20th Dec 2016 11:11
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
----------
COMPANIES
----------
Lloyds Banking Group confirmed it had won the battle to acquire the MBNA credit card business in the UK from Bank of America Corp, with the lender to pay GBP1.90 billion for the business. The FT said Lloyds was understood to have initially pulled back from buying MBNA after BofA refused to share the future costs of compensating customers for mis-sold payment protection insurance. But on Tuesday, Lloyds said the GBP1.90 billion price it will pay for MBNA assumes GBP240.0 million for future PPI claims, with Lloyds' exposure to PPI liabilities arising from MBNA capped at this amount. The acquisition of MBNA will increase Lloyds group revenue by GBP650.0 million per year and boost net interest margin by around 10 basis points. The deal is expected to completed by the end of the first half of 2017, subject to competition and regulatory approval.
----------
London Stock Exchange Group said it has entered talks with European exchange operator Euronext NV on the possible sale of its LCH SA clearing business in France. LSE had said in September it was considering selling the LCH business in France in order to proactively address any competition concerns European regulators may have about its merger with German rival Deutsche Boerse. On Tuesday, LSE said it is holding talks with Euronext on selling the LCH SA business but said there is no certainty these talks will lead to a deal being agreed.
----------
Anglo-South African financial services group Old Mutual said it has closed the secondary offering of shares in its OM Asset Management unit. Old Mutual sold around 15.0 million shares in the US-listed asset management unit at USD14.25 per share. In addition, OMAM bought back 6.0 million shares from Old Mutual at the same price. Together, the two transactions will raise USD291.0 million for Old Mutual. Following the sale, Old Mutual now has a 51.1% stake in OM Asset Management, down from 66% previously.
----------
Drugmaker GlaxoSmithKline said its ViiV Healthcare joint venture has received positive results from the first phase 3 studies on its two-drug HIV treatment. Glaxo said both of the phase 3 studies evaluating the safety and efficacy of switching HIV sufferers from a three or four-drug regimen to a two-drug treatment programme have met their primary endpoint of non-inferiority at week 48 of the programme.
----------
Electra Private Equity said it expects to receive around GBP106.0 million proceeds from the sale of its stake in Innovia Group by its investment manager Epiris. Innovia, which manufactures speciality films and substrate for polymer banknotes, has been sold to Canadian packaging company CCL Industries for CAD1.13 billion, Epiris said. Based on current exchange rates, Epris said it expects Electra to receive proceeds of GBP106.0 million, an uplift of GBP26.0 million, equivalent to a net asset value increase of 52.00 pence per share, on the valuation of its Innovia investment at September 30.
----------
Kier Group said it has been awarded a 15-year contract for repair and maintenance services on part of the Highways England network, with the deal valued at GBP140.0 million over the term of the contract. Kier said that, under the new Area 13 contract, which commences on April 1, 2017, it will provide routine and cyclic maintenance, defect repair, emergency incident response, traffic management, and severe weather services. Area 13, on which Kier is currently the incumbent operator, covers Cumbria and north Lancashire, in the north west of England.
----------
MARKETS
----------
London shares were flat to lower mid-morning with Lloyds among the blue-chip risers. The gold price, often seen as a barometer of market risk appetite - rising at times of worry - was down from its level late Monday, despite a string of terror attacks, with gold miners Randgold Resources and Fresnillo the standout fallers. Lloyds was up 2.7%. Wall Street was indicated to a higher open, with major stock indices pointed up 0.1%.
----------
FTSE 100: flat at 7,015.65
FTSE 250: down 0.2% at 17,746.15
AIM ALL-SHARE: flat at 826.61
GBP: soft at USD1.2347 (USD1.2364)
EUR: down at USD1.0385 (USD1.0433)
GOLD: down at USD1,133.09 per ounce (USD1,142.01)
OIL (Brent): up at USD55.22 a barrel (USD54.91)
(changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
The truck that ploughed into a Berlin Christmas market, killing 12 people and injuring 49, was driven at the crowd deliberately in a presumed terrorist attack, law enforcement officials said. The truck drove between 50 and 80 metres through the market at the historic Kaiser-Wilhelm Memorial Church late Monday, near one of the German capital's most popular shopping streets. The suspected driver, who fled the scene, was taken into custody shortly afterwards a few kilometres away. Police have not released details on his identity. Public broadcaster RBB reported he came to Germany in December 2015 from Pakistan, A security source earlier told dpa he had registered as an asylum seeker. The suspect was known to police for minor criminal offences, but not terrorist activity, the Tagesspiegel newspaper reported.
