News Archive


EU and Canada to sign trade pact after Belgians strike key deal


BRUSSELS Canada and the European Union will sign a landmark free trade deal on Sunday after a series of key votes in Belgian regional assemblies on Friday ended opposition that had threatened to destroy the entire agreement.

Soon after the final Belgian vote, European Council president Donald Tusk called Canadian Prime Minister Justin Trudeau and invited him to Brussels for the signing ceremony, which is scheduled for noon local time (1000 GMT).

“The Canada-EU Summit will be Sunday. Great news and I’m looking forward to being there,” Trudeau said on Twitter.

The Comprehensive Economic and Trade Agreement (CETA), which backers say will boost bilateral trade by 20 percent, appeared to be in trouble after Belgium’s French-speaking Wallonia region raised a series of late objections.

All 28 EU governments back CETA but Belgium’s central government had been prevented from giving consent because it needed approval from sub-federal authorities.

After Belgian politicians agreed to an addendum on Thursday to allay Wallonia’s concerns, the regional parliament voted on Friday to back the deal. The parliaments of Brussels and the Dutch-speaking community approved the deal a few hours later.

Wallonia’s Socialist premier, Paul Magnette, who had become a hero to protesters across Europe, said the Belgian negotiations produced a deal he could live with.

“The amended and corrected CETA is more just than the old CETA. It offers more guarantees and it is what I will defend,” Magnette said.

The addendum addresses fears that a system to protect foreign investors could strengthen multinationals. It also provides a safeguard clause for farmers.

“With this saga, which I must say made some noise, everybody in Europe knows the Walloon parliament exists,” Magnette said.

The agreement could partially enter force next year, some eight years after talks began, as long as the European Parliament also backs it. It would bring in tariff reductions before national and regional parliaments complete ratification.

The opposition to CETA is part of a growing backlash in the West against globalisation, with the fiercest protests against a proposed EU-U.S. deal best known by its initials, TTIP.

Protesters say TTIP and CETA would strengthen multinationals and degrade food, environmental and labour standards.

Magnette said on Friday that “TTIP is dead and buried”.

The Belgian dispute over CETA reflects a split in the country between a richer, Dutch-speaking north and a largely French-speaking south that has struggled to cope with the decline of its coal and steel industries.

The federal government has just one party from the south, Prime Minister Charles Michel’s MR liberals, the Socialists’ arch-enemies.

But not everyone in Wallonia agreed with Magnette.

“It is clear that the text of CETA stays the same: the DNA of CETA is one of deregulation and it puts nations in competition at an unprecedented level,” said Frederic Gillot of PTB-GO, a hard-left party that is winning voters from the Socialists.

(Additional reporting by David Ljunggren in Ottawa; editing by Philip Blenkinsop and Jonathan Oatis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/zr_Hqbei1io/us-eu-canada-trade-idUSKCN12S1RR

Fed meeting in sight but election looms for stocks


NEW YORK The Federal Reserve meets next week and the U.S. government releases an important report on jobs, but investors could be forgiven for having something else on their minds.

The heated U.S. presidential campaign, which for months has grabbed the bulk of U.S. news headlines, enters its final stretch next week before the Nov. 8 vote, and the race between Democrat Hillary Clinton and Republican Donald Trump of late has provided market-moving surprises.

In the latest reminder of how an upset in the expected outcome could rattle investors, news came on Friday that the Federal Bureau of Investigation is reviewing fresh evidence in its probe of Clinton’s email server.

That briefly pushed stocks down sharply and drove the CBOE Volatility Index .VIX – Wall Street’s fear gauge – to a two-week high.

“We’re so close to the election, and the pots are boiling. There’s always something going on,” said Bucky Hellwig, senior vice president at BBT Wealth Management in Birmingham, Alabama.

“And where there’s uncertainty with the Oval Office, it seems to historically cause problems for the market.”

