1 UK big five banks’ profits ‘wiped out’ (BBC) The major
UK banks saw a 45% rise in core profits in 2012, but that hike was wiped out by
a mix of regulation and their own mistakes, a KPMG report says. Its performance
report looks at Barclays, HSBC, Lloyds Banking Group, RBS and Standard
Chartered. It says the banks' combined core profits last year were £31.5bn. But
this was eliminated by the "cost of past mistakes and increased
creditworthiness of their own debt", the audit firm's report says.
This development meant that the major banks actually saw
their statutory profits slump 40% on the previous year, at £11.7bn, KPMG added.
The banks, it says, were hit by PPI costs of £7.4bn - up from £5.7bn in 2011. In
addition, there were other fines and penalties from regulators and
"redress provisions" of £4.7bn, and a £12.8bn accounting hit for
losses caused by the revaluation of "own debt'", "reflecting the
credit markets' more positive view on bank issuers and interest rate
movements".
2 Devastating rescue of Cyprus (Robert Peston on BBC) Although
eurozone governments and the International Monetary Fund have rescued Cyprus,
it probably won't feel like much of a rescue. The second largest bank, Laiki,
is being closed. Losses from its closure, which will be substantial - billions
of euros - will be absorbed by holders of its bonds and those with deposits
over 100,000 euros ($130,000). So at a stroke, one important source of credit
to the economy will be eliminated.
There is some
relief for those with savings of 100,000 euros or less, because their cash will
be transferred to the Bank of Cyprus, the country's biggest bank, and kept
intact. But Bank of Cyprus too is being reconstructed. And the costs of making
sure it has enough capital to operate safely in the future will also fall on
its deposits greater than 100,000 euros. So these depositors too will incur
losses running to billions of euros.
In the long
term as well, prospects for this economy will be extremely challenging: the
country's important offshore banking industry, the business of looking after
the tax-escaping cash of Russian businesses and individuals, is in effect being
closed down forever. All those losses being heaped on large depositors are
reason enough for anyone with a choice about where to place their cash to stay
away from Cyprus forever.
So here is the
Cyprus "rescue" in a nutshell: 1 An economy that will be starved of
credit, and will therefore shrink rapidly and very painfully for citizens. 2 An
economy whose main industry, offshore banking, is being shut.
The price for
Cyprus of staying in the eurozone will be as great as for the people of any of
the currency union's over-indebted nations. What should give the eurozone's
leaders some pause for thought is that at some point the people of countries in
financial difficulty may begin to wonder whether they are right to be paying
this steep bill to preserve the euro.
3
India’s leaderless democracy (Nilofar Suhrawardy in Khaleej Times) Despite there being too many leaders in
almost every domain, India suffers from the severe problem of being a
leaderless country. Though Manmohan Singh heads the government as Prime
Minister, prospects of him being hailed as a national leader remain as low
today as they were a decade ago. Sonia Gandhi has established herself as the
Congress chief and head of the coalition, the United Progressive Alliance
(UPA), but her foreign birth remains an obstacle to her ever heading the
country. All eyes are set on her son Rahul Gandhi taking over the reins of
government, yet there still remains doubt on whether he is ready for the task
or not.
The leading
opposition party, Bharatiya Janata Party (BJP) is confronted with the same
problem in a more taxing manner. Veteran L K Advani has been marginalised in
his own party by the saffron brigade. The key decision making process in the
BJP is now being controlled by the present party head Rajnath Singh, former
party chief Nitin Gadkari, Gujarat Chief Minister Narendra Modi, leader of the
opposition in Lok Sabha (Lower House) Sushma Swaraj and leader of opposition in
Rajya Sabha (Upper House) Arun Jaitley.
The recent
political history has witnessed a rise in self-acclaimed leaders identifying
themselves with the common man. Arvind Kejriwal heads this list, who has also
formed a political party called the Aam Indian Party (AAP). The truly common
Indian, from rural as well as urban areas, has little time for most political
distractions, whether they are Rahul Gandhi’s speeches, Kejriwal’s
demonstration or BJP’s rally. They can, of course, be ‘bribed’ to participate
in these gatherings, which they usually agree to out of their material interest
and not because of their political leanings.
On one hand,
numerous leaders as well as parties at national stage and at regional levels
may be viewed as a very strong reflection of this country’s democratic
political fabric. Yet the tragedy is that stretching in too many directions —
regional, religious, caste and creed are weakening the same political fabric.
The only relief is that these barriers are not stretched to violence and
conflict at grassroots level. Thus, in essence, despite India being virtually a
leaderless country, the Indian voters’ conscience has not let this weakness
prove fatal.
Mr. D’Aloisio, who declined to comment on the price
paid by Yahoo (a technology news site pegged the price at about $30 million),
was Summly’s largest shareholder. “They took a gamble on me when I was a
15-year-old,” Mr. D’Aloisio said, by providing seed financing that let him hire
employees and lease office space. The fund read about Mr. D’Aloisio’s
early-stage app on TechCrunch, the Silicon Valley blog of record, found his
e-mail address and startled him with a message expressing interest.
Other news-reading apps have attracted corporate
attention as of late, reflecting the scramble by media companies to adapt to
skyrocketing traffic from mobile devices. The social network LinkedIn was said
to be pursuing an app called Pulse earlier this month. Still, the eight-figure
payday for a teenage entrepreneur on Monday struck some as outlandish and set
off speculation that Yahoo was willing to pay almost any price for “cool.”
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