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Japan’s top business lobby agrees to raise base pay next year: media

TOKYO (Reuters) – Japan’s most influential business lobby has agreed to raise workers’ base pay for the first time in six years as the economy gains momentum and corporate earnings improve, the Asahi newspaper reported on Sunday.

Many economists say an increase in base pay is essential to Prime Minister Shinzo Abe’s pledge to end 15 years of mild deflation and to help the Bank of Japan meet its 2 percent inflation target.

The Keidanren business lobby will encourage its member companies to raise base pay next year in annual spring wage negotiations, the Asahi reported, citing a draft of the business lobby’s negotiations strategy.

The Keidanren will leave it up to each industry to decide how much it will raise base pay, but its approval of wage hikes could encourage labor unions to request even higher pay and help lift wages throughout the economy.

BOJ officials have expressed some concern that workers’ salaries have been slow to rise this year, so indications that pay will increase next year could make it more likely that the BOJ can meet its inflation target in the two-year time frame allowed for.

(Reporting by Stanley White; Editing by Paul Tait)

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Sony to give up on sale of its battery unit: media

TOKYO (Reuters) – Japan’s Sony Corp has decided not to sell its lithium-ion battery unit, media reported on Sunday, in a gamble that it can turn the business around with a weak yen and growing demand for smart phone batteries.

In addition to a weak yen, which can boost overseas earnings, the battery unit is also seeing increased demand for some of its new products, the Nikkei business daily reported.

For the past two years Sony had been planning to offload the unit, which was a pioneer in making lithium-ion batteries for computers and mobile devices but has struggled recently against cheaper South Korean rivals.

A government turnaround fund tried to broker a sale of the battery business to a Nissan Motor Co Ltd and NEC Corp joint venture earlier this year.

However, talks have stalled and Sony has now told the turnaround fund that it will hold on to the battery unit and develop it as a core business, the Nikkei reported, citing unidentified sources.

Sony, which last year sold its chemical business to the government turnaround fund, is trying to revive the fortunes of its consumer electronics business by focusing on cameras, gaming and mobile devices.

(Reporting by Stanley White; Editing by Paul Tait)

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Monte Paschi shareholders delay cash call, top executives may quit

SIENA, Italy (Reuters) – Italy’s third-biggest bank Monte dei Paschi di Siena was forced to delay a vital 3 billion euro ($4.1 billion) share sale to raise capital until mid-2014 because of shareholder opposition, plunging its turnaround plan into uncertainty.

The bank’s chairman and its chief executive may now resign after their plan to launch the cash call in January was defeated at an extraordinary shareholder meeting on Saturday due to the vote of Monte Paschi’s top shareholder.

The world’s oldest bank needs to tap investors for cash to pay back 4.1 billion euros in state aid it received earlier this year and avert nationalization after being hammered by the euro zone debt crisis and loss-making derivatives trades.

The unprecedented clash between the lender’s executives and its main shareholder – a charitable banking foundation with close links to Siena politicians – casts a pall over a tough restructuring meant to revive its fortunes.

Chairman Alessandro Profumo, a strong-willed and internationally respected banker who was formerly the chief of UniCredit, said he and CEO Fabrizio Viola would decide in January whether to step down.

“These are decisions one takes in cold blood and in the right place,” Profumo said at the meeting.

“What I have on my mind is a 3 billion euro cash call because we need to pay back 4 billion euros to taxpayers. Today this is uncertain and at risk,” he told a press conference.

Viola, sitting at his side, told reporters he would do everything “so that the ship does not sink”, but that he could not take responsibility for mistakes made by others.

A board meeting is scheduled for mid-January, a bank spokesman said.

Profumo and Viola had already secured a pool of banks ready to guarantee the rights issue, but only if it was carried out by the end of January.

They said delaying it would make fundraising harder because it would likely coincide with a string of cash calls by other Italian and European lenders triggered by a sector health check, and could precipitate the Tuscan bank’s nationalization.

But the cash-strapped Monte dei Paschi foundation – whose stake in the bank is big enough to veto any unwanted decision – forced a postponement until at least mid-May to win more time to sell down its 33.5 percent holding and repay its own debts.

An aide described the 56-year-old Profumo, who quit UniCredit in 2010 after clashing with that bank’s foundation shareholders and joined Monte dei Paschi in April 2012, as “very annoyed”.

Italian newspapers said former European Central Bank policymaker Lorenzo Bini Smaghi and Carlo Salvatori, chairman of the Italian unit of German insurer Allianz, were among possible candidates to replace him if he stepped down.

Antonella Mansi, a feisty 39-year-old businesswoman recently appointed head of the Monte dei Paschi foundation, said her insistence on a cash call delay did not amount to a no-confidence vote in the bank’s management.

