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Hitachi, Toshiba, Mitsubishi Heavy aim to merge nuclear fuel units -source

TOKYO Hitachi Ltd (6501.T) , Toshiba Corp (6502.T) and Mitsubishi Heavy Industries Ltd (7011.T) aim to merge their nuclear fuel businesses, a person with direct knowledge of the talks said, amid bleak prospects for Japan’s atomic reactors to return to operation after the Fukushima disaster.

The three Japanese industrial conglomerates are in talks to merge the fuel operations as early as spring 2017, the source told Reuters on Thursday on condition of anonymity as the talks are not public.

“We have to think of something for the domestic nuclear fuel business (given the slow progress in restarting nuclear reactors),” said another person with direct knowledge of the talks.

Spokesmen for Hitachi and Mitsubishi Heavy said their companies were each considering various options for their nuclear fuel businesses, but that nothing had been decided. Toshiba released a similar statement on its business.

Over five years after an earthquake and tsunami destroyed Tokyo Electric Power Co’s (9501.T) Fukushima Daiichi power station, only three of Japan’s 42 reactors are online and prospects are poor for a rapid return of other reactors.

The merger would aim to help the companies cut costs and keep their operations afloat, the first source said. The businesses have been under pressure as the nuclear industry endured two years with no reactors online and still faces legal, regulatory and political obstacles to getting other idled plants back in service.

The three companies may eventually consider merging their nuclear reactor businesses, though nothing specific has been discussed so far, the first source said.

Hitachi, Toshiba and Mitsubishi Heavy are expected to form a joint holding company for their fuel businesses and will consider eventually merging them into one entity, said the Nikkei business daily, which first reported the talks on Thursday.

(Reporting by Makiko Yamazaki and Kentaro Hamada; Additional reporting by Diptendu Lahiri in Bengaluru; Editing by William Mallard)

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Wells Fargo plans to eliminate sales goals sooner than planned

Embattled Wells Fargo Co plans to eliminate sales goals for its retail banking business sooner than planned, according to prepared remarks its chief executive officer will deliver at a congressional hearing on Thursday.

Wells Fargo is under pressure to show it is holding top brass accountable after government investigators discovered that employees opened as many as 2 million accounts without customers’ knowledge in order to meet sales targets.

On Tuesday, Wells Fargo said CEO John Stumpf will forfeit unvested equity awards worth about $41 million and will not get a salary while the company’s board investigates the bank’s sales practices.

The third largest U.S. bank will eliminate the goals by Oct. 1, earlier than its previous target of Jan. 1, 2017, according to the remarks, which were obtained by Reuters. Stumpf will appear before the House Financial Services Committee on Thursday.

The San Francisco-based bank agreed to pay $190 million earlier this month to settle regulatory charges over the account scandal and has fired about 5,300 employees, most of them low-ranking staff, in connection with it.

Carrie Tolstedt, the former head of the retail division at the center of the burgeoning sales scandal, will get no severance and forfeited unvested equity awards worth about $19 million, the bank said. Tolstedt left the company before her planned Dec. 31 retirement date.

Stumpf and Tolstedt will also not receive bonuses for 2016.

The penalties represent one of the biggest financial sanctions ever levied against a major bank boss and mark a sharp change from a few years ago when no CEO had to give back a bonus despite scandals at large banks.

A special committee of the bank’s independent directors will lead an investigation into the retail bank’s sales practices, helped by the board’s human resources committee and law firm Shearman Sterling LLP, according to the bank.

“We are deeply concerned by these matters, and we are committed to ensuring that all aspects of the company’s business are conducted with integrity, transparency, and oversight,” Stephen Sanger, the board’s lead independent director, said.

Stumpf, a member of the board, has recused himself from the investigation, the bank said.

Wells Fargo stock added 0.2 percent to $45.19. Up to Tuesday’s close, shares had fallen nearly 10 percent since Sept. 8, when it reached a settlement with regulators, wiping off about $24 billion of market capitalization.

