HSBC settles US private Libor claims

HSBC Holdings Plc has agreed to pay $100m (£71.3m) to settle private litigation over the Libor rigging scandal in the US, according to Reuters.

The bank is the fourth major company to settle claims that employees conspired to manipulate the Libor benchmark interest rate. The settlement is subject to court approval and was filed at the US District Court in Manhattan, New York.

HSBC has denied wrongdoing in the affair, but said it had settled the claims to reduce risk and avoid the cost and distraction of ongoing litigation.

The London Interbank Offered Rate or Libor is used to set rates on a vast array of products including credit cards, mortgages, student loans and other transactions. It sets the cost of banks borrowing from another.

Bankers were accused of fixing the rate by investors including the city of Baltimore and Yale University. The UK Financial Conduct Authority has said Libor will be phased out by the end of 2021.

China announces tariff plans for US soybeans, cars and orange juice

China has outlined plans to increase import tariffs on American goods in response to US plans to levy higher taxes on Chinese imports, according to BBC News.

Soybeans, cars and orange juice are among the 106 products Beijing indicated would be subject to a 25% tariff. Washington recently said 1,300 Chinese products would be hit with a 25% tariff on import, including televisions and motorcycles.

Earlier this year an initial wave of tariffs was announced by the US to target aluminium and steel imports. None of the tariffs have yet come into force.

US President Donald Trump claimed the tariffs were not intended to start a trade war between the US and China, but that the move was a bid to reduce the US trade deficit and that China had been sanctioning unfair intellectual property practices.

The Chinese government says it ‘strongly condemns and firmly opposes’ the proposed US tariffs, which it says are ‘unilateralistic and protectionist.’

The products targeted by Chinese tariffs were worth $50bn in 2017, according to the Chinese commerce ministry. They include chemicals, aircraft parts, corn products, whiskey, cigars, some types of beef, lubricants, propane, SUVs and some electric vehicles.

Economists warned the US President that increasing tariffs on Chinese imports was likely to provoke retaliation which could lead to higher prices for US consumers. Around 18.2% of all Chinese exports in 2016 went to the US.

Fed reveals interest rate rise

The US central bank has announced an interest rate rise to a target range of 1.5% to 1.75%, according to BBC News.

The Federal Reserve said the 0.25% change was being made to reflect a strengthened economic outlook. It was also hinted that interest rates would be raised twice more this year, while forecasts were also raised for increases in 2019.

The chairman of the Federal Reserve, Jerome ‘Jay’ Powell also expressed concern about trade tensions following the US government’s announcement of tariffs on steel and aluminium entering the US and the threat of sanctions targeted at China.

At a press conference, Powell said bankers and business leaders see the trade tensions as “a risk to the outlook.”

Members of the Federal Open Markets Committee, the body that votes on rate changes, forecast that the US economy will grow by 2.7% in 2018, above the 2.5% predicted in December 2017.

Members also expect higher interest rates in 2019 and 2020 than was the case in December 2017, which Brian Coulton of Fitch Ratings described as a “firming up of the future trajectory of policy tightening.”

Following the ultra-low interest rates put in place following the financial crisis, the Federal Reserve has been slowly increasing rates since 2015. The challenge for the central bank is to balance low unemployment with the potential for higher inflation.

EU considers tariffs on US exports

The EU is set to retaliate against US tariffs on steel imports by imposing import duties on US products including peanut butter, bourbon whisky, orange juice, cranberries, steel and industrial products.

EU trade commissioner Cecilia Malmstrom said the measures were intended to respond to US tariffs, which threaten jobs in the EU steel industry. US President Donald Trump has said EU rules make it ‘impossible’ for US firms to trade with European member states.

Malmstrom said she had ‘serious doubt’ about the US justification for steel and aluminium tariffs. It is claimed that US national security is threatened and therefore 25% tariffs on steel and 10% on aluminium are reasonable.

The trade commissioner confirmed that proceedings to challenge the tariffs would be initiated through the World Trade Organisation.

Malmstrom said: “From what we understand, the motivation of the US is an economic safeguard measure in disguise, not a national security measure. We are discussing different US products on which different import tariffs can be imposed.”

According to Malmstrom, global overcapacity is the root cause of problems with the global steel and aluminium markets, which are supported by “massive state subsidies… under non-market conditions.”

Why DNC Hack Should Serve as a Harsh Lesson for Businesses​

The recent revelation that Russia may have hacked into the Democratic National Committee’s (DNC) email database has brought the topic of Advanced Persistent Threats (ATPs) back to the forefront of cyber security experts around the business world.

According to a report by on Reuters, U.S. Democratic presidential candidate Hillary Clinton has stated that Russian intelligence services were behind a sophisticated attack that saw thousands of internal emails stolen. Although these accusations have been refuted by Russian officials, the issue remains unresolved which is significant for two reasons.

