BRUSSELS (AP) -- European Union finance ministers are to meet in in Brussels Tuesday to hammer out an agreement over how high banks should build their defenses against future financial shocks, with the U.K. running the risk of being isolated over who should set the height.
The EU's 27 members agree on the need to increase capital reserves of banks, following an international agreement called Basel III, which was negotiated by the world's largest economies to avoid another financial meltdown such as the one brought on by the collapse of U.S. investment bank Lehman Brothers in 2008.
But the U.K. wants national regulators to be able to set requirements significantly higher than those of the EU — a position opposed by almost all other EU members, who fear investors might then prefer UK banks and flee from those in other countries.
On his way into the meeting Tuesday morning, George Osborne, the British chancellor of the exchequer, was non-committal about the possibility of reaching an agreement.
"This is a time of considerable uncertainty in the eurozone economies," he said, referring to the 17 countries — the U.K. not among them — that use the euro currency. "And that uncertainty is undermining the entire European recovery. And I think we're reaching a point where we've got to make a decision to see the eurozone stand behind their currency. A very important part of that, of course, is strengthening the entire European banking system. And that is what we intend to do today."
Once enacted, Basel III would require lenders to increase their highest-quality capital — such as equity and cash reserves — gradually from 2 percent of the risky assets they hold to 7 percent by 2019. An additional 2.5 percent would have to be built up during good times. All members of the G-20 have agreed to implement Basel III; if the European Union succeeds, it would become the first entity to institute the new requirements.
The U.K. is arguing that, because national taxpayers have to bail out banks when they fail, national authorities should be able to set more stringent requirements to guard against such failures. A compromise proposal offered by the Danes, who hold the rotating presidency of the European Union, would allow national authorities some leeway to increase requirements beyond those called for in the Basel III agreement. That proposal has broad support — except, so far, from the U.K.
The finance ministers can approve the compromise proposal without British support, through what is known as qualified majority voting, in which member countries have different numbers of votes according to their populations. However, there is a tradition in the EU that changes that would affect an industry in a particular country — such as the banking sector in the U.K. — are not forced into effect over the objections of that country, and consensus is sought.
"I think there should be a unanimous decision on such an important issue," Swedish Finance Minister Anders Borg said on his way into the meeting.
New finance and economy course programs in Chicago Public Schools - Examiner
While issues in education may be a hot topic for presidential candidates Mitt Romney and Barack Obama this year, Chicago Public Schools are already taking great strides in improving education in local high schools.
In the recent release of a new plan designed to improve financial understanding of high school students, Chicago Public Schools will begin implementing new economy courses for graduating senior classes.
“Financial Literary Framework” in Chicago Public Schools
According to a recent news release from the Council for Economic Education, a new personal finance class may become a standard part of high school curriculum in the near future. Aimed toward students in their senior year, the course will be part of a new K-12 Financial Literary Framework program supported by Chicago Public Schools.
The new program is intended to help build economic skills and financial know-how for the business world and everyday life after high school. While the announcement is very recent, this personal finance plan has been in the works for four years. It has succeed thanks to the close level of cooperation between the Chicago Public School system and the Council for Economic Education.
The Council calls itself the forefront of organizations in the U.S. that support both economic and financial student education issues. They work to help children and teens—from kindergarten to senior year—gather the skills they need to be strong consumers and citizens in the national economy.
“We couldn’t be more excited to be part of this important endeavor by Chicago Public Schools,” reported Nan Morrison, the president and CEO of the Council for Economic Education. “By providing [high school seniors] with the financial education they need, we hope to change their futures.”
Personal finance courses to prepare students for the economy
As a result of their progress in the financial course program, Chicago Public Schools were acknowledged during May’s White House summit on the topic of financial literacy for young adults. It is part of the ongoing effort so support an economic education in U.S. schools, as well as foster the critical skills needed to work through the advanced modern business world.
Concerning the class itself, the senior level personal finance course will be completed over the course of one semester, using curriculum and instruction based on high standards given by the Council for Economic Education. It is said to be academically challenging for the 12th grade students, but relevant and applicable to actual skills they will need after graduation.
Other supporting partners of the Financial Literacy Framework program include the Illinois State Treasurer’s Office, the Economic Awareness Council, the Federal Reserve Bank of Chicago, and the Illinois Credit Union. While expensive, these contributions in tandem with a $1 million grant courtesy of Discover Financial Services will help begin an early form of the plan in Spring 2013.
The generous grant is intended to introduce the personal finance course to over 25 Chicago Public Schools in the local district. The grant will also provide program training for over 250 teachers in the following three years, and is set to be part of standard school curriculum by 2016.
Personal finance apps, ranked by Mobilewalla - Fort Worth Star-Telegram
Cash management can be a tricky business, unless you consistently stay on top of all of your incoming and outgoing transactions. Apps can help you track your spending, set goals and keep all of your accounts in one place.
