Major International Business Headlines Brief::: 26 April 2019

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Major International Business Headlines Brief::: 26 April 2019

 


 

 


 <http://www.nedbank.co.zw/> 

 


 

 


 

 

*  South Africa's Sibanye-Stillwater lowers valuation for miner Lonmin

*  Output at South Africa's Amplats hit by Eskom power cuts

*  Egypt's economy seen growing 5.5 pct in year to end of June

*  Nigeria's oil minister, Saudi Aramco discuss investment options

*  Farms spur Kenya growth rebound in 2018 - statistics office

*  South Africa's rand dips as global growth fears, oil spike stokes risk-off

*  Societe Generale's Ivory Coast unit 2018 net profit up 6 pct

*  Acacia Mining core profit slumps as Tanzania woes continue

*  Malawian telecoms company TNM's 2018 profit up 27 percent

*  Amazon posts fourth quarter of record profit

*  Microsoft hits $1 trillion market valuation

*  Deutsche Bank and Commerzbank abandon merger talks

*  Patrick Shanahan, acting US defence secretary, 'did not favour' Boeing

*  Sainsbury's-Asda merger blocked by regulator

*  RBS chief executive Ross McEwan resigns

 


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South Africa's Sibanye-Stillwater lowers valuation for miner Lonmin

JOHANNESBURG (Reuters) - South Africa’s Sibanye-Stillwater on Thursday revised its offer for Lonmin, with new terms that gave a valuation for the struggling platinum miner that was about 60 million pounds ($77 million) less than originally proposed.

 

Lonmin said Sibanye was offering an additional 0.033 Sibanye shares per Lonmin share in a deal to create the world’s No.2 platinum producer. Sibanye had initially said in December 2017 that it was offering 0.967 new shares for each Lonmin share.

 

Although the revised offers gives more Sibanye shares to Lonmin investors, an analyst said this still led to a lower valuation because Sibanye shares have fallen in value since the offer was first made in 2017.

 

Sibanye’s revised offer also does not fully compensate for the impact of its recent share sale that raised $120 million, meaning Lonmin shareholders will end up with less of the revised group, the analyst said.

 

The revised terms value Lonmin at 226 million pounds and give Lonmin shareholders 10.9 percent of the combined group, compared to a value of 285 million pounds and 11.3 percent in the original offer.

 

The boards of both firms said the new offer balanced a recovery in platinum group metal prices against Lonmin’s financial difficulties and its inability to fund investments to sustain its business and staff levels, Lonmin said.

 

Lonmin also said in its statement that its directors unanimously recommended shareholders accept the offer, which was conceived as a bid to ride out depressed platinum prices.

 

Lonmin and Sibanye shares were both up at 1500 GMT, rising 2.7 percent and 0.5 percent respectively.

 

London-listed Lonmin was hit hard by the drop in platinum group prices, and has had to work to cut spending in order to retain a positive balance sheet, required by conditions of Sibanye’s proposed offer.

 

It warned last month that it did not have sufficient liquidity to fund new projects needed to avoid shaft closures and job losses.

 

($1 = 0.7751 pounds)

 

 

 

 

 

 

 

 

 


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Output at South Africa's Amplats hit by Eskom power cuts

JOHANNESBURG (Reuters) - South African miner Anglo American Platinum Ltd’s (Amplats) first quarter production fell 6 percent, hit by problems at power supplier Eskom, operational challenges and ore stockpiling in the same period the year before.

 

Power cuts implemented by Eskom, which supplies more than 90 percent of electricity in Africa’s most advanced economy, pose a threat to miners which are among the biggest users of power in the country and are already grappling with weak profits.

 

Amplats’ total platinum group metal (PGM) production fell 6 percent to 998,900 ounces for the quarter ended March. 31, from 1,062,800 ounces in the same period a year ago.

 

Eskom cut power across the country in February and March as low coal supplies, a severe cash crunch, and multiple failures at its ageing fleet of power stations throttled supply.

