News Archive

Uber to use regular taxi drivers in Germany

FRANKFURT (Reuters) – Online transportation company Uber said on Monday it would offer services using regular, licensed taxi drivers in Germany, where taxi associations have been trying to stop it operating.

Uber said it would start its UberTaxi service — which uses regular taxi drivers to pick up rides in their down time — in Berlin and Hamburg before rolling it out in other cities.

While UberTaxi’s prices often undercut those of the regular taxi organizations trying to block the company, the service can benefit individual drivers by finding them passengers at times they would otherwise have been waiting on a stand.

The UberTaxi service is already running in London and New York and Uber is starting it in Germany after attempts to launch other services were blocked.

Courts in Berlin and Hamburg have banned Uber’s classic low-cost, limousine pick-up service UberBlack as well as UberPop, a newer ride-sharing service that links private drivers with passengers.

The courts said Uber’s drivers did not comply with German law for the commercial transportation of passengers.

Uber also said it would modify its UberBlack service to comply with the Berlin court ruling — while also appealing against it — and was considering contesting the Hamburg ruling.

Uber, which was recently valued at $18 billion, has been shadowed by skirmishes with taxi operators and local authorities in many cities where it operates, starting in its home base of San Francisco.

It is active in 43 countries and has pulled out of only one city: Vancouver, Canada.

The Berlin court said last week there was no way of telling whether private drivers using the UberPop mobile phone app were fit for the special responsibility of carrying passengers.

It said the UberBlack service did not meet the legal requirement for taxis to return to their service center and so fell between regulations for taxi and rental car services.

(Reporting by Harro ten Wolde; editing by David Clarke)

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UBS eyes higher shareholder returns in new group structure: CFO

LONDON (Reuters) – A corporate structure unveiled by UBS AG (UBSN.VX) on Monday will lead to higher shareholder returns in the long run, Chief Financial Officer Tom Naratil told Reuters.

Switzerland’s largest bank is creating a new group holding company in response to regulatory demands aimed at ensuring banks are easier to break up if they run into trouble.

“In the long run it will (increase return on equity),” Naratil told Reuters, adding it was hard to assess the exact uplift on returns but that without a group holding company UBS could have been forced to hold more capital, leading to lower returns per unit of capital.

“It’s clearly the biggest move that we have had to make in our corporate structure,” Naratil said, adding that the existing bank legal structure, which revolved around a parent company and branches, was the most effective before the Basel III global banking rules but was no longer optimal.

UBS, which has radically reformed its business after the financial crisis by greatly scaling back its fixed income activities, has been working on the new corporate structure for three years, according to documents published on Monday.

It also considered an alternative involving forcing assets out of its existing parent company, but concluded this would be “very complex and time consuming”, Naratil said.

Such a plan could have taken up many more years and would have required complicated discussions with debt holders, Naratil added. 

(Reporting by Laura Noonan; Editing by David Holmes)

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Deaths linked to GM ignition-switch defect rise to 23

DETROIT (Reuters) – The number of deaths linked to a faulty ignition switch in General Motors Co (GM.N) cars rose by two last week to 23, according to a report Monday from the lawyer overseeing a program set up to compensate accident victims.

Since Aug. 1, 867 claims for compensation for serious injuries or deaths said to have been caused by the switch had been received by the program, which is being overseen by lawyer Kenneth Feinberg. That is up from 850 last week.

As of Friday, 23 death claims had been deemed eligible, as well as 16 claims for serious physical injuries, according to updated statistics provided by Feinberg’s office. Last week, those numbers were 21 and 16, respectively.

The program will continue to receive applications until Dec. 31 on behalf of individuals injured or killed in accidents they say were caused by the switch. The problem with the switch can cause it to slip out of position, stalling the vehicle and disabling air bags. The fault led to the recall of 2.6 million vehicles earlier this year.

In the initial update after the program’s launch, Feinberg’s office reported approving 19 death claims, more than the 13 deaths the U.S. automaker had officially acknowledged. As of Friday, a total of 153 death claims had been submitted to the program, up from 150 previously.

