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Wednesday Papers: European lenders take Libor scandal hit

And Switzerland is ‘new China’ in currencies as the country battles to weaken the franc.

Wednesday Papers: European lenders take Libor scandal hit

Top stories

  • Financial Times: Deutsche Bank and UBS revealed increased provisions and sharp profit falls amid spreading scandal over the manipulation of key lending rates and the downturn of Europe’s economy; in the three months to the end of June, Deutsche increased its estimate on unprovisioned litigation costs from €2.1 billion to €2.5 billion, while UBS added SFr210 million to its litigation and regulatory provisions.
  • Financial Times: Switzerland’s euro holdings have ballooned in the second quarter of the year giving it the moniker of ‘new China in currencies’, as the bank battles haven demand from investors and struggles to maintain a ceiling of SFr1.20 against the single currency.
  • Financial Times: BP said its underlying replacement cost profit for the second quarter was $3.7 billion, compared with $5.7 billion a year ago; earnings per share were $19.37 from $30.20 a year ago.
  • The Guardian: BP has set aside a further $847 million to pay for the Deepwater Horizon disaster, raising the potential cost to $38 billion.
  • The Daily Telegraph: Italian police have raided Barclays' Milan office as part of an investigation into the alleged rigging of Euribor.
  • Financial Times: Deutsche Bank’s new management unveiled plans to cut 1,900 jobs, including 1,500 in investment banking, to help deliver €3 billion in cost savings.
  • The Guardian: Tesco was dealt a blow on Tuesday after ratings agency Standard & Poor's said it was considering cutting its credit rating and suggested that the retailer sell off businesses to cut its debt.
  • Daily Express: Staff at William Hill are in line for a bumper payout – with £3.5 million to be distributed among 700 share-scheme employees.
  • Financial Times: UBS, the Swiss bank, said on Tuesday it would take legal action against Nasdaq for a $358 million loss that it incurred as a result of the exchange operator’s “gross mishandling” of Facebook’s IPO.

