Johnson & Johnson to pay $30 billion for Europe’s biggest biotech company Actelion

US healthcare giant Johnson & Johnson is to buy Actelion, Europe's biggest biotech company – paying $30 billion (28 billion euros).

The purchase gives Johnson & Johnson access to the Swiss group's highly profitable range of medicines for rare diseases.

The deal represents a 23 percent premium to Actelion's closing price on Wednesday and is more than 80 percent above the November 23 closing price before takeover reports first emerged.

Royal Bank of Scotland sets aside 3.92 billion pounds to settle claims of U.S. loan mis-selling

Royal Bank of Scotland
morebyless/flickr.com

Royal Bank of Scotland (RBS.L) has taken a 3.1 billion pound ($3.92 billion) provision as it prepares to settle claims in the United States that it mis-sold toxic mortgage-backed securities in the run up to the 2008 financial crisis.

The provision means that state-backed RBS is unlikely to make a profit in 2016, the ninth straight year the bank has failed to make an annual profit.

RBS is preparing to start negotiations with the U.S. Department of Justice over a settlement of the mis-selling claims, the timing of which is still uncertain.

“This bank, and of course the British taxpayers, have paid a very heavy price for the decisions that were made at RBS before the crisis,” RBS Chief Executive Ross McEwan said on a conference call with reporters on Thursday.

“Today's announcement is yet another painful example of that legacy,” he said.

This is the first time that RBS has set aside any money to directly cover a settlement with the U.S. Department of Justice over the alleged decades-old mis-selling of mortgage-backed securities.

RBS is the latest European bank that needs to reach a settlement with U.S. authorities. Credit Suisse (CSGN.S) earlier this month agreed to pay $5.3 billion and Deutsche Bank agreed to pay (DBKGn.DE) $7.2 billion to settle their respective mis-selling cases.

These settlements stem from an initiative launched in 2012 by former U.S. President Barack Obama to hold Wall Street accountable for misconduct in the sale of the securities that helped to trigger the worst economic crisis since the Great Depression.

Analysts said investors would welcome the first signs of clarity over the eventual size of RBS's settlement even as the final total remains unclear.

“RBS shares are up a touch today, perhaps as investors decide that things might not be as bad as feared,” Neil Wilson, senior market analyst at trading firm ETX Capital in London, said.

RBS shares were up 1.7 percent by 0850 GMT.

Analysts have estimated the bank could have to pay the U.S. Department of Justice as much as 9 billion pounds in the next few months. Even the lowest estimate of 2 billion pounds would make it the largest fine in the bank's history.

UBS said in a research report this week that RBS sold around 35 percent more volume of the toxic securities than Deutsche Bank, but also said there had so far been little correlation between the volume sold and the size of a final settlement.

RBS said the total misconduct bill for mis-selling these securities might exceed its provisions.

CEO McEwan has been trying to clean up RBS's balance sheet and end an array of legal cases so the government can sell its more than 70 percent stake in the bank after a 45.5 billion pound bailout during the financial crisis.

McEwan said the bank was unable to clawback any banker bonuses in relation to the U.S. mortgage securities because they were sold before the financial crisis and there were no laws in place at the time that would allow RBS to recoup any of the money

The British government has said that the uncertainty about the scale of the U.S. penalty is one of the reasons why it halted plans to sell any further shares in the bank.

RBS said in its statement it continued to cooperate with the Department of Justice, although it remained uncertain when a settlement might be reached.

By Andrew MacAskill and Lawrence White

 

Santander warns of economic uncertainty following Brexit vote as UK profit falls

Santander Bank
Mike Mozart/flickr

(qlmbusinessnews.com via news.sky.com- – Wed, 25 Jan, 2017) London, Uk – –

Santander has warned on “significant” economic uncertainty following the Brexit vote after the slump in the pound helped UK profits fall sharply.

The Spanish lender also said a tax hike had taken its toll as attributable profit fell 15% to €1.7bn (£1.4bn), while profits for the wider group rose 4% to €6.2bn (£5.3bn).

Santander has 14 million customers and more than 800 branches in the UK.

