...Description In the midst of the financial crisis, Barclays (the world's 4th largest bank by assets) is forced by UK regulators to raise more capital. Should it take up the UK government's offer to invest, or take funding from investors from the Middle East? Students may price the two deals to determine which is more expensive, and must decide whether avoiding the constraints of government ownership is worth the extra cost. Learning objective: The class begins with a discussion of why, if the bank is required to raise capital, none of the instruments being offered look like equity? Why do regulators force banks to hold a certain amount of equity against their assets? Why do these instruments (which are more like preference shares and convertible debt) count as equity? Should they? We then discuss the pros and cons of accepting government versus private investment. Students generally conclude that other things being equal, it would be better to avoid government ownership, leading nicely to a discussion of... What is the relative cost of the two deals? Students must lay out the cash flows to the government preference shares versus the ""reserve capital instruments"" (debt) instruments, and the ordinary shares versus the ""Mandatory convertible notes"" (convertible debt) that the government and private deal will entail, respectively. The private deal involves granting various warrants for free, and these must also be priced using option pricing. Conclusion: Case teaches: Why is...
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...DWU(K) mobilized members of parliament to support its call to stop port privatization but it took a lot of effort to get them. First we mapped which constituencies have interest at the port in that they border it and we found four that is Likoni, Changamwe ,Mvita and kisauni. Then we mobilized our members against these MPs because all were government ministers and port privatization had been discussed in the cabinet. We also mobilized the community by organizing public meetings in those constituencies and giving other politicians a forum to speak and the local MPs felt threatened by their rivals talking against port privatization and they were forced to support our call. So that to get international support we were to do a lot of research so that union not to be seen as stubborn and blocking developments. We sort audience we the US labor attaché to whom we explained to her that we were only opposed to where port that was built with public fund to be transferred to private hands but we support government giving a private developer land and built private port so that we can compete. Mearsk Shipping line being one of the interested party to get part of the port sent Denmark ambassador to Kenya to convince DWU(K) to agree to privatization but we explained to him of our stand not to let port go to private hands. Having worked very closely with ITF(Africa) regional office on this issue, every time we were called to explain any issue we always called the Nairobi office and...
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...Nationalization of banks in India generated a controversy which was meaningless. In fact the public deposits in the banks have increased so much that it is unsafe to leave them in the private hands. Banks by advancing loans to the speculators and non- priority sectors can play havoc with the economy of the country. So banks were nationalized in the larger interests of the nation. Banks are the custodians of the public money but they were in private hands. Some directors of the banks used to utilize funds for their personal benefit By entering into partnership with some business they would sanction loans and get profits. Thus public money was used for personal profit. In a welfare state a government cannot sleep over the matters that do harm to the public interest. Banks, thus, used to advance loans to the individuals or non- priority sectors. Planned economy cannot work till all the factors influencing economy are geared up in that direction. Agriculture and cottage industries were to be financed in order to give a fillip to them. This could be done if the government had a control over the disbursement of Banks' loans. Nationalization is in accordance with our national policy of adopting socialistic pattern of society. Some may say that industries which provide proper place for exploitation should have been nationalized first They forget that the control of the capital is necessary because it gives power to exploit. Another objection raised against nationalization...
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...In 2008 the British government decided to nationalize struggling lender Northern Rock, dashing Sir Richard Branson’s plans to buy the bank, and drawing fire from politicians and shareholders. This decision was made after considering two private-sector bids to bail out the bank–one from Northern Rock’s management team, the other from Sir Richard Branson’s Virgin consortium. Changes in top management of NRB were planned in the way that former Lloyd’s of London head Ron Sandler would be Northern Rock’s new chief executive, while Ann Godbehere–formerly with Swiss Re –has been appointed chief financial officer. Britain’s finance minister Alistair Darling talking about these changes named it a “temporary period” of nationalization. He didn’t believe that the two proposals deliver sufficient value-for-money for the taxpayer. He explained that under Virgin’s ownership, Northern Rock would only offer a return on taxpayers’ investments if the company’s value reached at least 2.7 billion pounds ($5.3 billion). There was also opinion that main disadvantage of this management bit was that it did not inject enough new capital into the business. Reaction was swift and fierce. George Osborne, the Conservative party shadow finance minister, said the Labour party’s reputation for economic competence was now dead, and that a better solution would have been to take the bank into receivership, with the Bank of England as creditor. The reaction from shareholders was equally critical; they face...