 

Amplats said the power cuts hit PGM production at its Mogalakwena operations, which declined by 6 percent to 307,200 ounces, and at its Amandelbult operations, which decreased 7 percent to 192,800 ounces.

 

In February, Amplats said it lost 14,000 platinum ounces when Eskom implemented five straight days of power cuts and was considering building a 100 megawatt solar power plant at its Mogalakwena operations.

 

Amplats said if power disruptions persisted, there could be an impact on the timing of refining the built-up work-in-progress inventory in full, which it expects to have refined by the end of 2019.

 

 

 

Egypt's economy seen growing 5.5 pct in year to end of June

CAIRO (Reuters) - Egypt’s economy is expected to grow 5.5 percent in the fiscal year that ends in June, according to economists polled by Reuters, a forecast slightly higher than the one offered by a survey three months ago but lower than the government’s target.

 

The economy, with the exception of the oil industry, has struggled to attract foreign investors since the 2011 uprising that unseated Hosni Mubarak.

 

Egypt’s non-oil private-sector activity contracted for the seventh consecutive month in March, according to the Emirates NBD Egypt Purchasing Managers’ Index (PMI). Privatesector activity has expanded in only five months over the last three years.

 

“Medium-term economic growth is underpinned by improving fiscal finances, reforms to strengthen the business environment and rising investment in key sectors,” said Nadene Johnson, an economist at NKC African Economics. “But structural constraints are keeping the growth forecast slightly subdued.”

 

On Tuesday, Egypt’s election commission said nearly 90 percent of voters in a referendum had approved constitutional changes, a move that could allow President Abdel Fattah al-Sisi to stay in power until 2030.

 

Sisi’s supporters say he has stabilised Egypt and needs more time to reform and develop the economy. Critics fear the constitutional changes will curb political competition and debate, leading to a long period of one-man rule.

 

Aiming to shore up investor confidence, Egypt has been implementing economic reforms as part of a three-year, $12 billion agreement with the International Monetary Fund in November 2016. The reforms included a value-added tax, cuts to energy subsidies and a steep currency devaluation.

 

The median forecast from 20 economists polled April 8-22, before the referendum result, put growth at 5.5 percent in the current 2018/2019 fiscal year, lower than the government’s target. Three months ago, the median of 14 economists predicted 5.3 percent GDP growth.

 

Medians projected 5.6 percent GDP growth in the fiscal year ending in June 2020 and 5.7 percent in the 2020/2021 fiscal year.

 

Egypt is targeting growth at 5.6 percent in the 2018/2019 fiscal year, Finance Minister Mohamed Maait said in February, compared with its previous target of 5.8 percent. It targets 6.1 percent growth in 2019/2020.

 

Economic growth will be “fuelled mostly by government spending on national projects and infrastructure,” said Yara Elkahky, an economist at Naeem Brokerage. “Household consumption growth, however, is expected to remain muted as purchasing power still remains tight.”

 

The new consensus put Egypt’s urban consumer inflation at down from the 15.5 percent projected three months ago.

 

Annual urban consumer price inflation slowed to 14.2 percent in March from 14.4 percent in February. It is expected to decelerate to 12.0 percent in the 2019/2020 fiscal year and 9.6 percent in the 2020/2021 fiscal year.

 

Core inflation, which strips out volatile items such as food, fell to 8.9 percent in March from 9.2 percent in February.

 

Millions of Egyptians live below the poverty line and struggle to meet basic needs. They have faced rising costs since the pound was floated.

 

Most remaining fuel subsidies are due to be lifted by mid-June.

 

Elkahky expects inflation “to continue declining amid normalised supply levels and seasonality impacts,” adding that inflation could drop further as the Egyptian pound appreciates against the dollar.

 

“Risks to fiscal sustainability are still substantial,” said Maya Senussi, senior economist for the Middle East at Oxford Economics. She added that “could weigh on the general thrust of the (government’s economic reform) policy.”

 

 

 

Nigeria's oil minister, Saudi Aramco discuss investment options

LAGOS (Reuters) - Nigerian Oil Minister Emmanuel Kachikwu and the president of Saudi Aramco have discussed investment options in the mid and downstream sector, Nigeria’s petroleum ministry said on Wednesday in a tweet.

