What do they know that you don't?
Tue August 7, 2012 5:09pm
SOME of the world's largest companies are pulling cash out of European banks and drawing up contingency plans for the break up of the Euro.
IAG, which owns British Airways and Spanish airline Iberia has reduced the amount of cash they have tied up in Spanish banks from 27 per cent at the end of 2011 to just 3 per cent today.
A spokesman pharmaceutical giant GlaxoSmithKline told the Daily Mail: “We have been sweeping our money out of the southern eurozone states – in fact everywhere but Germany – over the past year. We’re taking cash back into the British banks to assure our position.”
Rival drug company AstraZeneca has established a "Eurozone credit committee" tasked with ensuring the company does not have too much money stored in troubled European banks.
Royal Dutch Shell also confirmed that it is pulling funds of Europe. Chief Financial officer Simon Henry reportedly said he would rather deposit $15billion in US bank accounts and US government bonds that leave the cash in Europe.
"There's been a shift in our willingness to take credit risk in Europe," Henry told The Times.
Overnight the Sentix research group said their index measuring investor sentiment had fallen for the fifth straight month. In other words big companies aren’t keen on investing in Europe and they are getting less and less keen.
In a poll of 2000 firms released by the British Chambers of Commerce more than half said they believe the Euro crisis will have a significant influence on their business this year.
So fear is driving the exodus. Real or not, that's not good news for Europe or world financial markets.