Archives for July 2016

Shell Gazprom agree Baltic LNG project

“Lower oil prices continue to be a significant challenge across the business, particularly in the upstream (business),” said Chief Executive Ben van Beurden on Thursday.

Shell’s second-quarter profit slumped from $3.8 billion to $1 billion year-on-year. Analysts had expected the company would earn about $2.2 billion.

Not only Shell’s oil business, but others divisions including gas, petrochemical and oil refining saw a steep decline. Cash flow reduced to $2.3 billion compared with $6.1 billion in the same period of 2015. This is not enough even to pay out $3.7 billion in dividends.

After the acquisition of BG Group for $54 billion, the Anglo-Dutch company’s oil production grew 28 percent in the second quarter. However, the takeover requires Shell to sell $30 billion in assets in the next three years in order to maintain its dividend.

Shares in the company fell more than three percent Thursday morning after the announcement.

Shell’s results show the oil market is still under heavy pressure after Brent crude prices collapsed to below $45 a barrel from $114 a barrel in 2014. Companies have slashed billions of dollars from costs and cut thousands of jobs, but earnings are still plummeting.

READ MORE: Oil price recovery stalls as US inventories hit all-time high

On Thursday, prices continued to decline, as Brent oil was trading at $43.49 and the US WTI was at $42, hovering near three-month lows.

Oil is being dragged down by a report from the US Energy Information Administration (EIA). American stockpiles unexpectedly grew by 1.7 million barrels last week, instead of falling 2.3 million barrels as had been predicted. Gasoline inventories increased by 452,000 barrels, instead of a forecast 40,000 barrel increase.

Article source: https://www.rt.com/business/353684-shell-revenue-oil-price/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Russia wins battle in Swedish court within Yukos shareholders’ case

READ MORE: Russia wins Hague court appeal over $50bn Yukos judgement

The former shareholders wanted to freeze Russian assets to ensure they got paid the $50 billion awarded them by a Dutch court in 2014. The arbitrator found the Russian government responsible for bankrupting the former oil giant. Later that decision was overturned by the Hague District Court.

“Our lawyers in Germany announced the official withdrawal of the Yukos lawsuit against Russia in this country,” said the Head of the International Legal Protection Center, Andrey Kondakov, who represented Moscow in the case.

The lawyer stressed that it was the first claim case to be withdrawn, and was thus a very important step. “Having realized the futility of the demands, and a probable loss in the court, for the first time ever they made a sensible decision to abandon their claim,” said Kondakov.

READ MORE: Kremlin appeals Hague court decision in Yukos case

Earlier this week, the former Yukos shareholders suspended their claim on a Russian-owned plot of land in Paris. The site near the Eifel Tower is intended for an Orthodox Church center currently under construction.

Yukos 1995 privatization was illegal – Russia’s Investigative Committee

Yukos’ lawyers have repeatedly said they intend to persistently search and seize Russian assets in France, and emphasized their readiness to seize church property, according to Kondakov.

“Claims on only one possession of property in France have been suspended so far,” said the lawyer, adding that legal proceedings were underway with the court unfreezing $750 million of the property’s $1 billion value.

A British court has suspended hearings on a case at the request of Yukos shareholders, said Kondakov, adding that the former investors also asked to temporarily stop proceedings in a US court.

“As for the US, we have rejected the proposal, as we aim to settle all the legal procedures as soon as possible, given that the Hague District Court supported us,” said Kondakov.

Russia may also petition the German court to force the losing side to pay its legal costs. “We see no reasons why the former Yukos shareholders shouldn’t cover our legal expenses in the German court,” said Kondakov.

READ MORE: Russian space agency funds unfrozen in Yukos case 

In 2014, the Hague arbitration court ruled that Moscow pay $50 billion in damages for expropriating oil firm Yukos’ assets with France and Belgium seized property owned by the Russian state. The ruling was challenged and annulled earlier this year by the Hague District Court.

Article source: https://www.rt.com/business/353554-yukos-withdrew-claim-germany/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Doing fine heading for recession: Economic confusion reigns in post-Brexit Britain

GDP growth was up from the first quarter’s 0.4 percent and above analyst forecasts of 0.5 percent.

Annual growth accelerated to 2.2 percent in the second quarter, from two percent in the first.

ONS chief economist Joe Grice said the industrial gains were bolstered by “strong growth across the services sector, particularly retailing.”

Statistics show industrial production jumped by 2.1 percent – the strongest growth in almost 17 years- following a 0.2 percent contraction in the first quarter.

Output in the manufacturing sector, which was the biggest driver of the growth, rose 1.8 percent over the period. Production in the services sector which accounts for more than three quarters of the economy, increased by 0.5 percent.

