Business this week
Oct 19th 2013 |From the print edition
America’s big banks reported earnings for the third quarter. Bank of America, Citigroup and Wells Fargo posted solid profits, though the mortgage-loan businesses in all three suffered. In contrast, JPMorgan Chase declared a $380m net loss, its first under Jamie Dimon as chief executive, as it set aside $9.2 billion for potential settlement costs in a slew of legal cases brought by American regulators.
A light touch
On a trip to China George Osborne, Britain’s chancellor of the exchequer, outlined proposals to smooth the way for Chinese state-owned banks to operate inLondon, such as classifying them as branches rather than subsidiaries, thereby avoiding rigorous scrutiny. International trading in the yuan has tripled over the past three years to $120 billion a day, withLondon emerging as the global hub.
BlackRock’s net income in the third quarter rose by 10% to $672m. In September assets under management at the giant investment company passed $4 trillion for the first time.
It emerged that Sir Hector Sants is taking three months off as head of global compliance at Barclays because of stress. Sir Hector used to headBritain’s financial regulatory authority. He was parachuted into Barclays with the responsibility of making sure the bank’s staff follow the letter of the law in the dozens of countries in which it operates. American authorities are investigating its capital-raising activities in theMiddle East.
In a regulatory filing Twitter disclosed that it will list shares in its eagerly awaited IPO on the New York Stock Exchange, a slap in the face for NASDAQ after the technical mishaps that beset Facebook’s flotation last year. Twitter also revealed that its revenue in the third quarter had doubled to $169m from the same period a year earlier, but that its net loss had tripled, to $65m.
Carlos Slim’s América Móvil gave up its bid for KPN, a Dutch telecoms company, after the foundation that looks out for the interests of KPN investors “and Dutch society more generally” exercised its right to buy 50% of the shares.
Apple appointed Angela Ahrendts as head of its retail operations. She has been the chief executive of Burberry for seven years and is credited with reviving the British fashion house with designs that eschew its ubiquitous plaid. Apple’s retail strategy could also do with a bit of a makeover; sales at its stores were down earlier this year for the first time since 2009.
The “Double Irish”
Meanwhile, the Irish government closed a tax loophole that had allowed Apple to register “stateless” subsidiaries in the country, through which it was able to shield $40 billion from the American taxman. But Apple and others can still set-up business inIreland and list a low-tax jurisdiction, such asBermuda, as their home country and park income in the lower-tax regime.
In the biggest deal yet in mobile gaming, Japan’s Softbank acquired a 51% stake in Supercell, which is based inFinland, for $1.5 billion. Supercell has had success with two bestselling games that are free to download on smartphones and tablets, and then entice users into paying a fee if they want to quicken the pace of play.
Big industry scored two wins when the European Union moved to water down policies on curbing emissions from cars and planes. The EU agreed to review a German proposal for more flexibility in reducing emissions from new vehicles (German carmakers produce models with lower fuel efficiency than French and Italian ones). And it presented amendments that will curb emissions on jets only when they enter EU airspace, after airlines objected to emission curbs on total flying times.
The Italian government’s proposed bail-out of Alitalia drew criticism.Italy’s national airline has not made a profit in a decade and lost euros 1.6m ($2.1m) a day in the first six months of the year, but the government has proposed a share restructuring that is backed partly by the state-owned post office, Poste Italiane. International Airline Group, which owns British Airways, fumed that the plan was protectionist.
Royal Mail’s share price soared after it was floated on the stockmarket in the biggest privatisation inBritain since a sell-off boom in the 1980s and early 1990s. There were some differences with that time. Around 690,000 people applied for shares, far fewer than the4.5m who sought shares in British Gas in 1986. And investors traded their shares on the internet, despite the inevitable crashes on overloaded websites. One aspect struck a familiar ring. Despite being given 10% of the shares in Royal Mail, postal workers voted to strike in November.