(Reporting by Narottam Medhora in Bengaluru, Sarah Lynch in Washington D.C. and Dan Freed in New York; Editing by Jeffrey Benkoe)

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AIG’s ex-CEO Greenberg cites lawyers, accountants in fraud defense

NEW YORK Maurice “Hank” Greenberg, the 91-year-old former chairman of former American International Group Inc (AIG.N), said at his fraud trial that he never would have considered doing a transaction that failed to pass muster with the insurer’s lawyers and accountants.

Greenberg defended himself during his second day of testimony over two allegedly sham transactions. The trial finally got under way this month after more than 11 years of pursuit by three New York attorneys general.

He is accused of engineering a $500 million transaction to inflate AIG’s reserves, and a $200 million transaction to hide underwriting losses from the auto-warranty program by converting them into investment losses.

The day’s questioning focused on the poorly performing auto-warranty program. The state claims AIG structured and invested in an offshore vehicle known as Capco to offload the losses.

“The concept of converting underwriting losses to investment losses was intriguing,” Greenberg said in the Manhattan courtroom on Wednesday.

But he said he would only consider using the vehicle after the lawyers and accountants signed off on it. “It had to pass muster.”

At the same time, under questioning by Assistant New York Attorney General David Nachman, Greenberg said he did not know if anyone asked for an opinion from an accounting or law firm about the propriety of the transaction.

Nachman also offered evidence that Greenberg sent Joseph Umansky, head of AIG’s special reinsurance operations, to the head of AIG’s private bank in Switzerland to find outside investors for the offshore entity. The attorney general views the investors as straw men.

Greenberg led AIG for four decades before he was forced out in 2005. The following year, the insurer paid $1.64 billion to settle federal and state probes into its business practices.

He still works in the insurance business as  head of C.V. Starr, a privately held company.

If Greenberg is found liable, New York Attorney General Eric Schneiderman is seeking to bar him and his co-defendant, former AIG chief financial officer Howard Smith, from the securities industry and from serving as officers or directors of public companies.

Schneiderman also is seeking to recoup more than $50 million from bonuses paid to the executives. The attorney general was forced to drop damages claims after a 2013 shareholder settlement.

Greenberg’s testimony continues on Thursday. The trial, which is not taking place every day, may run into early 2017.

The case is People v Greenberg et al, New York State Supreme Court, New York County No. 401720-2005.

(Reporting by Karen Freifeld; Editing by David Gregorio)

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Fed’s Yellen defends regulatory role, raises stress test changes

WASHINGTON Federal Reserve Chair Janet Yellen was thrust into the election-year boxing ring during a congressional committee hearing on Wednesday, defending the central bank’s regulatory role, taking and landing punches on Wells Fargo and other banks considered too big to fail, and addressing accusations of political conflicts of interest.

At a House of Representatives Financial Services Committee hearing, Yellen also provided details on the changes the central bank is considering making to the annual stress tests it gives U.S. banks. It would move to a more risk-sensitive, firm-specific approach that “would result in a significant aggregate increase in capital requirements” for the eight largest U.S. banks, she said.

She told the committee that the Fed was reviewing whether the largest U.S. lenders are complying with banking rules in the wake of the Wells Fargo scandal in which the bank settled charges that it opened as many as 2 million unauthorized customer accounts.

“I think it is very important that senior management be held accountable,” Yellen told the House panel.

The Dodd-Frank Wall Street Reform law enacted in 2010 expanded the Fed’s authority over banks, giving it the ability to break up those considered “too big to fail” and requiring it to monitor for institutions’ weaknesses that could wreak havoc across the country’s financial system.

Republicans have said those powers go too far, and the central bank’s resulting regulations have dried up liquidity, imposed excessive costs on small banks, and crippled banks’ ability to lend. Recently, the committee approved legislation crafted by its Republican chairman, Jeb Hensarling of Texas, to curb the Fed’s regulatory role as part of a revamp of Dodd-Frank.

