My finance view

Enda Kenny will push for the quick formation of an Irish government and the re-negotiation of an international bailout after what he called a “democratic revolution” reshaped the nation’s political landscape.

Kenny’s Fine Gael party will open contacts this morning on forming a new government, lawmaker Alan Shatter said. The Feb. 25 election left Kenny in a position to form an administration with Labour or independent lawmakers after the ruling Fianna Fail party suffered its worst ever defeat.

“We must have a stable government,” Shatter said in an interview with Dublin-based broadcaster RTE today. Labour is “part of the picture.”

Kenny, 59, will fly to Helsinki on March 4 to meet leaders including German Chancellor Angela Merkel at a gathering of the European People’s Party. Kenny said on broadcaster RTE that he will start the process of reopening the terms of the bailout Ireland received last year from the European Union and the International Monetary Fund. He’s seeking to lower the 5.8 percent interest rate on aid loans and end the protection of senior bank bondholders.

“We can count on a good match forthcoming with Germany and France in one corner and Ireland in the other as a Battle Royale gets played out in front of a worldwide audience,” Mark Grant, managing director at Southwest Securities Inc. in Fort Lauderdale, Florida, said in an e-mail yesterday.

Bonds Decline

Irish government bonds opened lower, sending the 10-year yield up five basis points to 9.40 percent as of 7:32 a.m. in London. Greek 10-year yields also rose five basis points, to 11.93 percent.

So far, 154 lawmakers have been elected to the 166-seat Dail, as the Irish parliament is known, according to RTE’s website. Fine Gael had won 70 seats and Kenny said “no time can be wasted” in forming a government. Labour won 36 seats, Fianna Fail had 18 and Sinn Fein had 13.

“With Fine Gael in charge we don’t expect any radical policies vis-á-vis rocking Ireland’s relationship with the EU/IMF,” according to Cathal O’Leary, head of fixed-income sales at NCB Stockbrokers in Dublin. “Ireland will continue to implement the 15 billion-euro ($21 billion) fiscal consolidation plan, with 9 billion euros of cuts still to be achieved.”

‘National Government’

Fine Gael will probably shy away from relying on the support of “high-maintenance” independent lawmakers, the party’s finance spokesman Michael Noonan said on Feb bad credit payday advance. 26. Labour leader Eamon Gilmore said a coalition between his party and Fine Gael would be “the closest thing we might get to a national government.”

“This country has huge problems,” Gilmore said in an interview with RTE yesterday. “The new government is going to be faced with major decisions.”

Labour hopes to hold a party conference to approve a coalition with Fine Gael on March 5, lawmaker Ciaran Lynch said today on RTE.

Fine Gael raced to its best-ever election performance as voters punished Fianna Fail after the government presided over the worst recession on record and a 85 billion-euro rescue in November. Fianna Fail lost about 60 of the 78 seats it won in 2007, with Deputy Prime Minister Mary Coughlan among the victims.

Stress Tests

Fine Gael lawmaker Richard Bruton said taxpayers can’t be expected to shoulder all of the cost if stress tests next month reveal further capital needs in lenders including Bank of Ireland Plc and Allied Irish Banks Plc. The state has already injected about 46 billion euros into the financial system, with another 8 billion euros due to go in next month.

“We have to see the stress tests,” Bruton said in an interview at the count centre in Dublin on Feb. 26. “If that unearths fears of further holes in the banks, the credibility of expecting the taxpayer to shoulder all the burden” is something that “many would regard as unsustainable.”

Kenny said the bailout cost is “too much” and he’ll seek agreement to ease the terms, including the existing protection of senior bank bondholders. EU Economic and Monetary Affairs Commissioner Olli Rehn said on Feb. 15 there is “no appetite” for imposing losses on senior bondholders at Irish banks.

“We owe so much to Europe, we can’t ignore what they say,” Garret FitzGerald, a former Fine Gael leader who served two terms as prime minister in the 1980s, said in an interview. Kenny is “very good with people and whilst you can delegate policy to able colleagues, he does have to go into the EU council on his own: that’s where the decisions are made.”

