Sat, Nov 05, 2011 - Page 10 News List

World Business Quick Take

Agencies

BANKING

RBS sees tough Q4

Royal Bank of Scotland (RBS) expects difficult market conditions in the fourth quarter, with banks around the world hit by Europe’s debt crisis. RBS yesterday said it had made a third-quarter net profit of about £1.2 billion (US$1.9 billion), but the partly-nationalized lender added it had taken more writedowns on its Greek exposure. RBS followed the likes of Barclays and Morgan Stanley in benefiting from a debt accounting gain, which boosted its earnings by £2.36 billion and helped offset lower profits at its GBM investment banking division. RBS added, however, that it had taken a further impairment loss of £142 million on its exposure to Greece during the third quarter.

AIRLINES

IAG agrees to buy bmi

British Airways owner IAG has agreed to buy Lufthansa’s British unit bmi to boost growth prospects at its London Heathrow hub, it said yesterday, as it reported results showing the pressure airlines were under from higher fuel costs. IAG reported a 31 percent fall in third-quarter profit, better than expected and outperforming its peers, but highlighting the need for airlines to seek growth where they can. IAG chief executive Willie Walsh told reporters that IAG did not yet have exclusivity on any deal, but believed its offer was more attractive than others Lufthansa had received. Rival UK carrier Virgin Atlantic said it had made a bid for bmi and was still “working with Lufthansa.” Analysts believe a deal would be worth about £300 million. With 9 percent of the takeoff and landing slots, bmi is the second-largest carrier at Heathrow, Europe’s busiest airport.

AUSTRALIA

RBA cuts economic forecast

The Reserve Bank of Australia (RBA) yesterday warned that financial turmoil in Europe could drag the country’s resource-led economy lower, as it cut forecasts for domestic growth and inflation. In a monetary policy statement finalized on Thursday, the central bank lowered its average economic growth forecast for the 2011-2012 fiscal year to 3.25 percent from 4 percent. The new estimate was officially released yesterday. The change came as Greece’s prime minister on Thursday backed away from his controversial plan for a national vote on a eurozone rescue package, which included a massive bailout for the debt-ridden nation. The RBA also lowered its inflation forecast to about 2.5 percent next year, 50 basis points lower than the bank’s August forecast.

ELECTRONICS

S&P puts Sony on watch

Standard & Poor’s (S&P) yesterday put Sony Corp on a negative credit watch after the Japanese electronics giant warned it expected to slide to its fourth straight annual loss. The US ratings agency placed its “A-” long-term corporate credit and senior unsecured debt ratings on Sony on watch with negative implications. “The likelihood of Sony’s weak earnings persisting has increased, as there are no signs of a halt to the deterioration in the earnings of the company’s core flat panel TV business,” S&P said. “In addition, Sony’s financial burden is likely to increase in tandem with the company’s making Sony Ericsson a wholly owned subsidiary,” it said. “We need to review the prospects for Sony’s operating and financial performance.” On Wednesday, Sony projected an annual net loss of ¥90 billion (US$1.15 billion), reversing a July forecast of a ¥60 billion net profit, after the company slumped into the red during the first half.

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