“Any uncertainties in the run-up to the referendum seem to have had a limited effect,” said Grice. “Very few respondents to ONS surveys cited such uncertainties as negatively impacting their businesses.”

According to the Treasury chief Philip Hammond, the better-than-expected figures show the fundamentals of the British economy are strong and it is “clear we enter our negotiations to leave the EU from a position of economic strength.”

UK economy must suffer over ‘mad’ Brexit decision, insists EU divorce clause author

Economists, however, warn that further economic expansion could be marred by the Brexit vote. Some of them say the second-quarter figures, which only included estimates of one week following the June 23 referendum, couldn’t be used to measure the impact of the vote result.

“While the treasury may point towards these figures as an indication that the UK economy can still flourish, we are now living in very different times post-Brexit, and it is highly likely we will see UK GDP contract in the third and fourth quarters,” James Mills, analyst at currency exchange service UKForex, was cited as saying by ABC News.

The economy seems to be heading towards a “significant deterioration” in the second half of 2016, said the National Institute of Economic and Social Research.

The British Chambers of Commerce argues it is “far too soon to draw firm conclusions” about the UK’s future growth prospects.

Article source: https://www.rt.com/business/353552-uk-economy-growth-brexit/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

‘Europe is extremely sick’, says Deutsche Bank chief economist

Deutsche’s share price fell by four percent on Wednesday after the announcement. Analysts’ predictions had varied from more than a billion euro loss to half a billion profit.

Deutsche Bank chief executive John Cryan warned about the possibility of further cuts.

“If the current weak economic environment persists, we will need to be yet more ambitious in the timing and intensity of our restructuring,” he said on Wednesday.

Overall, Deutsche Bank’s shares have lost about 44 percent of their market value in 2016. This is partly due to increasing skepticism about the bank’s position in the market and $14 billion in fines.

Revenue is down 20 percent in the three months, partly because of the Brexit vote. The investment bank slid 28 percent. At the same time, revenue from Deutsche’s foreign exchange business was flat, even though there was increased client demand for currencies in the wake of the British decision to leave the EU.

Cryan was given the job of chief executive last year to implement cutbacks at the bank, including reducing dividend payments to shareholders, axing thousands of jobs and selling assets.

Keiser: Deutsche Bank ‘technically insolvent’, running a ‘ponzi scheme’

Deutsche has been trying to reassure investors it can boost its capital levels and pay coupons on some debt securities. However, the bank failed to sell a stake in China’s Huaxia Bank in the second quarter, a crucial deal in its sale of assets.

The bank intends to complete the sale in the second half of the year, adding about 40 basis points to the capital ratio, the company statement said.

Article source: https://www.rt.com/business/353516-deutsche-bank-profit-fall/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Kiev says litigation over debt to Russia could drag on for years

“It was a political credit which we were forced to take… Our position is that we shouldn’t return the money,” he told Ukrainian channel Espreso.TV

The minister confirmed the hearings at the High Court in London over the lawsuit brought by Russia concerning Kiev’s unpaid debt could take up to two years.

Ukrainian President Petro Poroshenko in May approved a bill extending the moratorium on paying off the country’s external debt, including the $3 billion Eurobond owed to Russia. The law allows Kiev more time to legally find ways to restructure its external debt.

Kiev’s debt to Moscow is the result of a deal sealed in 2013 between President Vladimir Putin and former Ukrainian President Viktor Yanukovich. Moscow agreed to give Kiev a $15 billion loan through the purchase of Ukrainian Eurobonds. The first tranche of $3 billion was purchased by Russia and was to be repaid by December 20, 2015.

READ MORE: Russia demands $683,333 daily interest on Ukraine’s $3bn overdue debt

After Ukraine failed to repay the debt on schedule Moscow filed a lawsuit demanding the repayment.

Kiev imposes indefinite freeze on foreign debt repayment

Moscow had already suggested a debt-relief plan under which Ukraine could repay its arrears in three installments of $1 billion over the next three years. Russia wanted guarantees from the US, the EU or the International Monetary Fund on future payments of the Ukrainian sovereign debt. The deal, however, fell through, as Ukraine’s Western backers were unwilling to provide the guarantees.

Moscow says its bond purchase was a state loan, not a commercial one but Kiev argues that it was part of external commercial debt and could be restructured.

The International Monetary Fund recognizes Kiev’s debt to Russia as official and sovereign, with Ukraine, as the borrower state, responsible for the loan repayment.

Article source: https://www.rt.com/business/353515-ukraine-russia-debt-payment/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

HSBC to pay $43 mn in probe over Swiss subsidiary’s tax evasion

The Swiss branch of HSBC has paid tens of millions of dollars in fines after admitting substandard compliance on tax evasion.

