News Archive

Prada says owners being investigated by Italian authorities over tax

SHANGHAI (Reuters) – Italian luxury fashion house Prada SpA said on Monday its chairwoman Miuccia Prada and her husband, chief executive officer and fellow shareholder Patrizio Bertelli, are being investigated by Italian authorities over past taxes.

The Hong Kong-listed company said in a statement it had been informed by the Italian Judicial Authority of the probe. It said neither it nor any of its subsidiaries was or is involved in this matter.

Reuters reported in January that Miuccia Prada and Bertelli were under investigation as part of a tax avoidance probe by Milan prosecutors. At the time, the company said it was not aware of investigations taking place.

On Monday, the company said that Miuccia Prada and her husband had made a voluntary disclosure to Italy’s tax authority in December last year, prompting an examination into certain past tax filings by the couple with respect to foreign owned companies.

Representatives for Miuccia Prada and Bertelli were not immediately available outside European business hours.

(Reporting by Brenda Goh; Editing by Miral Fahmy)

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Support for Anatolia’s Temrezli uranium

Anatolia Energy Ltd, the Turkish uranium explorer, said it raised enough funds in a recent A$6 million (US$5.2 million) placement to take it to a development decision on its Temrezli ISR project.

The raising has also coincided with a rebound in the spot price of uranium which began in August. The price, coming off nine-year lows of about US$28/lb, rose to US$36.50/lb on September 22.

No wonder then that the placement was said to be strongly over-bid, with existing shareholder support along with new institutional and sophisticated investors in Australia, UK and Asia.

Results of a prefeasibility study for Anatolia are expected in the current quarter to end-December while an environmental impact assessment is also being compiled.

Anatolia said it would use the funds raised at the end of August to complete these two key studies as well as earmarking A$1.5 million for drilling at its Sefaatli project.

“The Temrezli uranium project is quickly advancing towards a development decision later this year, and looking financially very robust. This placement allows us to fast-track our exploration programme at the Sefaatli project and other high priority targets within close proximity to Temrezli which offer opportunities to develop satellite operations that would ultimately feed into the Temrezli project, offering potential to increase the production rate and expand the mine life,” the company said.

Results of a preliminary feasibility study on the project, located in central Turkey, were released in May. It estimated just US$30 million of upfront capital to build the 1Mlb/y U3O8 project.

Over a 10-year period, the mine would generate US$310 million of free cash flow and an internal rate of return (IRR) of 109% at a uranium price of US$60/lb. Even at a much lower US$40/lb the project still earns around 60% IRR and free cashflow approaching US$140 million.

Anatolia is targeting first production in 2016.

The Sefaatli project comprises two known prospects, Deliler and Tuglu Tepe, where previous drilling outlined uranium mineralisation.

The company is also planning an airborne radiometric survey over the corridor between the Temrezli and Sefaatli projects to refine its targets in the area. This will happen in the first quarter of 2015.

The raising was done in two tranches, the first comprising 50 million shares at A8c/share. The second tranche of 25 million shares will require shareholder approval on October 8, and so will certain options issued as part of the raising.

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Six years after AIG bailout, trial asks: was it legal?

WASHINGTON (Reuters) – One of the more unusual trials to come out of the 2008 financial crisis is set to begin on Monday, when a federal judge will consider whether the U.S. government’s rescue of American International Group Inc (AIG.N) was, in fact, legal.

In a case that explores the limits on U.S. government power in responding to major financial crises, the trial is expected to revisit in detail the New York Federal Reserve’s September 2008 decision to extend a bailout package to AIG as the insurance giant was minutes from bankruptcy.

The AIG bailout, on the heels of the Lehman Brothers collapse in 2008, preceded the “too big to fail” auto and bank bailouts the federal government undertook during a U.S. financial crisis underpinned by faulty mortgage lending.

The major players in that drama will be back on the Washington stage during the six-week trial: Former Federal Reserve Chairman Ben Bernanke, and former Treasury Secretaries Timothy Geithner and Henry “Hank” Paulson.

A lawyer for the insurance giant’s former chief executive, Maurice “Hank” Greenberg, was expected to argue that the government unlawfully sought to punish AIG shareholders with excessively harsh terms.

Greenberg’s lawyers have said in court papers the bailout “offer” from the New York Fed to provide AIG an $85 billion loan in exchange for high interest rates and a nearly 80 percent stake in the company amounted to unconstitutional theft from AIG shareholders.

Greenberg, through his Starr International Co, was AIG’s largest shareholder at the time. Starr filed lawsuit, to considerable public scorn, in November 2011.

Government lawyers have defended the actions as appropriate, pointing out that the deal had been approved by the AIG board, as the company faced no other alternative to bankruptcy. Lawyers at the U.S. Department of Justice have described the case as a “conspiracy theory” and “built on a mistaken premise.”