It said the UK profit fall was driven by the introduction of the 8% bank corporation tax surcharge as well as “the weakening of the pound against the euro following the outcome of the referendum”.

The pound has fallen by more than 10% against the single currency since the poll.

Santander also said there was “significant uncertainty about UK economic outlook following the EU referendum and global issues”.

The lender added that house price growth in the UK showed signs of slowing while inflation – which is being pushed higher thanks to the fall in the pound – would squeeze real terms income growth.

However, it said some of the risks were mitigated by Bank of England action and the wider strength of the banking sector.

Foreign-owned companies earning sterling revenues are adversely affected by the fall in the pound as it means they translate to lower sums in their home currencies.

Santander said that stripping out tax and currency effects, UK profits were higher, as customer numbers and lending grew.

By John-Paul Ford Rojas

Rolls-Royce Holdings Plc’s credit rating downgraded by Standard & Poor

Rolls Royce
Cedric Ramirez/flickr.com

(qlmbusinessnews.com via bloomberg.com – – Tue, 24 Jan, 2017) London, Uk – –

Standard & Poor’s downgraded Rolls-Royce Holdings Plc’s credit rating to three levels above junk after factoring in 670 million pounds ($836 million) in fines for bribery and corruption charges.

The aircraft engine-maker’s long-term investment rating has been downgraded to BBB+ from A-, S&P said in a statement Monday, cautioning that a new mandatory accounting system could weigh on reported revenue and profit. The ratings agency also said further investigations may follow the Jan. 16 fines.

The downgrade is the latest fallout after an agreement with U.S., U.K. and Brazilian regulators. Rolls was accused of paying bribes and using middlemen to secure contracts in countries including India, Indonesia and Nigeria. The company reported the incidents to the U.K.’s Serious Fraud Office in 2012.

Rolls-Royce shares fell as much as 3.4 percent Tuesday and were trading down 2 percent at 678 pence as of 9:13 a.m. in London.

Rolls-Royce said last week it expected earnings to be ahead of expectations for 2016. The company is due to report annual results Feb. 14.

The engine-maker in November detailed the initial impact on its books from a switch to a new accounting system that prevents Rolls from booking revenue for contracts far in advance. The impact on the company’s earnings is under review and has not been factored into the latest forecast, S&P said.
By Benjamin Katz

Deepening Italian accounting scandal sees BT shares plummet – corporate

UK telecoms firm BT has cut its revenue, earnings and cash flow forecasts for the next two years.

The reason for that was it had discovered that improper accounting at its Italian business went far deeper than previously thought.

Its shares slumped and on Tuesday were on track for their worst ever one-day fall, cutting its value on the stock market by almost a fifth.

Stamp duty making the UK’s housing crisis worse, says property chief

 

Chinese Developers
Gareth Williams/flickr.com

(qlmbusinessnews.com via telegraph.co.uk – – Mon, 23 Jan, 2017) London, Uk – –

Stamp duty is making the UK’s housing crisis worse by distorting the market and harming long-term development, the head of one of the world’s biggest property groups has warned.

Christian Ulbrich, global chief executive of Jones Lang LaSalle (JLL), said homebuyers were “paying for nothing” in a system that penalised landlords and second homeowners while doing little to address a lack of housing supply.

Britain has the highest property taxes of any developed country, figures from the Organisation for Economic Co-operation and Development show. Mr Ulbrich said the current system, where stamp duty jumps from 5pc to 10pc of a property’s value above £925,000, was “politically motivated”.

While the then Chancellor of the Exchequer, George Osborne, cut the rate of tax for the vast majority of house purchases with a big overhaul of the system in 2014, Mr Ulbrich said, the policy still made it “prohibitive” to build more houses.

“For long-term development, stamp duty is definitely harmful, because the stamp duty in itself doesn’t create any value. It’s an additional cost that makes development more unattractive and it has to be considered in the pricing,” he said.

Mr Ulbrich also hit out at the 3 percentage point surcharge that landlords and families pay when buying second homes, which he said had “a very strong dampening impact on the market”. He said he understood aims to reduce the influx of foreign money into the British property market, which Mr Ulbrich said would remain a haven for overseas investors, even after the Brexit vote.