 

Aramco is expanding downstream operations such as refining and petrochemicals production as part of its drive to become the world’s largest integrated energy firm.

 

Nigeria imports the bulk of its petrol, despite being Africa’s biggest crude oil producer, due to its dilapidated refineries.

 

Last month, Nigeria’s state oil company said it was in talks with different consortiums to revamp its refineries and save billions of dollars on fuel imports.

 

Kachikwu is on an official visit to Saudi Arabia.

 

Nigeria’s petroleum ministry, on its Twitter feed, said Kachikwu and Aramco officials including its president discussed “areas of shared investment interests and existing viable investment options in the midstream and downstream sector”.

 

In another tweet, it said Kachikwu held talks with Saudi Arabia’s energy minister to “cement the budding interest to support Nigeria’s infrastructure development in the oil sector”.

 

The talks are the latest between Nigerian and Saudi officials. In February, Nigeria’s president said his country - a member of the Organization of the Petroleum Exporting Countries - was willing to reduce oil output to help secure higher prices after an envoy from Saudi Arabia called for better adherence to a deal on production cuts.

 

 

 

Farms spur Kenya growth rebound in 2018 - statistics office

NAIROBI (Reuters) - Kenya’s economy expanded by 6.3 percent last year, the statistics office said on Thursday, helped by adequate rainfall which spurred agriculture, a mainstay of the economy.

 

The economy had slowed sharply to 4.9 percent in 2017 due to a drought and jitters over a prolonged election.

 

Last year’s recovery in growth was driven by agriculture, excluding fisheries and forestry, which expanded by 6.6 percent, up from 1.8 percent in 2017, said Zachary Mwangi, director general of the Kenya National Bureau of Statistics.

 

Agriculture accounts for close to a third of Kenya’s annual economic output.

 

Kenya, East Africa’s richest economy, is one of the fastest growing areas on the continent but its performance is often hit by drought. Violence after a December 2007 presidential election and disputes over the following two polls led some investors to scale back investment, hurting growth.

 

Missed revenue targets, rising public debt and uncontrolled expenditure have also emerged as concerns for investors in recent years.

 

The World Bank trimmed its 2019 economic growth forecast for Kenya to 5.7 percent from an earlier forecast of 5.8 percent due to a delayed onset of the main rain season.

 

The government expects the economy to grow by 6.3 percent in 2019, President Uhuru Kenyatta said earlier this month.

 

 

 

South Africa's rand dips as global growth fears, oil spike stokes risk-off

JOHANNESBURG (Reuters) - South Africa’s rand retreated on Thursday, succumbing to a firming U.S. dollar, as rising oil prices globally dented demand for emerging market currencies.

 

At 0650 GMT the rand was 0.05 percent weaker at 14.4500 per dollar compared to an overnight close of 14.4450.

 

The rand tumbled to 14.4525 late in the previous session, its softest in three weeks. Fellow emerging market currencies also fell, as a slack business confidence reading in Germany stoked fears of a broader global slowdown.

 

That benefited the dollar, which rallied to a 23-month high measured against a basket of rival currencies.

 

With global oil prices galloping to $75 per barrel for the first time in 2019 as the United States tightened sanctions on Iran, investors were also wary of energy-importing economies, fearing the price spike could strain their already stretched current accounts.

 

“This appears to be a generalised sell-off, with the jump in the oil price stoking fears about oil-importing economies battling external vulnerabilities. Bias is therefore for further rand weakness, especially as EUR/USD languishes,” said analyst at RMB Nema Ramkhelawan-Bhana.

 

Bonds also weakened, with the yield on the benchmark 10-year issue up 1 basis point to 8.58 percent.

 

Stocks opened weaker, with the Johannesburg Stock Exchange’s Top-40 index down 0.44 percent to 52,552 points.