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...This essay is embarked at discussing the advantages and disadvantages of privatization and nationalization of industries or firms. The essay will conclude by suggesting which of the two would be viable for future policy consideration in Zambia. The term privatization is often loosely used to mean a number of related activities, including any expansion of the scope of private sector activity in an economy and the adoption by the public sector of efficiency enhancing techniques commonly employed by the private sector. The term privatization may be taken to mean a financial transaction-the sale of a publicly owned asset to the private sector or the transfer of the authority to make resource allocation decisions from the government to the market place (Gabel, 1987). While acknowledging that no definition of privatization is water tight, for the purpose of this essay, privatization will be defined as the transfer of productive asset ownership and control from the public to the private sector (Ibid). In Africa, many governments have embraced the idea of privatization, brought to the fore mainly as a part of the adjustment and stabilization programs of the mid-eighties and the nineties. Privatization now frequently features in government policy statements and in conditionalities from donors. The past decade has also seen the World Bank and other donors get increasingly involved in lending operations towards parastatal sector reforms that included privatization components (Landis...
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...State versus Private Ownership Andrei Shleifer Department of Economics Harvard University Cambridge, Massachusetts. Abstract Private ownership should generally be preferred to public ownership when the incentives to innovate and to contain costs must be strong. In essence, this is the case for capitalism over socialism, explaining the "dynamic vitality" of free enterprise. The great economists of the 1930s and 1940s failed to see the dangers of socialism in part because they focused on the role of prices under socialism and capitalism, and ignored the enormous importance of ownership as the source of capitalist incentives to innovate. Moreover, many of the concerns that private firms fail to address “social goals” can be addressed through government contracting and regulation, without resort to government ownership. The case for private provision only becomes stronger when competition between suppliers, reputational mechanisms, the possibility of provision by private not-for-profit firms, as well as political patronage and corruption, are brought into play. 1 What kinds of goods and services should be provided by government employees as opposed to private firms? Should government workers make steel and cars in government-owned factories? Should teachers and doctors be publicly employed or should they work for private schools and practices? Should garbage be picked up by civil servants or employees of private garbage haulers? Should the whole economy be "socialized"? Although...
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...Nationalization is defined as the concept of a government seizing the private property of foreign nationals. In other words, nationalization is the alteration or assumption of control or ownership of private property by the state. It is historically a more recent development and differs in motive and degree from “expropriation” or “eminent domain,” which is the right of government to take property for particular public purposes (such as the construction of roads, reservoirs, or hospitals), normally accompanied by the payment of compensation. Nationalization may occur through the transfer of a company’s assets to the state or through the transfer of the share capital, leaving the company in existence to carry on its business under state control. Nationalization has often accompanied the implementation of communist or socialist theories of government, history tells us, as was the case in the transfer of industrial, banking, and insurance enterprises to the state in Russia after 1918. More recently, a further impetus has been resentment of foreign control over industries upon which the state may be largely dependent, as in the nationalization of the oil industries in Mexico in 1938 and Iran in 1951, and in the nationalization of foreign businesses in Cuba in 1960. In my view, another motivating factor for recent nationalizations may be the belief in some developing countries that state control of various industrial operations is at least temporarily necessary because of the lack...