Firstly, even if the Russian’s aren’t involved as Israel’s intelligence forces suggest, the latest hack shows the danger ATPs can pose to powerful government agencies. Secondly, if a major entity like the DNC has trouble dealing with ATPs, then businesses around the world need to take the threat extremely seriously.

Given the complexity of an ATP, big businesses are usually the target for hackers and any company that falls victim to an attack can find their bottom-line in serious trouble. As outlined by the Ponemon Institute’s 2015 Cost of Data Breach Study, the average financial impact of a breach is now $3.79 million. Surveying 350 companies in 11 countries, the study found that the cost of an attack had jumped 23% in two years.

A Three-Stage Threat

Analysing the basics of an Advanced Persistent Threat (ATP), Imperva Incapsula breaks down a successful attack into three stages:

  • Network infiltration
  • Expansion of the attacker’s presence
  • Extraction of amassed data

Using a combination of malicious uploads (such as SQL injections), Trojans and backdoor shells and then DDoS attacks (to act as a distraction), hackers can enter and extract data from a target site virtually undetected. Indeed, one of the reasons ATPs are so effective is that the distraction tactics often mean the real threat isn’t discovered until it’s too late.

By this point, the victim is forced to piece together a myriad of information in order to track it back to the attacker. Indeed, this is something the DNC is now facing. Even if Russian forces had something to do with the incident, it will take many weeks, and potentially, months, for the DNC’s security experts to determine the source of the email hack.

WAFs More Important than Ever

While political parties and governments will have their own means of protecting their servers, businesses wanting to avoid a similar fate should use web application firewalls (WAFs) to bolster their defences. When used in conjunction with security hardware, WAFs provide a vital layer of protection against ATPs.

By using traffic monitoring to guard against SQL injections, offering provisions for access control (restricting employee’s system access for their own protection) and more, WAFs can help protect businesses from ATPs. Of course, if the DNC can fall victim to advanced hackers, anyone can. Indeed, the DNC’s email breach should serve as a warning to all business out there, regardless of how secure they believe their systems are.

UK engineering consultant WS Atkins considers selling North American unit

UK engineering consultancy WS Atkins Plc (LON:ATK) is looking into strategic alternatives for its loss-making North American construction unit Peter Brown and expects to be clear about its future this summer, finance director Heath Drewett told Reuters.

The options Atkins is looking at include a closure or a disposal of the operation. An exit would be part of a plan to concentrate on more profitable activities in the engineering and design consultancy field.

In a trading statement, the company said that Peter Brown is still experiencing soft market conditions, but expects an improved margin performance in the second half. The construction management business is seen to post a loss of some GBP6m (USD9.2m/EUR7m) for the fiscal year to 31 March 2013 due to additional costs in closing out its legacy contracts.

However, Atkins anticipates to report annual results slightly ahead of previous projections thanks to the strength of its UK operations. According to Drewett, the company is also considering some acquisition opportunities in the US and the Asia-Pacific, even though it prefers to grow organically. It targets aerospace and defence as well as energy businesses.

Global economy faces continued sluggish growth, according to Dun & Bradstreet

US commercial information provider Dun & Bradstreet (NYSE: DNB) said it has published a five-year forecast of the global economy predicting continued but sluggish growth against challenging headwinds, differing from region to region.

D&B said that its Global Economic Outlook to 2017, based on a study and analysis of its proprietary business data and external data sources, provides insights on several contributing factors to real GDP growth for more 132 countries, representing seven major geographic areas.

According to D&B concerns over a double-dip recession in the US are unfounded despite the fiscal policy challenges. The significant improvement in the health of the corporate sector in combination with moderate consumer spending growth are offsetting austerity that will be required at all levels of government.

Growth remains constrained but the recovery continues to gradually gain momentum.

The outlook for European economies remains troubling. The immediate crisis in the Eurozone has subsided, but the underlying challenges in the region remain substantial.

While attention remains focused on fiscal and monetary policy D&B remains concerned about the competitiveness of European economies and the ability of their business sector to offset fiscal restraint. The outlook for the region remains unsettled with substantial downside risk given policy uncertainty.

In 2012, three years into the recovery, D&B downgraded 32 countries in its country risk analysis–the third highest number of downgrades in one calendar year–while only upgrading seven.

Risk ratings for 56 of the 132 countries are worse than in October 2009 when the recovery started, while only 23 are better.

Dex One, SuperMedia get shareholder approval for tie-up, file for bankruptcy

US marketing services firm Dex One Corp (NYSE:DEXO) and advertising agency SuperMedia Inc (NASDAQ:SPMD) said today that each of them had received shareholder approval for their planned combination and had voluntarily filed for a pre-packaged Chapter 11 bankruptcy protection to implement the merger.