Wall Street has been expecting Clinton to win her White House bid but Republicans to retain at least the U.S. House of Representatives, essentially keeping the current state of political gridlock.

In recent weeks, Clinton’s lead has widened in polls, causing some concern about the Democrats potentially winning control of both the presidency and Congress.

“That would be bad for certain sectors including health care and perhaps the financial sector,” said Ed Campbell, a portfolio manager at QMA, a multi-asset manager owned by Prudential Financial. “But I don’t think that’s likely to happen.”

Investor expectations also are low that the Fed will raise interest rates when it meets Tuesday and Wednesday, especially since the meeting falls just days ahead of the election.

The chances appear to be less than 10 percent that the Fed will raise rates next week, while there’s about a 75 percent chance the Fed will hike rates in December, according to the CME Group’s FedWatch tool on Friday.

“I think it’s largely going to be a non-event,” Campbell said. “They’d be loath to surprise the market, especially one week before the election.”

What could shake equities, however, is any comment from the Fed that could indicate the possible timing of the next hike.

At the Fed’s November meeting last year, it tweaked its policy statement to specifically reference the next policy meeting as a date of a possible rate lift-off, a move that grabbed investors’ attention.

The Fed then in December raised rates for the first time in nearly a decade.

If it’s strong enough, Friday’s jobs report could bolster already broad expectations that the Fed will raise rates again this December.

Economists polled by Reuters show expected nonfarm job gains of 175,000 for October, up from 156,000 the previous month.

“Post-election day, you might see a little bit of relief but then you start worrying about the Fed,” said Steve Chiavarone, portfolio manager at Federated Investors.

(Reporting by Caroline Valetkevitch; Additional reporting by Saqib Ahmed; Editing by James Dalgleish)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Qtx6b1VO7oA/us-usa-stocks-weekahead-idUSKCN12S2QG

Exclusive: Ackman’s Pershing Square shakes up fees amid losses


NEW YORK Billionaire investor Bill Ackman’s Pershing Square Capital Management is offering its hedge fund clients new fee arrangements following a second straight year of losses, according to a letter to investors on Thursday seen by Reuters.

Known for making big, concentrated bets on stocks and agitating for them publicly, Pershing Square will offer starting Jan. 1 a new share class to existing and future clients in which it will not charge any performance fee on gains less than 5 percent; after that, the performance fee will be 30 percent.

Current investors are being offered a one-time chance to opt into the new cost scheme. The new share class is in response to requests from existing clients, including a large pension fund, according to a person familiar with the situation.

“The fee arrangement was designed to accommodate certain investors that expressed interest in retaining a greater share of returns in low to moderate return scenarios in return for rewarding us with a greater share of returns in higher return scenarios,” Pershing Square wrote in the letter.

A spokesman for Pershing Square declined to comment.

Investors have the option to stay with the old system, where the fund charges 20 percent on all positive returns, long the industry standard. The firm will continue to charge a 1.5 percent management fee for all share classes, and clients are not charged performance fees for investment gains below previous losses on their capital, a so-called high-water mark.

The math works out so that investors in the new share class will get a fee break should Pershing Square gain less than 15 percent but face increased costs above that. Pershing Square has averaged gains of about 15 percent net of fees since inception in 2004.

The issue is moot for now: The firm’s flagship Pershing Square International Ltd fund is down 17.4 percent this year through Oct. 11, according to private performance information seen by Reuters. The same fund fell 16.6 percent in 2015 due to losing bets on pharmaceutical firm Valeant (VRX.TO) and dietary supplements maker Herbalife (HLF.N).

Pershing Square also told clients in the letter that they could invest additional money with the firm that would be subject to the existing high-water mark. In other words, clients will not pay any performance fees on new capital until Pershing Square recovers from its previous losses.

“We would like to extend an opportunity to our existing investors who have remained committed to Pershing Square during the most challenging performance period in the history of our firm,” the letter said.

