Deutsche Bank said to weigh cutting jobs on top of Postbank sale

Deutsche Bank AG is considering cutting as many as 8,000 jobs in addition to selling a consumer-banking unit, which would shrink the total workforce almost 25 per cent, according to a person familiar with the matter. 

PHOTO: REUTERS

SEP 15, 20157:46 AM

[LONDON] Deutsche Bank AG is considering cutting as many as 8,000 jobs in addition to selling a consumer-banking unit, which would shrink the total workforce almost 25 per cent, according to a person familiar with the matter.

The new cuts would probably mostly affect administrative and technology jobs, although some client-facing positions may be eliminated, said the person, who asked to remain anonymous because the plans are confidential. A plan to divest Bonn-based Deutsche Postbank AG, which employs about 15,000, is still part of the strategy, the person said. A final decision will be made next month, the person said.

Deutsche Bank, which runs Europe's biggest investment bank, employed 98,647 people at the end of June. Klaus Winker, a company spokesman, declined to comment on Monday.

Co-Chief Executive Officer John Cryan, 54, who replaced Anshu Jain in July, is pressing ahead with the bank's plan to bolster profitability by reducing expenses and cutting back businesses.

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On his first day in the job, he pledged to sell the Postbank unit, as outlined in April, and tackle the company's "swollen" cost base and "antiquated and inadequate" technology.

"Given nothing has really happened to Deutsche Bank's staff levels on a net basis, Cryan will have to make some deeper cuts to show he is serious about actually cutting expenses," Jon Peace, an analyst at Nomura Holdings Inc. who has a neutral stance on Deutsche Bank, said by phone from London.

"A decrease in the order of 10 per cent of staff after the sale of Postbank would finally add credibility."

Deutsche Bank's staff levels at the end of June are up 0.4 per cent from the end of 2013, according to the company's filings. Reuters reported the total cuts under consideration earlier Monday.

Mr Cryan aims to complete the bank's plans by the end of next month. When taking over as co-CEO with Juergen Fitschen, he inherited a strategy to boost returns by lowering expenses by about 15 per cent by 2020 and shrinking assets at the investment bank by as much as 17 per cent through 2018.

While that plan foresaw the bank closing as many as 200 consumer-banking branches and exiting up to 10 countries, the company stopped short of saying how many jobs would be lost and where.

Deutsche Bank will probably close most or all of its investment bank's operations in Russia, said the person.

Deutsche Bank has said it plans to divest Postbank by the end of next year via a trade sale or by issuing shares to the public.

BLOOMBERG

Dollar snaps six-day skid against euro ahead of Fed

The dollar snapped a six-day skid against the euro but dropped against the yen Monday as currency traders girded for a major US Federal Reserve decision later this week. 

PHOTO: BLOOMBERG

SEP 15, 20156:48 AM

[NEW YORK] The dollar snapped a six-day skid against the euro but dropped against the yen Monday as currency traders girded for a major US Federal Reserve decision later this week.

Analysts offered a wide range of readings of potential currency market outcomes from Thursday's Fed policy decision, which could result in the first US interest rate hike in over nine years.

Although the Fed has signaled its plans to lift benchmark interest rates in 2015, turbulence in global financial markets could prompt the US central bank to push back its time frame.

The Fed's decision and economic projections released at the same time "will give traders a clearer view on when and how many times the US could raise rates in the next six months," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

"If the Fed does decide to hike this week, the cost of buying US dollars could spike very sharply."

But Christopher Vecchio, currency analyst at DailyFX, said even a rate hike could lead to weakness in the US currency if the Fed signals a "one and done" policy with no intention to hike again any time soon.

Trading foreign exchange this week is "not a simple binary bet," said Kathy Lien of BK Asset Management, offering several possible scenarios.

For example, she said, the Fed could opt not to hike and not to give any outlook for doing so, which would spark a multi-day decline in the dollar.

But ont he contrary, Ms Lien said, the dollar could also rally for several days if the Fed raises the rate and indicates it could go ahead with a second increase in 2015 if economic growth accelerates.

AFP

    
 

China building third airstrip on disputed South China Sea islets: expert

Chinese dredging vessels are purportedly seen in the waters around Mischief Reef in the disputed Spratly Islands in the South China Sea in this file still image from video taken by a P-8A Poseidon surveillance aircraft provided by the United States Navy on May 21, 2015. 

PHOTO: REUTERS

SEP 15, 20157:36 AM

[WASHINGTON] China appears to be building a third airstrip in contested territory in the South China Sea, a US expert said on Monday, citing satellite photographs taken last week.

The photographs taken for Washington's Center for Strategic and International Studies (CSIS) think tank on Sept. 8 show construction on Mischief Reef, one of several artificial islands China has created in the Spratly archipelago.