The Swiss government announced its plan on Tuesday to give HSBC clients the opportunity to appeal the decision, if they don’t want their information passed to the US Internal Revenue Service (IRS).

According to the Swiss Federal Tax Administration, the IRS is targeting HSBC accounts “where there is evidence the US beneficial owner exercised control, directly or indirectly, over the account in violation of corporate governance … by withdrawing funds from the account for personal use.”

“Following an information request in April 2016 from US authorities to the Swiss Federal Tax Administration (SFTA), the bank has provided certain files, mostly related to former clients, to the SFTA,” said Lonnie Frisby, a spokeswoman for HSBC’s Swiss private bank.

“The Swiss authorities may forward part or all of this information to US authorities in accordance with applicable laws and treaties. Anyone subject to this request has been notified,” she added.

Authorities in Switzerland opened a money laundering investigation into HSBC’s alleged illegal tax activity in February 2015. Swiss police then raided the bank’s Geneva office. Europe’s largest bank came under fire after the International Consortium of Investigative Journalists published a report naming 100,000 clients allegedly using the bank to dodge taxes.

The revelations came from a list of HSBC clients stolen by a former HSBC computer technician Herve Falciani in 2008. Falciani shared the confidential data with French authorities.

Article source: https://www.rt.com/business/353368-hsbc-clients-tax-evasion/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Gazprom ready to restart Turkish Stream dialogue after Erdogan apology

The issue with the pipeline construction, which will deliver Russian natural gas to Turkey, could be clarified after the meeting, Dvorkovich said.

According to the minister, they have also discussed going ahead with Turkey’s Akkuyu nuclear power plant.

“We discussed some investment projects, including the construction of the Akkuyu nuclear power plant. There is some progress here already. The necessary regulatory framework is being finished by the Turkish side. We expect to be able to move forward quite quickly,” Dvorkovich told reporters.

The Turkish Stream gas pipeline and the Akkuyu nuclear power plant are major projects for Russia and Turkey.

The construction of the Turkish Stream pipeline to deliver Russian gas to Turkey via the Black Sea was initially scheduled to begin in 2014 but was delayed after the failure to reach an intergovernmental agreement. Negotiations on the project were suspended after Turkey shot down a Russian jet in Syria in November 2015.

READ MORE: Russia, Turkey back at negotiating table after 7-month crisis over downed jet

Russia halts Turkish Stream project over downed jet

Gazprom and Turkey’s Botas signed a memorandum of understanding to construct the pipeline two years ago. The 1,100km pipeline was planned to have four lines with a capacity of up to 63 billion cubic meters (bcm) of gas annually. About 16 bcm was to be supplied for use in Turkey while the remaining 47 bcm was to go to a hub on the Greek-Turkish border to be transported onwards to Europe.

In 2010, Moscow and Ankara signed an agreement to construct and operate the Akkuyu nuclear power plant in the Mersin province of Turkey. The $20 billion project was expected to become the first nuclear power plant in the country which is aiming to develop its own generating capacity. The construction of the 4800 megawatt Akkuyu nuclear power plant will enable Ankara to reduce the cost of power generation and cost to consumers.

Neither Turkish Stream, nor Akkuyu were included in the list of economic sanctions against Turkey introduced by the Russian government after the jet incident. The list included an embargo on food products and a ban on charter flights.

Article source: https://www.rt.com/business/353350-russia-turkish-stream-negotiations/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Verizon to acquire Yahoo in $4.8bn deal

“For me personally, I’m planning to stay. I love Yahoo, and I believe in all of you. It’s important to me to see Yahoo into its next chapter,” Mayer said in a statement on Monday.

According to Recode.net, Mayer “would likely go after the deal is officially struck in six to nine months.” The New York Times also reported Mayer wouldn’t join Verizon.

Mayer’s contract stipulates she is paid $54.9 million only if both a new owner takes over and she gets fired. This happens at the time, when Yahoo is ready for massive layoffs. In February, the company announced it would cut its workforce by 15 percent and close offices in five locations.

Marissa Mayer joined Yahoo as chief executive in 2012 from rival Google. She became an instant darling of the media, hailed as the savior of the struggling internet company. Mayer had been trying to revive the company’s core media and online advertising business.

She was criticized for spending funds on various projects that failed to produce any substantial revenue. In 2013 Mayer led Yahoo’s acquisition of blogging startup Tumblr for $1 billion, promising at the time “not to screw it up”. The value of the startup has nearly halved since then.

“The Yahoo way is, ‘We’ll throw 10 rocks against the wall, and maybe one of them will hit the bull’s-eye.’ But you need a sniper rifle in this business,” said analyst Rich Tullo.