Apple appsMint.com Personal Finance (Free)* -- One of the most popular money-management apps. You can create a razor-sharp view of your accounts, track your budgets and better manage your expenses. (Mobilewalla score: 99/100)CheckPlease Lite Tip Calculator (Free)* -- Adjust the tip rate on your checks, split the bill among your friends or round up your tip. Take the guesswork out of it. Includes a tutorial to show you options. (Score: 93/100)My Eyes Only -- Secure Password Manager (Free) -- Having trouble keeping track of all the passwords to your accounts? Keep them in one place and recover them easily. You'll never be locked out again. (Score: 89/100)SplashMoney -- Personal Finance Manager ($4.99) -- You can connect to your bank accounts and sync to your PC or Mac to track all of your different accounts, from credit cards to money markets. Includes charts to help the budgeting process. (Score: 82/100)Adaptu Wallet: Personal Finance and Money Management (Free)* -- Manage your cash flow, stay apprised of your monthly budget and enter photos of all your cards to free up your wallet. (Score: 69/100)Android appsPayPal (Free)* -- Millions of individuals and small businesses trust PayPal with their daily transactions and credit-card processing. Easily manage your transactions, or simply send your friends money via this simple and secure platform. (Mobilewalla score: 89/100)Google Finance (Free) -- Keep track of your entire stock portfolio with real-time alerts from Google Finance. A must-have for day traders and stock junkies. (Score: 87/100)EasyMoney -- Expense Manager (Free) Manage and track all of your personal or work expenses with ease. Quickly assess your monthly spending levels with graphic displays or instant reporting for that demanding boss. (Score: 86/100)E*TRADE Mobile Pro (Free)* -- Manage your E*TRADE account securely and effectively from this feature-rich platform. Get quotes, make trades or chat directly with E*TRADE representatives. (Score: 84/100)mooLa! Platinum Edition ($4.99) -- Track and manage all of your "moola" in one simple-to-use interface. Pay bills, manage investments, even balance your checkbook. (Score: 69/100)Apps with an asterisk* denote availability on Apple and Android.Mobilewalla is a search and discovery engine using breakthrough technology to score every app to help consumers navigate the mobile application marketplace. Apps are scored using an algorithm that weighs several characteristics, including user ratings, position within category and staff recommendations. For more app intel, go to www.mobilewalla.com.Ship Finance Restores Double-Digit Dividend Yield After Frontline Agreement - Seekingalpha.com
Ship Finance International Ltd. (SFL) has released its first quarter results and the big news for income investors is the restoration of the quarterly dividend rate to previous levels following a one quarter decrease. The shipping sector has been a train wreck - ship wreck? - since 2008 when an oversupply of new ships purchased by aggressive shipping companies sent charter rates to below breakeven for many companies. Ship Finance is one of the few companies to have made it out through the bad times with the current ability to pay a decent dividend and provide the potential for share appreciation returns to investors.
Ship Finance works as a leasing company in the shipping industry. It buys ships and leases them out on long-term bare boat contracts. The customer companies typically pay a minimum per day lease rate with a profit-sharing clause if the shipper is able to earn above a certain threshold. Ship Finance was spun out of Frontline Ltd (FRO) in 2004 and initially just owned crude oil tankers. Over the years, Ship Finance has expanded away from tankers and the Frontline leased vessels now account for one-third of the fleet. Offshore drilling and support ships are now the largest portion of the fleet accounting for 46% of the assets. Ship Finance also owns container and drybulk ships, accounting for 13% and 8%, respectively, of the fleet.
Historically, Ship Finance has paid out the majority of net income as dividends. In late 2008, the formerly steadily increasing quarterly payout was cut in half to 30 cents per share. The company resumed a path of increasing dividends in the first quarter of 2010 and the payout was up to 39 cents in the 2011 third quarter. Late in 2011, Frontline was in trouble with its loan covenants and was challenged to just stay profitable. Frontline made some moves to reduce its daily operating cost, including adjusting its lease terms, with Ship Finance. The result is a reduced debt load for Frontline and reduced daily lease rates on the tankers owned by Ship Finance. In return, Ship Finance received a $105 million up front payment and 100% profit share up the old lease rates. The new agreement runs through 2015.
Ship Finance reduced the dividend to 30 cents for the 2011 fourth quarter and now has re-raised the quarterly distribution to 39 cents for the 2012 first quarter dividend to be paid in June. The new dividend rate puts the yield at 9.8%, after the 6% share price increase following the announcement of the new dividend rate. A 10% yield is a reasonable return from Ship Finance based on the current soft tanker rates market. With some firming of tanker rates and better forward visibility on Frontline's earnings, Ship Finance's yield should slide to around 8%, which would result in a 20% share price increase. Ship Finance's shares should be viewed as over-priced anytime the yield slips below 8%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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