The companies stated that the reorganisation plan would assist the progress of their merger, which was agreed in August last year and is now expected to be completed within 45 to 60 days, subject to court approval. The transaction, which was revised in December 2012 to include extended terms of the credit agreements, has also received approval by the majority of lenders, Dex One and SuperMedia said, adding that they had substantial cash balances and did not plan to seek debtor-in-possession financing during the reorganisation.

As part of the merger agreement, Dex One’s shareholders will receive 0.20 shares in the enlarged group for each of their units and SuperMedia’s stockholders will get 0.4386 shares for every single unit they own. As a result, the existing shareholders of Dex One will control some 60% of the combined company, while those of SuperMedia will hold a 40% stake. The combination is seen to create a stronger player with a better penetration of the local marketplace.

Houlihan Lokey Capital Inc and Kirkland & Ellis LLP serve as advisors to Dex One. SuperMedia is taking counsel from Morgan Stanley & Co LLC, Chilmark Partners, Fulbright & Jaworski LLP and Cleary Gottlieb Steen & Hamilton LLP.

QROPS for USA Residents

Thousands of people make the decision to relocate to the USA from the UK every year, yet there are many who make the decision without being in possession of all the facts surrounding the taxation of their pension funds. The decision to leave the UK to enjoy retirement in a country that offers a better quality of life is often driven by the heart. However, retirees need to be absolutely certain that their pension will cover the entire length of their retirement. Leaving the UK to enjoy the latter years of life will remove the safety net of the British welfare system, and that can have devastating consequences.

Unfortunately, QROPS pension rules in the USA are more complex than in most other countries in the world, and this means that a foreign-based pension fund cannot simply be ‘plugged in’ to the American system. However, recent changes to the regulations mean that QROPS USA is now live, and there are a number of schemes that have recently been brought to the market. Several US 401K pensions have now been officially registered with Her Majesty’s Revenue and Customs (HMRC), but there are still various compatibility problems seem to originate in the USA.

Problems of incompatibility arise when USA residents have accrued their pension funds in the UK or another foreign jurisdiction. Foreign pension funds are not recognised by the American government, so contributions and investment growth may be subject to taxation from the Inland Revenue Service (IRS) in the States. The IRS has extremely stringent guidelines governing the reporting of taxation issues, so a new breed of QROPS is needed specifically for expats living in the USA. Thankfully, there are now pension products that comply with the reporting requirements of both the HMRC and the IRS.

The benefits of transferring pension funds to a QROPS pension with American compatibility are wide-ranging, but the most significant involves the protection of investment growth from US Federal Income Tax. This type of overseas pension fund will also enable people to draw a tax-free initial lump-sum of up to 30% of the fund’s value. USA residents can also be confident that their pension incomes are not subject to UK taxes, and that is an issue that can allow people to plan their financial future accurately. The advantages and benefits of QROPS USA are extensive, but both the HMRC and IRC websites contain detailed information for fund-owners.

Under the British taxation system, a 55% charge is levied on unused funds that still remain in a pension fund; however, American-compliant pension funds incur absolutely no charges. This type of pension scheme incurs no tax on funds that pay regular benefits, and funds which aren’t in drawdown are also free from taxation. A QROPS also falls outside of UK inheritance tax laws, so there really are several benefits to setting up such a pension arrangement.

 

A Qualifying Recognised Overseas Pension Scheme is open to foreigners wishing to reside in the USA, American nationals who have been working outside the USA and American nationals who currently live outside the USA. It allows retirees to take control of their finances, as they can protect their pensions from the unfair or unnecessary tax burden imposed by the country of their origin. For more information, please visit – http://www.whichoffshore.com/qrops

 

 

 

US Liberty Media walks away from deal to acquire Belgian Telenet

US cable TV company Liberty Global Inc (NASDAQ:LBTYA) said it would not prolong its offer for Belgian takeover target Telenet Group Holding NV (EBR:TNET) after the expiration deadline set for today.

In an official announcement in Belgian business dailies De Tijd and L’Echo, the US firm said that it held 58.3% of Telenet’s shares and 58.4% of its voting rights after on Monday a further 9.49m shares and 3,000 warrants were tendered to its voluntary cash offer.

Liberty, which previously owned 50.2% in Telenet, launched on 18 December a EUR1.96bn (USD2.6bn), or EUR35.00 a share, offer for the rest of the stock. The bid, to be funded with cash on hand and borrowings, could result in Telenet being delisted.

Last week, the target released a trading update ahead of schedule, saying its revenues last year had increased 8.2% to EUR1.49bn, up from analysts’ average forecast of EUR1.48bn and the company’s expectation for 7% to 8% growth.

Liberty had previously questioned the target’s growth forecasts for the period between 2012 and 2018, saying it would not lift its bid.