Finance ministers from the G20 countries met in London to discuss the outline of a new framework for regulating finance ahead of a summit in Pittsburgh this month. The new rules, should they be adopted, would require banks to increase capital as a buffer against a downturn and ask financial companies to develop “living wills” that set out procedures for creditors to unwind a failed bank. The meeting was held almost a year after the collapse of Lehman Brothers, which helped trigger the world’s worst financial crisis since the 1930s.
The ministers also discussed ways to implement uniform guidelines on bankers’ bonuses. Separately, Lloyd Blankfein, the boss of Goldman Sachs, gave a speech in which he said anger about bankers’ pay was “understandable and appropriate”.
A 477-page report by the inspector-general of America’s Securities and Exchange Commission concluded there were systemic breakdowns in the agency’s oversight of Bernard Madoff. Mr Madoff was sentenced to 150 years in prison for his Ponzi scheme. The SEC first investigated Madoff-related funds in 1992.
Chewing it over
America’s Kraft Foods launched a takeover bid for Britain’s Cadbury, which rejected the £10.2 billion ($17 billion) offer as too low. The confectioner traces its roots back to 1824 when it was founded by Quakers. As well as chocolate it makes chewing gum, the worldwide market for which grew by almost half between 2004 and 2008. Kraft, which includes Toblerone chocolate among its brands, is to press Cadbury for a deal.
Suntory, a Japanese drinks and distilling company, was poised to make a bid for Orangina Schweppes, a European beverage-maker which used to be owned by Cadbury.
Deutsche Telekom and France Telecom announced a 50:50 joint venture in which they will combine their T-Mobile and Orange mobile-phone units in Britain. Deutsche Telekom will contribute £625m ($1 billion) to equalise the debt burden between the two firms and both brands will be maintained separately for 18 months after the transaction closes. The deal creates Britain’s biggest wireless operator, with a combined 37% of the market for subscribers, vaulting ahead of Telefónica’s O2 and Vodafone. Competition regulators will scrutinise the proposal.
Round one to Boeing
The World Trade Organisation found that preferential government loans received by Airbus breached WTO rules. The decision is preliminary and was not announced. America filed the complaint against Airbus in 2004, after which Europe countersued claiming the American government’s aid to Boeing was illegal. An interim ruling on that case is expected in December.
Switzerland has the world’s most competitive economy, according to an annual index from the World Economic Forum. America came in second place for the first time since 2004, when the WEF began compiling the data in their current form. In its ranking of the “soundness” of banks, America fell to 108th position, behind Tanzania. Britain was 126th, one notch below Burundi.
America’s unemployment rate rose to 9.7% in August, its highest level since June 1983.
Gold prices traded around the $1,000-a-troy-ounce mark. Investors are turning to the metal (again) as a safer alternative to other assets amid low interest rates and worries about the dollar’s status as a currency reserve. The greenback has fallen to its lowest level in almost a year against a basket of currencies.
Sweden’s Koenigsegg, a tiny maker of high-performance cars, said it would sell a minority stake in its business to state-run Beijing Automotive Industry Holdings (BAIC). The deal helps Koenigsegg finance its purchase of Saab, which is being sold by General Motors. Meanwhile Geely, another Chinese carmaker, said it would require the help of a state-backed investment company in its probable bid for Sweden’s Volvo, which is being sold by Ford.
Steve Jobs made his first public appearance since undergoing a liver transplant. Apple’s boss took to the stage for a product launch at which he unveiled the latest version of the iTunes online-music service and a new range of iPod devices, including one model with a video camera.
Return of the Fab Four
Contrary to rumours, the Apple event did not mention when the catalogue of songs by the Beatles would become available on iTunes. Negotiations have dragged on for months with EMI, which meanwhile issued boxed sets of remastered Beatles albums in an effort to revive its waning fortunes. Viacom released an elaborate new video-game based on the band.
Friday, September 11, 2009
Tuesday, September 1, 2009
Week - 01-11-09
Barack Obama nominated Ben Bernanke for a second term as chairman of the Federal Reserve. George Bush appointed Mr Bernanke in 2006, and there had been some speculation that Mr Obama might remove him. Several Democrats in Congress have criticised Mr Bernanke for being too timid in his response to the financial crisis, though a recent Bloomberg poll found that 75% of investors worldwide approved of his handling of it.
The White House released its mid-year budget review. It reduced its estimate for this fiscal year’s deficit by $262 billion, to $1.58 trillion (mostly because some money set aside for bailing out financial companies is no longer required), but increased its projection for the total deficit over the next ten years by $2 trillion. Unemployment was forecast to hit 10% by the end of 2010; the economy was predicted to grow by 2% next year.