“Starr’s case stems from a misperceived entitlement … that when AIG faced an existential crisis in September 2008, AIG was entitled to dictate the terms of its own rescue,” they said in papers filed before trial.

But U.S. Judge Thomas Wheeler last month rejected the United States’ bid to dismiss the lawsuit, which seeks as much $50 billion in damages, saying that the case involved “complex financial and economic issues” that deserved analysis.

The case poses two central questions. One is whether it was legal for the government to take $35 billion worth in AIG shares, and only effectively pay $500,000. The 5th Amendment to the U.S. Constitution prevents private property from being taken for public use without just compensation.

The other is whether the government was allowed to condition its first $85 billion loan on an equity stake in the company. Starr’s lawyers have argued that the Federal Reserve Act does not allow the government to demand a stake in the company in exchange for the loan.

AIG finished repaying the full $182.3 billion bailout in December 2012, leaving taxpayers with a nearly $23 billion profit.

Greenberg, 89, led AIG for nearly four decades before his 2005 ouster.

Arguing for Starr is David Boies, who represented former Vice President Al Gore before the U.S. Supreme Court during the contested 2000 presidential election.

Few experts even expected the case to go to trial.

“Certainly what the government did was unusual … my guess is that the government will win,” said Hester Peirce, a senior research fellow at George Mason University who studies financial regulation.

“The standard idea is that during a crisis, what the government should do is lend freely, but they should do so at a penalty rate,” Peirce said.

(Reporting by Aruna Viswanatha; Editing by Doina Chiacu and Andrea Ricci)

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Standard Chartered suspends certain Hong Kong operations

HONG KONG (Reuters) – Standard Chartered Plc (STAN.L) has suspended some of its Hong Kong banking operations, including over-the-counter services and check deposits, until further notice due to “situations in certain areas”, the Asia-focused lender said on Monday.

Standard Chartered has activated contingency plans to ensure continuous services to customers, the bank said in a statement. It said services including ATMs and cash deposits machines will be temporarily suspended in branches in Causeway Bay on Hong Kong island and Nathan Road in Kowloon.

Some Hong Kong financial firms advised staff to work from home on Monday or go to secondary offices after thousands of pro-democracy demonstrators blocked parts of the city and clashed with police.

Hong Kong police fired volleys of tear gas on Sunday to try to disperse protesters who have launched what they term a “new era” of civil disobedience to pressure Beijing into granting full democracy for the former British colony.

(Reporting by Denny Thomas and Umesh Desai; Editing by Paul Tait)

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Pimco sees $10 billion in withdrawals after Gross exit: WSJ

NEW YORK (Reuters) – Bill Gross’s exit from the investment firm Pimco had an immediate impact on the company, with investors withdrawing about $10 billion following the announcement, the Wall Street Journal reported, citing a person familiar with the matter.

Withdrawals were widely expected after the exit of Gross, one of the company’s co-founders, who announced his department on Friday. Gross had managed the $222 billion Pimco Total Return Fund, the world’s largest bond fund.

On Friday, Morningstar analyst Vincent Lui estimated that Gross’s departure could lead investors to pull hundreds of billions of dollars in assets from Pimco and invest them with Janus Capital Group, the firm Gross joined.

Investors have already pulled almost $70 billion from Gross’s flagship mutual fund from May 2013 through August 2014, according to Morningstar data, reducing the fund’s assets from a peak of $292.9 billion in April 2013.

(Reporting by Ryan Vlastelica; Editing by Nick Zieminski)

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UK firms’ risk appetite picks up even as election looms: Deloitte

LONDON (Reuters) – British companies are feeling their most confident about taking on business risk in seven years despite worries about an election in 2015 and a possible referendum on Britain’s membership of the European Union, a survey showed on Monday.

In a change of mood likely to be welcomed by the Bank of England, 72 percent of chief financial officers said now was a good time to take risk onto their balance sheets, according to the quarterly survey by accountants Deloitte.

That was up from 65 percent in the previous survey conducted in the second quarter.

“With a resurgent U.S. economy, good growth in the UK and plentiful liquidity, CFOs have shrugged off the effects of rising uncertainty and weakness in Europe,” said Ian Stewart, chief economist at Deloitte.

“But it’s not all plain sailing for the corporate sector.”

Perceptions of economic and financial uncertainty rose for the first time in two years, in large part due to Scotland’s independence referendum on Sept. 18 which threatened to break up the United Kingdom but eventually resulted in a ‘no’ vote.

The survey was conducted from Sept. 8 to 22.