Source

 

 

                        
No. of
banks     
Return on assets*           
Bad loans/Total loans **          

Bad loans and
foreclosed property/Total loans                  

Tier 1 leverage ratio   
Q3 2008
80 0.36% 1.71% 2.61% 10.28% Q4 2008  
79 0.16% 1.58% 2.62% 9.85% Q1 2009 78 0.18% 2.01% 3.14% 9.77% Q2 2009 78 0.15% 2.45% 3.71% 9.69% Q3 2009 79 0.05% 2.67% 3.98% 9.61% Q4 2009 78 -0.07% 2.73% 4.05% 9.37% Q1 2010 78 0.55% 2.90% 4.45% 9.46% Q2 2010 77 0.47% 2.62% 4.21% 9.51% Q3 2010 76 0.46% 2.86% 4.53% 9.52% Q4 2010 75 0.39% 3.06% 4.69% 9.50%

 

* Return on assets: Bank profit as a percent of assets. The higher the number, the better. In good times, the figure is usually more than 1 percent.

** Problem loans to total loans: The percentage of loans upon which payment is very delinquent. The lower the number, the better.

*** Tier 1 leverage ratio: A measure of a bank’s capital adequacy. The number must be at 5 percent or higher for the bank to be considered “well capitalized.”

SOURCE: Federal Reserve Bank of St. Louis

Source

Kohl’s Corp.’s fourth-quarter net income increased 14 percent as merchandise profit margins improved through exclusive brand offerings and tight inventory management.

The department store operator, which announced its first dividend Wednesday, said Thursday that it was boosting its buyback program but gave a full-year earnings forecast below Wall Street’s expectations.

Kohl’s earned $493 million, or $1.66 per share, compared with $431 million, or $1.40 per share, in the same period last year low interest rate personal loans.

This narrowly beat analysts’ $1.65 per share.

Revenue for the period ended Jan. 29 climbed 6 percent to $6.04 billion from $5.68 billion, meeting Wall Street’s view. Revenue at stores open at least a year rose 4.3 percent.

Kohl’s expects fiscal 2011 earnings of $4.05 to $4.25 per share. Analysts anticipate $4.37 per share.

Source

Now that demand is up and business is finally improving for many companies, they’re doing what they always do at the beginning of an expansion

Japanese Prime Minister Naoto Kan’s wish for a weaker yen is coming true as the strengthening global economy encourages the nation’s investors to send more of their money overseas in search of higher yields.

The yen has depreciated 8.1 percent from its August peak against a basket of nine developed-nation peers, Bloomberg Correlation-Weighted Currency Indexes show. The lower exchange rate marks a turnaround from early 2010 when global investors demanding a refuge from Europe’s sovereign-debt crisis propelled it to a 15-year high versus the dollar.

Declines are being driven by the growing gap between yields on Treasuries and Japanese government bonds and the revival of carry trades, when investors borrow where yields are low, such as in Japan, to buy assets in higher-returning countries. Kan, whose approval rating fell to 17.8 percent last month in a Feb. 17 Jiji Press survey, may benefit from a weaker yen that bolsters profits at exporters such as Toyota Motor Corp.

“Investors will be seeking higher yields overseas, given yields are so low in Japan,” said Kei Katayama, leader of the foreign fixed-income group at Daiwa SB Investments Ltd. in Tokyo, which manages $54.3 billion in assets. “Developing nations are gaining momentum, and this trend won’t change easily.”

The yen may weaken to 86 per dollar by the end of the second quarter and 90 by the end of the year, according a Bloomberg News survey of 40 forecasters. The currency has fallen 1.3 percent this month to 83.10 today.

Treasury Yields

The shift out of the yen comes as Treasury yields rise on speculation the U.S. economy and inflation are accelerating, boosting demand for assets linked to growth. U.S. gross domestic product will expand 3.2 percent this year, compared with 2.9 percent in 2010, while the 10-year note yield may rise to 3.94 percent from 3.29 on Dec. 31, according to Bloomberg News surveys.

In Japan, 10-year yields are forecast to rise this year to 1.24 percent from 1.13 percent on Dec. 31 as the nation’s economy grows 1.4 percent, according to Bloomberg News surveys.