REVERSAL OF FORTUNE

Ackman is suffering a stark reversal after being the toast of Wall Street in 2014 when he notched up a 37.2 percent gain in his International fund, among the best performances in the industry.

Recent losses have pushed down firm assets. Pershing managed $11.4 billion as of September 30, according to a firm disclosure, down from $16.5 billion as of September 30, 2015.

Amanda Haynes-Dale, co-founder and managing director of New York-based hedge fund investor Pan Reliance Capital Advisors, approved of the new fee options.

“I think it’s fair,” said Haynes-Dale, who is not a client. “It’s a greater alignment of interests for investors.”

But Jacob Walthour, chief executive officer of Blueprint Capital Advisors, which works with institutional investors to invest in hedge funds, criticized the move.

He said it wasn’t fair to charge an even higher fee on gains over 5 percent given the losses that Ackman has clocked up.

“This is like driving a car the wrong way down a one way street,” Walthour said. Industrywide “incentive fees are headed toward 10 percent with the addition of hurdles, not 30.”

“Raising fees at any level of return is unacceptable when you think of the financial condition of our nation’s pension funds,” he added. “The greed and arrogance in this industry just never ceases to amaze me.”

While “2 and 20” has long been seen as the industry norm in reference to management and performance fee percentages, the actual numbers are falling as hedge funds around the world cut fees to retain investors amid weak returns.

The average annual management fee has declined to 1.39 percent from 1.44 in 2015 and 1.68 about a decade ago, according to the data from industry monitor Eurekahedge. Funds have also cut performance fees, from an average of 18.77 percent in 2007 to 16.69 percent today.

Other large hedge fund managers to cut their fees this year include Brevan Howard Asset Management, Caxton Associates and Och-Ziff Capital Management Group (OZM.N).

(Editing by Carmel Crimmins and Cynthia Osterman)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/RalrITq5bgc/us-hedgefunds-pershingsquare-exclusive-idUSKCN12S2D3

Soybean exports power U.S. economy to best performance in two years


WASHINGTON The U.S. economy grew at its fastest pace in two years in the third quarter as a surge in soybean exports and a rebound in inventory investment offset a slowdown in consumer spending.

Gross domestic product increased at a 2.9 percent annual rate after rising at a 1.4 percent pace in the second quarter, the Commerce Department said on Friday.

That growth rate was the strongest since the third quarter of 2014 and beat economists’ expectations for a 2.5 percent expansion pace. Business investment improved last quarter, though spending on equipment remained weak.

But with exports and inventories accounting for almost half of the increase in output, economists warned the growth spurt would likely be temporary. Still, the data helped dispel any lingering fears the economy was at risk of stalling. Over the first half of the year, growth had averaged just 1.1 percent.

“While the economy may not be ready to take off, today’s GDP suggests the economic expansion is not at risk of ending,” said David Donabedian, the chief investment officer of Atlantic Trust Private Wealth Management in Baltimore.

Coming ahead of a Federal Reserve policy meeting next week, economists said the data was unlikely to change views that the U.S. central bank would wait until December, after the Nov. 8 presidential election, to raise interest rates.

The labor market is near full employment and price pressures have been steadily increasing, raising confidence that inflation will gradually move towards the Fed’s 2.0 percent target.

Less than two weeks before the election, the GDP report was seen as bolstering Democratic presidential nominee Hillary Clinton, who has positioned herself as the best candidate to continue the more than six years of growth under President Barack Obama.

“This is good news for the Clinton campaign, which has tied itself closely to the Obama administration’s record on the economy,” said Robert Murphy, an economics professor at Boston College.

Clinton’s campaign team welcomed the growth pick-up and warned that policies proposed by Republican candidate Donald Trump would “would take us backwards.” Trump’s campaign team described the growth numbers as “dismal” and said they underscored the need for change.