The key to the economy
Sales of previously owned homes in America rose by 7.2% in July compared with June, the biggest jump since 1999, as buyers took advantage of cheaper prices and a glut of foreclosed properties. Sales of new homes increased by 9.6%, the fourth consecutive monthly advance.
At a hearing in New York, a federal judge pushed the Securities and Exchange Commission for an explanation of why it had not pursued Bank of America over allegations that BofA misled investors about bonuses paid to executives at Merrill Lynch around the time it took over the investment bank. The SEC has reached a settlement with BofA, under which it is fined $33m but neither admits nor denies wrongdoing. The judge found this “puzzling”.
Nicolas Sarkozy and France’s biggest banks announced new rules on the way traders are paid as part of a wider clampdown on bonuses in the financial sector. The French president said he would not unilaterally cap bonuses as it would put France at a disadvantage when attracting talent, but warned bankers not to expect their pay to be “a game where you always win”. Meanwhile, Lord Turner, the head of Britain’s financial regulator, said he (unofficially) supported the idea of a global tax on financial transactions to help curb excessive salaries.
Spain’s Banco Santander offered to buy back €16.5 billion ($22.5 billion) worth of mortgage- and asset-backed securities, a huge boost to Europe’s securitised-bond markets.
The German government pressed General Motors to reach a decision on the future of Opel, the carmaker’s European arm, which employs 25,000 workers in Germany. It supports a proposal to sell a majority stake in Opel to Magna International, an Austrian-Canadian car-parts supplier, with strong provisions attached that protect German jobs.
Heading for the scrapyard
The month-long “cash-for-clunkers” programme ended in America. Just over 690,000 old, gas-guzzling cars were traded in under the scheme, which cost $2.9 billion of public money. The Toyota Corolla was the most popular new car purchase; the Ford Explorer four-wheel drive topped the list of models traded in.
TeliaSonera, the largest telecoms operator in the Nordic region, tightened its grip on its assets by offering to buy the remaining shares in two subsidiaries in which it has stakes in Estonia and Lithuania. The deal is a fillip for the Baltic countries, which have seen their economies slump.
A.P. Moller-Maersk delivered a gloomy forecast about its prospects for the rest of the year. The Danish shipping line, the world’s biggest, recorded a first-half loss as freight rates fell sharply. Separately, a measure of world trade volumes compiled by a Dutch agency grew by 2.5% in June compared with May, the largest increase in a year.
Procter & Gamble decided to sell its pharmaceuticals division in a $3.1 billion deal, and so refocus its consumer-health business on non-prescription drugs. The buyer is Warner Chilcott, which makes birth-control pills among other things, and recently moved its registered country of residence to Ireland.
A group of bondholders at Tribune, America’s second-biggest newspaper publisher, and counts the Los Angeles Times among its titles, took the first legal steps to investigate Sam Zell’s buy-out of the company, which, they argue, eventually caused it to seek bankruptcy protection.
Christmas presence
Sony unveiled its Daily Reader, a device it hopes will challenge Amazon’s Kindle in the electronic-book market. Sony’s gadget will go on sale in America in December, at a price of $399
The White House released its mid-year budget review. It reduced its estimate for this fiscal year’s deficit by $262 billion, to $1.58 trillion (mostly because some money set aside for bailing out financial companies is no longer required), but increased its projection for the total deficit over the next ten years by $2 trillion. Unemployment was forecast to hit 10% by the end of 2010; the economy was predicted to grow by 2% next year.
The key to the economy
Sales of previously owned homes in America rose by 7.2% in July compared with June, the biggest jump since 1999, as buyers took advantage of cheaper prices and a glut of foreclosed properties. Sales of new homes increased by 9.6%, the fourth consecutive monthly advance.
At a hearing in New York, a federal judge pushed the Securities and Exchange Commission for an explanation of why it had not pursued Bank of America over allegations that BofA misled investors about bonuses paid to executives at Merrill Lynch around the time it took over the investment bank. The SEC has reached a settlement with BofA, under which it is fined $33m but neither admits nor denies wrongdoing. The judge found this “puzzling”.
Nicolas Sarkozy and France’s biggest banks announced new rules on the way traders are paid as part of a wider clampdown on bonuses in the financial sector. The French president said he would not unilaterally cap bonuses as it would put France at a disadvantage when attracting talent, but warned bankers not to expect their pay to be “a game where you always win”. Meanwhile, Lord Turner, the head of Britain’s financial regulator, said he (unofficially) supported the idea of a global tax on financial transactions to help curb excessive salaries.
