Britain’s high street lenders last night had their credit ratings cut by Moody’s, the ratings agency, as part of a major worldwide downgrade of bank ratings. The review was announced months ago, meaning any impact is likely to be muted as the downgrades were already priced in by the market. All four of Britain’s leading high street banks had their long-term ratings downgraded. Greg Bauer, Moody’s global banking managing director, said: “All of the banks affected by [the] actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities.” Barclays had its credit rating cut by two notches from A1 to A3, while HSBC, Britain’s largest bank by market capitalisation, saw its rating cut one notch from Aa2 to Aa3, The Telegraph says.
The International Monetary Fund has directly confronted Germany by urging the Eurozone to take a “determined and forceful move” to “complete economic and monetary union” by sharing government debt and underwriting failing banks. The IMF’s intervention is timed to tip the balance against Angela Merkel at a critical summit between Germany, France, Italy and Spain in Rome today where the embattled German Chancellor will be fighting off identical demands. Christine Lagarde, the IMF’s managing director, last night unveiled the blueprint to save the euro while warning that the EU’s single currency was under “acute stress” that threatened “the viability of the monetary union itself”. “We are clearly seeing additional tension and acute stress applying to both banks and sovereigns in the euro area,” she said, according to The Telegraph.
Profound changes are needed if the Spanish airline Iberia is to have a future, its boss warned yesterday. Willie Walsh launched a stinging attack on “selfish” Iberia pilots whose strikes this year had contributed to the problems of the Spanish airline. Iberia’s operating losses in the first quarter of this year rose to €178m from €98m last year. In the first year since it merged with British Airways, International Airlines Group made an annual profit of €485m on revenues of €16.3bn.Speaking in Madrid at the first IAG shareholders’ meeting, Mr Walsh said: “The challenges facing Iberia are a reflection of the macroeconomic turmoil facing [Spain]. They have to be addressed and cannot be shirked, he said, writes The Times.
China has pledged to overhaul its politically sensitive rare earths industry, saying that decades of exploitation and illegal mining are threatening supply of the crucial raw materials. In an unprecedented public statement on the subject, China’s Cabinet said it would tighten environmental regulations on rare earths, clean up production and crack down on illegal mines, but stated that controversial export quotas would remain in place. Rare earths, which despite their name are not especially rare nor earths, are a group of chemical elements used in hi-tech devices such as smartphones, MRI scanners and bombs. While the industry is still small, comprising about 150,000 tonnes per year, demand and prices have soared in recent years thanks to growing demand from the high end technology sector, where they are also used in batteries, oil refining and electric car motors, The Times explains.
Xstrata’s lavish £173m bonus pay-out to management has been roundly condemned by the Association of British Insurers for being excessive and a breach of best practice. The ABI, which represents 17% of the British stock market, issued a rare “red-top alert” – its most serious rebuke – which has been sent to 300 of its members. The move will also pile further pressure on Xstrata’s £39bn merger plans with rival Glencore, which is due to be voted on by shareholders on July 12, and is already facing opposition from angry investors. The ABI report opposes the miner’s retention package, which will pay £173m to 73 senior executives simply for turning up to work, with pay not connected to any incentives to perform well, The Telegraph reports.
RBS customers are among more than 100,000 whose bank accounts were hit by a technical fault that saw payments frozen, benefits stopped and access to their balance details blocked. The system collapse also affected NatWest and Ulster Bank and led RBS group to keep more than 1,000 branches open until 7pm last night to help customers. The fault meant some balances were not properly updated with overnight payments, leaving individuals and businesses potentially missing out on salaries and other vital transactions. RBS apologised last night for the “unacceptable inconvenience”, and said customers would not be left out of pocket as a result of the problems, The Scotsman says.
Apple has lost another round in the “patent wars” after a court in the Netherlands ruled that the iPhone and iPad breached a patent owned by Samsung. The court said that Apple had breached a patent held by Samsung relating to the way phones and tablet PCs connect to the internet. The amount of damages Apple must pay Samsung has not yet been determined, but it will be calculated within the next two months based on sales of patent-infringing iPhones and iPads in the Netherlands. The final sum also will include the revenue and profit that Apple made from them, the court said. The products themselves, however, can continue to be sold in stores, according to The Times.