But she said that carrying out the capital increase in January would massively dilute the foundation’s holding, leaving it with virtually nothing to sell to reimburse debts of 340 million euros.

“We have a precise duty to ensure (the foundation’s) survival. You can’t ask us to let it collapse,” she said.

Analysts however said a delay, and the possibility of Profumo resigning, might undermine the whole rescue of the bank.

“It’s important to carry out the capital increase as early as possible,” said Roberto Lottici, fund manager at Ifigest. “The risk is that the bank finds itself rushing into a cash call later at a lower price than what it could achieve now.”


The rights issue, along with a painful restructuring plan, is among the conditions the European Commission imposed before giving its green light to the state aid for Monte dei Paschi.

But in Siena, where the bank is known as “Daddy Monte” and is the biggest employer, fears that the cash call might sever the umbilical cord between the lender and the city run high.

Siena mayor Bruno Valentini, whose city council is the top stakeholder in the Monte dei Paschi foundation, said on Friday a postponement might help keep the bank in Italian hands.

“We cannot let the third biggest bank in this country fall prey to foreign interests,” he said. “Monte dei Paschi is not just an issue in Siena, it is a big national issue.”

Several small shareholders at the meeting echoed that view, although one, Luigi Barile, accused the foundation of pushing the lender “to the edge of a precipice”.

Under the agreement with Brussels, if Monte dei Paschi cannot complete the capital increase by the end of 2014 the Treasury would convert the bonds it bought from the bank into shares, effectively nationalizing it.

The bank, which is cutting 8,000 jobs and shutting 550 branches, said a delay in the cash call would cost it at least 120 million euros in interest payments owed to the state on the bonds. ($1 = 0.7303 euros)

(Additional reporting by Danilo Masoni; Editing by David Evans)

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Monte Paschi chairman to decide in January on possible resignation

SIENA, Italy (Reuters) – Alessandro Profumo, chairman of troubled Italian lender Monte dei Paschi di Siena (BMPS.MI), said on Saturday he would decide whether to step down in January.

“These are decisions one takes in cold blood and in the right place, I have nothing to say,” Profumo told a shareholder meeting.

He said a board meeting of the bank was scheduled to be held in January and he would take his decision then.

Speculation has been mounting that Profumo might quit because of a clash with the bank’s top investor over the timing of a vital capital increase.

(Reporting by Silvia Aloisi, editing by Valentina Za)

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Apple CEO’s 2013 pay steady but sees part of stock award shrink

SAN FRANCISCO (Reuters) – Apple Inc CEO Tim Cook earned roughly the same in 2013 as in 2012, but lost part of his performance-based stock award during a year in which intense competition and margin pressure bludgeoned the iPhone maker’s stock.

Cook took home $4.25 million, including a base salary of $1.4 million and a performance bonus of $2.8 million, roughly on par with 2012, the company said in a preliminary proxy statement on Friday.

But he gave up about 7,100 shares tied to an annual performance-dependent award, based on shareholder returns from August 24 of 2012 to August 25, 2013. Apple’s stock lost a quarter of its value over that one-year period.

The company also advised shareholders to vote down a resolution by activist investor Carl Icahn, who proposed the iPhone maker buy back $50 billion worth of shares in fiscal 2014. It was the first time the company had publicly voiced its response to Icahn’s demands.

Apple argued on Friday it has already returned $43 billion in dividends and share repurchases over the first six months of its roughly $100 billion capital return program.

The “dynamic competitive landscape and the company’s rapid pace of innovation require unprecedented investment, flexibility and access to resources,” Apple said in advising shareholders to reject Icahn’s proposal.

Known for decades of strong-arm tactics, including proxy fights, Icahn has repeatedly made it clear that his proposal is not a sign that he stands against Apple’s management. The billionaire has discussed the issue with Cook in past months, arguing via tweets that a buyback of as much as $150 billion is within the company’s means and would prop up its stock.


Since taking over from the late Steve Jobs, Cook has steered Apple in a more investor-friendly direction, including the establishment of one of the industry’s biggest capital return programs.

Apple’s board in 2012 granted Cook an award of one million restricted stock units (RSUs) – one of the largest pay packages for an executive in a decade, intended to signal its confidence in Cook in the wake of the late Steve Jobs.

The award vests annually, but part of the grant depends on shareholder returns versus a basket of Apple’s corporate peers, including Cisco Systems Inc and Google Inc.

But Apple has come under increasing strain from rivals like Samsung Electronics and Huawei in key markets, while Inc and other manufacturers are using Google’s Android software to launch competing tablets.