Investment flows into Japanese mutual funds that focus on offshore assets rose 14 percent to 624.6 billion yen ($7.51 billion) in January from a year earlier, according to the Investment Trust Association. The amount moving into these funds doubled to 6 trillion yen in 2010 from the previous year.

Last year, the carry trade of borrowing in dollars and selling the greenback to buy the currencies of Australia, Norway, New Zealand and Brazil returned 11.5 percent, according to data compiled by Bloomberg. That compares with a loss of 2.8 percent using the yen as a so-called funding currency.

Carry Trade Reversal

The results have reversed in 2011, with carry trades using the yen gaining 23.8 percent, compared with 2.8 percent in dollar-funded trades.

“Investors are increasingly buying higher-yielding assets, as the worldwide economic recovery is stabilizing more now,” said Morio Okayasu, chief analyst in Tokyo at FOREX.com Japan Co., a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey. “Yen-carry trades are getting popular, so the bias is for the Japanese currency to be sold.”

Smaller price swings are also boosting the carry trade. The JPMorgan Chase & Co. implied volatility index for seven major currencies fell to 10.18 last week, the lowest since August 2008. Higher volatility undermines the strategy by making the trade less predictable.

Currency Intervention

The yen reached 80.22 against the dollar on Nov. 1, the strongest level since April 1995. Its 15 percent appreciation last year led Kan to express concern about the currency’s strength and prompted the government to sell 2 trillion yen in the nation’s first intervention in the foreign-exchange market since 2004. Governments and central banks intervene by selling or buying currencies to influence prices.

As a stronger yen made exports from Japan less competitive, Yokohama, Japan-based Nissan Motor Co., Japan’s second-largest carmaker, announced in July it would spend $600 million to upgrade two Mexican auto plants and increase U.S. production.

When the yen then weakened, exports, which make up about 16 percent of the nation’s economy, rose. December exports rose 13 percent from a year earlier, after a 9.1 percent gain in November, the Finance Ministry reported Jan. 26.

Toyota City, Japan-based Toyota, the world’s largest carmaker, raised its full-year profit forecast by 40 percent on Feb. 8, as sales in Asia and other emerging markets exceeded the company’s estimates. Net income may more than double to 490 billion yen for the 12 months ending March 31, from 209 billion yen a year ago and its November estimate of 350 billion yen.

Political Leadership

Tokyo-based Honda, Japan’s third-largest carmaker, increased its profit forecast 6 percent Jan. 31.

“The political leadership will be ecstatic if we see a weaker yen, since it will help boost exports and help make Japanese goods more competitive,” said Paresh Upadhyaya, head of Americas G-10 currency strategy in New York at Bank of America Corp., the top euro-yen forecaster in the six quarters ended Dec. 31 based on data compiled by Bloomberg.

Yen weakness may be tempered by the nation’s current account surplus. The broadest measure of trade widened 30.5 percent in December from a year earlier to 1.195 trillion yen, the Finance Ministry said Feb. 8.

“If you run a current account surplus, you’re creating more demand for your currency than there is relative to supply,” said Robert Lynch, head of foreign exchange strategy for HSBC Holdings Plc in New York.

While the yield difference between U.S. and Japanese two- year securities expanded to 62 basis points, or 0.62 percentage point, on Feb. 8, the most since June, Lynch said it’s still narrow when compared with pre-financial crisis spreads as wide as 447 basis points in July 2006. HSBC forecasts the yen will strengthen to 80 per dollar by year-end.

Benchmark Rates

Bank of Japan Governor Masaaki Shirakawa kept the benchmark interest rate between zero and 0.1 percent at the last monetary policy meeting on Feb. 15, where it has been since December 2008. In a Bloomberg News survey last month, 12 of 15 economists predicted the Bank of Japan won’t raise the benchmark rate until 2013 at the earliest, two said it will increase next year and one predicted no change until 2014.

The Federal Reserve will raise rates to 0.5 percent by year-end, according to a Bloomberg News survey. Fed Chairman Ben S. Bernanke and his colleagues at a Jan. 26 meeting voted to keep its rate target in a range of zero to 0.25 percent, where it’s been since December 2008. The Fed is promoting growth after the credit crisis that led to an 18-month contraction that was the longest since the 43-month slump during the Great Depression, according to the National Bureau of Economic Research.