The CFOs ranked the 2015 election and a future UK referendum on EU membership ahead of deflation, weakness in the euro zone and higher interest rates as risks to their businesses.

“Political risk has eclipsed worries about the economy as concerns for CFOs,” Stewart said.

Britain’s opposition Labour Party, which has a narrow lead in opinion polls, has promised tough action on power companies, banks and other sectors to help consumers. The Conservative Party has also raised concerns among big business by promising to hold a referendum on leaving the EU if it is re-elected.

Manufacturing lobby group EEF said on Monday that a survey of its own, of 160 companies in August, showed that 85 percent of manufacturers favoured staying in the EU while 7 percent would vote to leave.

The investment plans of Britain’s biggest companies are key to the hopes of the Bank of England and the government that the economic recovery can move onto a more sustainable footing

Deloitte’s survey was based on responses from 118 CFOs.

A third survey published on Monday showed private sector growth in Britain performed a bit less strongly in the three months to September and companies’ expectations of a pick-up in the fourth quarter were also less emphatic.

Employers group CBI said its Growth Indicator slowed to +23 in September from +35 in May due to slower growth in the retail and motor trades sectors. But the balance remained well above its long-run average, the CBI said.

The BoE expects a slowdown in the pace of Britain’s economic recovery in the second half of 2014, one of the reasons why it has been holding off from raising record low interest rates.

(Writing by William Schomberg; Editing by Hugh Lawson)

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U.S. trade pact in spotlight as new EU Commission faces grilling

BRUSSELS (Reuters) – The European Union’s likely next trade chief will face tough questions about how she would handle free trade negotiations with the United States when confirmation hearings for the new European Commission open on Monday.

Sweden’s Cecilia Malmstrom will be among the first group of nominees to former Luxembourg Prime Minister Jean-Claude Juncker’s new European Commission to face scrutiny from the European Parliament.

Malmstrom will have to address concerns among consumer and environmental groups and others that the EU’s plan to create the world’s largest free trade area with the United States could undermine European standards on data privacy, food safety and the environment.

The public hearings, being held over the next nine days, could make or break a plan to reshape the 28-nation EU under new management in an attempt to revive the economy and regain trust among its half-billion people.

Nominees for posts on the EU’s executive Commission, which both proposes EU laws and enforces compliance with them, will be subjected to three-hour hearings that could wreck the line-up proposed by Juncker.

The new team of 28 Commissioners, one for each EU country, includes five former prime ministers. It is scheduled to take over from the current team, led by Portugal’s Jose Manuel Barroso, for a five-year term starting Nov. 1.

Lawmakers are uneasy about several of Juncker’s appointments and the nominees from Britain, France, Spain and Hungary are expected to undergo particularly tough cross-examination.

“We will make sure all the commissioners face a very demanding level of scrutiny,” Gianni Pittella, leader of the center-left Socialists and Democrats Group in the European Parliament, said in a statement.


The European Parliament can only approve or reject the new Commission as a whole, in a vote scheduled for Oct. 22, but it has used its veto power to oust some nominees in the past.

Two of Juncker’s most controversial decisions were to give Britain’s Jonathan Hill control of banking and to put France’s Pierre Moscovici in charge of budget discipline.

German lawmakers do not trust a Socialist former French finance minister to penalize his own country for breaching euro zone deficit limits while the left doubts Conservative lobbyist Hill will curb excess in the City of London financial center.

Hill’s hearing is on Wednesday and Moscovici’s on Thursday.

Environmentalists are furious at the choice of Spain’s Miguel Arias Canete for a combined energy and climate change portfolio, despite family interests in oil. His hearing is on Wednesday.

Tibor Navracsics from Hungary, whose brief covers education, culture and citizenship, faces a rough time convincing lawmakers concerned about his party’s record on democracy.

Malmstrom ensured she would have a lively confirmation hearing by suggesting in leaked written testimony to the parliament that she wants to exclude a controversial investor protection clause from a planned EU-U.S. free trade agreement.

Her statement pleased left-wing politicians who believe that including a mechanism in the agreement that would allow foreign companies to bring claims against a country if it breaches a trade treaty would hand too much power to multinationals.

However, a European Commission source said Malmstrom’s leaked testimony was wrong and would be corrected.

So EU lawmakers will want to ascertain Malmstrom’s real views on the investor protection clause when her hearing starts at 2.30 p.m. (0830 EDT).

Also facing questioning on Monday will be Malta’s Karmenu Vella, put in charge of environment and fisheries, Croatia’s Neven Mimica, responsible for international cooperation, and Germany’s Guenther Oettinger, who will deal with the digital economy in the new Commission.

