during Lula’s government.”

Under Lula, Brazil created 14 million jobs, helping to raise 19 million people out of poverty from 2003 to 2008. Unemployment fell to a record low of 6.8 percent in December. As cabinet chief, Rousseff oversaw a program to build 1 million homes and was in charge of administering a 500 billion-real ($290 billion) infrastructure drive.

Rousseff, a former member of the Marxist underground that battled Brazil’s 1964-1985 dictatorship, has said that if elected she’ll continue Lula’s policies to spur development without sacrificing economic stability. Under Lula, the annual inflation rate has fallen from 17.24 percent in May 2003 to 4.49 percent in the 12 months through August.

To contact the reporters on this story: Andre Soliani in Brasilia at asoliani@bloomberg.net; Joshua Goodman in Rio de Janeiro at jgoodman19@bloomberg.net

Lula said he plans use Brazil’s experience with social programs to help other countries find ways to build wealth. He pledged to share technology developed by Embrapa, Brazil’s agricultural research agency.

“I intend to take the knowledge acquired in the implementation of successful social programs to many African and Latin American countries that still fight extreme poverty and hunger,” he said today in his weekly newspaper column “Presidente Responde.” “It’s sharing the good we’ve learned, to have solidarity with our brothers from other countries.”

Lula’s approval rate rose to a record 79 percent in a Datafolha poll released Aug 26. Former Cabinet chief and Lula’s chosen successor, Dilma Rousseff, leads opposition candidate Jose Serra by 24 points and is poised to win the October presidential election in the first round, according to an Ibope poll published by TV Globo network on Aug 28.

Lula also said he plans to help implement political reform in Brazil after he leaves office. Lula is barred by Brazil’s Constitution from seeking a third consecutive term.

–Editors: Brendan Walsh, Robert Jameson

To contact the reporter on this story:’ Iuri Dantas in Brasilia at idantas@bloomberg.net

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net

Blatter tells The Associated Press that improving the standards of elite referees is a top priority in the coming months, and until the 2014 finals in Brazil, if he is chosen next June to lead FIFA for a fourth four-year term.

Blatter says: “You can’t have nonprofessional referees in professional football.”

His call for change follows high-profile errors by referees at the World Cup in South Africa, where just two of the 30 selected for FIFA duty listed refereeing as their full-time job.

Blatter says he’ll reveal a detailed review of training for top-level referees in October.

By GRAHAM DUNBAR (AP)
The Associated Press.

With the election less than six weeks away, Rousseff has
taken full advantage of recent free TV time to link her name
with President Luiz Inacio Lula da Silva, whose management of
Brazil’s booming economy has made him massively popular with
the working class and foreign investors alike.

The sizable lead has allowed Rousseff to begin turning her
attention to what her government might look like, despite an
outcry from the opposition that she is prematurely measuring
the drapes for the Planalto Palace in Brasilia.

Rousseff forcefully rejected a report that she would enact
special austerity measures to win over foreign investors, some
of whom are concerned about heavy election-year spending and
other imbalances such as a yawning current account deficit.

“Why on earth would I make budget cuts?” Rousseff asked
reporters, pointing out that inflation is under control and
Brazil’s international reserves are at record high levels.

The survey by the Sensus polling institute was the second
in four days to show Rousseff with the absolute majority of
votes needed to win the Oct. 3 election outright.

One measure showed her leading by a 46-28 percent margin
over her nearest challenger, Jose Serra. But if spoiled or
blank votes are thrown out, as they are on election day, she
has 55.3 percent support compared to 33.7 percent for Serra.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Lula is prohibited from seeking a third term but the debut
of free TV time last week for candidates has featured repeated
ads showing him and Rousseff together. At campaign events, Lula
has referred to her as “my president” and said his former chief
of staff is best-positioned to continue his policies.

Rousseff “has done a good job of capitalizing on Lula’s
popularity and she has been able to establish herself as his
right-hand person,” Clesio Andrade, the head of Brazil’s
National Transport Confederation, which commissioned the poll,
told reporters.

‘THE ELECTION HASN’T EVEN BEGUN,’ SERRA SAYS

Serra’s TV ad on Tuesday accused Rousseff of “getting
carried away with herself,” highlighting recent media reports
that she is already negotiating with coalition members for
cabinet posts.

“The election hasn’t even begun yet,” a narrator in the ad
said.

Yet Rousseff’s lead is now so large that, at a joint
campaign event in a working-class suburb of Sao Paulo on
Friday, Lula spent almost as much time singing the praises of
his party’s candidate for state governor as he did touting
Rousseff.

The 62-year-old former energy minister and career
technocrat has never run for public office. Although she has
struggled to emulate Lula’s common touch with voters, some
analysts say that only a major event like a corruption scandal
could derail her candidacy at this point.

Serra, a 68-year-old former governor of Sao Paulo state,
has labored to establish a distinct agenda from Rousseff
without running the risk of criticizing the popular Lula.

A candidate must receive more than half of valid votes to
avoid a runoff. A survey released by the Datafolha pollsters on
Saturday also showed Rousseff winning in the first round.

The Sensus poll surveyed 2,000 people between August 20-22
and has a margin of error of plus or minus 2.2 percentage
points.

(Additional reporting by Eduardo Simoes in Sao Paulo,
Writing by Brian Winter; editing by Todd Benson and Todd
Eastham)

By Natuza Nery

http://www.reuters.com/article/idUSN2424892220100824