‘Quite Skeptical’

“Japanese investors have been quite skeptical about the U.S. recovery,” said Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc. “Sentiment has shifted so dramatically.”

The yen has declined against 15 of its 16 most-traded counterparts this year except for the South African rand. It may depreciate to above 100 per dollar this year and trade about 95 yen at year-end, said Kenichiro Ikezawa, a fund manager in Tokyo at Daiwa SB.

For the first time since June, futures traders are betting on a drop in the yen versus the dollar, according to the Washington-based Commodity Futures Trading Commission. The difference in the number of wagers by hedge funds and other large speculators on a decline compared with those on a gain — so-called net shorts — was 18,548 as of Feb. 15, compared with net longs of 36,731 a week earlier.

“Dollar-yen seems to have bottomed out at last,” Ikezawa said. “The U.S. won’t add to monetary easing from here, and Japan will inevitably lag behind in rate increases.”

Source

Singapore will spend S$6.6 billion ($5.2 billion) on benefits including tax cuts and rebates as the government prepares to face elections within the next year.

The government will hand cash to all adult citizens as a “dividend” from record growth, upgrade homes and invest in improving productivity, Finance Minister Tharman Shanmugaratnam said in the city state’s budget speech yesterday. Companies will be required to increase contributions into employees’ pension funds and pay more to hire foreign workers, he said.

Prime Minister Lee Hsien Loong has pledged to ensure lower- income families aren’t left out of the island’s expansion, as quickening inflation threatens to erode purchasing power in Asia. Economists at Citigroup Inc. and Standard Chartered Plc say the budget may signal higher costs for businesses at a time when consumer-price growth is already at a two-year high.

“It’s a redistributive pre-election budget,” said Kit Wei Zheng, an economist at Citigroup in Singapore. “There will be some wage inflation pressures,” though the government is trying to offset the higher costs with one-time measures, he said. Those steps announced yesterday include tax breaks and rebates.

The administration expects inflation to average 3 percent to 4 percent this year, up from a previous forecast of 2 percent to 3 percent. Consumer prices may rise 5 percent to 6 percent in the first few months of 2011, it projects.

Inflation Threat

“The rising cost of living is a concern,” Shanmugaratnam said. “We are providing lower- and middle-income Singaporeans with benefits in this budget that for many households will more than offset their increase in household expenses — even before taking into account any wage increases.”

Singapore’s expansion is forecast to slow this year to less than half of 2010’s pace, when a rebound from the global recession spurred wages and boosted home prices to a record. The economy expanded 14.5 percent last year, the fastest rate since independence in 1965. The government has said this year’s growth will be 4 percent to 6 percent with “some upside potential.”

Rising commodity prices may hurt Asia’s growth should they force governments to tighten domestic policies to control inflation, Shanmugaratnam said.

“Food and other commodity prices have climbed sharply, because supply has been affected by harsh weather conditions while demand continues to grow in China and elsewhere,” Shanmugaratnam said. “The political uncertainties in the Middle East have also driven oil prices up. There will not be early relief from these inflationary pressures.”

Currency Appreciation

Singapore’s first approach is to seek to moderate medium- term inflationary pressures through the currency, Shanmugaratnam said. The island’s dollar rose as much as 0.6 percent yesterday and has climbed more than 10 percent in the past year to be the second-best performing currency in Asia excluding Japan.

The central bank “has permitted the Singapore dollar to appreciate against a basket of foreign currencies over the last 18 months, which has helped counter inflation in imported goods,” the minister said. “However, using the exchange rate to offset sudden spikes in prices, such as what we have seen in oil prices over the last six months, would require a sharp appreciation of the Singapore dollar. This would disrupt our exporters.”

Of the S$6.6 billion in benefits that the government announced yesterday, S$3.2 billion will be distributed this year while the rest will be for “longer-term social investments,” Shanmugaratnam said. The government will also spend S$10 billion to upgrade its public housing estates to preserve their value, he said.