Democrats, meanwhile, are pushing the Fed to take full advantage of its authority, with some on Wednesday pressing Yellen to break up Wells Fargo Co, recently ensnared in a scandal over creating phony accounts in real customers’ names.

Yellen demurred on intervening in Wells Fargo, but said the Fed has initiated a review of all the large banks and is concerned about compliance across the board.


Republican Representative Scott Garrett also pressed Yellen over media reports that Fed Governor Lael Brainard might take a top job in the next administration if Democrat Hillary Clinton wins the Nov. 8 election.

“The Fed has an unacceptably cozy relationship both with the Obama administration and with higher ups in the Democratic Party,” Garrett said.

Yellen said she was unaware of any contact between Brainard and Clinton.

Puerto Rico, currently mired in a financial meltdown, also came up frequently in the hearing, but Yellen said a solution to its fiscal crisis should come from the White House or Congress.

Alongside the stress tests, the largest banks must also provide “living wills” to show how they would wind down operations should they fail, without needing help from the federal government. This spring the Fed said five out of eight of those banks, including Wells Fargo Co. and Bank of America Corp., did not have credible plans, and gave them until October to make revisions.

On Wednesday Yellen said the Fed stands ready to use its authority to impose higher capital requirements on those banks if problems are not corrected in their wills. J.P. Morgan Chase Co., Bank of New York Mellon Corp., and State Street Corp. also must resubmit their wills.

Yellen also said Congress may want to consider making small community banks exempt from the Volcker Rule restricting their investments and the compensation limits in Dodd-Frank.

“The risks addressed by these statutory provisions are far more significant at larger institutions than they are at community banks,” she said. “In the event that a community bank engages in practices in either of these areas that raise heightened concerns, we would be able to address these concerns as part of the normal safety-and-soundness supervisory process.”

(Reporting by Lisa Lambert and Patrick Rucker, Additional reporting by Jason Lange; Writing by Lisa Lambert; Editing by Andrea Ricci and Linda Stern)

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Icahn slashes stake in Transocean by more than two thirds

Billionaire investor Carl Icahn cut his stake in rig provider Transocean Ltd by more than two-thirds “for tax planning purposes.”

The move comes a week after the activist investor trimmed his stake in U.S. natural gas producer Chesapeake Energy Corp, indicating that he was reducing his exposure to oil-exposed companies.

Icahn, who accumulated a nearly 6 percent stake in Transocean in November 2013, reduced it to 1.5 percent, according to a regulatory filing on Wednesday. (

Icahn said his director designees would continue to serve on Transocean’s board on the company’s request.

Chesapeake said on Tuesday that two directors, including a representative of Icahn, resigned from its board.

Transocean’s shares were down 0.99 percent at $9.92 in after-market trading on Wednesday.

(Reporting by Anet Josline Pinto in Bengaluru; Editing by Sriraj Kalluvila)

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OPEC agrees modest oil output curbs in first deal since 2008

ALGIERS OPEC agreed on Wednesday modest oil output cuts in the first such deal since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.

“OPEC made an exceptional decision today … After two and a half years, OPEC reached consensus to manage the market,” said Iranian Oil Minister Bijan Zanganeh, who had repeatedly clashed with Saudi Arabia during previous meetings.

He and other ministers said the Organization of the Petroleum Exporting Countries would reduce output to a range of 32.5-33.0 million barrels per day. OPEC estimates its current output at 33.24 million bpd.

“We have decided to decrease the production around 700,000 bpd,” Zanganeh said.

The move would effectively re-establish OPEC production ceilings abandoned a year ago.

However, how much each country will produce is to be decided at the next formal OPEC meeting in November, when an invitation to join cuts could also be extended to non-OPEC countries such as Russia.

