Finance Matters

• 07Sep

  WTO rules on huge plane dispute

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  From The BBC:

  The World Trade Organization (WTO) has given its long-awaited ruling on the biggest trade dispute in its history.The decision, which is officially confidential, is over whether the European Union gave illegal subsidies to planemaker Airbus as the US argues. The Wall Street Journal and others reported that the WTO had found in favour of the US position. But a UK government source told the BBC that the WTO verdict was much more of a “mixed outcome”. “The decision really questions the wisdom of taking this to the WTO in the first place,” the UK source said. “Boeing will be far from jubilant tonight.” Both US and European diplomats have declined to officially release the ruling, which is more than 1,000 pages long. The decision is not expected to be officially made public for at least several months. Partially upheld?The EU has also made a counter claim against the US for its support of Boeing. A ruling on the EU’s claim against the US is due in the next six to eight months. The ruling on…

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• 07Sep

  G20 pledges tougher bank action

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  From The BBC:

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  Alistair Darling: “We are going to enter an era where people are not being rewarded for reckless behaviour”
  Finance ministers from the world’s most powerful economies have agreed a series of measures to try to regulate the global banking system.They want a system that rewards long-term performance rather than short-term risk-taking. However the G20 meeting in London did not agree on specific limits on the amounts individual bankers get paid. Britain, the US and Canada opposed the idea, but the Financial Stability Board is to examine the issue. It will report back to the summit of G20 leaders in Pittsburgh, Pennsylvania later this month.
  The G20 countries agreed on measures requiring banks to disclose the pay and bonuses of their highest-paid employees and to allow bonuses to be “clawed back” if decisions which seemed successful later go wrong. The FSB has also been asked to look at the desirability of new rules which woul…

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• 07Sep

  Kraft in £10.2bn move for Cadbury

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  From The BBC:

  US giant Kraft Foods has proposed buying UK confectionery firm Cadbury in a £10.2bn ($16.7bn) move.Kraft said that the purchase of the maker of Dairy Milk would protect jobs in the UK – including saving a factory earmarked for closure. Cadbury, whose shares leapt 36% on the news, had “unequivocally” rejected the approach, Kraft said. The US firm added it wanted to create “a global powerhouse in snacks, confectionery and quick meals”. Distribution savingsAs well as Dairy Milk, Cadbury also owns the Green & Black’s chocolate brand and Halls lozenges, Trident and Dentyne gum brands, and liquorice allsorts maker Bassett’s. It span off its drinks division as a separate business last year.
  Kraft’s brands include Kenco coffee, Oreo biscuits, Terry’s Chocolate Orange and Toblerone as well as cheese products such as Philadelphia and Dairylea. The proposed deal would allow up to $625m a year to be saved in distribution, marketing and product development costs, Kraft said. It added tha…

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• 07Sep

  Central banks back new regulation

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  From The BBC:

  Central bankers have backed new measures to strengthen supervision of the global banking industry.A meeting of the Bank for International Settlements (BIS), which consists of the world’s central banks, pledged to increase bank’s capital requirements. The plans should “substantially reduce the probability and severity of economic and financial stress,” the BIS said. But the BIS did not set out a timeline for implementation of the proposals. The measures will be outlined in detail by year-end and be introduced in a way “that does not impede the recovery of the real economy”. The BIS meeting comes just after the finance ministers from the Group of 20 richest nations meeting in London backed a system that rewards long-term performance rather than short-term risk-taking. But they could not agree on specific limits on the amounts individual bankers get paid. Tier oneThe BIS, established in 1930 in the aftermath of the Great Depression, consists of 55 member central banks and is based in Base…

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• 07Sep

  Iran to import Venezuelan petrol

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  From The BBC:

  Venezuela has agreed to export petrol to Iran, in a sign of closer ties between two of America’s most vocal adversaries.At the end of a two-day visit to Iran, President Hugo Chavez said Venezuela would supply 20,000 barrels of petrol a day to the country. Iran is a major oil exporter but lacks domestic refining capability. Iranian leaders expressed support for the Venezuelan socialist leader’s anti-American policies. Mr Chavez has been using Venezuela’s oil wealth to counter US influence in Latin America and to boost ties with nations not friendly with Washington. “Venezuela has agreed to export 20,000 barrels of petrol daily to Iran from October in a deal worth $800 millon (£485m),” he was quoted as saying by Iranian media. He added: “This amount will be deposited in a fund established in Iran and will be used to finance purchase of machinery and technology from Iran.”
  During his visit to Iran, Mr Chavez met Iran’s Supreme Leader Ayatollah Ali Khamenei, who supports his anti-US…

