Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday June 20
RBS senior staff rushed to sell shares awarded to them for their performance in 2009, with more than half of the 650m shares being sold into the market immediately. This was the biggest one-day sale of the bank’s shares since the company’s government bail-out and saw the disposal of £140m of stock, which was originally paid as bonuses. Whilst this did move RBS’s shares down to 38.5p, a sharp drop of 4 per cent, many analysts claimed that this was a positive sign of the appetite in the market. The average daily trade volume on this day was about five times more than normal. However, doubts were raised about how much of the demand came from large institutional shareholders looking for a piece in the bank, and how much from those short-term investors, like investment banks and hedge funds, who would be looking to sell on the shares quite quickly.
Read about RBS staff selling bonus shares in more depth here.
Tuesday June 21
As the Greek government were due to face a vote of confidence, the first important step toward receiving another bail-out loan from the EU and the IMF, the Fitch credit ratings agency claimed that, were commercial lenders to move their loans to Greece, it would deem the country to be in “default”. Fitch Ratings said that the loosening of terms by commercial banks cannot be considered “voluntary”, as they would only come about due to political pressure. The classification of Greece as “default” would further lower its credit rating, and it was claimed at the time that the country was already being categorized as “junk”. This status signals to lenders that they should not expect to get back anything near the value of their original loan. Since Tuesday, Greece’s government has survived the vote of confidence, and the expectation is now that their parliament will be asked to start implementing €28bn worth of spending cuts on June 28.
Read about Greece and credit ratings agencies in more depth here.
Wednesday June 22
On Wednesday, Transocean blamed BP for the rig drilling disaster on the Gulf of Mexico on 20 April last year, which killed 11 people and resulted in a huge oil spill, the removal operation for which went on for months. Transocean, owner of the rig in question, laid blame heavily on BP, the well’s operator. They claimed that the incident “was the result of a succession of interrelated well design, construction, and temporary abandonment decisions that compromised the integrity of the well and compounded the likelihood of its failure. Transocean questioned BP’s risk assessment of various operations on Macondo, including failing to properly require or confirm critical cement tests. This all comes in the run-up to multidistrict litigation against BP and other companies involved, which is due to started next February.
Read about Transocean and BP in more depth here.
Thursday June 23
On this day in history, the Dow fell more than one per cent, the S&P 500 Index moved dangerously close to its 200-day moving average and the FTSE dropped 1.7 per cent to its lowest close since March 16, when the Japanese earthquake disaster sent the markets plunging. This was all a reaction to the International Energy Agency’s announcement that in the next month it would be releasing 60m barrels of emergency reserves, “in response to ongoing disruption of oil supplies from Libya”. Brent crude went down almost $7 on the day from $114.21 to $107.14 (£75.63) per barrel, and US crude sank close to $91 a barrel, dropping near to five per cent from the day’s high. Based on this surprise announcement, Goldman Sachs predicted that Brent crude may fall by $10-$12 a barrel by the end of July.
Read about the IEA's decision to release emergency oil reserves in more depth here.
Friday June 24
It was reported today that China has been blocking an agreement for Hong Kong Airlines to by 10 Airbus superjumbo aircraft, worth a reported $3.8bn at list prices. The deal, which was due to be formally announced at the Paris air show earlier this week, but Airbus learned that Beijing was standing in the way of the deal. One executive of Airbus, a division of the European aerospace group, claimed that “These are not the only orders taken hostage by the Chinese. The A380s are the first” and later commented on other deals involving Chinese carriers. This was noticeably a protest by Beijing against the European Union’s plans, due to start next year, which would bring international airlines into its emissions trading scheme. Those companies under the jurisdiction of the scheme must pay for permits for each tone of carbon dioxide that they emit over a certain quantity, and will affect airlines as of January 2012. It has been suggested that this move by Beijing will inspire other countries negatively affected by the new laws to take some kind of action in protest.
Read about China's blocking of this billion-dollar Airbus deal in more depth here.
Come back next Friday for another report on the world of business and finance.
Tags: A380 , A380s , Airbus , Beijing , BP , Brent crude , default , emissions trading scheme , EU , European Union , Fitch , FTSE , Goldman Sachs , Greece , Gulf of Mexico , Gulf of Mexico oil rig disaster , Gulf of Mexico oil spill , Hong Kong Airlines , IEA , IMF , International Energy Agency , International Monetary Fund , junk , Libya , Macondo , Paris air show , RBS , rig drilling disaster , Royal Bank of Scotland , S&P 500 , S&P 500 Index , Transocean , US crude