Tax Rebate

The measures announced yesterday include a 20 percent income-tax rebate capped at S$2,000 for earnings in 2010 and the scrapping of radio and television license fees. The government will also supplement the salaries of low-income Singaporeans, and reduce marginal tax rates on personal incomes from 2011 to result in lower payments for most taxpayers.

While the top personal tax rate is higher than in Hong Kong, “there is no pressing competitive need for us to reduce it at this point,” the minister said. Hong Kong taxes individuals at a maximum 17 percent, while Singapore levies a 20 percent rate.

The gap between Singapore’s most affluent and poorest people widened last year as higher wage earners received bigger increases in income, according to the statistics department.

The People’s Action Party led by Lee has been in power since independence and holds 82 of the 84 elected seats in parliament. At the last election in 2006, the ruling party won about 67 percent of votes, 8 percentage points lower than the previous poll. The next election must be held by February 2012.

Pension Payments

Companies will have to pay more into employees’ pension funds, the government said yesterday. An employer currently pays up to 15 percent of a worker’s wage into employee pension funds, and this will increase by half a percentage point next month. From September, the rate will be lifted a further half point to 16 percent, subject to a raised cap, the finance minister said.

Singapore has cut taxes in recent years to encourage businesses to set up operations or expand in the city state.

Exxon Mobil Corp. is among the companies that are adding capacity and the nation’s two casinos, which opened last year, have hired tens of thousands of workers at their hotels, malls and gaming centers.

Last year, Singapore announced S$5.5 billion of spending to spur productivity as it sought to reduce the economy’s dependence on overseas labor. Singapore will raise the levies on foreign workers to prevent them exceeding the long-term target of one-third of the workforce, Shanmugaratnam said.

The government will provide a 20 percent corporate tax rebate and a cash grant to small and medium enterprises to help companies cope with rising costs, he said, adding that the initiative will cost it S$560 million.

In 2009, the government tapped the country’s reserves for the first time to give employers cash grants to retain local workers. Singapore will return S$4 billion into its reserves that it had earlier drawn, Shanmugaratnam said yesterday.

The fiscal surplus will be about S$100 million in the year starting April 1, from a projected shortfall of approximately S$300 million for the current period, he said.

Source

China ordered its banks Friday to hold back more money as reserves in a new move to curb lending and cool a spike in inflation.

The order raising reserves by 0.5 percent of deposits was the second such move this year by the central bank and followed six reserve increases in 2010. Reserves vary by institution but are about 20 percent for China’s biggest state-owned lenders.

Beijing is using a series of repeated, gradual hikes in interest rates and reserve levels to stanch a flood of lending that helped China rebound quickly from the global crisis but now is fueling pressure for prices to rise.

Inflation is politically dangerous for China’s communist leaders because it erodes economic gains on which they base their claim to power. Poor families are hit hardest in a society where some spend up to half their incomes on food and millions have seen little benefit from three decades of economic reform.

Consumer inflation climbed to 4.9 percent in January, driven by a 10.3 percent jump in food costs. Analysts expect the inflation rate to continue to climb through midyear as rising demand outstrips food supplies.

Beijing has raised interest rates three times since October, but economists say more rate hikes are needed and it will be months before the effect is seen high quality business cards.

Chinese savings rates are so high that rises in reserve levels still allow the total amount of money available for lending to grow. Instead, they are seen instead as a signal to banks to slow lending or face more drastic controls.

The central bank also announced recently that it will watch lending by individual banks and impose controls on them if necessary.

China’s banks lent just over 1 trillion yuan ($153 million) in January. That was after their 2010 lending rose to nearly 8 trillion yuan ($1.2 trillion), overshooting the official target of 7.5 trillion yuan.

Analysts say Chinese leaders acted too slowly in heading off inflation after they deflected the 2008 crisis and growth quickly returned to normal levels. The government has set a 4 percent inflation target this year but private sector analysts say consumer prices could rise by up to 6 percent.

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Sanofi-Aventis is buying specialty drugmaker Genzyme for $20.1 billion, the latest example of a beleaguered pharmaceutical company snapping up high-priced biotech drugs to offset dwindling sales of older, simpler medications facing generic competition.

Sanofi, the world’s fourth-largest drug maker, overcame Genzyme’s reluctance to a takeover by raising its previous offer to $74 per share and agreeing to make additional cash payments pending the success of several drugs.