The images show a rectangular area with a retaining wall, 3,000m long, matching similar work by China on two other reefs, Subi and Fiery Cross, said Greg Poling, director of CSIS's Asia Maritime Transparency Initiative (AMTI).

"Clearly, what we have seen is going to be a 3,000-meter airstrip and we have seen some more work on what is clearly going to be some port facilities for ships," he said.

Security experts say the strip would be long enough to accommodate most Chinese military aircraft, giving Beijing greater reach into the heart of maritime Southeast Asia, where it has competing claims with several countries.

News of the work comes ahead of a visit to Washington next week by Chinese President Xi Jinping.

US worries about China's increasingly assertive territorial claims are expected to be high on the agenda.

A spokesman for the US Defence Department, Commander Bill Urban, declined to comment specifically on Poling's assessment, but repeated US calls for a halt to land reclamation, construction and militarisation of South China Sea outposts to"ease tensions and create space for diplomatic solutions."

"China's stated intentions with its program, and continued construction, will not reduce tensions or lead to a meaningful diplomatic solution," he added.

A new airstrip at Mischief Reef would be particularly worrying for the Philippines, a rival claimant in the South China Sea. It would allow China to mount "more or less constant"patrols over Reed Bank, where the Philippines has long explored for oil and gas, Poling said.

Three airstrips, once completed, would allow China to threaten all air traffic over the features it has reclaimed in the South China Sea, he said, adding that it would be especially worrying if China were to install advanced air defenses.

Satellite photographs from late June showed China had almost finished a 3,000-meter airstrip on Fiery Cross.

Satellite images from earlier this year showed reclamation work on Subi Reef creating land that could accommodate another airstrip. Poling said the latest images made it obvious that such an airstrip was being built at Subi.

China stepped up creation of artificial islands in the South China Sea last year, drawing strong criticism from Washington.

Asked about Mischief Reef on Monday, China's Foreign Ministry spokesman Hong Lei repeated China's claim to"indisputable sovereignty" over the Spratly Islands and its right to establish military facilities there.

REUTERS

    
 

Higher UK minimum wage to hit hospitality hardest: report

British businesses in the hospitality, retail and social care sectors are likely to be challenged by a planned rise in the minimum wage and will need to find ways to boost productivity, an economic think tank said on Tuesday.

PHOTO: REUTERS

SEP 15, 2015 7:26 AM

[LONDON] British businesses in the hospitality, retail and social care sectors are likely to be challenged by a planned rise in the minimum wage and will need to find ways to boost productivity, an economic think tank said on Tuesday.

The Resolution Foundation, which researches low pay, said finance minister George Osborne's plan to raise the hourly minimum wage to 9 pounds (S$19.50) by 2020 from its current 6.50 pounds could lead to lower hiring and profits and higher prices.

"Past warnings about the negative effects of the minimum wage on employment have been wide of the mark, but the size of the increase in the new wage floor will certainly be challenging in sectors such as hospitality, retail and care," Conor D'Arcy, a researcher at the Resolution Foundation, said.

Businesses such as Whitbread, which operates hotels and coffee shops, and clothing retailer Next say the bigger-than-normal increases may cost jobs.

Mr Osborne is seeking to boost work incentives and cut the cost of welfare for the low-paid.

Britain's independent budget forecasters estimate the new minimum wage will result in 60,000 fewer jobs and project the cost to business would amount to 1 per cent of corporate profits.

The higher minimum wage will directly affect around a quarter of British workers, the Resolution Foundation said, and raise employers' wage bill by 0.6 per cent by 2020, plus higher employer social security and pension contributions.

In the hospitality sector, which relies on low-paid staff, the pay bill will rise by 3.4 per cent and the government will need to find an extra 1.3 billion pounds to pay for social care, the report said.

"While some (employers) may opt to reduce hours or new hires, past experience tells us that most absorb the pressures via some combination of small increases in prices, a dip in profits and productivity gains," Mr D'Arcy said.

REUTERS

Crisis-hit Brazil announces spending cuts, tax hikes

Planning Minister Nelson Barbosa told a news conference that the austerity package would total 64.9 billion reais (S$23.9 billion). 

PHOTO: AFP

SEP 15, 20157:00 AM

[BRASÍLIA] Brazil announced steep spending cuts and tax hikes Monday in response to a deepening economic crisis that has already caused a shock downgrade of its credit rating.

Planning Minister Nelson Barbosa told a news conference that the austerity package would total 64.9 billion reais (S$23.9 billion).

Major items in the package include freezing public sector salary raises and hiring; entirely eliminating 10 of 39 ministries; cutting 1,000 jobs and reducing housing and health-related social spending.

The downgrade last week by Standard & Poor's sent the government scrambling to prevent an exit of foreign capital and to balance the books in an economy already suffering from plummeting commodity prices and the effects of a huge corruption scandal.

After a weekend huddled with ministers, pressure piled on President Dilma Rousseff.