 

 

 

Societe Generale's Ivory Coast unit 2018 net profit up 6 pct

ABIDJAN (Reuters) - The Ivorian arm of French bank Societe Generale made a net profit of 42 billion CFA francs ($72 million) in 2018, up 6 percent from 39.62 billion CFA francs in 2017, a company statement in newspaper Fraternite Matin showed on Thursday.

 

The local business said it would pay a gross dividend of 225 CFA francs per share for 2018, down from 645 CFA francs per share the previous year.

 

($1 = 581.4800 CFA francs)

 

 

 

Acacia Mining core profit slumps as Tanzania woes continue

(Reuters) - Acacia Mining Plc reported a slump in underlying core earnings as it struggled with production issues at its North Mara gold mine in Tanzania.

 

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) slipped to $24 million for the three months ended March 31, from $44 a year earlier.

 

Gold production dropped 13 percent to 104,899 ounces during the quarter, as a fall of ground in the North Mara Gokona underground mine prevented access to higher-grade stopes, the company said.

 

The miner is also struggling with a long-running tax dispute in Tanzania where it operates all its mines. It has cut output by a third since the government banned the export of mineral concentrates in 2017.

 

However, the company stood by its production target for the rest of the year.

 

Acacia also said Mike Kenyon and André Falzon would step down from the board and that it appointed Alan Ashworth, Deborah Gudgeon and Adrian Reynolds as independent non-executive directors with immediate effect.

 

Shares of the mid-cap company were down 2.4 percent after the opening bell, deepening a 12 percent drop year to date.

 

 

 

Malawian telecoms company TNM's 2018 profit up 27 percent

BLANTYRE (Reuters) - Telkom Networks Malawi’s (TNM) net profit rose 27 percent last year, helped by improved revenue streams and cost management, it said on Thursday.

 

The company, which competes with India’s Bharti Airtel, said profit after tax rose to 16.66 billion Malawi kwacha ($22.96 million) from 13.10 billion Malawi kwacha in 2017.

 

TNM invested 19.31 billion Malawi kwacha last year, mainly in 4G mobile technology (LTE), network quality improvement, new coverage sites and the replacement of its mobile money platform.

 

Founded in 1995 as a joint venture between the government and Telekom Malaysia, TNM has been rolling out a 4G network to meet growing demand from some of its nearly 4 million users who increasingly use their smartphones to browse the internet.

 

The company has also been making inroads into digital banking using its improved mobile money tool, Mpamba, modelled on Safaricom’s M-pesa.

 

TNM is 41.31 percent owned by Press Corporation Ltd, a Malawian conglomerate whose businesses span banking and fishing to retail. Old Mutual has roughly a 24 percent stake in the company.

 

($1 = 725.7500 kwacha)

 

 

 

Amazon posts fourth quarter of record profit

Amazon has posted a fourth successive quarter of record profit.

 

The online retailer and cloud computing provider said net profit more than doubled to $3.56bn (£2.76bn), beating analyst estimates.

 

Revenue growth slowed, however, in part because of weaker sales outside the US. Sales rose 17% to $59.7bn. It expects sales growth of 13% to 20% for the next three months.

 

And expenses growth slowed, albeit to a rate of 12.6%.

 

Sales for Amazon Web Services rose 41% to $7.7 billion in the three month period to the end of March.

 

"The benefits of cloud computing are clear for the user, and with profits up 59% this quarter, so are the advantages for Amazon," said George Salmon, an analyst at stockbroker Hargreaves Lansdown.

 

"While the cost of building the data-driven infrastructure to support the cloud systems is vast, the fact it requires such deep pockets actually works in Amazon's favour. It's difficult to see how a new challenger can wrestle business away from the likes of Amazon, Google, and the latest member of the $1tn club, Microsoft."

 

Microsoft has seen its stock market value top $1tn after reporting better-than-expected sales and profits.

 

The US software giant passed the mark briefly on Thursday, before its share price fell back.--BBC

 

 

 

Microsoft hits $1 trillion market valuation

Microsoft has seen its stock market value top $1 trillion (£774bn) after reporting better-than-expected sales and profits.