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...M. Adeel Sohail 14767 Assignment # 3 Analysis of Pakistani Industries Miss Sadia Mansoor Nationalization of Steel and Wheat Industry in Pakistan Nationalization In 1972, nationalization program was implemented by Mr. Zulfikar Ali Bhutto for the very first time in Pakistan. The aim of this process was to promote economic democracy, liberalization, and to put the country in state of progressivism. Ended in 1977, this program was again put forward in 1996 by Benazir Bhutto. Despite its success in the initial years, these programs left disastrous effects on Pakistan’s national economy. Impact on Wheat Industry In the third phase of nationalization (year 1976), around 2,000 cotton, ginning, and rice husking units came under the program. This caused huge chaos among the workers of the country, especially the farmers as the agricultural hub was being affected by the policy. The program eliminated the crucial role of middlemen. The first and second phase had already created resentment among investors and trading agents across the country. There were various implications that nationalization gave to Pakistan: hyper inflation, drastic fall in production & GDP growth which consequently led to low savings & tax collections, resulting in unemployment, loss of confidence in the investor sentiment, public sector overweighed, sick industries, fall in production and most importantly increase in corruption. Government socialist policies against the business elite was believed to...
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... States are not responsible for the acts of private persons, acts of officials of other states or international organizations, or acts of insurrectionaries within their own territories. (4) Classical Case: Sandline International Inc. v. Papua New Guinea (5) Conclusion – What is your stand? Expropriations Question 4. (1) Summary of case in Question 4. (2) Concept to be used: Imputability, Terrorism (3) Discuss the case: This is a case of expropriation post the major political change in Ruraltania. Expropriation or nationalization is the state’s taking or deprivation of the property of foreigners. The right of states to expropriate foreign property is universally recognized. Expropriation is regarded as proper so long as it is done for a legitimate public purpose and the state pays prompt, adequate, and effective compensation. By “adequate” compensation is meant the...
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...Major capital investments were made in the physical facilities in 1976. Production facilities for manufacturing of the Hydraulics components were substantially expanded. Internally designed hydraulic radial piston type motors were put into production. A major expansion took place in 1980 till 1990. The production of centralized grease lubricating systems was substantially expanded. A newly introduced R&D effort resulted in the design, development, and production of lubrication system. During this period, as a legal Czechoslovakia monopoly, the company specialized in producing systems for heavy equipment manufacturing industries, steel making and mining. Nationalization: In 1948 the company was nationalized and its engineering and manufacturing resources were re-focused on railroad applications. During this nationalization company has changed his focus and starts manufacture the new products like new heating system for railroad cars and manufacturing of centralized grease lubrication system was restarted and hydraulic technology became integral part of It remained nationalized till 1990 and major changes made during last 10 years from 1980 to 1990. During this period newly introduced R&D efforts resulted in...
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...Thoughts on Economics Vol. 20, No. 02 Privatization in Bangladesh: Problems and Prospects Muhammad Ruhul Amin( Showkat Ara Khanam(( Abstract: Privatization has been advocated in the development literatures as the gateway of the growth and development of the countries all around the world. Despite the phenomenal expansion of privatization programs, the results differed from country to country. Some could achieve the desired goals and some failed enormously. However, the World Bank and the IMF continued their campaign of privatization for less developed countries (LDCs) including Bangladesh to stimulate their growth and development. Some LDCs have adopted privatization programs of their own volition. The central theme of this paper is to examine the implications of privatization for the overall development of Bangladesh. The paper raises a number of issues in this regard. The issues involve meaning, significance, approaches, strategies and effectiveness of privatization. While seeking solutions to these issues, the problems inherent in policy formulation and its implementation strategies have been clearly spelled out in the paper. The authors suggest that in order to make privatization efforts a success, an indigenously designed pragmatic policy needs to be undertaken. They warn that the policy prescriptions of external sources including donor agencies, pressure groups and political lobbyists should be handled with great care and caution. 1. Introduction ...