U.S. financial markets were initially little changed after the publication of the mixed data, but U.S. stocks ended lower after the Federal Bureau of Investigation said it would review additional emails that have surfaced related to Clinton’s use of a private email server to determine whether they contain classified information. [.N]

U.S. Treasury yields also ended slightly lower and the dollar fell against euro and the yen.

CONSUMER SPENDING SLOWS

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, supported the economy in the third quarter by increasing at a 2.1 percent rate, but down from the second quarter’s robust 4.3 percent pace.

With a tightening labor market generating steady increases in wages, spending could accelerate in the fourth quarter.

Data on Friday from the Labor Department showed worker compensation rose 0.6 percent in the third quarter after a similar gain in the second quarter, leaving the year-on-year gain at 2.3 percent. A third report, however, showed consumer sentiment fell in October.

“Car sales have plateaued and election uncertainty may have caused some consumers to pull back,” said Curt Long, chief economist at the National Association of Federal Credit Unions in Arlington, Virginia. “But given the strength of the labor market, the economy should continue along its present path of slow-but-steady growth.”

A surge in soybean exports after a poor soy harvest in Argentina and Brazil helped to shrink the U.S. trade deficit in the third quarter, giving a lift to growth.

U.S. soybean exports surged to a record 1.936 billion bushels during the 2015/16 marketing year that ended on Aug. 31, as harvests in key competitors Brazil and Argentina were hit by weather problems, forcing importers to buy more U.S. supplies than planned.

Economists said that soybean-driven export growth spurt could reverse in the fourth quarter, but they also noted that exports of capital and consumer goods have been growing strongly in recent months.

Overall exports increased at a 10 percent rate, the biggest rise since the fourth quarter of 2013. As a result, trade contributed 0.83 percentage point to GDP growth after adding a mere 0.18 percentage point in the April-June quarter.Businesses increased spending to restock after running down inventories in the second quarter. Businesses accumulated inventories at a $12.6 billion rate in the last quarter, contributing 0.61 percentage point to GDP growth.

Spending on nonresidential structures, which include oil and gas wells, increased at a 5.4 percent rate, the fastest pace since the second quarter of 2014, after falling in the second quarter.

Business spending on equipment slipped at a 2.7 percent rate, dropping for a fourth straight quarter. While the pace of decline has been ebbing as oil prices stabilize and the dollar’s rally gradually fades, a strong turnaround is unlikely in the near-term.

Heavy machinery maker Caterpillar (CAT.N) this week reported a 49 percent drop in third-quarter profit from a year ago and lowered its full-year revenue outlook for the second time this year. Caterpillar said demand for new heavy machinery had been undercut by an “abundance” of used construction equipment, a “substantial” number of idle locomotives and a “significant” number of idle mining trucks.

Investment in residential construction fell for a second straight quarter, while spending by the government bounced back.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/RRGm6G5ZO-I/us-usa-economy-idUSKCN12S0E5

Baker Hughes-GE talks come after difficult time for both companies


NEW YORK Industrial giant General Electric Co and oilfield services company Baker Hughes, both beset by difficulties during oil’s two-year price rout, may have a clear path out of the doldrums: join forces.

GE (GE.N) said Thursday it was in discussions with Baker Hughes Inc (BHI.N) but not to acquire the company outright. Baker Hughes said Friday talks were ongoing. Both companies declined to comment on the talks beyond official statements.

GE’s oil and gas division has fought to get the scale the conglomerate enjoys in other industries. Despite efforts to grow through a series of acquisitions, the division has faced weaker revenues during oil’s downturn than other units of GE. Organic growth in oil and gas has lagged other sectors.

Baker Hughes had its own growth difficulties, spending a year and a half stuck in limbo amid a $28-billion merger with Halliburton that was ultimately scrapped after opposition from antitrust regulators.

Following the termination of the Halliburton merger, Baker Hughes CEO Martin Craighead has said the company is well positioned to focus on developing products that lower costs and maximize production for operators in the oil and gas industry.