 

The US software giant passed the mark briefly on Thursday, before its share price fell back.

 

It makes it one of only three US public firms to have hit the $1tn mark, the others being Apple and Amazon.

 

Microsoft's stock has climbed by about a third in the past year, helped by the growth of its cloud business.

 

On Wednesday, the firm said revenue rose 14% to $30.6bn in the fourth quarter, thanks to more cloud growth and an unexpected boost for its software.

 

Net profit surged 19% to $8.8bn.

 

It continues the strong performance seen under boss Satya Nadella, who has spent the past five years trying to lessen the firm's reliance on its once-dominant Windows operating system.

 

Apple and Amazon hit the $1tn mark for the first time last August and September respectively, but both fell back towards the end of the year amid a downturn on global markets.

 

PetroChina was briefly worth about $1.1tn after floating in Shanghai in 2007, although most of its shares were held by the Chinese government. It is now worth about $200bn.

 

While the $1tn milestone garners headlines, Microsoft executives have dismissed its importance in the past.

 

"This is a metric that nobody on the senior leadership team is tracking," Chris Capossela said at an event last year.

 

"Nobody is sitting around high-fiving when the stock hits some new high."

 

Microsoft may be best known for its Windows operating system, but it makes more money from its Azure cloud services and Office software package.

 

While Apple makes more than 50% of its money from the iPhone, and Amazon from its online store, Microsoft's strength has been sticking its fingers in several pies.

 

In 2018, Windows brought in about 18% of Microsoft's revenue, while Office accounted for 25%.

 

Its smaller gaming and Xbox division brought in about 9% while its own-brand hardware such as the Surface tablets accounted for about 5%.

 

The much-ridiculed Bing search engine is also surprisingly profitable: its data powers some of the latest smart speakers including Amazon's Alexa.

 

Microsoft's involvement in so many growing markets clearly has investors hopeful for its future.--BBC

 

 

 

Deutsche Bank and Commerzbank abandon merger talks

Deutsche Bank and Commerzbank have abandoned merger talks, saying the deal would have been too risky.

 

Both banks said the deal would not have generated "sufficient benefits" to offset the costs of the deal.

 

The German banks only entered formal merger talks last month.

 

The German government had been supporting the tie-up, with reports saying Finance Minister Olaf Sholz wanted a national champion in the banking industry.

 

The government still owns a 15.5% stake in Commerzbank, acquired after the bank was bailed out following the financial crisis.

 

The deal was seen as a way of reviving the fortunes of both banks.

 

Deutsche Bank shares fell 1.5% to €7.48 each, while Commerzbank shares dropped 2.5% to €7.60.

 

Combined, the banks would have controlled one fifth of Germany's High Street banking business with €1.8 trillion ($2tn; £1.6tn) of assets, such as loans and investments.

 

Worries over the German economy

However, in a statement Deutsche Bank said managing the merger would have created additional risks and costs, which would have not been offset by the potential benefits.

 

"Deutsche Bank will continue to review all alternatives to improve long-term profitability and shareholder returns," it said.

 

Commerzbank chief executive Martin Zielke said it had "made sense" to consider the deal, but like Deutsche Bank it concluded that the potential benefits did not justify the extra costs and risk.

 

Deutsche Bank has been struggling to generate growth and has been hampered by losses at its US investment banking operations.

 

Commerzbank has also found it difficult to grow.

 

Both banks are facing an economic slowdown in Germany and in the eurozone.

 

Critics of the tie-up said that combining two struggling banks would have just created one large bank with problems.

 

In addition, the deal faced opposition from unions who feared that more than 10,000 jobs would be cut.

 

Gloomy outlook

Deutsche Bank's multiple efforts to reorganise its business have "stalled" according to analysts at investment bank Keefe, Bruyette & Woods.

 

It said the bank was facing a poor economic environment, rising costs for funding and "disillusioned clients and employees".

 

"Unlike peers, Deutsche Bank does not have the luxury to fall back on large, profitable parts of its business to help offset struggles elsewhere," their report said.

