(Bloomberg) -- One of the biggest Brexit battlegrounds between the European Union and the U.K. now has a price tag: at least $2.4 million a day.That’s how much any move by the European Union to cut off access to London’s dominant clearinghouses for derivatives could cost traders in euro interest rate swaps, net of buying, according to an estimate from Albert Menkveld, professor of finance at Vrije Universiteit Amsterdam, who has sat on advisory panels to European regulatory authorities.Fragmenting cross-Channel clearing would result in additional costs because global dealers would need more collateral for their positions in multiple clearinghouses in the U.K. and in the EU, Menkveld said. They wouldn’t be able to offset, or net, the positions as easily and that would require dealers to raise extra funds.Those additional costs would likely be passed on to pensions, money managers and other users of derivatives in the local jurisdiction, Menkveld said, who compares the burden on financial markets to traffic jams caused by passport controls.“This is the price we all paid for control by national authorities,” Menkveld wrote in a blog post. “As a European citizen I can now zip onto the Autobahn at 100-plus kilometers per hour, but my pension fund might soon pay for crossing the border with the U.K. to diversify risk.”His tally is one of the first to show the immediate fallout if authorities stop the seamless, cross-Channel settlement of trillions in euro interest rate swap contracts, which currently takes place largely in London. The actual cost could be far greater if it weakens London’s attractiveness as a global financial center. The business is widely viewed as a core pillar of London’s standing and the EU’s desire to pull more of that business away has prompted sabre-rattling from politicians, financiers and even the governor of the Bank of England.The U.K. and major lobby groups for the biggest banks and money managers in the world are calling for the EU to maintain easy access to London clearinghouses, including the London Stock Exchange Group Plc’s LCH unit which is the world’s biggest for euro interest rate swaps. The European Commission in Brussels wants the bloc’s traders to move more of their euro-denominated business inside the EU and not rely so heavily on London. A ruling last year extended access to London through June 2022.Clearinghouses serve as a key hub in the global financial system, settling hundreds of trillions of dollars in deals between banks, hedge funds, pensions and a wide range of corporations. The firms collect collateral, or margin, from buyers and sellers to reduce the risk that the default of one side spreads panic to the other and, in turn, across the broader system.If the temporary decision isn’t renewed, Bank of England Governor Andrew Bailey has said a quarter of euro-derivatives clearing business would need to shift to the EU. The rest would likely stay in London because it is currently the most efficient place for it, he said.Additional CostsThe estimated net price impact probably understates the total additional costs to traders in the market from the disruption that would ensue, Menkveld said.Costs could mount because traders would probably have a harder time offsetting positions in euros, pounds and other currencies as well as the increased compliance burden. In more stressed markets, traders could face much higher costs from the split and difficulty using clearinghouses in both the U.K. and the EU, he said.“There is a trade-off here between the benefits of local control by regulators, and the additional costs that fragmented clearing imposes,” Menkveld said. “The benefit is hard to quantify but the costs are non-trivial.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Zambia said a lack of capital halted production at a copper mine it seized from Indian billionaire Anil Agarwal’s Vedanta Resources Ltd., a development the operator disputed.The standstill at Konkola Deep, a high-grade underground pit that also contains cobalt, was triggered by a shortage of funds to develop new mining areas, said Barnaby Mulenga, permanent secretary in the Ministry of Mines. The lack of capital is also curbing output at other operations of Konkola Copper Mines Plc, which was placed under provisional liquidation in 2019 after the government alleged Vedanta lied about expansion plans and paid too little tax.KCM said on Thursday that Konkola Deep is still operating. Higher copper prices will also make it economical to open up new mining areas, it said in a statement.The developments at KCM come as copper surged back above $10,000 a ton, with the reopening of major industrial economies sparking a commodities rally. Africa’s No. 2 copper producer is reliant on exports of the metal, but production at Konkola Deep may only resume after the resolution of a legal arbitration with Vedanta opens the way for new investment, Mulenga said.