Baker Hughes shares gained 8.4 percent Friday to $59.12, valuing the company at about $25 billion.

With oil prices rebounding to $50 a barrel, MA activity could tick up as investors see the two-year rout in crude ending. A partnership with Baker Hughes could allow GE’s oil and gas division to transform itself into a larger player in the sector to better compete with oilfield services leader Schlumberger Inc (SLB.N), and could give Baker Hughes a chance to redefine itself following the failed merger.

“If there’s a time to double down on the sector, now is the time given the prices we’ve seen,” said Jonathan Garrett, principal analyst for U.S. upstream research at Wood Mackenzie. The partnership would be formed at a time GE has been shrinking its capital markets division and is returning to its industrial roots, he said.

For GE, which strives to be in the top of each industrial sector, oil and gas has been a harder area to develop, said Ed Hirs, energy fellow at the University of Houston. Baker Hughes offers good capitalization and scale for the smaller GE unit.

“This is a pretty good, intelligent bet on the future,” he said, noting that it comes as the oil market’s downturn appears to be ending. The downturn led oilfield service companies to cut their prices, curtailing profits.

Baker Hughes is “a much-emasculated industrial enterprise relative to its pre-HAL dalliance days,” Bill Hebert, senior research analyst at Piper, Jaffray Co, said in a note to clients.

Both companies have faced pressure from activist investors. ValueAct Capital is the largest shareholder of Baker Hughes, investing after the merger with Halliburton was announced and betting upon its success. After the collapse of that merger, ValueAct has remained Baker Hughes’ top shareholder.

Trian Partners is one of GE’s largest shareholders, and has demanded that the company cut costs and be more disciplined about acquisitions.

The exact structure of a deal could determine the benefits for both sides. GE could gain breadth from Baker Hughes’ strengths in downwell services, completion and artificial lift, while Baker Hughes could improve its services with technologies developed by other GE units, analysts said.

GE has forecast cost cuts at the division and has said it will “try to compensate” for the fact that the division has earned less than expectations given a year and a half ago. The company had purchased Lufkin, a pump maker, for $3.3 billion just one year before oil prices cratered.

“We still think it’s a really good GE business,” GE CEO Jeff Immelt said on the company’s most recent earnings call. “I have every confidence we’re going to come out of the cycle better than we went in.”

(Reporting By Jessica Resnick-Ault with additional reporting from Terry Wade in Houston, Lewis Krauskopf, Michael Flaherty and Greg Roumeliotis; Editing by Nick Zieminski)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/Da-w5q-pmYE/us-baker-hughes-m-a-ge-idUSKCN12S2LL

Wall St. falls as FBI to review more Clinton emails


NEW YORK U.S. stocks declined in a volatile session on Friday but were able to partially recover from a sharp drop spurred by news the FBI will review more emails related to Democratic presidential candidate Hillary Clinton’s private email use.

Each of the three major indexes on Wall Street fell to session lows, with the SP 500 dropping 1 percent in an hour, after FBI Director James Comey said in a letter to several congressional Republicans the agency had learned of the existence of emails that appeared to be pertinent to its investigation. The U.S. election is scheduled to take place in 11 days, on Nov. 8.

“The headline hit, everyone panicked for a second that it was going to affect the outcome of the election,” said Stephen Massocca, chief investment officer at Wedbush Equity Management LLC in San Francisco.

The benchmark SP 500 index fell as much as 0.6 percent on the session, hitting a low of 2,119.36 before recovering.

“People calmed down and considered what it really meant, that in all likelihood it really isn’t going to impact the election,” Massocca said.

Earlier in the session, the SP 500 had risen as much as 0.4 percent after economic data showed the U.S. economy grew 2.9 percent in the third quarter, its fastest pace in two years, and upbeat earnings from Google parent company Alphabet Inc (GOOGL.O).

Alphabet shares were up 0.3 percent at $819.56.