 

The analysts said that Deutsche Bank should make further cuts to its international operations.

 

To help dispel the gloom, Deutsche Bank released a preview of its first quarter results, which are due on Friday.

 

It will report a net income of €200m (£173m), which was more than analysts had been expecting.

 

Last year, the bank reported its first annual profit since 2014.

 

European deals

The eurozone banking industry is in a "fragile state", according to Sascha Steffen, Professor of Finance at Frankfurt School of Finance and Management.

 

He argues that efforts to rebuild banks' balance sheets after the financial crisis have been "insufficient" and banks remain "vastly under-capitalised".

 

As a result, he expects mergers among banks from different European countries, and that could include Commerzbank and Deutsche Bank.--BBC

 

 

 

Patrick Shanahan, acting US defence secretary, 'did not favour' Boeing

Acting US Defence Secretary Patrick Shanahan has been cleared of allegations that he showed favouritism towards Boeing, his ex-employer.

 

The defence department's inspector general had been investigating him over a complaint filed in March.

 

A watchdog accused him of "promoting" Boeing and "disparaging" its competitors during meetings.

 

But the inquiry found that Mr Shanahan had "fully complied with his ethical obligations and ethical agreements".

 

Mr Shanahan, who worked at Boeing for 30 years, was serving as deputy defence secretary at the time the allegations were made.

 

Pentagon chief's ties to Boeing investigated

The White House revolving door: Who's gone?

What's next for Boeing after 737 grounding?

The report on the inspector general's findings has been released publicly. It will be submitted to Congress on Thursday.

 

The outcome could pave the way for US President Donald Trump to nominate Mr Shanahan as permanent defence secretary.

 

The White House is yet to comment on who Mr Trump intends to appoint to the role - the Pentagon's highest civilian position.

 

The complaints against Mr Shanahan were filed by Citizens for Responsibility and Ethics in Washington.

 

Mr Shanahan always denied the allegations but said he would support the investigation.

 

As part of the inquiry, more than 30 witnesses were interviewed, including Mr Shanahan, and 1,700 pages of classified documents were reviewed.

 

The inspector general "took these allegations seriously", Pentagon official Glenn Fine, who oversaw the investigation, said.

 

"The evidence showed that Acting Secretary Shanahan fully complied with his ethical obligations and ethical agreements with regard to Boeing and its competitors," his statement said.

 

 

Mr Shanahan has served as interim Pentagon chief since 1 January after his predecessor, Jim Mattis, resigned over policy differences with Mr Trump.

 

To secure the position full-time, the Senate will have to confirm him in a vote.

 

Lawmakers, including the late Arizona Senator John McCain, have expressed concerns over his lack of military and foreign policy experience.

 

Prior to his public service, he rose through the ranks to become a senior executive at Boeing, the world's biggest plane maker. His career there spanned from 1986 to 2017.--BBC

 

 

 

Sainsbury's-Asda merger blocked by regulator

The proposed merger between Sainsbury's and Asda has been blocked by the UK's competition watchdog over fears it would raise prices for consumers.

 

The Competition and Markets Authority (CMA) also said it would raise prices at the supermarkets' petrol stations and lead to longer checkout queues.

 

Sainsbury's boss Mike Coupe said the regulator was "effectively taking £1bn out of customers' pockets".

 

But he said the supermarkets had agreed to end the deal.

 

Asda boss Roger Burnley said he was disappointed: "We were right to explore the potential merger with Sainsbury's, which would have delivered great benefits for customers and supported the long term, sustainable success of our business."

 

Why did the supermarkets want to merge?

The deal would have created the UK's biggest supermarket chain, accounting for £1 in every £3 spent on groceries.

 

Sainsbury's and Asda had said the planned tie-up would have cut their costs, allowing them to lower prices for consumers across the UK.

 

Analysts also believed it was designed to help the two supermarkets counter the rise of discounters Aldi and Lidl in the increasingly competitive grocery market.

 

Why was the CMA concerned?

But the CMA, which had previously raised concerns about the deal, said the merger would lessen competition at both a national and local level.