“This demand for copper will only get higher and the sooner these issues are resolved there is still an opportunity to exploit this resource,” Mulenga said. “This is a giant which is sleeping and we remain positive that it will be mined at some point.”Zambia Plan to Sell Billionaire’s Mines Stuck in Legal Mire Mulenga said KCM’s current challenges result from Vedanta failing to complete underground works that would have allowed more ore to be extracted from Konkola Deep. The flagship mine in Zambia’s Copperbelt requires most of the $1.2 billion needed to turn KCM around, he said.Vedanta, which has denied the government’s allegations, said it was “saddened” to hear about the production halt at Konkola Deep. The company said it had invested more than $1.7 billion in KCM and had planned to spend a further $1.5 billion to make the operations profitable.Last month, employees of more than 30 contractors at KCM stopped work and staged protests over workers’ grievances.The mounting problems at KCM highlight the political risks as President Edgar Lungu’s government seeks a greater share of mining revenues ahead of elections this year. While Zambia’s copper production rose to a record last year, that didn’t prevent the nation from defaulting on its external debt.Zambia also plans to sell a majority stake in Mopani Copper Mines Plc after acquiring the operations from Glencore Plc, Mulenga said earlier this year. The government wants to raise about $300 million to expand output and pay off the $1.5 billion it owes the commodities giant.A Copper Mining Lesson From Zambia: History Repeats Itself (Updates with comment from KCM in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
LONDON (Reuters) -BMW remains on course to meet its profit targets for 2021 despite rising raw material costs, the German carmaker said on Friday, having largely steered clear of the semiconductor chip shortage battering rivals like Volkswagen. Volkswagen boss Herbert Diess had said on Thursday that Europe's top carmaker was in "crisis mode" over the chip shortage, which would hit profits in the second quarter, while Ford Motor Co last week said the lack of chips could halve its second-quarter vehicle production. BMW is known for its strong relations with suppliers and has been working with them to avoid disruptions.
(Bloomberg) -- Citigroup Inc. has been sounding out investors for a new coal-mining vehicle that it says could help limit the unintended consequences from large producers moving to exit the business.The world’s biggest mining companies are under pressure from investors to stop producing thermal coal, the most polluting fuel, but face a conundrum over what to do with their assets. The mines will still keep producing under new owners, limiting any real benefit to the environment, and there’s a risk that whoever buys them may face less environmental and social scrutiny than the large, listed resource companies.Citi has been meeting large institutional investors in London to pitch the idea, called “Coal to Zero,” according to people familiar with the situation and documents seen by Bloomberg News. Trafigura Group, one of the world’s biggest commodity traders, and Resource Capital Funds, are backing the venture. The concept is still in the early stages, the people said.According to the documents seen by Bloomberg, Coal to Zero plans to buy up the best mines in safe mining jurisdictions. It will run them for profit, but commit to closing the operations before 2045. The pitch document says the vehicle will not look to grow or extend production from the mines. In return, investors will get annual dividends representing almost all the company’s profit. A percentage will be allocated to a fund to benefit local communities.For climate scientists, operating coal on this time line is still far too long as the fuel should be taken out of the energy mix much sooner to reach climate targets.Citi has has been vocal about its efforts to mitigate the effects of climate change and recently touted its withdrawal from financing coal mining. The bank said last year that it would stop providing financial services to thermal coal-mining companies over the next 10 years and plans to eliminate its credit exposure entirely by 2030.“Citi is discussing an investment vehicle with a group of sponsors that will facilitate an orderly transition in the coal mining sector,” the bank said in a statement. Coal to Zero “aims to deploy private capital to support an orderly exit from coal in a way that is fair to the people and communities impacted. In doing so, it intends to generate a positive, measurable environmental and social impact alongside a financial return for investors.”A Trafigura spokesperson in Geneva declined to comment. Resource Capital Funds, a mining-focused private equity fund, didn’t immediately respond to an emailed request for comment.In the pitch document, Coal to Zero says it will be an “energy transition vehicle focused on global decarbonization by acquiring, responsibly operating and retiring coal assets significantly before the end of their mineable life.” The company says it will have a measurable environmental and social impact and is seeking interest from “ESG thought leaders.”At least some of the investors pitched to by Citi are skeptical about the idea, according to people familiar with the matter. While the pitch is based on a more ESG-friendly approach to coal mining, backers would continue to profit from the assets in a similar way to the miners being forced to sell them in the first place, they said.Thermal coal has become a major headache for the world’s biggest mining companies as investor pressure grows. For years, companies such as Anglo American Plc and BHP Group have argued they are the best placed to manage the industry’s decline.But after growing push-back from investors, Anglo and BHP are in the process of selling or spinning off their remaining thermal coal mines, meaning some of the best mines in Australia and Colombia are for sale, with few willing buyers available.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
LONDON (Reuters) -The Bank of England slowed the pace of its trillion dollar stimulus program and forecast a faster recovery for Britain from the coronavirus slump on Thursday, but stressed it was not tightening monetary policy. Governor Andrew Bailey said it was good news that the economy looked set for a stronger recovery than previously forecast, with less unemployment.