While the economic data supported the case for an interest rate hike, the Federal Reserve is unlikely to make a move at its meeting next week, as it falls just days ahead of the U.S. presidential election. Many market participants are instead expecting a rate hike in December.

Investors also digested the latest wave of earnings reports with the hope the quarter snaps a year-long earnings recession.

Nearly 73 percent of the SP 500 companies that reported have topped Wall Street expectations, with growth for the quarter now expected to be 3 percent, according to Thomson Reuters I/B/E/S. The quarter had been expected to show a decline of 0.5 percent at the start of October.

On the negative side, Amazon.com (AMZN.O) suffered its worst day in nearly nine months, down 5.2 percent to $776.32 after the online retailer warned heavy investments in the crucial holiday quarter would hurt profits. The stock was the top drag on the SP 500 and the Nasdaq.

The Dow Jones industrial average .DJI fell 8.29 points, or 0.05 percent, to 18,161.39, the SP 500 .SPX lost 6.6 points, or 0.31 percent, to 2,126.44 and the Nasdaq Composite .IXIC dropped 25.87 points, or 0.5 percent, to 5,190.10.

For the week, the SP 500 dipped 0.7 percent and the Nasdaq lost 1.3 percent, while the Dow managed a 0.1 percent gain.

Declining issues outnumbered advancing ones on the NYSE by a 1.49-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favored decliners.

The SP 500 posted 10 new 52-week highs and 10 new lows; the Nasdaq Composite recorded 45 new highs and 129 new lows.

About 7.31 billion shares changed hands in U.S. exchanges, compared with the 6.34 billion daily average over the last 20 sessions.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Meredith Mazzilli)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/SEbE46Cn6-4/us-usa-stocks-idUSKCN12S1CJ

Belgium’s regional parliaments back EU-Canada trade deal


BRUSSELS The parliament of Belgium’s French-speaking region of Wallonia and other regional assemblies voted in favour of a planned EU-Canada trade agreement on Friday, ending opposition that had threatened to destroy the entire deal.

Lawmakers of Wallonia, which led resistance to the Comprehensive Economic and Trade Agreement (CETA), voted 58 for and five against, after Belgian politicians agreed to an addendum on Thursday to allay concerns after weeks of tough negotiations [nL8N1CX4UP].

The parliaments of Brussels and the French-speaking community also approved the deal later on Friday, as expected, given similar Socialist-led coalitions in control.

All 28 EU governments back CETA, which supporters say could increase trade by 20 percent. But Belgium’s central government had been prevented from giving its consent because it needed approval from sub-federal authorities.

Wallonia’s Socialist premier, Paul Magnette, who had become a hero to protesters across Europe, said Belgian negotiations had led to a deal he could live with.

“The amended and corrected CETA is more just than the old CETA. It offers more guarantees and it is what I will defend,” Magnette said.

The Belgian addendum addresses fears that a system to protect foreign investors could strengthen multinationals. It also provides a safeguard clause for farmers.

“With this saga, which I must say made some noise, everybody in Europe knows the Walloon parliament exists,” Magnette said.

The Belgian dispute over CETA reflects a split in the country between a richer, Dutch-speaking north and a largely French-speaking south that has struggled to cope with the decline of its coal and steel industries.

The federal government has just one party from the south, Prime Minister Charles Michel’s MR liberals, the Socialists’ arch-enemies.

But not everyone in Wallonia agreed with Magnette.

“It is clear that the text of CETA stays the same: the DNA of CETA is one of deregulation and it puts nations in competition at an unprecedented level,” said Frederic Gillot of PTB-GO, a hard-left party that is winning voters from the Socialists.

After the Belgian agreement, EU and Canadian leaders will meet on Sunday to sign the deal, European Council president Donald Tusk said on Twitter.

The agreement could partially enter force next year, some eight years after talks began, as long as the European Parliament also backs it. It would bring in tariff reductions before national and regional parliaments complete ratification.