 

Sainsbury's has more than 1,400 shops in the UK, of which about 800 are convenience stores, while Asda has more than 600.

 

 

Stuart McIntosh, chair of the CMA's inquiry group, told the BBC's Today programme: "It would reduce competition in supermarkets and online grocery shopping and at the companies' petrol stations.

 

"We think that is likely to lead to higher prices or other changes which would be unwelcome to shoppers, such as longer checkout queues."

 

What concessions had the supermarkets offered?

Earlier this year, Sainsbury's and Asda, which is owned by US retail giant Walmart, promised to sell between 125 and 150 of their supermarkets to allow the merger to proceed, along with some petrol stations and convenience stores.

 

They also pledged to bring in £1bn of price cuts for consumers if the deal went ahead, and be held to this by an independent guarantor.

 

Sainsbury's said the CMA had ignored this offer, and misunderstood the potential impact on competition.

 

But the CMA said it had conducted surveys of 60,000 of the supermarkets' customers.

 

"Those promises were based on cost savings which we don't think are likely to be realised. Also those price promises are very likely to be difficult to track in practice," Mr McIntosh said.

 

What now for Sainsbury's and Asda?

Next Wednesday is shaping up as the most important day of Mike Coupe's professional life.

 

The chief executive of Sainsbury's has today seen his big gambit, a merger with Asda, fail - and fail utterly.

 

Now he needs to come up with a convincing Plan B, and demonstrate to a sceptical market how Sainsbury's can prosper without what would have been a transformational deal with Asda.

 

If he cannot do that, he will probably have to stand down.

 

Now the companies have said the deal is off, Mr Coupe's task next Wednesday is two-fold. First there is the subtle task of coming up with a new commercial strategy for Sainsbury's as a standalone company, without it looking like there is anything wrong with the current one.

 

This will be difficult given he has spent months explaining why the Asda deal is so necessary, and in the meantime faced accusations that the day-to-day management of the chain is not up to scratch.

 

This will require money - investment in stores and price cuts - and this is his second job. How can Sainsbury's pay for all this and maintain its all-important dividend payments to shareholders?

 

Asda has a different problem. It needs a new owner as its American parent, Walmart, has made it clear it wants out.

 

That could mean a sale to a private-equity investor, or a stock market listing. Neither would be straightforward.

 

What have others said?

Shares in Sainsbury's fell almost 6% following the news, despite many having expected the CMA's decision.

 

 

John Moore, senior investment manager at Brewin Dolphin, said: "This returns the focus to the UK grocery market, which is highly competitive, and now both businesses will need to concentrate their energies on reinvigorating and perhaps re-imagining their individual offerings to shoppers."

 

The GMB union, which represents Asda workers, said the ruling was good for jobs.

 

GMB general secretary Tim Roache said: "Swathes of stores and depots would have to have been sold off, with jobs put at risk and no real benefit for customers or communities.

 

"The workforce has been through months of uncertainty, worrying about what's going to happen and wondering if their stores or depots would be sold from under them."

 

Ian Giles, competition partner at law firm Norton Rose Fulbright, called the CMA's ruling "controversial in competition law circles".

 

"It suggests a higher bar than had been the case in previous retail mergers. The parties perhaps underestimated how the scale of this deal, and the CMA's focus on consumer markets, meant they would face such serious obstacles in securing approval."--BBC

 

 

 

 

RBS chief executive Ross McEwan resigns

The chief executive of RBS, Ross McEwan, has resigned after five and a half years in the post.

 

Mr McEwan, aged 61, said that he had "delivered the strategy" that he set out when taking over in 2013.

 

Under his leadership the bank, which is 62% government-owned, has closed hundreds of branches, but last year reported a profit of £1.62bn, more than double the profit of the previous year.

 

He will remain in the role until a successor has been appointed.

 

"It is never easy to leave somewhere like RBS. However with much of the restructuring done and the bank on a strong and profitable footing, I have delivered the strategy that I set out in 2013 and now feels like the right time for me to step aside and for a new chief executive to lead the bank," Mr McEwan said in statement.