Wednesday’s announcement comes after nearly nine months of back-and-forth between the two companies, with Sanofi-Aventis finally deciding Genzyme’s portfolio of rare disease treatments was worth adding an extra $5 a share to its original $69 per share offer.

Genzyme’s shares rose 80 cents, or 1 percent, to $75.10 Wednesday.

The combination seems odd at first: a huge French company best known for vaccines used by millions of patients each year, buying a Cambridge, Mass.-based biotech company whose drugs are taken by only a handful of patients around the world.

But experts say the merger reflects the landscape of the pharmaceutical industry, as companies seek to replace older medications that have lost their patent protection.

“There’s a view among a lot of the pharma companies that biotech companies are particularly helpful in addressing the conundrum of patent expirations,” said Adam Berger, managing director with investment bank Leerink Swann.

By the end of 2011, medications worth more than $30 billion in annual sales industrywide will begin competing with low-cost generic drugs. Many of these drugs, developed in the 1990s, treat common diseases like arthritis, diabetes and asthma. Sanofi’s blood thinner Plavix, the second-best selling drug in the world, loses patent protection in 2012.

Compared with these pill-based drugs, Genzyme’s high-tech injectable drugs are virtually immune to generic competition. Not only are they extremely difficult to manufacture, but they enjoy extra patent protections awarded to encourage development of specialty medications.

Genzyme’s drug Myozyme, for example, is the only treatment for Pompe Disease, an often-fatal disorder that affects fewer than 10,000 patients worldwide. A year’s supply costs $300,000 for adults. Other Genzyme treatments range from $100,000 to $300,000 per year.

Large pharmaceutical companies stayed away from these so-called orphan drugs for decades, in part because of the negative publicity associated with their high prices. Industry observers say that trend is likely to change.

“This is a starting point where we could see other companies that have specialty pharmaceuticals becoming more attractive to large pharma,” said Jim Prutow, a consultant with PRTM Management Consultants.

The drought of new products has already spurred a string of mega-mergers, peaking with the 2009 combinations of Pfizer and Wyeth, Merck and Schering Plough, and Roche and Genentech low interest personal loan.

“While the world was dealing with financial crises, credit contractions and lack of confidence, biopharma was doing deals at a record pace because of the acute need for new products,” Berger said.

Sanofi-Aventis CEO Chris Viehbacher launched his hostile takeover bid for Genzyme last October, only to meet stiff resistance from Genzyme’s founder and CEO Henri Termeer. The two sides eventually softened their positions, with Genzyme opening its books to share confidential data earlier this month, signaling a deal was near.

“Biotechnology had never really been embraced by Sanofi-Aventis in the past and I think that proved to be a weakness of the company,” said Viehbacher, at a news conference Wednesday at Genzyme’s headquarters.

Termeer will step down as chairman and CEO of Genzyme following completion of the deal, but will keep a consulting role as co-chairman with Viehbacher of an integration steering committee.

Genzyme’s best-seller Cerezyme treats Gaucher disease, an enzyme disorder that can result in liver and neurological problems. Its second-best seller, Fabrazyme, treats an inherited disorder known as Fabry disease, which is caused by the buildup of a particular type of fat in the eyes, kidneys and nervous system.

The deal gives Genzyme shareholders one “contingent value right” for each share owned. These CVRs give holders the right to cash payments based on Genzyme meeting certain goals, including raising production levels for Cerezyme and Fabrazyme, getting final FDA approval for multiple sclerosis treatment Lemtrada, and higher sales targets.

Founded in the 1980s with a dozen employees, Genzyme grew into a biotech powerhouse in the 1990s after launching Ceredase, the first treatment for Gaucher’s disease.

By 2008 the company employed 12,000 people and reported sales of $4.6 billion, but a series of manufacturing stumbles the following year left the company vulnerable to takeover.

In June of 2009, the company shut down its Allston, Mass.-based plant for about three months to clean up viral contamination that had been slowing production of Cerezyme and Fabrazyme. The virus was not harmful to people, but the shutdown was costly. Then, in November of 2009, the FDA said it found tiny particles of steel, rubber and fiber in drugs made by Genzyme.