Business and economics

  • The Independent: ENRC has bought a licence to operate the Frontier mine in Congo, a deposit held by Canada's First Quantum until it was confiscated two years ago, in a deal worth $101.5 million.
  • Daily Mail: Eurostat said the jobless total in the eurozone rose by 123,000 in June to 17.8 million – or 11.2% of the workforce.
  • Financial Times: The UK Office of Fair Trading has accused InterContinental Hotels Group, which boasts the largest number of hotel rooms of any group, and and Expedia of striking deals to restrict the ability of the websites to offer discounted rooms.
  • Financial Times: Twitter has admitted that a commercial relationship with NBC played a central part in its censorship this week of a user who had criticised the US broadcaster’s coverage of the Olympics.
  • The Daily Telegraph: GKN said sales rose 16% to £3.3 billion in the first half of 2012 with pre-tax profits up 43% to £289 million.
  • Daily Mail: Weir Group, a Scottish maker of pumps for the oil and gas industry, reported 27% increase in half year profits to £226 million and an 11% hike in the divi to 8 pence.
  • Daily Mail: Pretax profits of Rotork rose 17% to £58.1 million and its order book rose 13% to a record high of £177.7 million.
  • The Daily Telegraph: PokerStars, an online poker company based in the Isle of Man, has agreed to pay $731 million to US authorities to settle allegations of money laundering and bank fraud.
  • Financial Times: Profit of the China’s steelmakers fell to £376 million in the first half year due to falling demand and rising costs.
  • Financial Times: The Government of Singapore Investment Corporation, the city state’s sovereign wealth fund, almost quadrupled its allocation of cash and cut exposure to equities and bonds over the past 12 months.
  • Financial Times: EDF of France is seeking partners to share the financial burden of its project to build four atomic reactors in the UK, sparking fresh concerns about whether nuclear energy is becoming too expensive.
  • Financial Times: Microsoft has launched a new email service as it focuses on communications as a key attraction for new users and as a main feature of its forthcoming Windows 8 operating system.
  • The Daily Telegraph: Ryanair's third takeover bid for Aer Lingus has cost the Irish flag carrier €4.3 million in legal and advisory fees so far.
  • Financial Times: Access Bank, one of Nigeria’s largest banks which acquired Intercontinental Bank last year, has won a ruling in London’s High Court against Erastus Akingbola, the former Intercontinental managing director, who is now liable to pay the bank more than £600 million in damages.
  • Financial Times: The Obama administration announced new sanctions on the Iranian oil industry and on a Chinese and an Iraqi bank on Tuesday, saying “defiance” by the Iranian government would lead to “increasing consequences”.
  • The Daily Telegraph: Apple was "literally betting the company" when it introduced the iPhone, a US court heard on the first full day of a patent trial in which the US company is squaring up against Korean rival Samsung.
  • Financial Times: A US jury has rejected the Securities and Exchange Commission’s allegations that Brian Stoker, a former Citigroup banker, misled investors who bought a $1billion mortgage product by failing to tell them the bank had bet against it.
  • The Independent: Underlying profit of Hugo Boss was up 23% to €78 million for the second quarter; the company forecast a 10-12% full-year profit growth for 2012.
  • Financial Times: Revenues of Wolfson Microelectronics fell from $79.7 million to $70.6 million in the six months to July 1, and the diluted loss per share widened from 4.47 cents to 7.18 cents.
  • Daily Mail: Games Workshop, Britain's biggest fantasy games retailer, said the introduction of new paints used by collectors to personalise action figures helped boost pre-tax profit to £19.5 million from £15.3 million for the year to 3 June.
  • The Daily Telegraph: Aldi, the discount supermarket chain, is to create 3,000 jobs in the UK over the next year.
  • Financial Times: Reuters reported revenues of $3.31 billion, up 3% year-on-year before currency distortions, but operating profit of $617 million was down an underlying 5%.
  • The Independent: JCB’s sales of diggers for road and house building in the emerging markets of Brazil, Russia, India and China have rocketed to more than 35,000 in the first six months of 2012, beating its half-year record of 32,600 in the boom year of 2007.
  • Financial Times: Net profit of Archer Daniels Midland fell 25% to $284 million, or 43 cents per share, in its fourth quarter ended 30 June.

Share tips, comment and bids

  • Financial Times: American International Group, the insurer bailed out by the US government at the height of the financial crisis, is buying a network of financial advisers from its rival Hartford Financial for up to $90 million.
  • The Daily Telegraph: Google has bought online marketing service Wildfire for $250 million in a bid to expand its lucrative advertising business.
  • Financial Times: KDB Financial Group has ended talks to buy HSBC’s retail operations in South Korea because of differences over employment conditions.
  • Daily Express: Irish airline Aer Lingus has once again urged shareholders to reject a £544million takeover bid by Ryanair, even as it reported a first-half loss.
  • Financial Times: Carl Icahn has ended his dalliance with Hollywood after selling his 25 per cent stake in Metro-Goldwyn-Mayer for close to $600 million.
  • The Guardian (Comment): Granting a banking licence to the European Stability Mechanism, rather than using the European Central Bank, would be a more democratic fix.
  • The Daily Telegraph (Comment): It’s time Britain celebrated all of its winners - whether they are Olympians or business leaders.
  • The Daily Telegraph (Comment): Another bruising day in the courts for the Serious Fraud Office. Our financial crime fighter is in the dock these days more often than the miscreants it is supposed to be prosecuting.
  • Daily Mail (Comment – Alex Brummer): Bob Dudley and BP badly need some better outcomes if investors are not to become even more disillusioned.
  • Financial Times (Lex): UBS: The Swiss bank’s chief executive needs to tackle costs with the same rigour of his colleagues at Deutsche Bank.
  • Financial Times (Lex): BP: The UK oil company has taken a big writedown due to ultra-low US natural gas prices, but that ought not to be enough to dent its valuation
  • Financial Times (Lex): Finmeccanica: The Italian industrial group is out of intensive care and showing signs of recovery but should not try any acrobatics just yet
  • Financial Times (Lex): AB InBev: Brewer’s shares fall after a disappointing US performance but the long-term picture offers more cheer

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