Oil prices LCOc1 jumped more than 5 percent to trade above $48 per barrel as of 2015 GMT. Many traders said they were impressed OPEC had managed to reach a compromise after years of wrangling but others said they wanted to see the details.

“This is the first OPEC deal in eight years! The cartel proved that it still matters even in the age of shale! This is the end of the ‘production war’ and OPEC claims victory,” said Phil Flynn, senior energy analyst at Price Futures Group.

Jeff Quigley, director of energy markets at Houston-based Stratas Advisors, said the market had yet to discover who would produce what: “I want to hear from the mouth of the Iranian oil minister that he’s not going to go back to pre-sanction levels. For the Saudis, it just goes against the conventional wisdom of what they’ve been saying.”.

Saudi Energy Minister Khalid al-Falih said on Tuesday that Iran, Nigeria and Libya would be allowed to produce “at maximum levels that make sense” as part of any output limits.

That represents a strategy shift for Riyadh, which had said it would reduce output to ease a global glut only if every other OPEC and non-OPEC producer followed suit. Iran has argued it should be exempt from such limits as its production recovers after the lifting of EU sanctions earlier this year.

The Saudi and Iranian economies depend heavily on oil but in a post-sanctions environment, Iran is suffering less pressure from the halving in crude prices since 2014 and its economy could expand by almost 4 percent this year, according to the International Monetary Fund.

Riyadh, on the other hand, faces a second year of budget deficits after a record gap of $98 billion last year, a stagnating economy and is being forced to cut the salaries of government employees.


Saudi Arabia is by far the largest OPEC producer with output of more than 10.7 million bpd, on par with Russia and the United States. Together, the three largest global producers extract a third of the world’s oil.

Iran’s production has been stagnant at 3.6 million bpd in the past three months, close to pre-sanctions levels although Tehran says it wants to ramp up output to more than 4 million bpd when foreign investments in its fields kick in.

Saudi oil revenue has halved over the past two years, forcing Riyadh to liquidate billions of dollars of overseas assets every month to pay bills and cut domestic fuel and utility subsidies last year.

“The Iranians have lived with a very tough macro backdrop for many years…” said Raza Agha, chief Middle East economist at investment bank VTB Capital. “So a sustained drop in oil prices has a more difficult social impact on Saudi.”

However, with unemployment in double digits, Tehran is also facing calls to maximize oil revenues and President Hassan Rouhani is under pressure from conservative opponents to deliver a faster economic recovery.

Oil prices are well below the budget requirements of most OPEC nations. But attempts to reach an output deal have also been complicated by political rivalry between Iran and Saudi Arabia, which are fighting several proxy-wars in the Middle East, including in Syria and Yemen.

OPEC sources have said Saudi Arabia offered to reduce its output from summer peaks of 10.7 million bpd to around 10.2 million if Iran agreed to freeze production at around current levels of 3.6-3.7 million bpd.

Riyadh has raised production in recent years to compete for market share while Iran’s output was limited by sanctions. Minister Zanganeh has said Iran wanted an output cap of close to 4 million bpd. Saudi output drops in winter when it needs less fuel than during summer, when cooling requirements spike.

(Additional reporting by Patrick Markey and Lamine Chikhi in Algiers, Andrew Torchia in Dubai; Writing by Dmitry Zhdannikov; Editing by Dale Hudson)

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Citigroup becomes last big U.S. bank to join payments network

NEW YORK Citigroup Inc on Wednesday became the last of the big U.S. banks to agree to allow customers to send instant payments by mobile phone over an industry network that is competing with upstart Venmo.

Citigroup said in a statement that it will begin offering the service early next year over the clearXchange network.

ClearXchange has emerged as the industry’s rival to Venmo, a non-bank payment service of PayPal Holdings Inc, which is winning fans among young adults who use it to split apartment rents and dinner tabs.