At the height of the dot-com boom the Silicon Valley web pioneer had a market capitalization of $128 billion. Today, Yahoo’s market cap is $36.36 billion.

On Monday, Verizon announced the acquisition of Yahoo for $4.83 billion. The deal has doubled Verizon’s digital advertising business, and the buyer got Yahoo’s search, mail, and content businesses. Yahoo will be merged with Verizon’s AOL unit.

Yahoo is keeping its 15 percent stake in Chinese e-commerce company Alibaba and Yahoo Japan, which have a combined value of $40 billion. The company tried to sell its stake in the Chinese e-commerce giant, but abandoned the idea.

Article source: https://www.rt.com/business/353345-marissa-mayer-golden-parachute-yahoo/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

EU begins sanctions process against Spain Portugal over breaking budget rules

The eurozone finance ministers decided this month to start sanctions procedures against the two countries for breaching EU spending rules. Sanctions could be a fine of up to 0.2 percent of a country’s GDP and the suspension of commitments or payments from EU structural funds of up to 0.5 percent.

European Commission Vice President Jyrki Katainen said “socio-economic factors,” including the countries’ high rates of unemployment, should be taken into account when deciding how much to suspend.

“We remain at your disposal to participate in a structural dialogue with the European Parliament on the application of these measures, with a view to make a balanced proposal,” Katainen said in a letter to the president of the European Parliament, Martin Schulz.

The letter also contained a list of 12 Portuguese and 60 Spanish funds that could be suspended, either completely or in part. Structural funds are used to address regional disparities within the bloc.

German Finance Minister Wolfgang Schaeuble has also proposed the Commission completely or partially suspend structural funds for projects in 2017 as a penalty.

Madrid and Lisbon are accused of not making “sufficient effort” to cut their budget deficits which, according to EU fiscal rules, should be no more than three percent of GDP. The criterion was introduced ahead of the euro launch in 1999 and so far no country has been penalized for breaking them.

Spain was asked by Brussels to lower the deficit to 4.2 percent of GDP in 2015, from 5.9 percent in 2014, but the country ended up with a 5.1 percent shortfall instead.

Portugal’s shortfall was 4.4 percent last year, a drop from 7.2 percent in 2014 and from almost 10 percent in 2010.

“There is no justification for imposing sanctions for not reaching a target in 2015, when the European Commission itself recognizes that we will reach this year’s goal,” said Portuguese Prime Minister Antonio Costa. The country is aiming for a budget deficit fewer than three percent of GDP this year.

Article source: https://www.rt.com/business/353327-eu-spain-portugal-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The decision by Ericsson’s board of directors to remove Vestberg from his post was announced on Monday.  

“Hans Vestberg steps down as president and CEO and member of the board of directors of Ericsson with immediate effect,” a statement on Ericsson’s website reads.

“In the current environment and as the company accelerates its strategy execution, the board of directors has decided that the time is right for a new leader to drive the next phase in Ericsson’s development,” the statement continues. 

However, Vestberg, who served in the position for seven years, will apparently be vastly rewarded for his service to the company. Swedish media outlet Dine Penger reported that he will receive compensation of some 28 million Swedish kroner (US$3.2 million).

The first installment of 7 million kroner should be handed over to the former CEO during his six-month notice period, Swedish newspaper Norran reported.

IMF chief Lagarde to stand trial in €400mn payout case – court

The outlet also cited Vestberg’s press officer as saying that “after the notice period he will get 21 million in severance pay, which corresponds to 18 months of salary. If he gets a new job within these 18 months, the payout could be cut to up to 50 percent.”

In July, Vestberg voiced plans to boost the company’s cost-cutting program – which already amounts to $1 billion – by nearly 50 percent, The Financial Times reported. Citing Swedish media, the outlet added that the measure could see up to 25,000 people losing their jobs. The company currently employs over 116,000 workers.

Prior to Vestberg’s ousting, two main shareholders of Ericsson – Investor AB and Industrivarden – had voiced criticism over the company’s poor performance, Reuters reported.

Sales have plunged by 11 percent in the second quarter of 2016. But it’s not just the poor financial performance of the company over the past years and months that has launched Vestberg into a negative spotlight.

The ex-top manager was also part of an anti-corruption investigation, The Financial Times reported. Vestberg additionally faced criticism over the use of private jets and the amount of his salary, paid by a company which has been struggling to stay afloat, compared to rivals such as Nokia and Huawei.

Article source: https://www.rt.com/business/353296-payout-ericcsson-ceo-finance/?utm_source=rss&utm_medium=rss&utm_campaign=RSS