By December, Genzyme’s stock had fallen to $48 per share, down nearly 25 percent from the previous year.

__

Perrone reported from Washington, Keller reported from Paris.

Source

An Ecuadorean judge ruled Monday in an epic environmental case that Chevron Corp. was responsible for oil drilling contamination in a wide swath of Ecuador’s northern jungle and ordered the oil giant to pay $9.5 billion in damages and cleanup costs.

The amount _ $8.6 billion plus a legally mandated 10 percent reparations fee _ was far below the $27.3 billion award recommended by a court-appointed expert but appeared to be the highest damage award ever issued in an environmental lawsuit.

But whether the plaintiffs _ including indigenous groups who say their hunting and fishing grounds in Amazon River headwaters were decimated by toxic wastewater that also raised the cancer rate _ can collect remains to be seen.

In a statement, Chevron called the decision “illegitimate and unenforceable” and said it would appeal. It has long contended it could never get a fair trial in Ecuador and has removed all assets from this politically volatile Andean country, whose leftist president, Rafael Correa, had voiced support for the plaintiffs.

Chevron, which earned $19.1 billion last year, said it did not believe the judgment “enforceable in any court that observes the rule of law.”

Company spokesman Kent Robertson told The Associated Press that “the evidence of fraud on the part of the plaintiffs’ lawyers is overwhelming.”

“We intend to see that the perpetrators of this fraud are held accounable for their misconduct,” he added in an e-mail exchange.

The marathon, high-stakes case, fraught with corporate espionage and geopolitical intrigue, has been winding its way through U.S. and Ecuadorean courts for more than 17 years but has in recent years turned into an unusually acrimonious legal slugfest.

Even Hollywood had a role, with Chevron successfully forcing documentary filmmaker Joe Berlinger to surrender outtakes from his documentary “Crude” about the dispute, a decision upheld by a U.S. appeals court. Those outtakes were used in an attempt to show that a plaintiffs’ attorney, Steven Donziger, had both denigrated and unethically influenced Ecuadorean justice.

The plaintiffs’ lead lawyer, Pablo Fajardo, called the 187-page judgment “a great step that we have made toward the crystallization of justice” but added that “we are not completely satisfied” with court-specified damage award. The plain-spoken native of the oil patch told The Associated Press that the plaintiffs were discussing whether to appeal.

The suit was originally filed in a New York federal court in 1993 against Texaco and dismissed three years later after the oil company argued that Ecuador was the proper venue to hear the case. Chevron bought Texaco in 2001 and the suit was refiled in Ecuador two years later.

Though it had only 47 named plaintiffs, the suit sought damages on behalf of 30,000 people for environmental contamination and illnesses that allegedly resulted from Texaco’s operation of an oil consortium from 1972 to 1990 in a Rhode Island-sized oil patch dug out of virgin rain forest.

Monday’s ruling was hailed by the environmentalist groups Amazon Watch and Rainforest Action Network as “proving overwhelmingly that the oil giant is responsible for billions gallons of highly toxic waste sludge deliberately dumped into local streams and rivers, which thousands depend on for drinking, bathing, and fishing.”

“It is time Chevron clean up its disastrous mess in Ecuador,” they said in a joint statement.

A local indigenous leader, Guillermo Grefa of the Kichwa people, was quoted by the plaintiffs as saying “we can now tell our neighbors and those affected that justice exists. They can now dream of drinking clean water that doesn’t have petroleum residues like what we’ve had to drink up until now.”

Chevron invested tens of millions of dollars in its legal defense as well as counterattacks against the plaintiffs and Ecuadorean officials. It has long argued that a 1998 agreement Texaco signed with Ecuador after a $40 million cleanup absolves it of any liability in the case. The plaintiffs say the cleanup was a sham and didn’t exempt third-party claims.

Chevron sought relief in a half-dozen U.S. federal courts and requested binding arbitration in an international tribunal in the Netherlands.

The oil company even used corporate spies to clandestinely videotape meetings with Ecuadorean officials in which the men posed as contractors seeking oil contamination cleanup contracts. The two even tried to coax the trial judge _ who later resigned as a result _ into saying he expected to rule against Chevron. One of the men turned out to be a convicted drug trafficker.