The connection would take place about the same time that the bank consortium operating clearXchange plans to rebrand the network as Zelle. [L1N1B61T8]

The network was started five years ago as a joint-venture of Bank of America Corp, JPMorgan Chase Co and Wells Fargo Co Over time, other banks, including Capital One Financial Corp and U.S. Bancorp joined the network.

Until now, Citigroup stayed with a service called Popmoney that has connected smaller banks and is operated by Fiserv Inc . In August, Fiserv said it would work to connect Popmoney banks to clearXchange banks.

Fiserv acted to make it easier for individuals to send money to one another without regard to where they keep their bank accounts.

During the years the banks have taken to create one network, Venmo has blossomed as a kind of social network with a critical mass of millennial generation users.

(Reporting by David Henry in New York; Editing by Tom Brown)

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Apple deepens enterprise push with Deloitte partnership

Apple Inc (AAPL.O) and Deloitte LLP announced a partnership on Wednesday in which the consultant will open a new practice to help corporate clients work with Apple products, the tech firm’s latest attempt to boost enterprise sales as its key product, the iPhone, shows signs of maturation.

More than 5,000 Deloitte advisers will be included in the Apple initiative, the companies said. The consulting firm also launched EnterpriseNext, a program aimed at helping clients make better use of Apple products and services.

Apple has announced a steady stream of enterprise partnerships in recent years as it aims to draw more revenue from a market that some say it has traditionally overlooked.

A partnership struck with IBM in 2014 signaled Apple’s intentions of getting more serious about corporate clients, or enterprise, and deals with Cisco and SAP have followed.

The deal with Deloitte will ensure that Apple is top of mind as companies think strategically about their practices, Apple CEO Tim Cook said in an interview.

“What’s needed now is more of a focus on transforming the enterprise and helping businesses identify which areas have the highest either return on investment or highest impact on customer satisfaction,” Cook said. “Deloitte is well positioned for this.”

As part of the EnterpriseNext program, customers can meet with designers and engineers who specialize in Apple’s operating system.

“The intent there is to, in one location, bring the best engineers, the best products and the best thinkers to try and address clients’ problems,” Punit Renjen, CEO of Deloitte Global, said in an interview.

Apple faces mounting pressure to find new streams of revenue after sales of the iPhone, which drives more than half of its revenue, declined for the first time this year.

The tech giant appears to have concluded that the quickest way to progress in enterprise is to partner with companies rooted in the space, said analyst Jan Dawson of Jackdaw Research.

Cook said in 2015 that Apple’s enterprise business had reached $25 billion in annual revenue. He declined to provide a new figure on Wednesday but stressed the company is gaining ground.

“The momentum is significant, and we see this as a very important growth vector,” he said.

(Reporting by Julia Love; Editing by Peter Henderson and Alan Crosby)

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U.S. core capital goods orders rise for third straight month

WASHINGTON,New orders for non-military U.S. capital goods other than aircraft rose for a third straight month in August, a positive signal for the business investment outlook.

The Commerce Department said on Wednesday new orders for the category, which includes goods like motor vehicles and machinery and is a closely watched proxy for business spending plans, increased 0.6 percent last month.

Economists polled by Reuters had forecast these so-called core capital goods orders falling 0.2 percent.

The government downwardly revised its estimate for those orders in July to a 0.8 percent gain from the previously reported 1.5 percent increase.

Business spending has contracted since the fourth quarter of 2015, in part as companies slashed capital spending budgets in response to lower oil prices.

The slump in investment has worried Federal Reserve policymakers because it could depress longer-term economic growth.

Shipments of core capital goods, which are used to calculate equipment spending in the government’s gross domestic product measurement, fell 0.4 percent last month after being unchanged in July.

A 21.9 percent drop in demand for civilian aircraft helped keep overall orders for durable goods flat in August. Durable goods include items ranging from toasters to aircraft that are meant to last three years or more.

(Reporting by Jason Lange; Editing by Paul Simao)

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