Apple’s profit and margins slid in the September quarter despite selling 33.8 million iPhones. Sources have said demand for the $100 cheaper, brightly hued iPhone 5C has severely lagged sales for the top-tier 5S, spurring concerns about the iPhone’s market positioning and its ability to compete with a growing profusion of lower-cost rivals.

This month, it finally secured a deal with China Mobile after protracted negotiations, a deal that should enlarge its footprint in the world’s largest telecoms market.

(Reporting by Edwin Chan; Editing by Tim Dobbyn)

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U.S. bank watchdogs to consider Volcker rule tweak

WASHINGTON (Reuters) – U.S. bank regulators said on Friday they would consider allowing banks to hold on to certain complex securities despite a new rule limiting risky investments.

The announcement came after lenders warned in a lawsuit of hefty losses from the so-called Volcker rule.

The American Bankers Association welcomed the regulatory action. “ABA appreciates the regulators taking this important step, and our experts are studying to see if the affected banks indeed find immediate interim relief from this action,” ABA president Frank Keating said in a statement.

The Volcker rule prohibits banks from owning hedge funds or private equity funds to reduce risk, but the ban included a type of security that a group of community banks regard as harmless.

The regulators said they would now reconsider whether these instruments could be made exempt and would make a decision no later than January 15.

A change would mark the first finessing of the Volcker rule, one of the most hotly debated provisions of the Dodd-Frank law, which was designed to overhaul Wall Street after the devastating financial crisis of 2007-09.

Banks had argued in court they needed a decision before the end of the year because accounting rules would force them to write down $600 million in capital this quarter if they knew they had to sell the securities later.

But the regulators indicated that a decision by the middle of January was early enough.

“The accounting staffs of the agencies believe that … any actions in January 2014 that occur before the issuance of December 31, 2013, financial reports should be considered when preparing those financial reports,” they said.

The regulators have to reply to the banks in court before Monday at 9 a.m., but it was unclear whether the statement would alter the course of the lawsuit, in which the banks had asked for a stay of the relevant part of the rule.

At stake are so-called collateralized debt obligations backed by trust preferred securities – or TruPS CDOs – which have hybrid characteristics of both debt and equity and can get a favorable tax treatment.

The Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation had earlier told banks they did not immediately need to sell the assets in question.

The case was filed by the American Bankers Association, in conjunction with CBT Bancshares Inc and its Citizens Bank and Trust Co subsidiary, as well as MBT Financial Corp and its Monroe Bank and Trust Co subsidiary.

(Reporting by Douwe Miedema; Editing by Kenneth Barry and Andrew Hay)

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Abbott Labs settles with U.S. over kickback claims

(Reuters) – Abbott Laboratories (ABT.N) has agreed to pay the United States $5.48 million to resolve allegations that it paid improper kickbacks to induce doctors to use some of its products, the U.S. Department of Justice said on Friday.

The settlement resolves allegations that Abbott paid well-known doctors for teaching assignments, speaking engagements and conferences, expecting that they would arrange for the hospitals with which they were affiliated to buy Abbott’s carotid, biliary and peripheral vascular products.

This activity violated the federal Anti-Kickback Act and led to the submission of false Medicare claims, the government said, in a case brought under the federal False Claims Act.

Carotid and peripheral vascular products are implanted to treat circulatory disorders by increasing blood flow, while biliary products are implanted to treat obstructions in the bile ducts, the government said.

“Patients have a right to treatment decisions that are based on their own medical needs, not the personal financial interests of their health care providers,” Assistant Attorney General Stuart Delery of the Justice Department’s civil division said in a statement.

Abbott spokeswoman Angela Duff said the Abbott Park, Illinois-based company is pleased to settle, and did so to avoid the uncertainty and cost of lengthy litigation. “Abbott believes its actions were appropriate at all times,” she added.

The Justice Department said the settlement resolves allegations originally brought by former Abbott employees Douglas Gray and Steven Peters. They will receive more than $1 million from the settlement, the department added.

(Reporting by Jonathan Stempel in New York; Editing by Richard Chang)

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Wall Street ends mostly flat, but scores weekly gains

NEW YORK (Reuters) – U.S. stock indexes closed mostly flat on Friday, with the Dow snapping a six-day streak of record closing highs after investors took a break from this week’s rally.

Shares of Twitter Inc (TWTR.N), the social media company that has nearly tripled in value since going public in early November, slid 13 percent to close at $63.75 after investors took profits. Twitter was among the most actively traded stocks on the New York Stock Exchange on Friday.

The tech-heavy Nasdaq fell 0.25 percent, with leaders like Apple (AAPL.O) off 0.7 percent at $560.09 and Facebook Inc. (FB.O) down about 4 percent at $55.44. The Nasdaq has surged 37.7 percent this year, making it the best performer among the three major U.S. stock indexes.