Spain’s Banco Santander offered to buy back €16.5 billion ($22.5 billion) worth of mortgage- and asset-backed securities, a huge boost to Europe’s securitised-bond markets.
The German government pressed General Motors to reach a decision on the future of Opel, the carmaker’s European arm, which employs 25,000 workers in Germany. It supports a proposal to sell a majority stake in Opel to Magna International, an Austrian-Canadian car-parts supplier, with strong provisions attached that protect German jobs.
Heading for the scrapyard
The month-long “cash-for-clunkers” programme ended in America. Just over 690,000 old, gas-guzzling cars were traded in under the scheme, which cost $2.9 billion of public money. The Toyota Corolla was the most popular new car purchase; the Ford Explorer four-wheel drive topped the list of models traded in.
TeliaSonera, the largest telecoms operator in the Nordic region, tightened its grip on its assets by offering to buy the remaining shares in two subsidiaries in which it has stakes in Estonia and Lithuania. The deal is a fillip for the Baltic countries, which have seen their economies slump.
A.P. Moller-Maersk delivered a gloomy forecast about its prospects for the rest of the year. The Danish shipping line, the world’s biggest, recorded a first-half loss as freight rates fell sharply. Separately, a measure of world trade volumes compiled by a Dutch agency grew by 2.5% in June compared with May, the largest increase in a year.
Procter & Gamble decided to sell its pharmaceuticals division in a $3.1 billion deal, and so refocus its consumer-health business on non-prescription drugs. The buyer is Warner Chilcott, which makes birth-control pills among other things, and recently moved its registered country of residence to Ireland.
A group of bondholders at Tribune, America’s second-biggest newspaper publisher, and counts the Los Angeles Times among its titles, took the first legal steps to investigate Sam Zell’s buy-out of the company, which, they argue, eventually caused it to seek bankruptcy protection.
Christmas presence
Sony unveiled its Daily Reader, a device it hopes will challenge Amazon’s Kindle in the electronic-book market. Sony’s gadget will go on sale in America in December, at a price of $399
Thursday, August 13, 2009
Business this week
UBS posted a SFr1.4 billion ($1.3 billion) quarterly net loss. Net outflows of clients’ cash slowed, but still hampered the Swiss bank’s efforts to recover from huge losses. It has been hurt also by investigations in America into customer accounts allegedly used for tax evasion. UBS reached a preliminary settlement with the Internal Revenue Service in a civil action on revealing the identities of account holders. It had settled a criminal case with the Justice Department in February. See article
Britain’s big banks reported earnings for the first half. HSBC’s pre-tax profit was $5 billion—a mere half of what it made in the same period last year, but a significant improvement on its loss in the last six months of 2008. Pre-tax profit at Barclays was £3 billion ($4.4 billion), 8% higher than a year ago. Neither bank has taken government equity.
Northern Rock, in which the British taxpayer holds a sizeable stake, reported a first-half loss of £725m and revealed that the proportion of its mortgages which were more than three months in arrears had risen to 3.9%. Lloyds Banking Group said it had lost £4 billion in the first half of the year, as it grappled with toxic loans at HBOS, which it took over in January. See article
GMAC, a beleaguered American lender, reported a $3.9 billion quarterly loss. The company has received $12.5 billion in public loans since December, and has until early November to fulfil its obligations under the government’s “stress test” requirements.
Here to help
America’s Treasury found that a $75 billion programme set up in March to assist banks in modifying mortgage payments has aided only 9% of eligible borrowers so far. Homeowners can apply if their loan is equivalent to at least 31% of their income and if they are 60 days or more behind with a payment. The Treasury urged banks to do more to push the scheme.
The real economy?
America’s economy contracted by 1% at an annual rate in the second quarter, according to an initial estimate. Consumer spending remained anaemic, but there was a noticeable improvement in business spending, which fell by 8.9% compared with 39.2% in the first quarter. The Bureau of Economic Analysis also carried out a comprehensive review of data, and revised GDP growth for 2008 down to 0.4%, from a previous 1.1%. See article
Google’s boss, Eric Schmidt, resigned as a director at Apple. With Google expanding its mobile-phone and computing businesses, antitrust regulators have started an inquiry into directorships that straddle both companies.
Rupert Murdoch said he expected that all of his websites would charge users for access within a year, despite his previous commitment that only some sites would experiment with such charges. News Corporation’s boss was speaking as the company revealed a quarterly loss, caused in part by its struggling MySpace social-networking site. The media mogul has sparked an intense debate about ending free access to online news content; many observers remain sceptical that such a plan will work.
Cisco Systems reported a drop in quarterly profit. John Chambers, its chief executive, expressed confidence that the company’s recent expansion into dozens of new businesses such as camcorders and visual systems for sports stadiums would eventually help to spur growth.