The opposition to CETA is part of a growing backlash in the West against globalization, with the fiercest protests against a proposed EU-U.S. deal best known by its initials, TTIP.

Protesters say TTIP and CETA would strengthen multinationals and degrade food, environmental and labour standards.

Magnette on Friday said he had no doubt about whether the EU should reach an agreement with the United States.

“With this CETA, TTIP is dead and buried,” Magnette said.

(Reporting by Robert-Jan Bartunek; editing by Philip Blenkinsop and Jonathan Oatis)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/zr_Hqbei1io/us-eu-canada-trade-idUSKCN12S1RR

Deutsche settlement over Russia trades possible in 2017: sources


FRANKFURT/NEW YORK U.S. and U.K authorities have made progress in their investigation into allegations that Deutsche Bank (DBKGn.DE) helped its clients in Russia disguise suspicious trades, and a settlement could come by the first half of next year, people familiar with the matter said.

The U.S. Department of Justice, New York’s Department of Financial Services and the UK’s Financial Conduct Authority each launched investigations into the so-called Russian “mirror trades,” which allegedly involved clients using Deutsche Bank to buy securities in rubles only to sell them shortly after in a foreign currency, Reuters previously reported.

The bank has been making presentations to both U.S. and UK government officials on its findings and discussions are expected to begin soon on settlement terms, such as the size of a potential penalty, one of the people said this week.

Deutsche Bank, the U.S. Justice Department, New York’s Department of Financial Services and the Financial Conduct Authority all declined to comment on the matter.

The probe into suspicious equities trading in Russia is yet another legal hurdle for Germany’s largest lender, which is also in talks with U.S. authorities to settle claims the bank misled investors in selling mortgage-backed securities in the run-up to the financial crisis.

The trades in question may have allowed Russian customers to illegally move money from one country to another, in violation of money laundering controls, people close to the matter have said.

People have said the probe was also looking into whether clients transferred money in breach of Western sanctions on Russia over the Ukraine conflict which went into effect in 2014.

But the focus of the probe is currently on alleged money laundering, rather than possible violations of the Western sanctions, two people familiar with the matter said this week.

Deutsche Bank said last year it was investigating certain equity trades in Moscow and London, adding the total volume of the transactions under review is “significant.” It also cut back on its investment banking activities in Russia last year.

Reuters reported that the bank had found a total of $10 billion of suspicious trades in Russia, including $6 billion in mirror trades, citing people familiar with the matter.

Germany’s financial watchdog found no evidence to date that Deutsche Bank violated money laundering rules in Russia in connection with the case, people close to the matter told Reuters earlier this month.

While Bafin, the financial supervisory authority for Germany, generally asks German lenders to improve internal procedures, it has no power to ask for hefty fines – unlike regulators in the U.S. and UK, who have made Deutsche pay out billions to resolve past missteps.

Deutsche Bank raised its provisions for all outstanding

legal cases to 5.9 billion euros from 5.5 billion euros in the third quarter, without specifying for which cases. People close to the matter have told Reuters that 1 billion euros of that has been set aside for the Russian case.

(Reporting by Kathrin Jones, Arno Schuetze and Alexander Hübner in Frankfurt and Karen Freifeld in New York, Editing by Soyoung Kim and Andrew Hay)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/zqEfcD1Sjfw/us-deutsche-bank-russia-litigation-idUSKCN12S2HP

Morgan Stanley COO Jim Rosenthal to retire at end of year: memo


Morgan Stanley (MS.N) chief operating officer Jim Rosenthal will retire at the end of the year.

Rosenthal, who joined the Wall Street firm in 2008 and helped oversee the integration of Morgan Stanley with Smith Barney, will continue to serve as a senior adviser, according to an internal memo.

A Morgan Stanley spokesman confirmed the contents of the memo.

(Reporting by Olivia Oran in New York; Editing by Bernard Orr)

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