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Wednesday Papers: Bernanke calls Libor a ‘flawed’ benchmark

And David Bagley, HSBC’s chief compliance officer, resigned from his post.

Wednesday Papers: Bernanke calls Libor a ‘flawed’ benchmark

Top stories

  • Financial Times: Libor is “structurally flawed” and an international effort would be needed to restore the rate’s credibility as the leading benchmark for mortgages, derivatives and corporate lending around the world, Ben Bernanke, US Federal Reserve chairman, told Congress on Tuesday.
  • Financial Times: David Bagley, HSBC’s chief compliance officer, resigned from his post during a US Senate hearing following publication of a damning report alleging that Britain’s biggest bank may have inadvertently allowed the laundering of Mexican drug money.
  • The Guardian: There are no longer any UK bankers who are credible candidates to become the next governor of the Bank of England, economist David Blanchflower.
  • Financial Times: Goldman Sachs has reported an 11% fall in net earnings to $962 million from $1.08 billion in the three months to June from a year earlier while net revenues fell to $6.6 billion from $7.28 billion.
  • The Independent: A £50 billion plan designed to jumpstart Britain's flatlining economy will be unveiled by the Government on Wednesday.
  • Daily Mail: The collapse in value of G4S shares has placed the FTSE 100 security firm on the radar for a potential takeover, City experts said on Tuesday night.
  • The Daily Telegraph: Barclays chose not to remove former chief executive Bob Diamond in the immediate aftermath of the Libor scandal because the board was hoping to “tough it out” and had failed to realise his reputation was holed “below the water”, Britain’s regulators have claimed.
  • Financial Times: Group revenues at Yahoo fell by 1% to $1.2 billion, with modest improvements in online display advertising offset by a decline in search-engine advertising and affiliate payments from internet service providers, such as AT&T.
  • The Daily Telegraph: Nigerian regulators have told parliament that Shell should be fined $5 billion for environmental damage caused by an oil spill at its offshore Bonga field.
  • The Independent: Rio Tinto said iron ore production rose by 4% to 94.3 million tonnes in the first half of the year, while coking coal output jumped by 9% to 3.7 million tonnes.
  • Financial Times: Ben Bernanke offered a gloomy outlook for the US economy but the Federal Reserve chairman offered no hint of further monetary easing in testimony to Congress.
  • Financial Times: Intel warned of lower than expected revenues in the second half of the year as PC makers hold back from ordering its computer chips in the face of economic uncertainty and the October launch of Windows 8.

Business and economics

  • The Independent: Wolseley, the FTSE 100-listed building giant behind Plumb Center, is exploring "strategic options" for its business in France, with an outright sale thought to be the preferred option.
  • Financial Times: Net income of Coca-Cola declined to $2.79 billion, or $1.21 a share, from $2.8 billion, or $1.20 a share, in the second quarter a year ago.
  • Financial Times: Thailand’s state-controlled energy company PTT said it will invest up to $3 billion in Myanmar.
  • Financial Times: On Tuesday the benchmark 10-year yield on US Treasury bond was hovering just above a postwar low of 1.44%, after record demand at an auction of new debt last week.
  • The Independent: Inflation stood at 2.4% last month in Britain, its lowest level since December 2009, according to the Office for National Statistics.
  • The Daily Telegraph: Bank lending to small businesses in the UK is “not in great shape”, Business Secretary Vince Cable has admitted as he revealed 13,000 companies had applied for loans under a government scheme.
  • Financial Times: Brussels is investigating allegations that Microsoft’s flagship Windows 8 operating system will unlawfully stifle competition.
  • The Guardian: The Guardian and the Observer lost £44.2 million last year as losses at the national newspapers could not be offset by double-digit growth in digital revenues.
  • Financial Times: Statutory pre-tax profit of IG Group, the spread betting company, stood at £185.7 million for the year to 31 May, up from £12.5 million a year earlier when it took a large writedown on its Japanese business.
  • The Independent: Google is to extend its London Campus for start-up tech firms to the rest of the UK through a mentoring service and network programmes.
  • Financial Times: Net income at Johnson & Johnson, the US healthcare company, fell 49.3% year on year to $1.4 billion, or 50 cents a share.
  • The Guardian: Burberry has kicked up a stink in its relationship with perfume maker Interparfums by serving notice on the French company that makes its fragrances and beauty products, in a move that will cost €181 million.
  • Financial Times: A top US regulator said the oversight regime had failed in its duty to protect the customers of Peregrine Financial Group, the futures broker that collapsed last week after it was discovered to have a $200 million shortfall in its customer segregated accounts.
  • Financial Times: Russia and Kazakhstan have warned that bad weather will reduce the size of their grain crops this year, adding an additional supply worry to already stressed global agricultural markets.
  • Financial Times: Paul Maritz, the highly regarded chief executive of the fast-growing software company VMware, has been replaced as part of an executive reshuffle pushed through by its controlling shareholder EMC.
  • Financial Times: Marks and Spencer is set to become the first UK bank to shun free current accounts as it plans to charge all customers a monthly fee for banking services when it launches later this year.

Share tips, comment and bids

  • Financial Times: Samsung Electronics is buying the mobile technology development business of CSR, the struggling UK chipmaker, in a $310 million deal.
  • The Daily Telegraph: Homeserve, the FTSE 250 home repair and insurance company, has been approached by private equity buyers looking to bid up to £1 billion to take the company private.
  • Financial Times: State Street said it will buy the hedge fund administration arm of Goldman Sachs for $550 million cash, as the Boston-based custody bank announced a 1.9% drop in revenues to $2.43 billion in the second quarter.
  • Financial Times: Actis, a private equity group which bought 80% stake in Banque Commerciale du Rwanda, has sold its shares for an unnamed sum to a Kenyan bank, I&M Bank, along with two French and German state development finance institutions, Proparco and DEG.
  • The Guardian (Comment): In the end only one outcome seems possible – after the Games, Nick Buckles will have to go.
  • The Daily Telegraph (Comment): Fund managers from across the world have begun to doubt Germany’s ability to withstand further shocks from the region’s debt crisis, registering a stark change in view since the late spring.
  • The Daily Telegraph (Comment): It is time for David Cameron and George Osborne to face the unpalatable truth: the Coalition is failing badly on the economy.
  • Daily Mail (Comment – Alex Brummer): The disclosure that HSBC, the only British High Street bank to come through the financial crisis with totally clean hands, is as culturally flawed as its rivals will come as a shock to all those people who have flocked to it.
  • Financial Times (Lex): Yahoo: new chief should engineer a way for hotshots to come and receive lots of funding for trying out their ideas on a huge audience
  • Financial Times (Lex): Rio Tinto: with iron ore having its day in the commodities sunlight, the miner would be mad not to plough more of its resources into making the most of it
  • Financial Times (Lex): Goldman Sachs: net income has nearly halved but there are still about the same number of staff, albeit on pay and benefits that have fallen by about a quarter
  • Financial Times (Lex): HSBC and Barclays: both HSBC and Barclays have been lambasted by lawmakers – so why have shares in one barely moved when the other’s shares have fallen sharply?

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The Accumulator: FTSE see-saws on trade war fears

by Michelle McGagh on Jun 22, 2018 at 14:57

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