Below are our top 10 stories that you need to know about. Be sure to check our twitter page for regular posts of important headlines. Click on the links for full stories.
Opinion articles of the week:
- The Bank of America claim that cyber safety and security market will top $1.5 trillion by 2020. Click here for more on how this market may develop.
- Has cheap oil become bad for the economy? Click here for the debate.
- Karen Brady claims that UK football teams will suffer from a Brexit. Click here for more.
- George Osborne has warned that the ‘national living wage’ will spark job cuts. Click here for more.
- Simon Calder argues that the Zika virus will significantly affect tourism in Latin America. Click here for his short podcast.
1. UK ECONOMY GROWS
The UK economy grew by 0.5% in the three months to the end of December, official figures show, taking the annual rate of growth for 2015 to 2.2%. The Office for National Statistics show an improvement on the third quarter figure of 0.4%. But the 2.2% annual growth in 2015 was down compared with 2.9% in 2014. (BBC News)
2. ADIDAS ENDS SPONSORSHIP DEAL IAAF
Adidas has told the International Association of Athletics Federations (IAAF) it is ending their multi-million dollar sponsorship deal four years early. The German sportswear giant signed an 11-year, $33 million agreement with the IAAF in 2008, but with doping and corruption scandals currently engulfing the sport, Adidas has told the governing body it is ending the deal.
Neither party would confirm or deny the split, with Adidas issuing a statement which said it had “a clear anti-doping policy” and was “in close contact with IAAF to learn more about [the] reform process.”
The contract was due to expire in 2019 and the termination represents a huge blow to the sport, with the partnership covering grassroots development and product marketing. With additional revenues from sales the projected loss to the IAAF over the next four years could be more than $30 million. The organization has a number of high-profile commercial partners, including Toyota, Seiko, Canon and TDK, but it’s unclear whether any of these are considering their future with the IAAF. (RT)
Click here for more information on the doping and corruption scandals.
3. JAPAN NEGATIVE INTEREST RATES
The Bank of Japan pushed interest rates to -0.1% on Friday, after years of keeping them at the lower end of the positive range.
The negative rates will be imposed on reserves worth about 10 trillion to 30 trillion yen initially and will apply only to new reserves that financial institutions deposit at the central bank. The reduction will cause real interest rates to fall, with the goal of stimulating consumption and investment and the new policy will push down rates for lending, although it won’t have a negative impact for banks. (Bloomberg)
Click here for a short video on how interest rates affect stock markets.
4. SHELL BG MERGER SHAREHOLDER APPROVAL
BG shareholders have overwhelmingly backed its $52bn (£36bn) takeover by Royal Dutch Shell, clearing the way for the completion of the mega-merger within weeks. The deal will now go through on February 15 after more than 99% of investors gave their approval at a meeting in London, nine months after the transaction was first announced. It comes a day after 80% of Shell shareholders gave their backing.
The acquisition will boost Shell’s oil and gas production by 20%, seeing it overtake rival Chevron in value and bring it closer to challenging the world’s top global oil company, ExxonMobil.
The deal remains on track despite the collapse in the world oil price, which has seen a barrel of Brent crude this month slip close to $27, its lowest level since November 2003 and about 75% cheaper than its peak at above $115 in the summer of 2014. (Sky News)
Click here for a 60 second video explaining the context of the merger decision. (BBC News)
5. IRAN AIRBUS DEAL
Iran has signed a deal to buy 118 Airbus planes worth $25bn (€22bn; £17.4bn) at list prices in one of the biggest deals signed since Western sanctions against Tehran were lifted. The agreement was signed during a visit by Iranian President Hassan Rouhani to France. The order included 73 wide body and 45 narrow body jets, including 12 A380 superjumbos.
Iran’s decision to buy the A380 is a significant boost for Airbus. The company has struggled to convince airlines to order the world’s biggest passenger aircraft in the past two years. Airbus only broke even on the A380 programme last year, a decade after it first took to the air.