GM executives have said Feinberg will determine how many people are eligible for compensation under the program and that the fund has not been capped.

Under the program’s protocol, eligible death claims will receive at least $1 million, which could increase depending on factors such as whether the deceased had any dependants. GM has set aside $400 million to cover the compensation costs, and said the total could rise by another $200 million.

Feinberg’s office said last week it has made the first cash offers to about 15 people. At least three families so far have accepted settlement offers from the program, including the family of Trent Buzzard, a two-year old boy who was paralyzed from the chest down in an April 2009 accident involving a 2005 Chevy Cobalt, according to a lawyer for the family, Robert Hilliard.

(Reporting by Ben Klayman in Detroit and Jessica Dye in New York; Editing by Peter Galloway)

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Airbus seen set to win A350 certification on Tuesday

PARIS (Reuters) – Airbus (AIR.PA) looks set to win European safety certification for its newest airliner, the A350, on Tuesday, people familiar with the plans said.

The stamp of approval will allow Europe’s newest wide-body jetliner to enter service once the first production model has been tested and delivered to launch customer Qatar Airways, which the companies expect to happen in the fourth quarter.

The roughly 300-350 seat A350 was developed at an estimated cost of $15 billion to compete with the Boeing (BA.N) 787 Dreamliner.

Both use a carbon-composite design to save weight and cut fuel costs.

The A350 is also expected to compete with Boeing’s larger 777 when a new version comes out later in the decade.

After more than year of flight trials, the European Aviation Safety Agency and the U.S. Federal Aviation Administration are expected to give their approvals simultaneously, but without the glitzy celebrations which marked the certification of the A380 superjumbo in 2006.

Airbus officials said last week the certification could take place in coming days. The company declined further comment. EASA was not immediately available for comment.

Airbus had set a September target for the first flight of its upgraded A320neo, which took place on Thursday, and for the certification of the A350.

(Reporting by Tim Hepher; editing by Jason Neely)

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EU regulator to give reasons for inquiry into Irish aid to Apple

BRUSSELS (Reuters) – The European Commission will publish on Tuesday its reasons for opening an in-depth inquiry into Irish government aid to Apple (AAPL.O), a Commission spokesman said.

Antoine Colombani, spokesman for Competition Commissioner Joaquin Almunia, said the Commission would publish a “non-confidential version of its decision” to open the probe on Tuesday.

The Commission announced in June it was investigating Ireland, the Netherlands and Luxembourg over deals they have cut with Apple, Starbucks (SBUX.O) and Fiat. (FIA.MI)

(Reporting by Barbara Lewis; editing by Adrian Croft)

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Swiss bank UBS says it has started FX settlement talks

ZURICH (Reuters) – Switzerland’s UBS has begun settlement talks over allegations it was involved in manipulating foreign exchange rates, the bank said, and warned that it could face a material penalty in any deal struck.

The terms proposed in the talks included findings that UBS did not have adequate controls over its foreign exchange business, it said in a share-swap prospectus published on Monday.

UBS, Switzerland’s largest bank, did not identify the regulator concerned but the prospectus said that other investigating authorities could also start settlement talks in the near future. A spokesman for the company declined to elaborate beyond what was said in the prospectus.

However, sources told Reuters on Friday that Britain’s Financial Conduct Authority (FCA) was talking to UBS and five other banks – Barclays, HSBC, Royal Bank of Scotland, JP Morgan and Citi – about a possible settlement that could results in each bank being fined hundreds of millions of pounds.

The banks are expected to be fined different amounts, depending on the gravity of the alleged misconduct, the sources said.

As well as the FCA, authorities in the United States, Switzerland and Hong Kong are investigating the $5.3 trillion a day foreign exchange market.

Reuters reported this month that banks were pushing for a coordinated settlement with the FCA, which was on track to be reached by the end of the year.

The maximum potential fine for one bank was put forward at between 300 million pounds ($487.11 million) and 400 million pounds, with the others pegged below 300 million pounds, one source familiar with the matter said.