(Additional reporting by Alastair Macdonald and Barbara Lewis; Editing by Eric Walsh)

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Pimco moving away from Bill Gross model, CEO says

(Reuters) – Pimco is ready to move forward from a “founder-led” model in the wake of the abrupt exit of Bill Gross from the fund management company, CEO Doug Hodge said Sunday in a phone interview.

Hodge said the $222 billion Total Return Fund, run by Pimco co-founder Gross, “does not define” the company.

Pimco’s new chief investment officer, Dan Ivascyn, said in a phone interview that though he was initially reluctant to take over Gross’ job, he’s now ready to take on additional roles.

(Reporting By Jennifer Ablan, editing by John Pickering)

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Hong Kong protests deepen retail gloom as China visitors stay away

HONG KONG (Reuters) – Increasing civil unrest in Hong Kong is scaring off Chinese tourists, heaping further pressure on retailers which are already grappling with a protracted slowdown in sales.

Central Hong Kong descended into chaos on Sunday as pro-democracy protesters converged on barricades as hundreds of police cordoned off streets and walkways and tensions flared amid the arrest of several lawmakers. Police used tear gas to disperse demonstrators.

With mainland Chinese travelers likely to avoid Hong Kong over the long National Day holidays this week due to planned protests in the city, the downtrend in retail sales in the former British colony is set to extend beyond its six-month slide.

Already hurt by Beijing’s anti-corruption campaign, which has led Chinese visitors to tighten lavish spending in the city renowned as a shoppers’ paradise, Hong Kong businesses are also facing a slide in the number of tour groups.

Added to which, those who traipse across the border each day are now more interested in basic household products and infant milk formula than luxury handbags and high-end fashion, data shows.

Travel agents said the number of Chinese tours has dropped by up to 30 percent, boding ill for the busy Golden Week holiday that starts on Oct. 1, usually a busy period that retailers rely on for a boost to their sales.

Hong Kong activists are expected to lock down the heart of the financial center on Wednesday, part of a civil disobedience movement that some fear will hurt the city’s competitiveness and business environment. At the heart of their demands is the right for Hong Kong people to choose the city’s next leader, rather than a leader pre-selected by Beijing.

Demonstrators are demanding democracy in a series of protests that will culminate in an “Occupy Central” blockade of the financial district on Oct. 1, the start of China’s long holiday.

“For overseas tourists, they don’t understand much about Occupy Central, but they are concerned if there will be any riots or large-scale rally, and they worry about the refund policy if there is unrest,” said Paul Leung, chairman of The Hong Kong Inbound Travel Association, referring to refunds on tours.

It was not surprising to see a 20-30 percent drop in the number of Chinese tours, he said, adding that the size of the groups had also dropped to 20 to 30 people from about 40 in the past.

China’s slowing economic growth has been a negative factor for luxury goods makers and Hong Kong retail-related stocks have been sold off lately on weak consumer sentiment and uncertainties due to the civil unrest.

Prada SpA’s (1913.HK) Hong Kong-listed shares have fallen to their lowest level in 26 months.

“We are concerned about the development,” said a spokeswoman from cosmetics chain Sa Sa International (0178.HK). “Sa Sa is closely monitoring the event and will adopt contingency measures when appropriate.”


“Social, political tension is clearly driving a few people away because obviously you have a lot of different options. If you’re a wealthy Chinese individual, the likelihood is that you’ve been to Hong Kong two or three times already and you’ll have more welcoming places to go to,” said Erwan Rambourg, who researches luxury and sporting goods research at HSBC.

South Korea and Japan were among the top options, he said.

Hong Kong’s retail sector relies heavily on mainland Chinese visitors, who contributed around one-third of the city’s retail sales in 2013, according to Credit Suisse.

Prospects are not looking up yet, as demand for luxury goods continues to slide while spending by locals remains sluggish.

The Retail Management Association has revised the city’s 2014 retail sales growth to 5 percent from 12 percent, while Hang Seng Bank trimmed its forecast to 5 percent from 13 percent. Retail sale in terms of value rose 11 percent in 2013.

Hong Kong retail sales for August are due on Sept. 29.

But some retailers in the Central business district and shoppers are not too worried about the impact of protests.

“If our shops in Central are affected, we will consider shortening operation hours as a measure to ensure the safety of our staff and customers and to avoid losses to the shops,” a company spokeswoman from Chow Tai Fook Jewellery (1929.HK) said.

“We, however, believe there will not be much negative impact on our business as customers can go to our shops in other locations.”

A Chinese visitor in her late 20s, surnamed Zhang, who was shopping downtown where students had boycotted classes to protest, said she would be shopping as usual.

“There are a lot of shopping malls in Hong Kong; we can just go elsewhere.”

(Additional reporting by Kinling Lo and Twinnie Siu; Editing by Anne Marie Roantree and Jacqueline Wong)

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