“Consolidating a little bit here is probably healthy rather than continuing a march higher without taking a breath,” said Joseph Benanti, managing director of Rosenblatt Securities in New York. “It’s a healthy pause with some profit-taking.”

Volume overall was light, as it has been all week. About 4 billion shares traded on U.S. exchanges, well below the average of about 6.1 billion this month, according to data from BATS Global Markets.

Both the Dow and the SP 500 wrapped up a second straight week of solid gains. The SP 500 posted its best two-week period since July, while the Dow marked its best two weeks since June 2012. The SP 500 has soared 29.1 percent this year, on track for its best year since 1997. The Dow has climbed 25.8 percent this year, on track for its best year since 1996.

Sprint Corp (S.N) shares jumped 8.3 percent to $10.79, following speculation that a deal by Japan’s SoftBank Corp (9984.T) to acquire U.S. wireless carrier T-Mobile US (TMUS.N) is closer to getting done. Sprint’s stock also hit a 52-week high at $11.46 in Friday’s regular session.

The Dow Jones industrial average .DJI fell 1.47 points or 0.01 percent, to end at 16,478.41. The SP 500 .SPX dipped just 0.62 of a point, or 0.03 percent, to finish at 1,841.40. The Nasdaq Composite .IXIC dropped 10.59 points or 0.25 percent, to close at 4,156.59.

Friday’s slight decline also halted the SP 500’s run of four record closing highs in a row.

For the holiday-shortened week, the Dow gained 1.6 percent, the SP 500 added about 1.3 percent and the Nasdaq advanced about 1.3 percent. The U.S. stock market was closed on Wednesday for Christmas and trading had ended early on Tuesday.

In company news, Textron Inc (TXT.N) agreed to buy aircraft maker Beechcraft Corp for $1.4 billion in cash. Textron shares rose 1.1 percent to close at $36.61.

General Motors Co’s (GM.N) China joint venture will recall close to 1.5 million vehicles because of potential safety issues in one of the biggest recalls in the world’s biggest auto market. GM’s stock fell 1.4 percent to end at $40.94.

Advancers outnumbered decliners on the NYSE by a ratio of about 8 to 7. On the Nasdaq, about 13 stocks fell for every 12 that rose.

(Refiles to add dropped word ‘among’ in second paragraph)

(Editing by Jan Paschal)

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U.S. judge expands classes in lawsuits over $34 billion mortgage debt

NEW YORK (Reuters) – A Manhattan federal judge on Friday expanded the scope of class-action litigation accusing banks of concealing the risks of more than $34 billion of mortgage-backed securities prior to the financial crisis.

U.S. District Judge Harold Baer said investors may now pursue claims as a group against Citigroup Inc (C.N), Goldman Sachs Group Inc (GS.N) and UBS AG (UBSN.VX) over an estimated $11.9 billion of securities.

Those offerings were linked to the RALI Mortgage Asset-Backed Pass-Through Certificates, which were issued in 2006 and 2007 by the former Residential Capital LLC. One offering was the subject of a partial $100 million settlement this year.

Baer also said investors may pursue a similar case against Royal Bank of Scotland Group Plc (RBS.L) over an estimated $22.5 billion of securities in 12 offerings linked to the Harborview Mortgage Loan Trusts, which were also created in 2006 and 2007.

The judge also named the Iowa Public Employees Retirement Systems and Illinois’ Midwest Operating Engineers Pension Trust Fund as class representatives in the Harborview case.

Lawyers for the bank defendants did not immediately respond to requests for comment.

The lawsuits are among the larger cases accusing banks that packaged mortgages into securities of deceiving investors in prospectuses about the quality of the underwriting, causing investors to lose money when market conditions deteriorated.

Baer rejected arguments that the investor claims were too dissimilar to justify grouping them, which can result in higher recoveries at lower cost and that some class members had been sophisticated enough to know the risks of what they bought.

But he also said many of the same arguments have been pressed by various parties over the course of more than five years of litigation. Both lawsuits were filed in 2008.

“At the outset, as I reread defendants’ papers and this opinion, I was reminded of a thought ascribed to Albert Einstein, it goes like this, insanity is doing the same thing over and over and expecting different results,” Baer wrote.

Joel Laitman, a partner at Cohen, Milstein, Sellers Toll representing the lead plaintiffs in both cases, and who previously estimated the sums at issue, called Baer’s decision “very, very positive for the litigation.”

The cases in the U.S. District Court, Southern District of New York are New Jersey Carpenters Vacation Fund et al v. Royal Bank of Scotland Group Plc et al, No. 08-05093; and New Jersey Carpenters Health Fund et al v. Residential Capital LLC et al, No. 08-08781.

(Reporting by Jonathan Stempel in New York; Editing by Kenneth Barry)

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