The FCA launched an investigation last October into allegations that bank traders used advance knowledge of client orders to try to manipulate foreign exchange benchmarks.

In recent months the investigation has focused on lax internal compliance, oversight failures and market conduct breaches by individual employees rather than deliberate manipulation of the market, sources have told Reuters.

More than 30 traders from various banks have been put on leave, suspended or fired. No individual or bank has been formally accused of any wrongdoing.

(1 US dollar = 0.6159 British pound)

(Reporting by Joshua Franklin; Additional reporting by Carmel Crimmins; Editing by David Goodman)

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Dollar broadly stronger as Hong Kong unrest caps stocks

LONDON (Reuters) – The dollar hit its highest in almost two years against the euro with German inflation data expected to keep pressure on the ECB to ease monetary policy further, while unrest in Hong Kong hurt Asian-exposed European shares.

The dollar was broadly stronger, hitting a four-year high against a basket of currencies, a six-year peak against the yen and a 13-month high against the New Zealand dollar. Reserve Bank of New Zealand data showed the central bank intervened last month to speed its currency’s descent.

Data on Friday showing higher U.S. growth in the second quarter fueled speculation that a Federal Reserve interest rate hike may come sooner than expected, in striking contrast with the outlook for the European Central Bank.

“The strength of the dollar is forcing investors to move away from a lot of the stock market assets and put it into the greenback,” said James Hughes, chief market analyst at Alpari.

“With a potential rate hike becoming more likely and the data showing constant improvement, it’s no surprise we are seeing the positive move.”

Near-zero inflation in the euro zone is nurturing expectations the ECB will eventually start printing money to buy government bonds, launching a program known as quantitative easing, or QE.

Analysts polled by Reuters see German inflation at 0.8 percent in September, with euro zone inflation data due on Tuesday expected to show price growth at 0.3 percent. Spanish inflation came in at minus 0.3 percent, in line with forecasts.

The ECB meets on Thursday.

The euro earlier dropped to a 22-month low of $1.2664 and last stood at $1.2690, unchanged on the day.

The dollar index, which tracks the U.S. unit against a basket of major rivals, climbed as high as 85.798. It was last flat at 85.627.

“I see no reason to think that the dollar’s rally will come to an end any time soon… The main driving force – the divergence of monetary policy – is likely to remain in place for the next six months to a year at least,” Marshall Gittler, Head of Global FX Strategy at IronFX.

The pan-European FTSEurofirst 300 index was flat at 1,376.98 points, as falls in Asian markets, fueled by unrest in Hong Kong, capped a Wall Street-led rebound. Asia-exposed shares such as miner Rio Tinto, emerging market-focused lender HSBC and Richemont fell between 1 percent and 1.7 percent as riot police advanced on Hong Kong democracy protesters.

Hong Kong shares dropped 2.3 percent to three-month lows, hit by the worst unrest since China took back control of the former British colony two decades ago. MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.2 percent, hitting its lowest level since mid-May.

“Hong Kong is a real storm in a teacup but I’d sell HSBC after its outperformance,” Justin Haque, a broker at Hobart Capital markets said. “This is another layer that adds to a gloomy outlook for October.”

In the bond market, Italian and Spanish yields rose 4-5 bps to 2.43 percent and 2.25 percent, respectively, on the back of concerns about political instability.

Italian Prime Minister Matteo Renzi faces rumors that he could face pressure to quit, while the president of Spain’s Catalonia region signed a decree on Saturday calling for a referendum on independence to be held on Nov. 9.

(Reporting by Marius Zaharia; Additional reporting by Marc Jones, Jamie McGeever and Francesco Canepa; Editing by Toby Chopra)

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Lenovo says $2.1 billion IBM x86 server deal to close on Wednesday

BEIJING (Reuters) – Lenovo Group Ltd (0992.HK) will close its acquisition of International Business Machines Corp’s (IBM) (IBM.N) x86 server division on Oct 1 for $2.1 billion, giving the Chinese tech firm the firepower to win business clients from U.S. rivals.