An embargo imposed in 1995 has prevented Western manufacturers from selling equipment and spare parts to Iranian companies. Iranian airlines have about 140 planes that are an average of 20 years old, with many needing to be retired. (BBC News)
6. BARCLAYS TROUBLES
Barclays has confirmed it is being sued for more than £700m by deal-maker Amanda Staveley in connection with its emergency fundraising in 2008.
Ms Staveley’s firm, PCP Capital Partners, confirmed that they had taken legal action against the bank in London. The fundraising at the height of the financial crisis aimed to bolster Barclays’ financial health and prevent a UK government bailout.
She is seeking damages of as much as £720m. PCP Capital Partners invested £3.5bn in Barclays in October 2008 on behalf of Abu Dhabi’s Sheikh Mansour bin Zayed Al Nahyan. Barclays also raised £5.3bn from Qatari investors that year. The bank will contest the action. (BBC News)
Furthermore, Barclays is set to be fined $70m (£49m) for misleading investors about its US “dark pool” trading operations, says the New York Attorney General’s office.
The UK-based bank has been accused of not making it clear to its clients that particularly aggressive traders, known as high frequency traders, were using the private platform. “Dark pool” trading operations allow investors to trade large blocks of shares but keep the price private. The bank declined to comment.
A formal announcement, including a settlement with Credit Suisse also over dark pool trading, is expected on Monday from the New York Attorney General (NYAG) and the Securities and Exchange Commission (SEC).
As well as the fine, Barclays is expected to admit to having broken the law and will agree to install an independent monitor to conduct a review of its electronic trading business, according to the NYAG. (BBC News)
7. LLOYDS SALE SHARE DELAYED
The government sale of Lloyds shares has been delayed as global markets face a continued hammering from falling oil prices and fears of an economic slowdown in China. Chancellor George Osborne said now was not the right time to sell the remaining shares the Treasury holds in the bank to retail investors as planned.
The sell-off had been expected this spring. Now that’s been put on hold due to “market turbulence”. The final share sale is expected to raise around £2bn for the Treasury. The bank was part-privatised during the financial crisis, with the government paying on average 73.6p per share. (City A.M)
8. HBO MANAGERS THREATEN LEGAL ACTION
A string of ex-HBOS managers are considering a legal challenge against City regulators if they mount a formal bid to ban them from Britain’s financial services industry.
Several former executives at the bank have taken legal advice that they have little prospect of securing a fair hearing during enforcement proceedings because the official inquiry into HBOS’s collapse has already been published.
The news threatens to throw a further obstacle in the way of regulators’ attempts to take action against former HBOS chiefs more than seven years after the bank failed, triggering a £20.5bn taxpayer bailout. (Sky News)
A patent holder is demanding $500m (£351m) from Apple because it says the firm has used its intellectual property without permission.
VirnetX holds several patents relating to the technology used in creating virtual private networks (VPNs). It says that Apple’s own VPN technology, plus its FaceTime and iMessage services, all infringe on its patents.
VirnetX previously won a $368m verdict against Apple, but an appeals court threw out the ruling. An increased sum is now being demanded by VirnetX because it says new generations of Apple products are being released which continue to infringe on its patents. Apple’s lawyer said the company will robustly defend the claim. (Sky News)
With share prices plummeting and sales falling, is the iPhone, Apple’s main source of revenue, in decline? Click here for the debate. (BBC News)
Apple is not the only smartphone maker suffering. Samsung announced a 19% decline in profits which they blame on cheap smartphone makers eating into their market share (Sky News)
10. TOURISM TROUBLES
EasyJet announced a decline in revenues per seat following the terrorist attacks on Paris and the suspected bombing of a passenger plane over Egypt. The airline’s shares, down 10% since the Paris attacks, fell 3% to £15.79 and were the biggest losers in the FTSE 100 index. EasyJet, which is the second-biggest airline in France, said in November that business to and from the country had fallen and that some customers were choosing not to show up for flights.
Travel operator Thomas Cook has also cancelled all British bookings to Tunisia until November following a wave of violent protests across the country.
The two announcements underline the problems facing sections of the tourism industry as tourists steer clear of destinations hit by political turmoil and terror attacks. (The Guardian)