However, he said, increasing supply would help to “create an environment where that demand finds a home”. “We need more building,” he said. “That is good for the economy”.

Mr Ulbrich cited the Crossrail scheme in London as an example where “focus on building the right infrastructure” helped to “enlarge the spectrum of commutable areas around London where people can still live and come to work every morning. “Stamp duty doesn’t help to build one single apartment, it just makes it more expensive.”

Mr Ulbrich also warned that JLL would be hit by a “double whammy” this year from rising business rates and the subdued commercial property market. Research shows that business rate bills in London are likely to soar by £9.4bn over the next five years. The JLL chief criticised the system as counter-cyclical, as he suggested that more frequent revaluations were necessary.

“The [commercial property] market is currently cooling down, at the same time, business rates are going up because they were reflective of values before the Brexit vote. But the impact is happening after the Brexit vote,” he said. “We were very much hit by the overall loss in sentiment in the property market in London, and then we got the increase in business rates, so it’s a real double whammy.”

By Szu Ping Chan

HSBC looking to shift around 1,000 workers from London to Paris after Brexit – corporate

The top boss of HSBC has said it is planning to move some staff from London to Paris following Britain's exit from the European Union.

Chief Executive Stuart Gulliver revealed that in interviews at the World Economic Forum in Davos, Switzerland.

He said that Europe's biggest bank would likely look to shift around 1,000 workers who generate around 20 percent of its trading revenue.

HSBC's global banking and markets division that houses those trading jobs made profits of $384 million in the UK.

November 2016 saw record spending of £13.2bn online, says industry experts

 

Ken Teegardin/Flickr

(qlmbusinessnews.com via uk.finance.yahoo.com — via PA Money News -– Wed, 18 Jan, 2017) —

A record £13.2 billion was spent online in November using cards as consumers took advantage of shopping bonanzas such as Black Friday, according to an industry body.

The UK Cards Association said the monthly online spending total is the highest since its records started in January 2014.

The £13.2 billion spent online equated to 24% of all debit and credit card spending in November. Card spending online had surged by 12% compared with a year earlier.

Earlier this week, the association said a record £2.9 billion was spent using contactless “tap and go” payments in November. Around one in every four card payments is now contactless.

Overall, payment card spending amounted to £56 billion in November, up by 1% on October – the strongest growth in four months.

Within this total, £40 billion was spent using debit cards in November and £16 billion was spent using credit cards.

Looking at card spending overall, debit card spending grew by 4.6% annually, while credit card spending increased more slowly, by 2.3% year-on-year.

The debit and credit card share of total retail sales was 76.7% in November.

The association said spending on hobbies, toys and games and at department stores saw particularly sharp monthly growth as the Christmas shopping season got under way.

The average debit card payment is for £40.07, while the average credit card payment is for £55.03.

The typical online card payment is for £80.21, while the typical contactless payment is for £8.95, the report said.

Richard Koch, head of policy at the UK Cards Association, said: “November saw the strongest monthly growth in card spending in four months, with debit cards accounting for most of the increase at the start of the Christmas shopping season.

“The record spend online highlights the importance of card payments in internet retail, and the wider economy too.”

 

The British Pound saw its best day Since 2008 After Theresa May’s Brexit speech

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(qlmbusinessnews.com via bloomberg.com — Tue, Jan 17, 2017) London, Uk —

The pound climbed against the dollar, set for its biggest advance since the global financial crisis, as Prime Minister Theresa May said U.K. lawmakers will get a vote on the final deal for an exit from the trading bloc.

The currency strengthened against all major counterparts as May made the announcement in a speech laying out the government’s Brexit strategy, which involves pulling out of the EU’s single market. Sterling is rebounding from Monday’s biggest decline in a month that came after the Sunday Times reported the main substance of May’s speech without the additional detail on the parliamentary vote.

Despite its gains on Tuesday, the pound remains about 17 percent weaker since the nation opted to walk out of the EU in the June referendum. The currency’s slump since the vote has pushed up the cost of imported goods, with data released before May’s speech showing that inflation surged at the fastest clip in more than two years.