U.S. stocks were set for a subdued open on Thursday after data showed weekly jobless claims fell more than expected, while vaccine makers came under pressure after President Joe Biden's plan to back intellectual property waivers on COVID-19 shots. Shares in Pfizer Inc, Moderna Inc, Johnson & Johnson and Novavax Inc, all involved in the making of COVID-19 vaccines, fell between 0.8% and 9.2% in premarket trading.
Volkswagen is looking for outside money in its plan to build up to six battery cell factories in Europe by 2030, Chief Executive Herbert Diess said on Thursday, adding he was open to listing some of those activities on the stock exchange. Diess said the carmaker could not fund these plants alone. Volkswagen announced in March the battery factory plans, which are expected to have a capacity of 240 gigawatt hours.
Elon Musk, CEO of Tesla and SpaceX, likes cryptocurrency, such as bitcoin and dogecoin. But he's urging investors to proceed "with caution."
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In an interview with Fortune, Alba talked about taking her “fourth baby” (a.k.a. her company) public.
(Bloomberg) -- Societe Generale SA turned in its best equities-trading performance since 2015, rebounding from a disastrous quarter a year earlier and providing relief to Chief Executive Officer Frederic Oudea as he prepares to unveil his new investment bank strategy.Revenue at the equities business -- hit last year by market volatility -- was the high point in a strong trading quarter for the French bank, soaring to 851 million euros ($1.02 billion) compared with analyst estimates of 573 million euros. Fixed income revenue and provisions were also better-than-expected.European and Wall Street banks reported their best equities revenue in years after booming stock markets and retail-investor volatility during the height of the pandemic continued into the new year. The rally is easing pressure on Oudea after the bank’s first annual loss in more than three decades last year, prompting him to reshuffle top management and pledge buybacks.“Market conditions were very positive in the beginning of the year, and there’s always a seasonality,” Oudea said in an interview with Bloomberg TV on Thursday. “But we are confident for the overall year.”SocGen rose as much as 4.5% in early Paris trading and gained 4.3% as of 9:05 a.m., taking this year’s increase to about 45%.Equities revenue was hammered in the first half of 2020 by losses on structured products hurt by companies canceling dividends, triggering a review and a 684 million-euro writedown at the unit. SocGen is cutting about 450 million euros of costs until 2023 at the business and has designed new products. Still, its equities performance since then has been uneven, with gains in the third quarter giving way to declines in the fourth.The first-quarter performance of the equities unit “shows that the franchise is really intact, and that we made the right decision to redesign the portfolio of structured products,” Oudea said. The bank plans a group-wide strategic plan in the first half of next year once there’s greater clarity on the economic recovery, he said.In a bid to boost profitability, he’s started cutting hundreds of jobs at the investment-banking unit and merged the domestic retail networks to reduce the number of branches. Last month, SocGen also agreed to sell its 170-billion euro asset management arm Lyxor to Amundi for 825 million euros. The deal accelerates the bank’s exit from asset management, even as the sector shows higher valuation multiples, making it a growth priority for some peers.French rival BNP Paribas -- which also saw equities income erased a year earlier -- posted its best quarter from that business since 2018, though couldn’t match SocGen’s performance in fixed income, where it missed estimates. On Friday, Barclays Plc’s equities unit reported a 65% year-on-year jump in equities revenue, making it its best quarter ever.Elsewhere, the implosion of Bill Hwang’s Archegos Capital Management spoiled what would otherwise have been strong trading performances by the Swiss banks. U.S. banks’ equity-underwriting fees were almost quadruple their first-quarter 2020 level in aggregate, according to Bloomberg Intelligence, marking the third quarter in a row of growth more than doubling.SocGen’s investment bank saw its revenue soar 54% to about 2.5 billion euros in the first three months topping analysts’ estimates. The division’s new head, Slawomir Krupa, will update strategy on Monday, just as the unit is dealing with a round of job cuts announced in November.During the first quarter, SocGen also joined other European lenders in posting lower provisions and set aside 276 million euros to cover potential bad loans, less than the the 715.8 million euros that analysts anticipated. The lender expects its cost of risk for the year at between 1.6 billion euros and 1.85 billion euros, or about half its 2020 level.Many big European lenders have bolstered profit by stashing less money for doubtful loans than last year or by freeing up reserves. Deutsche Bank AG, Banco Santander SA and Lloyds Banking Group Plc are among the firms to argue that rosier economic prospects justify such moves.SocGen’s CET1 ratio, a key measure of its capital strength, rose to 13.5%, above analysts estimates. The bank expects the Lyxor deal to have a positive impact of about 18 basis points on its core capital ratio, while share buybacks should have a negative impact of 13 basis points.Other highlights of SocGen’s earnings:Revenue EU6.24b vs EU5.89b est.Global Markets EU1.65b vs. EU1.31b est.Fixed Income & Currencies EU625m vs. EU569.7M est.Equities & Prime Services EU851m vs. EU572.7M est.CET1 Ratio 13.5% vs. 12.99% est.Net income EU814m vs. EU258.3M(Updates with strategic plan in seventh paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The crypto run this time has two features the 2017 version didn’t—institutional adoption and actual applications.
Bill Gates transferred stakes in several companies to Melinda Gates on the day the power couple announced their divorce
(Bloomberg) -- Coinbase Global Inc. sank to a record low as investors fled high-flying market newcomers.The operator of the largest U.S. cryptocurrency exchange slumped 6% to $256.76 on Thursday, dropping for a fourth straight day. That left the shares just above the $250 reference price for its April direct listing. An exchange-traded fund that tracks shares of companies that recently went public plunged for an eighth day, the longest slide since 2015. Virgin Galactic Holdings Inc. and Opendoor Technologies Inc., companies that came to market through blank-check offerings, each sank at least 3.8%.“We saw a mini-bubble in SPACs, IPOs, crypto, clean-tech and hyper-growth in late 2020 and early 2021 and many of these asset classes are nursing bad hangovers,” said Mike Bailey, director of research at FBB Capital Partners.Coinbase’s slide comes as investors pour into extremely speculative cryptocurrencies such as Dogecoin and Binance Coin -- tokens that the exchange doesn’t offer. Most of its traffic had come from Bitcoin trades, but the price of the largest crypto coin has been mired in a narrow band for weeks. Coinbase started trading at $381 on April 14 before briefly topping $400. It’s now down 22% from the close on its first day.Nasdaq had set a reference price of $250 a share on April 13 for Coinbase’s direct listing, a number that’s a requirement for the stock to begin trading, but not a direct indicator of the company’s potential market capitalization.“What has really hurt Coinbase, now that their direct listing has taken off, you’re seeing expectations that other exchanges are coming on board,” said Edward Moya, senior market analyst at Oanda. “There’s this belief this could be as good as it gets for Coinbase in the short-term.”The Renaissance IPO ETF dropped 4.2% on Thursday, bringing its year-to-date loss to about 14%.(Updates prices.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Vietnam’s government is pouring cash into the country, which should enable the nation to achieve its 6.5% to 7% annual growth targets.
‘I have a $3,000-a-month pension. I am living with my ill father, and I am currently not working and looking for a job. I am going to college using the GI Bill. I am almost 50, and have no 401(k).’
Vlad Tenev, CEO of Robinhood Markets, speaking at a “fireside chat” on Thursday, attempts to dispel any lingering speculation that the brokerage may be a so-called dogecoin whale, maintaining a massive stockpile of the crypto for its own benefit.
The (ARKK) ETF (ticker: ARKK) delivered a 153% return in 2020. The ETF, which is actively managed by ARK Invest CEO and her team, is down 27% over the last three months, including an 13% decline in the past week alone.
It pays to be in the stuffed crust pizza game if you are Papa John's.