----------
UK Prime Minister Theresa May will be pressed to give further details about her plans for Brexit when she appears before a panel of senior MPs on Tuesday. The Prime Minister will make her first appearance in front of the Liaison Committee amid frustration from some MPs at the lack of information about the government's stance before she begins the formal Brexit process by the end of March. May told the Commons on Monday she has promised to keep pushing for an early deal on the rights of EU nationals living in the UK after being rebuffed by fellow leaders at last week's European Council. The Prime Minister said that leaders of the remaining 27 states had made clear they were not prepared to enter discussions on the subject until she formally triggers withdrawal talks under Article 50 of the EU treaties. May insisted her end-of-March timetable would remain in place even if the Supreme Court rejected the government's appeal over its right to begin the Brexit process without parliamentary approval.
----------
The Bank of Japan kept its monetary stimulus unchanged as widely expected and raised its assessment of the economy. Governor Haruhiko Kuroda and his board members decided by a 7-2 majority vote to maintain the central bank's target of raising the amount of outstanding Japan government bond holdings at an annual pace of about JPY80 trillion. The BoJ board also decided to maintain the -0.1% interest rate on current accounts that financial institutions maintain at the bank. The bank will purchase government bonds so that the yield of 10-year JGBs will remain at around 0%.
----------
The US job market has improved and wages are on the rise, according to Federal Reserve Chair Janet Yellen. "After years or a slow economic recovery, you are entering the strongest job market in nearly a decade," Yellen said in commencement address at the University of Baltimore on Monday. the Fed raised interest rates last week, and may hike rates three times next year if the jobs situation remains positive. "Job creation is continuing at a steady pace; the layoff rate is low; and job openings are up over the past couple years, which is another sign of a healthy job market," Yellen added.
----------
Germany's producer prices increased for the first time in more than three years in November, data from Destatis showed. Producer prices edged up unexpectedly 0.1% year-on-year in November, reversing a 0.4% fall in October. This was the first rise since June 2013. Prices were expected to fall 0.2%. On a monthly basis, producer prices gained by a more-than-expected 0.3%, but slower than October's 0.7% increase. Economists had forecast a 0.1% growth.
----------
The Italian government announced a request to parliament to raise the public debt by EUR20 billion to fund the possible rescue of Monte dei Paschi di Siena (MPS) and other stricken banks. MPS, founded in 1472 and considered the world's oldest lender, came bottom in recent European banking stress tests. It needs to raise EUR5 billion by the end of the month to make up for large-scale write downs on a mountain of bad loans. The government's move came after Italian media reported on a EUR15 billion state aid package to help MPS, as well as other lenders in difficulty such as Banca Popolare di Vicenza and Veneto Banca. Earlier, MPS started a last-ditch attempt to raise money on its own via a recapitalisation. Retail and institutional investors were given from Monday to Thursday to express an interest in buying new shares in the bank, which would bolster its finances.
----------
Ukrainian President Petro Poroshenko announced the government had taken over the country's largest bank, Privatbank, citing concerns of instability in the domestic financial system. "The new owner is the state acting through the Ministry of Finance," Poroshenko said in a speech. The government would have 100% ownership, he said after the surprise move, which was welcomed by the EU and the International Monetary Fund. The IMF, which has provided crucial financial aid to Ukraine, said the decision to nationalize Privatbank was made "in view of insufficient efforts to strengthen its capital adequacy in recent months."
----------
A French court found International Monetary Fund chief Christine Lagarde guilty of negligence over an arbitration payout made when she was finance minister, but did not hand down punishment. While the court did not fault Lagarde for giving a green light to arbitration proceedings in 2007, it found her guilty of failing to file an appeal of the decision by the arbitration panel, which awarded business mogul Bernard Tapie EUR403 million in 2008. Following the decision, the IMF executive board said it had reaffirmed "its full confidence in the managing director's ability to continue to effectively carry out her duties."
----------
US president-elect Donald Trump said that Russia's ambassador to Turkey Andrey Karlov was assassinated by a "radical Islamic terrorist", while Russian President Vladimir Putin called the act a "provocation". Karlov was shot and killed in Ankara on Monday by a Turkish police officer who shouted Islamist slogans and criticised the conflict in Syria, before he was killed by police.
----------
China confirmed it has returned a US Navy underwater drone back to US authorities, which the country seized last week in the South China Sea. The underwater glider was handed back at noon local time Tuesday the Chinese Defence Ministry announced in a one sentence Chinese language statement on its official website. The drone was being used to collect military oceanographic data as part of routine operations near the Philippines, when a Chinese Navy ship intercepted it on December 15.
----------
Trump received the outcome he expected from the US Electoral College, a majority among its 538 members, sealing his victory in the US presidential election and clearing the way for his inauguration on January 20. An attempt to block the Trump win by so-called "faithless" electors fell far short.
----------
By Arvind Bhunjun; [email protected]; @ArvindBhunjun
Copyright 2016 Alliance News Limited. All Rights Reserved.
Related Shares:
Lloyds