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Europe split on financial trading tax

business Updated: Nov 08, 2011 21:21 IST

Europe's economic heavyweights Germany and France ran into strong resistance on Tuesday in their drive to impose a tax on financial transactions, indicating that introducing the levy even in the 17-country eurozone will be difficult.

On top of long-standing opponents like the UK and Sweden, which do not use the euro, the proposal also received a lukewarm reaction from traditional allies like the Netherlands, Luxembourg and most smaller eurozone nations.

They fear that introducing even a small tax on transactions in bonds, shares and derivatives could drive banks and other financial institutions out of the European Union if other financial hubs don't follow suit.

Italy meanwhile voiced fears that raising the costs of transactions could hurt banks at a time they are already under severe pressure and even drive up countries' borrowing costs as their bonds would be traded less on the open market.

Soc-Gen to slash bonuses
Societe Generale France's second-biggest listed bank, said it would slash bonuses and scrap its 2011 dividend after a tough quarter as it scrambles to meet strict new capital requirements.

SocGen, the first French bank to drop its dividend since regulators announced stricter rules earlier this year, reiterated it would plug an estimated €2.1 billion ($2.9 billion) capital shortfall without private or state help.

The bank's commitment to beefing up capital - even at the expense of profits, which slumped a steeper than expected 31% in the third quarter - boosted its battered shares and drew praise from investors worried about euro zone banks' ability to withstand the sovereign debt crisis.

German exports hit record
German exports hit a new record in September, helping the trade surplus rise to its highest level since June 2008, in a sign Europe's largest economy was still outperforming peers even as clouds gathered over the horizon.

Exports rose by 0.9% on the month to €91.3 billion ($126 billion), the highest value on record, data from the Federal Statistics Office showed on Tuesday, countering a Reuters poll forecast for a 1.0% drop.

(With AP and Reuters inputs)