“The fact that the U.K. Prime Minister Theresa May will put a final Brexit deal to vote in both Houses of Parliament is positive for sterling,” Athanasios Vamvakidis, a London-based strategist at BofAML, said in e-mailed comments. “In order for the parliament to approve it the deal has to be good.”

May dodged a question on what would happen if parliament rejects the deal that she manages to reach with her EU counterparts, saying only that she expects lawmakers to back it.

The pound climbed 2.7 percent to $1.2372 as of 4:11 p.m. in London and touched $1.2397, the strongest level since Jan. 6. The currency fell to as low as $1.1986 on Monday.

The reaction to May’s speech is a marked contrast to those that followed her previous interventions, which had been seen as a trigger to sell the currency. Sterling fell following her speech at the Conservative Party conference in October, which fanned speculation she was eyeing a clean break with the EU, and dropped to the lowest level since October last week following her first television interview of 2017.

“The final take on this speech is that May has come across very well,” said Stephen Gallo, analyst at BMO Capital Markets. “This, in addition to the economic fundamentals, are good arguments for not being aggressively short GBP/USD below 1.2000.”

The announcement on the Parliament vote fueled the initial extension of the GBP rally, partly because it raises expectations that MPs less in favour of Brexit could have more influence, according to Josh O’Byrne, strategist at Citigroup; still, big picture hasn’t changed much after this speech
May didn’t add to “hard-Brexit” fears, and hence the “sell-the-fact” reaction in the market, Manuel Oliveri, strategist at Credit Agricole, says in e-mailed comments

Cable initially rallied in response to the speech on a short squeeze move, Nomura’s Jordan Rochester writes.

By Stefania Spezzati and David Goodman

Pound Sterling falls to a new low ahead of PM Theresa May’s Brexit Speech

 

Brexit talks
Number 10/flickr.com

(qlmbusinessnews.com via bloomberg.com — Mon, Jan 16, 2017) London, Uk —

“Even if the pound recovers somewhat in London, it seems as though the realities of a hard Brexit are still not fully priced in,” said Sean Callow, senior strategist at Westpac Banking Corp. in Sydney. “It is difficult to make the case for the pound to avoid testing, probably breaking, the ‘flash crash’ lows in coming weeks.”

The pound fell as much as 1.6 percent on Monday to $1.1986, the weakest level since Oct. 7 when it slid to $1.1841, the least since 1985. Sterling was 1 percent down at $1.2065 as of 11:14 a.m. in London.

Government officials said they expected May’s speech to cause a further “market correction,” according to the Sunday Times, which didn’t say how it obtained the information. The prime minister’s office declined to comment on the report when contacted by Bloomberg.

Sterling pared its losses in London trading as the U.K. Treasury was said to be drawing up plans to reassure investors following May’s speech on Tuesday and U.S. President-elect Donald Trump told the Times he will offer the U.K. a “fair” trade deal.

One-month implied volatility for the pound climbed to as high as 13.3325 percent, the most since Oct. 12, from 12.0250 percent Friday, as traders sought protection against more turmoil. Bank of England Governor Mark Carney will speak at 6:30 p.m. in London Monday before the release of December inflation data on Tuesday.

The pound may come under broad‑based downside pressure this week as faster inflation is expected to push U.K. real interest rates further below zero, according to Commonwealth Bank of Australia.

Leveraged funds boosted net short positions on sterling to 61,273 contracts as of Jan. 10, double the amount from the week ending Dec. 20, according to data from U.S. Commodity Futures Trading Commission.

May’s speech isn’t the only approaching Brexit milestone. “The pound risks a violent rally to cover short positions if the U.K. Supreme Court rules to support Parliament,” said Naohiro Nomoto, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ in Tokyo.

The pound is prone to outsized swings during Asian trading, with the most extreme being October’s flash crash when the currency tumbled over 6 percent within minutes. While an investigation by the Bank for International Settlements released last week found no single cause for the event, it highlighted that the time of day played a significant role in making the market more vulnerable.

By David Goodman and Masaki Kondo