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 August 29
The largest bank in the US, Bank of America, announced at the start of this week that it will be selling almost half of its 10% stake in China Construction Bank to a group of investors that weren’t named. BoA said that it was looking to strengthen its capital base, as it has to following new global regulations (known as Basel III), and so it should, as the move will grant them $8.3bn (£5.1bn) in cash, generating an after-tax gain of $3.3bn and increasing the bank’s core capital by $3.5bn. In addition to the Basel III rules being imposed on its books, BoA also have to deal with billions in problem mortgage loans, which QFINANCE reported on two weeks ago.
Read about the BoA's decision in more depth here.
Tuesday August 30
London City regulator the FSA put out figures on Tuesday showing that banks have so far this year paid out a total of more than £215m in compensation to clients that were mis-sold payment protection insurance (PPI). The figure included 16 banks, representing 92 per cent of all PPI claims made, with nearly half of the damages being paid out after a decision in April by the High Court, which rejected an appeal against the new rules. £37m was paid in May and £65m in June, a significant increase in comparison to the early part of the year. Some of the bigger banks, including Lloyds, RBS and Barclays, have made it known that they have put aside significant sums to deal with one-off compensation charges, with Lloyds making a hefty provision of £3.2bn to handle claims.
Read about the banks and their PPI provisions in more depth here.
Wednesday August 31
After eight years trying to break into the market, Tesco has announced that it will be selling off its business in Japan, the smallest of Tesco’s international businesses. Of the 129 small stores in the Greater Tokyo area, Tesco said that only half of these are profitable. Chief executive Philip Clarke said “We have concluded that we cannot build a sufficiently scalable business” and vowed focus more on turning around the firm’s loss-making Fresh ‘n’ Easy chain in the US by 2013. (Perhaps the cash will help boost sales in America. I mean, after all, every little helps.) Bit of trivia for you as well: In Japan, Tesco apparently operates stores under both its own name and the brand name “Tsurakame”.
Read about this decision by Tesco in more depth here.
Thursday September 1
As the global economic situation continues to get worse, there is no doubt that more and more people are asking themselves if they should just up and leave to some far-flung exotic corner of the earth, like Greenland or Brazil. Oh no wait, apparently Brazil’s getting sucked down too. Thursday saw Brazil’s central bank unexpectedly cut the country’s key interest rate to 12% from 12.5%, blaming a “substantial deterioration” in the outlook for the global economy. The bank stated that the levels of debt and weak growth in developed economies could begin to impact on Brazil. A number of analysts criticized the decision, with Mauricio Rosal at Raymond Jones believing that the cut was “a bit premature”. Despite comments from both sides, the decision has raised questions about the central bank’s independence from political pressure, as many politicians had been calling for a rate cut recently. Come back next week for a doom-filled report on the central bank of Greenland.
Read more reactions to the move by Brazil's central bank here.
Friday September 2
Apologies, but the Friday news entry has to be placed under the disclaimer of “at the time of writing”, although a snapshot of a point in time is just as fascinating as an informed report… right? Anyway, at the time of writing the European markets were nervously awaiting vital US jobs data and, in typical nervous/pessimistic fashion, the markets fell in anticipation. At the time of writing, midday figures showed that London’s FTSE 100 had dropped 2%, and other parts of Europe showed a similar story. Frankfurt’s Dax had fallen 3.1% and the Cac 40 in Paris dropped 2.8%. The highly volatile markets are currently awaiting these figures, expecting them to reveal something about where the global economy might be headed. Analysts have claimed that there are fears over the impact of various government austerity programs, as well as the downgrading of a number of governments’ credit ratings, including the US.
Read about US jobs data and the markets in more depth here.
Come back next Friday for another report on the world of business and finance.
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Tags: 22nd Edition: SOX COmpliance & Evolution to GRC Conference , Bank of America , Barclays , Basel III , Brazil , brazilian economy , business news , CAC 40 , China Construction Bank , Dax , finance and business news , finance news , Financial Standards Authority , Fresh n Easy , FSA , FTSE 100 , German Dax , Greenland , Infosecurity World Exhibition & Conference 2012 , Japan , Lloyds , Mauricio Rosal , Payment Protection Insurance , Philip CLarke , PPI , Raymond Jones , RBS , Tesco , Tsurakame