There was some rare good news from Detroit’s troubled carmakers. Sales at Ford in July were 2% higher than in the same month in 2008, its first year-on-year gain since November 2007. Sales were down by 9% at Chrysler and by 19% at General Motors, though this was better than many analysts had expected.
Government drivers
Ford’s better fortunes coincided with the start of the politically contentious “cash-for-clunkers” programme, giving customers a subsidy for trading in their old vehicles for new, fuel-efficient models. The scheme quickly ran out of cash, but the White House pushed for its replenishment.
Toyota reduced its projected loss for the year and raised its outlook for sales slightly. The carmaker has been helped by, among other things, the Japanese government’s car-scrapping incentives and tax reductions on environmentally friendly vehicles.
Nissan took the wraps off its Leaf electric car. Unlike the fuel-electric hybrids made by its competitors, Nissan’s Leaf runs solely on a battery that can power the car for up to 100 miles (160km) on a single charge. The battery can be recharged in 30 minutes with a special quick charger, though it takes eight hours from an ordinary household socket. Carlos Ghosn, Nissan’s boss, predicted that pure electric vehicles could make up 10% of the world’s market by 2020.
Britain’s big banks reported earnings for the first half. HSBC’s pre-tax profit was $5 billion—a mere half of what it made in the same period last year, but a significant improvement on its loss in the last six months of 2008. Pre-tax profit at Barclays was £3 billion ($4.4 billion), 8% higher than a year ago. Neither bank has taken government equity.
Northern Rock, in which the British taxpayer holds a sizeable stake, reported a first-half loss of £725m and revealed that the proportion of its mortgages which were more than three months in arrears had risen to 3.9%. Lloyds Banking Group said it had lost £4 billion in the first half of the year, as it grappled with toxic loans at HBOS, which it took over in January. See article
GMAC, a beleaguered American lender, reported a $3.9 billion quarterly loss. The company has received $12.5 billion in public loans since December, and has until early November to fulfil its obligations under the government’s “stress test” requirements.
Here to help
America’s Treasury found that a $75 billion programme set up in March to assist banks in modifying mortgage payments has aided only 9% of eligible borrowers so far. Homeowners can apply if their loan is equivalent to at least 31% of their income and if they are 60 days or more behind with a payment. The Treasury urged banks to do more to push the scheme.
The real economy?
America’s economy contracted by 1% at an annual rate in the second quarter, according to an initial estimate. Consumer spending remained anaemic, but there was a noticeable improvement in business spending, which fell by 8.9% compared with 39.2% in the first quarter. The Bureau of Economic Analysis also carried out a comprehensive review of data, and revised GDP growth for 2008 down to 0.4%, from a previous 1.1%. See article
Google’s boss, Eric Schmidt, resigned as a director at Apple. With Google expanding its mobile-phone and computing businesses, antitrust regulators have started an inquiry into directorships that straddle both companies.
Rupert Murdoch said he expected that all of his websites would charge users for access within a year, despite his previous commitment that only some sites would experiment with such charges. News Corporation’s boss was speaking as the company revealed a quarterly loss, caused in part by its struggling MySpace social-networking site. The media mogul has sparked an intense debate about ending free access to online news content; many observers remain sceptical that such a plan will work.
Cisco Systems reported a drop in quarterly profit. John Chambers, its chief executive, expressed confidence that the company’s recent expansion into dozens of new businesses such as camcorders and visual systems for sports stadiums would eventually help to spur growth.
There was some rare good news from Detroit’s troubled carmakers. Sales at Ford in July were 2% higher than in the same month in 2008, its first year-on-year gain since November 2007. Sales were down by 9% at Chrysler and by 19% at General Motors, though this was better than many analysts had expected.
Government drivers
Ford’s better fortunes coincided with the start of the politically contentious “cash-for-clunkers” programme, giving customers a subsidy for trading in their old vehicles for new, fuel-efficient models. The scheme quickly ran out of cash, but the White House pushed for its replenishment.
Toyota reduced its projected loss for the year and raised its outlook for sales slightly. The carmaker has been helped by, among other things, the Japanese government’s car-scrapping incentives and tax reductions on environmentally friendly vehicles.
Nissan took the wraps off its Leaf electric car. Unlike the fuel-electric hybrids made by its competitors, Nissan’s Leaf runs solely on a battery that can power the car for up to 100 miles (160km) on a single charge. The battery can be recharged in 30 minutes with a special quick charger, though it takes eight hours from an ordinary household socket. Carlos Ghosn, Nissan’s boss, predicted that pure electric vehicles could make up 10% of the world’s market by 2020.
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