Ex-Julius Baer bankers to plead guilty in US in Swiss tax case

FEB 5, 201612:20 AM

[NEW YORK] Two former private bankers at Julius Baer are expected to plead guilty Thursday to charges that they helped wealthy American clients evade taxes, as the Swiss bank prepares to resolve a criminal investigation with a US$547 million settlement.

The expected pleas by Daniela Casadei and Fabio Frazzetto, both former client advisers at Julius Baer, in federal court in Manhattan come two days after the Swiss citizens arrived in the United States to face the charges.

Both are expected to appear in court again later Thursday, the office of Manhattan US Attorney Preet Bharara said in an advisory, using language typically indicative of a guilty plea.

Their prospective pleas came after Julius Baer in December disclosed that it had reached a deal with prosecutors to pay US$547.25 million to resolve a probe born out of a US crackdown on offshore tax evasion by Americans through Swiss banks.

See who is talking about JULIUS BAER

Last 30 days:

• 545
• 0
• 279

30 days avg

HOT COMPANIES

AstraZeneca +189% messages

• Unilever +142%
• Shell +128%
• EasyJet +127%
• SSE +110%
• GlaxoSmithKline +63%
• Sports Direct Intl +48%
• Vodafone +39%
• Lloyds Banking +27%
• RSA Insurance +20%

• Unilever +142%
• Shell +128%
• EasyJet +127%
• SSE +110%
• GlaxoSmithKline +63%
• Sports Direct Intl +48%
• Vodafone +39%
• Lloyds Banking +27%
• RSA Insurance +20%

Casadei, 52, and Frazzetto, 42 were indicted in 2011 for conspiring to help US taxpayers hide more than US$600 million in offshore accounts and evade paying taxes.

Both would normally beyond the reach of US extradition, as Switzerland does not extradite its own citizens.

Their lawyers did not respond immediately to requests for comment Thursday. Julius Baer declined comment.

The US tax evasion crackdown has already resulted in charges against a number of bankers, lawyers and advisers and billions of dollars in settlements with Swiss banks.

The US Justice Department last week announced the final settlement in a program that resulted in deals with 80 banks for US$1.36 billion to avoid possible prosecution.

Banks that were already under criminal investigation like Julius Baer, though, were not eligible for the program, which required the banks to provide detailed information on the accounts of US taxpayers under investigation.

In 2014, Swiss banking giant Credit Suisse pleaded guilty to conspiring to aid and assist US taxpayers in filing false tax returns in a US$2.6 billion settlement.

The penalty was more severe than the US$780 million that rival UBS AG agreed to pay in 2009 as part of a deferred prosecution deal.

Wegelin & Co, which had been the oldest Swiss private bank, was meanwhile forced to close after agreeing in 2013 to plead guilty to conspiracy to evade taxes and pay US$74 million.

The case is US v. Casadei, US District Court, Southern District of New York, No. 11-cr-00866.

REUTERS

    
 

Lower fuel costs boost bottom line for SIA in Q3

By

Nisha Ramchandaninishar@sph.com.sg@NishaBT

The drop in fuel prices helped Singapore Airlines earn a net profit of nearly S$275 million for the third quarter ended 31 Dec, 2015, up from S$214.7 million a year ago. 

SPH

FEB 4, 20166:29 PM

THE drop in fuel prices helped Singapore Airlines (SIA) earn a net profit of nearly S$275 million for the third quarter ended 31 Dec, 2015, up from S$214.7 million a year ago.

Revenue for the quarter slid 3.9 per cent year on year to S$3.94 billion due to weaker yields from both passenger and cargo operations. Passenger yields slid 4.6 per cent, while cargo yields tumbled 13.5 per cent.

Earnings per share for the quarter clocked 23.6 Singapore cents, rising from 17.3 cents a year ago.

Group expenditure fell to S$3.65 billion, or 7.6 per cent lower, on the back of lower fuel prices. This was partially offset by the stronger greenback against the Singapore dollar and a hedging loss.

See who is talking about SIA

Last 30 days:

• 526
• 7
• 36

30 days avg

HOT COMPANIES

AstraZeneca +189% messages

• Unilever +142%
• Shell +128%
• EasyJet +127%
• SSE +110%
• GlaxoSmithKline +63%
• Sports Direct Intl +48%
• Vodafone +39%
• Lloyds Banking +27%
• RSA Insurance +20%

• Unilever +142%
• Shell +128%
• EasyJet +127%
• SSE +110%
• GlaxoSmithKline +63%
• Sports Direct Intl +48%
• Vodafone +39%
• Lloyds Banking +27%
• RSA Insurance +20%

Lower expenses pushed operating profit up to S$288 million, nearly doubling from S$146.3 million a year ago.

However, taxes were also higher, climbing from S$25.1 million a year ago to S$65.8 million.

SIA said: "The challenging operating environment is expected to persist, with travel demand remaining volatile, affected by economic forces and external events. On the competitive front, expansion of other full-service airlines as well as low-cost carriers, particularly in South-east Asia, will continue to exert pressure on loads and yields."