The closing purchase price is lower than the $2.3 billion announced in January because of a change in the valuation of inventory and deferred revenue liability, Lenovo said. Roughly $1.8 billion will be paid in cash and the remainder in stock.

The purchase is Lenovo’s latest since overtaking Hewlett-Packard Co (HP) (HPQ.N) as the world’s top personal computer (PC) maker last year, in its quest to diversify away from a steadily shrinking PC market. Earlier this year, Lenovo also said it would pay $2.9 billion for Google Inc’s (GOOG.O) Motorola smartphone unit.

In an interview, Lenovo Chief Executive Yang Yuanqing said the IBM deal opened a new “growth engine” for his company. He said he expected the x86 unit to bring in $5 billion in its first year and deliver margins higher than the 4 percent of Lenovo’s PC business.

“In the large and medium enterprise space we can now fully leverage IBM technology to compete with brands like HP and Dell,” Yang said by telephone. “We can combine this good technology with Lenovo’s efficient operations.”

IBM’s x86 server business has trailed those of HP and Dell Inc [DI.UL] in market share. But Yang said Lenovo has expertise competing in markets with razor-thin margins, gained during its journey to becoming the world’s largest PC maker.

Lenovo currently sells a line of low-end servers under the ThinkServer brand, but the company pursued IBM’s x86 portfolio because its higher-end machines can perform more complex analytics and database-related functions.

The x86 server team will continue to be led by former IBM executive Adalio Sanchez, who will report to Gerry Smith, president of Lenovo’s enterprise business group, Lenovo said in a statement announcing the deal’s impending closure.

Some observers expected the deal would take longer to close because of uncertainty about how U.S. regulators might respond to a Chinese company buying a server business during a time of cyber-security tensions between the United States and China.

Lenovo previously bought its consumer PC laptop business from IBM in 2005.

In recent years, IBM has been undergoing a strategic shift away from hardware, focusing instead on higher-margin cloud and big data products.

(Editing by Christopher Cushing)

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UBS launches share-for-share exchange for new holding company

ZURICH (Reuters) – UBS said on Monday it was launching a share-for-share exchange to set up a new holding company, UBS Group AG, part of a restructuring drive to ensure it can be broken up more easily in a crisis.

Switzerland’s largest lender said back in May it planned to break with its existing structure in which a parent company holds a host of interconnected branches, in order to satisfy regulators’ demands for separate legal entities in different regions.

The Swiss bank said in a prospectus it expected to propose a supplementary capital return of at least 0.25 francs a share once it had completed the transaction. The payout will likely be in 2015, based on the current timetable.

“As announced previously, the establishment of a holding company is a significant step in a series of envisaged changes to UBS’s legal structure that are intended to substantially improve its resolvability in response to evolving industry-wide ‘too-big-to-fail’ requirements,” the bank said.

The changes to UBS’s legal structure will not affect its strategy, the bank said.

The bank released some updated figures as of Aug 31 with the prospectus, which showed retained earnings edged up to 27.1 billion Swiss francs ($28.44 billion) from 26.3 billion francs in the second quarter. Equity attributable to shareholders also rose to 50.8 billion francs from 49.5 billion francs.

UBS reaffirmed that it expected the new structure will allow it to qualify for a capital rebate under Switzerland’s too-big-to-fail requirements, resulting in lower overall capital requirements for the bank.

In May, Swiss financial regulator FINMA published provisional rules that would require UBS to hold total capital worth 19.2 percent of its risk-weighted assets by 2019.

In addition to setting up the new holding company, UBS Group AG, the bank also plans on establishing a Swiss subsidiary in mid-2015 and a holding company for its U.S. operations by mid-2016.

The change in structure means UBS’s businesses can be separated more easily if one ran into trouble without jeopardizing the others, preventing a repeat of 2008 when Swiss taxpayers had to save the bank from huge losses in the United States.

The previous model of interconnected branches meant the entire business had to be rescued by Swiss taxpayers when it ran up more than $50 billion in U.S. mortgage losses.

(This version of the story corrects million to billion in sixth paragraph)

(Reporting by Joshua Franklin)

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