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• 07Sep

  Gender pay gap in City ‘shocking’

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  From The BBC:

  Men working in the UK’s financial sector receive five times more in bonus payments than women, according to a survey of 44 leading companies.On average, women earn £2,875 compared with £14,554 for men, the Equality and Human Rights Commission found. Chairman Trevor Phillips said the sector must take action “to address this shocking disparity of rewards”. Equality Minister Harriet Harman said the government was introducing “tough new measures” to tackle the pay gap. BBC business reporter Brian Milligan said the survey, commissioned by Ms Harman, was believed to provide the most accurate picture yet of pay differences within banks and insurance companies. Divide ‘entrenched’One of the main reasons for the vast difference in bonuses is that relatively few women reach the top ranks of financial firms where the biggest rewards are paid.
  It comes on top of an average difference of 39% between men and women’s basic salaries. The EHRC said the gender divide was “entrenched” by recr…

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• 06Sep

  Building societies fear new rules

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  From The BBC:

  Building societies say planned new regulation will make it difficult for them to compete with banks.Proposals from the Financial Services Authority, the City watchdog, include plans to limit riskier types of lending by building societies. These could include high loan-to-value mortgages for borrowers with small deposits and buy-to-let mortgages. The Building Societies Association (BSA) says that the proposals would disadvantage the industry. The BSA has made a formal submission to the FSA following a consultation period on the proposals. ‘Discriminatory, anti-competitive’Adrian Coles, director general of the BSA, said the proposed regulation would have a “discriminatory and anti-competitive effect in the mortgage market”. “The FSA wants controls to make sure mutuals operate safely in the future, but if you start restricting buildings societies, it is hard for them to diversify and the sector won’t be able to react to market drivers,” he said. He added that the new rules, should they co…

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• 06Sep

  Rivals ‘in battle for T-Mobile’

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  From The BBC:

  Vodafone and O2 have both tabled bids of about £3.5bn to buy T-Mobile UK from owner Deutsche Telecom, the Sunday Times has reported.The report says a decision was likely to be made within weeks. A successful bid by either firm would make them the biggest mobile operator in the UK once T-Mobile’s 16.6 million customers were added. Vodafone and O2, which is owned by Spain’s Telefonica, declined to comment on the report. T-Mobile is currently the fourth-largest mobile operator in the UK, with a 15% share of the market. O2 is the largest UK operator, with a 27% share, followed by Vodafone (25%) and Orange (22%). France Telecom, which owns Orange UK, is also thought to be interested in T-Mobile….

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• 06Sep

  Economy ‘to bounce back by 2010’

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  From The BBC:

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  “This country has to live within its means” says George Osborne
  The UK economy should bounce back next year but the risk of a relapse remains high, a business group has warned.The British Chambers of Commerce expects the economy to grow 1.1% in 2010, almost double its previous forecast of 0.6% made in June. It says unemployment will peak at just above 3 million, fewer than the 3.2 million forecast previously. However, it said that sustaining the recovery would prove challenging given the UK’s debt burden. “The upturn in the economy has probably already started and we could see a relatively strong bounce-back in the next few quarters,” said chief economist David Kern. “But sustaining the recovery will be very challenging and the risks of relapse are high,” he added. The group expects the UK economy to shrink by 4.3% this year, more than its June forecast of 3.8%. This was because the decline in economic activity in the firs…

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• 02Sep

  The age of action? New green pledge campaign launches

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  From The BBC:

  A new environmental campaign, backed by a variety of businesses and celebrities, is launching on Tuesday.Organisers of the campaign, 10:10, aim to get people in the UK to reduce their carbon footprint by 10% in 2010. The campaign was created by Franny Armstrong, director of recent film, the Age of Stupid. Partners include the Guardian newspaper and Comic Relief. “It’s now or never for the climate,” they said. “Politicians have so far failed to do what needs to be done.” The campaign comes in the build-up to a meeting of world leaders in Copenhagen in December to work out a successor to the current Kyoto treaty on carbon emissions. ‘Achievable’The aim is for individuals to pledge to cut their CO2 emissions by 10% next year, but the target is more flexible for businesses – they aim to get “as close to the 10% target as possible”. The website has tips on how to cut your carbon footprint, and the campaign is selling a metal band made from scrap metal salvaged from airplanes, much like the…

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