    
 

IMF: Oil crash a 'formidable shock' to African exporters

FEB 4, 20167:05 AM

[WASHINGTON] The International Monetary Fund said Wednesday the plunge in oil prices will force significant fiscal adjustments on Africa's oil exporters.

The IMF said the 70 per cent fall in crude prices over the past 18 months has been a "formidable shock" to sub-Saharan African oil exporters like Nigeria and Angola, given their heavy reliance on oil receipts in state revenues.

"While most oil producers have low levels of debt and adequate levels of reserves, the massive oil price decline makes adjustment to the new environment inevitable," an IMF spokesperson said in an emailed statement to AFP.

The Fund said it is working with the affected countries on how to adjust economic policies in response to the fall in oil income.

"These vary depending on country-specific situations, but in most cases, fiscal adjustment will be needed," the Fund said.

Nigeria, the largest African economy and largest crude exporter, has already approached the World Bank and African Development Bank for assistance to shore up its finances.

The IMF said that it had not received any new request for financial assistance from sub-Saharan African oil exporters.

"We indeed stand ready to assist the authorities, should such a request materialize," it said.

In a visit to the Nigerian capital Abuja in January, IMF Managing Director Christine Lagarde said the Fund was not negotiating a loan programme with the country.

"Frankly, given the determination and resilience displayed by the presidency and his team, I don't see why an IMF programme is going to be needed," she said at the time.

AFP

    
 

Gold clings near 3-month peak as US rate hike views ease

Gold stayed near a three-month top on Thursday after marking its best day in two weeks, buoyed by expectations that global economic and financial headwinds could make it tough for the US Federal Reserve to raise interest rates in the near term. 

PHOTO: BLOOMBERG

FEB 4, 201610:54 AM

[MANILA] Gold stayed near a three-month top on Thursday after marking its best day in two weeks, buoyed by expectations that global economic and financial headwinds could make it tough for the US Federal Reserve to raise interest rates in the near term.

Gold has benefited from the uncertainty on the timing of the next US rate hike, burnishing its safe-haven draw that has been on full display since the year began as investors shunned risky assets.

Spot gold was little changed at US$1,140.90 an ounce by 0226 GMT, after rising as high as US$1,145.60 on Wednesday, its loftiest since Oct 30.

Gold rallied 1.2 per cent overnight, the biggest single-day gain since Jan 20. The metal has risen nearly 8 per cent so far this year.

William Dudley, president of the Federal Reserve Bank of New York, said financial conditions have tightened considerably and the weakening global outlook could have "significant consequences" to the US economy.

Those comments dragged down the dollar overnight, adding to market expectations that the Fed is unlikely to raise rates again in March. US rates rose for the first time in nearly a decade in December.

BMI Research, part of ratings agency Fitch, said gold is now increasingly likely to move between US$1,000 and US$1,200 instead of pushing below US$1,000 this year as it had previously thought.

"The Federal Reserve will keep monetary policy looser than previously anticipated in the months ahead as global economic headwinds prompt officials to postpone their hiking plans until the second half of 2016," BMI told clients in a note.

Also cooling US rate hike views, activity in the US services sector slowed to a near two-year low in January.

US gold for April delivery was flat at US$1,141.50 an ounce.

Holdings of top gold-backed exchange-traded fund, SPDR Gold Trust, continued to rise, standing at 22.19 million ounces on Wednesday, the highest since late October.

Investor focus will soon turn to Friday's nonfarm payrolls and a weak reading could sustain the dollar selloff, said INTL FCStone analyst Edward Meir.

"If we get a stronger-than-expected reading, the pendulum might swing the other way, as the Fed 'hawks' recover lost ground in the debate," said Mr Meir.

Economists polled by Reuters are looking for US nonfarm payrolls to increase by 190,000 in January, after rising by 292,000 in December.

Other precious metals kept pace with gold's gains. Spot silver was flat at US$14.65 an ounce, not far below Wednesday's three-month peak of US$14.80.

Spot platinum rose to a one-month high of US$885.27 an ounce and palladium was up 0.5 per cent at US$511.75 an ounce, near Wednesday's one-month top of US$515.54.

REUTERS

    
 

Oil prices extend rebound in Asia

Oil prices extended their rebound in Asia on Thursday, buoyed by a weaker dollar, bargain buying and fresh speculation of a possible output cut by the Opec producers' group. 

PHOTO: REUTERS

FEB 4, 201611:59 AM

[SINGAPORE] Oil prices extended their rebound in Asia on Thursday, buoyed by a weaker dollar, bargain buying and fresh speculation of a possible output cut by the Opec producers' group.

Traders brushed aside bearish data showing another increase in US commercial crude inventories, but analysts said any rally in a market awash with barrels of oil is bound to be short-lived.