Just last week, U.S. federal judge Lewis A. Kaplan in New York took the unusual step at Chevron’s request of pre-emptively blocking any judgment for at least 28 days after concluding that attempts to collect assets could seriously disrupt the business of a company vital to the global economy.

Issued by Judge Nicolas Zambrano from a ramshackle courthouse in the provincial city of Lago Agrio, Monday’s ruling gives Chevron 60 days to set up an escrow account in Ecuador through which the damages would be distributed.

If upheld and enforced, the award would substantially exceed the $5 billion originally awarded to victims of the 1989 Exxon Valdez oil spill in Alaska’s Prince William sound. That jury award was later cut down to $507.5 million by the U.S. Supreme Court. Other major environmental damage payments include the $470 million paid by Union Carbide in 1989 to India’s government for the lethal gas leak five years earlier in Bhopal that killed an estimated 15,000 people.

BP set up a $20 billion oil spill compensation fund after last year’s massive Gulf of Mexico oil spill, of which about $3.4 billion has been paid out.

Zambrano’s decision specifies that Chevron pay $6 billion for cleanup of soil and water, $1.4 billion to put build health care systems, $800 million for creating health care plans and attending to cancer patients _ the court-appointed expert had calculated 1,401 pollution-cased cancer deaths.

The balance is earmarked for recovering native plant species, water distribution systems and repairing cultural damage. In addition, Fajardo confirmed to the AP late Monday, the law specifies that Chevron must pay 10 percent of the judgement as reparations.

A professor at Loyola Law School in Los Angeles who has studied the case, Georgene Vairo, said the comparatively small judgment is a signal from Ecuador that it is willing to negotiate a smaller fine.

“This is way low compared with what everyone was expecting to happen,” she said. “They are trying to show the world they are reasonable people. This is Ecuador coming to the table.”

Fajardo called on Chevron in a statement issued later Monday to comply with the ruling and halt its “campaign of warfare against the Ecuadorean courts and the impoverished victims of its unfortunate practices.”

“We believe the evidence before the court deserves international respect and the plaintiffs will take whatever actions are appropriate consistent with the law to press the claims to a final conclusion,” he added.

Among actions taken by Chevron against the plaintiffs is a civil suit it filed in New York on Feb. 1 against Donziger and other plaintiffs’ lawyers claiming they confected the contamination suit and accusing them of extortion and racketeering.

The San Ramon, California-based company has long contended that the court-appointed expert in the case was unduly influenced by the plaintiffs. In a statement Monday, it called Zambrano’s ruling “the product of fraud (and) contrary to the legitimate scientific evidence.”

Robertson, the company spokesman, said Chevron had presented evidence in various U.S. courts showing that the plaintiffs’ attorneys and consultants had ghostwritten the court-appointed expert’s report that recommended $27.3 billion in damages.

“The legitimate scientific evidence provided to the court, as well as scientific analysis performed by the government of Ecuador, proves Texaco’s cleanup worked,” he contended Monday.

Chevron contends that Texaco’s former partner in the consortium, state oil company Petroecuador, kept polluting after Texaco pulled out. It disputes the findings of the expert, geological engineer Richard Cabrera, who concluded that Texaco left a mess when it departed in the early 1990s.

Cabrera’s 14-member team of experts found petroleum hydrocarbons at levels deemed unsafe by national standards in 44 percent of water samples it tested. It also found cadmium, barium, lead and other heavy metals in the mud of wastewater pits and said 80 percent required cleanup. The team also cited scientific studies that found cancer levels nearly twice Ecuador’s norm, with stomach and uterine cancer the most common followed by leukemia.

Chevron disputed all those findings, and Wall Street analyst Fadel Gheit of Oppenheimer & Co. told the AP in New York that he did not believe the plaintiffs would be able to collect.

“They think Chevron’s a cash cow, so they thought they could get something, but it’s not going to happen. If so, it would be unprecedented. Companies like Chevron have been accused of polluting for decades” without being forced to pay, he told the AP.

The news hit during trading hours, but Chevron’s stock closed up $1.22, or 1.3 percent, at $96.95.

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