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.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure
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