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...INTRODUCTION The participation of the state in enterprises in Nigeria dates back to the colonial era. The task of providing infrastructural facilities such as railway, road, bridges, water, electricity and port facilities fell on the colonial government due to the absence of indigenous companies with the required capital as well as the inability or unwillingness of foreign trading companies to embark on these capital-intensive projects(Iheme 1997).This involvement was expended and consolidated by the colonial welfare development plan (1946 – 56) that was formulated when the labour party came to power in the United Kingdom. This trend continued after independence such that by 1999, it was estimated that successive Nigeria Governments have invested up to 800 billion Naira in public owned enterprises (Obasanjo, 1999). THE CONCEPT OF PRIVATIZATION Although the concept of privatization is an is an emotive, ideological and controversial one evoking sharp political reactions, its political origins, meaning and objectives are not ambiguous. Iheme (1997).defines privatizations as: …any of a variety of measurers adopted by government to expose a public enterprise to competition or to bring in private ownership or control or management into a public enterprise and accordingly to reduce the usual weight of public ownership or control or management. However, in a strict sense, privatization means the transfer of the ownership (and all the incidence of ownership, including...
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...| UNIVERSITY OF TECHNICAL EDUCATION | |BTEC HND IN BUSINESS (MANAGEMENT) | | | |ASSIGNMENT COVER SHEET | |NAME OF STUDENT | | |REGISTRATION NO. | | |UNIT TITLE |Unit 3: Business Environment | |ASSIGNMENT TITLE |Organisations in their Environment | |ASSIGNMENT NO |1 of 2 | |NAME OF ASSESSOR |Dr. Willibeth C. Candol | |SUBMISSION DEADLINE |June 13, 2011 ...
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...PRIVATISATION Definition of Privatisation Privatisation means inducing private ownership, management and control into public sector undertakings. It is opposite of nationalising private firms. It implies disinvestment in public sector units and passing of management rights to private entrepreneurs. In some cases the management and control of public undertakings may be transferred to private sector without transferring the ownership. Importance of Privatisation * Improvement in efficiency: -The motive of private enterprises is to maximise profits. Therefore, they have to improve efficiency and performance without the competitive forces. * Raising Funds: -By selling government equity to private sector it is possible to raise funds for public investment. * No political influence: - Once a public sector is privatised it becomes free from political, ministerial and government intervention. * Quick Decisions: - In private sector organisation quick decisions can be taken to respond to changing circumstances. * Better Service to the customers: -The survival and growth of private sector enterprises depends on consumer satisfaction. Therefore they try to provide better quality goods and services to their customers. * Quick remedial measures: -In private sector enterprises quick remedial measures must be taken to avoid wastages, losses and to secure benefits from business opportunities. There is no scope for red tapism. * Easy to fix responsibility:...
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...[pic] BBA Program Dept. of Business Administration International Islamic university Chittagong Dhaka campus INTERNSHIP REPORT ON PRODUCTION & FINANCIAL PERFORMANCE OF STATE OWNED ENTERPRISES (SOEs) IN BANGLADESH Supervised by: Mohd. Mohsin Assistant professor in Finance Dept. of Business Administrative International Islamic university Chittagong Dhaka campus Prepared by: Mukter Hossain ID: B071515 24th Batch, BBA Major in Finance & Banking Dept. of Business Administration International Islamic university Chittagong Dhaka campus Letter of Transmittal May 22, 2011 To Mohd. Mohsin Assistant Professor in Finance Department of Business Administration International Islamic University Chittagong Dhaka Campus Subject: Submission of internship Report. Dear Sir, Here is my report on “Production & Financial Performance of State Owned Enterprises in Bangladesh” It has been a pleasure as well as a challenge on my part to work on this report that has enabled me to know about Production of State Owned Enterprises and their Financial Performance. I wish you would be to kind to accept my internship without placement report and help me to complete my degree. Sincerely your’s, Mukter Hossain ID. No. B071515 Major in Finance & Banking IIUC, DC Letter of Acceptance Mukter Hossain, ID. B071515, Batch 24th, BBA program has submitted the report on “Production & Financial Performance of State owned...
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