At around 0300 GMT, US benchmark West Texas Intermediate for delivery in March was up 36 cents, or 1.12 per cent, to US$32.64 and Brent crude for April was trading higher by 29 cents, or 0.83 per cent, at US$35.33. Both contracts closed higher Wednesday.

The US Department of Energy said Wednesday that commercial crude stockpiles in the world's top oil consumer soared by 7.8 million barrels in the week ending January 29.

That was almost double market expectations and took total crude inventories to 502.7 million, topping 500 million barrels for the first time on record, exacerbating market concerns over the global glut that has depressed prices for nearly two years.

Daniel Ang, an analyst with Phillip Futures in Singapore, said prices initially dropped on the inventories surge, but bargain hunters moved in as the dollar weakened, reversing the trend.

Oil is traded in dollars so a softening of the US currency makes crude cheaper for holders of other units, perking up demand.

"When oil becomes cheaper, discount buying kicks in, pushing prices higher. So you see a bullish momentum forming," Mr Ang told AFP.

Comments by Ecuador, one of Opec's poorer members, that there might be a special Opec meeting later this month have also revived hopes for an output cut, according to other analysts.

But Mr Ang said any price rise must have a solid foundation, otherwise it would not last.

"The current trend now is that producers which are hurting very badly from the low oil prices would say there might be an output cut. But the countries that really have the influence are not saying anything," he said.

"So I think we should wait for concrete movements not just hearsay."

A price rebound last week driven by talks of possible coordination between Russia and Opec to slash production fizzled out after traders realised there was no substance to it.

AFP

    
 

US oil, gas industry sheds 100,000 jobs in slump: Kemp

FEB 4, 20168:52 PM

[LONDON] The number of people employed in oil and gas extraction and support activities across the United States has fallen by around 100,000 since October 2014.

Between October 2014 and November 2015, the number of people on the payroll of oil and gas extraction firms and support services fell by almost 87,000, according to the US Bureau of Labor Statistics (BLS).

But once data on job losses in December and January becomes available, the total reduction is likely to be around 100,000, or 16 percent of employment at its peak.

Total employment in oil and gas production and services fell from almost 538,000 in October 2014 to 451,000 in November 2015 and is likely to have slipped under 440,000 in January.

Over the same period, the US economy has added more than 3.5 million jobs in other sectors, according to the BLS Current Employment Statistics survey.

But the raw figures on job losses and additions do not tell the whole story because the jobs lost paid relatively high wages.

During the oil and gas drilling boom from 2004 to 2014, the industry created some of the best-paid jobs in the economy for workers at all levels from roustabout to petroleum engineer.

Before the slump in oil and gas prices, the median pay for a rig operator was US$47,000 per year compared with $35,500 for all occupations in the economy.

Even a comparatively unskilled roustabout, or labourer, was earning an average of almost US$36,000 in May 2014, according to data from the BLS Occupational Employment Statistics survey.

These are averages for all employees at all levels of skill and seniority. Some workers were earning considerably more. At the top end, drillers were earning over US$80,000 and roustabouts more than US$55,000.

At the top of the industry, petroleum engineers, among the most highly trained personnel, often with supervisory roles, were averaging more than US$130,000, rising to more than US$180,000 for those in the top quartile.

The job losses identified in the BLS Current Employment Survey are only for those directly employed by firms in oil and gas extraction and support activities, and do not include all the other job losses in the supply chain.

For example, the number of jobs in the US railroad industry fell by more than 10,000 between April and December 2015, with the downturn in oil- and gas-related freight one contributory factor.

Railroad employees, from track layers and dinkey operators to hostlers and locomotive engineers, tend to earn significantly above the national average for all occupations.

The same is true in other parts of the oil and gas supply chain, from steel workers producing oil pipe to manufacturers of oilfield pumps and generator sets.

Then there are job losses in retailing, accommodation, real estate and other industries not directly linked to oil and gas production but in parts of the country with a large oil and gas presence, such as North Dakota and Texas.

More layoffs are virtually certain in the months ahead in oil and gas production, as well as along the supply chain and in petroleum-dependent economies, as the continued price slump filters through to even less drilling activity.

The number of rigs drilling for oil and gas has fallen from over 1,900 in October 2014 to 744 at the end of November 2015 and just 619 at the end of January 2016, according to oilfield services firm Baker Hughes.

More layoffs will inevitably follow at drilling firms as well as their suppliers as the whole industry downsizes in preparation for a prolonged downturn.

The oil and gas industry accounts for significant employment and is an even more significant driver of investment spending and growth along the supply chain, ranging from aggregates to steelmaking and specialist equipment.

On its own, however, the oil and gas sector is not big enough to push the US economy into another recession, as Matthew Klein at FT Alphaville has explained.

Consumer spending on big-ticket items such as homes and cars is far more important for whole-economy growth.

But in combination with a stronger dollar, slowing growth in international markets, and an over-accumulation of inventories through much of the economy, the oil slump is creating headwinds for manufacturers, freight firms and the wider economy.

REUTERS