 

When Mr McEwan took over in 2013, RBS was loss-making and had businesses in 30 countries.

 

His strategy was to reduce the size of the bank by withdrawing from overseas markets. Last year, the bank had operations in 12 countries.

 

He also cut costs at the UK banking business, which includes NatWest, by closing branches.

 

In 2014, the bank employed 109,000 staff, but by the end of last year that was down to 67,100.

 

After nine years of losses, RBS returned to profit in 2017 and started paying dividends again last year.

 

Shares have fallen 29% since Mr McEwan took over 1 October 2013.

 

Customer service woes

The bank has struggled to improve customer service.

 

In February the Competition and Markets Authority published the results of its latest survey of customer satisfaction. More than 16,000 people were canvassed.

 

RBS came last out of 16 banks when respondents were asked whether they would recommend their personal current account provider to friends and family. Natwest came 10th.

 

Small businesses were also surveyed and in this category RBS was second-last out of 14 banks, while NatWest came eighth.

 

Speaking to the BBC, Mr McEwan said customers should have received more attention: "It would have been nicer to have spent a lot more time focusing on the customers of this bank.

 

"But we found ourselves in some many conduct and litigation-type issues, that we had to get through, and consumed a huge amount of my time."

 

When he stepped up to the top job after running the retail part of RBS, Ross McEwan had instructions from the majority shareholder, the Government, to focus closer to home and to shrink its international reach.

 

So it is now a largely British and Irish bank, making it all the more exposed to the potential Brexit fall-out for its business customers.

 

At the same time, the amiable New Zealander had what he called several "noisy" years sorting out multi-billion pound regulatory fines and pay-outs in court cases.

 

There has been the controversy over mistreatment of business clients in financial distress, and political pushback against branch closures.

 

Trying to meet European Commission requirements to shrink the bank by splitting off the Williams & Glyn division has been a time-consuming, expensive failure.

 

And the share price has stuck stubbornly at around half the break-even point for the UK Government's bail-out.

 

Ross McEwan would have preferred to have returned RBS to market disciplines rather than government ones, but the share price has hindered that sale.

 

Through the turmoil of returning to a sustainable profitability, he has tried to keep things simple, using his retail expertise to focus RBS on its customers. That has meant navigating an unprecedented churn in technology, with a rapid shift to apps and online banking.

 

With the finances back in the black, McEwan has acknowledged that turning round the reputational problems for Royal Bank of Scotland is a 10 year project for his successor to see through.

 

With a recent restructure of executive roles, it looks like Alison Rose, currently deputy chief executive of Natwest, has been groomed for the role, though Katie Murray may think differently, having been recently promoted to RBS chief financial officer.

 

GRG controversy

Mr McEwan has attracted criticised for his handling of the controversy surrounding RBS's Global Restructuring Group.

 

The Global Restructuring Group (GRG) was marketed as an expert service that could save a business, but according to a report by the Financial Conduct Authority one in six firms transferred to the service were actually damaged by it.

 

Most of the issues occurred before Mr McEwan took over as chief executive.

 

However, Mr McEwan had to admit that he was wrong when he told MPs in 2018 that the GRG unit helped "the vast majority of businesses it works with".

 

US settlements

Last summer RBS agreed to settle a long-running investigation by US authorities into the mis-selling of financial products in the run up to the financial crisis of 2008.

 

RBS agreed to pay $4.9bn (£3.6bn) - making it one of the last major banks to settle cases related to the US mortgage market.

 

The deal paved the way for the government to reduce its holding in RBS from more than 70% to 62%.

 

The bank has been majority-owned by the government since it received a £45bn bailout at the height of the financial crisis in November 2008.--BBC

 

 

 

 

 

 

 

 

 

 


 

 


 

INVESTORS DIARY 2019

 


Company

Event

Venue

Date & Time

 


 

 

 

 

 


 

Workers Day

 

01 May  2019

 


 

Africa Day

 

25 May 2019

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 

 


 

 

 

 


 

 

 

 


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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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