In this barbecue-mad nation of 200 million, her Finance Minister Joaquim Levy recently promised that the government would be "cutting into the meat" of federal spending, beyond just fat.

"These are major corrections, which involve government employees in a meaningful way and how the machinery of state works," Mr Levy stressed on Monday.

The government of Latin America's biggest country announced in August that the economy was officially in recession and that the contraction could extend through 2016, becoming the longest recession since 1931.

AFP

      

Greek leaders question EU migration policy, seek room to amend bailout

The two main candidates for the Greek premiership in this weekend's snap election on Monday questioned the EU's migration policy and said they would seek ways to amend the country's unpopular new economic bailout. 

PHOTO: AFP

SEP 15, 20156:54 AM

[ATHENS] The two main candidates for the Greek premiership in this weekend's snap election on Monday questioned the EU's migration policy and said they would seek ways to amend the country's unpopular new economic bailout.

In a televised debate, leftist leader and former PM Alexis Tsipras said military action against people smugglers would not work in Greek waters.

"Operations of a military nature cannot be carried out in Greece's case, you will hit innocent refugees, not smugglers... the boats come without smugglers," Mr Tsipras said.

His conservative rival Evangelos Meimarakis said that "illegal migrants" should be sent back to their country of origin.

EU member states earlier Monday approved plans for military action against people smugglers in the Mediterranean, seizing and if necessary destroying boats to break up the networks operating out of Libya.

Overwhelming Greece's Aegean Sea islands, migration has turned into a major issue ahead of the September 20 election, a campaign which had previously been dominated by the country's six-year economic crisis.

Mr Tsipras and Mr Meimarakis went into their second debate looking for an edge in the neck-and-neck race between their Syriza and New Democracy parties.

The debate was more lively than the first round on September 9 that also included another five parties.

Former PM Tsipras, 41, quit last month, triggering new elections.

He is asking for a second chance to put a human face on the unpopular 86-billion-euro (S$136.7 billion) bailout he brokered with Greece's EU creditors in July.

'OPEN' ISSUES IN BAILOUT

"I could say the deal we brought is a living organism," he said, listing a number of "open issues" including debt reduction, privatisations, labour relations, and how to deal with non-performing bank loans.

"We will apply the deal, the section which we are obliged to apply, as fast as possible, and we will fight on major issues that remain open, for the benefit of the people," Mr Tsipras said.

Mr Meimarakis, 61, said his party intended to apply the terms of the bailout for a year before seeking to amend some of the terms.

"The bailout includes reforms, restructuring, privatisations...we began them, we believe in them, we can do them," he said.

A Metron Analysis poll for TV station Antenna on Monday showed the two parties in a dead heat race, each attracting 24.6 per cent of the popular vote.

Metron Analysis found 70 per cent had given a thumbs down to Tsipras' government record, compared to a 76-percent approval rate in February.

Evidently intent to fight Mr Tsipras over every inch of ground, the taller Meimarakis complained during the debate that the balanced side-by-side shots of the two leaders were stealing his height advantage over his rival.

Mr Meimarakis was clearly more on edge in Monday's debate, and spent much of the time sidestepping questions in order to criticise Mr Tsipras' previous answers.

' YOU BROUGHT DESTRUCTION'

Mr Tsipras came to power in January promising to eliminate austerity, but was forced to accept a rescue package including more cuts, and ultimately resigned in August after a revolt by hardline eurosceptics wiped out his parliamentary majority.

He now pledges, if re-elected, to continue the fight against poverty and corruption and to force the rich to pay their taxes.

Mr Meimarakis, a former defence minister temporarily heading the New Democracy conservatives after former leader Antonis Samaras resigned in July, accuses Mr Tsipras of destroying the economy in his seven-month stint in power.

"I never want you to be prime minister again," he told Mr Tsipras. "You brought destruction to the country...we never had so many ills in such a small period of time".

Nevertheless, Mr Meimarakis says he will invite Mr Tsipras to form a unity government and a multi-party team to negotiate with the country's creditors on how to lift the country out of crisis.

Mr Tsipras has rejected any possibility of working with the conservatives whom he accuses of helping to bankrupt the country through nepotism and corruption over the last 40 years.

"The dilemma on Sunday is simple," he said. "Do we want the Greece of the few or the many?"

AF
P

Japan set for historic defence shift, but still not "normal nation"

Japan and ally the United States can start making plans for a possible conflict with China after the expected enactment of defence legislation this week, but Japan will not be sending troops to back up US-led operations against Islamic State. 

PHOTO: AFP

SEP 15, 20157:32 AM

[TOKYO] Japan and ally the United States can start making plans for a possible conflict with China after the expected enactment of defence legislation this week, but Japan will not be sending troops to back up US-led operations against Islamic State.

Those two scenarios show both how far Japan will have come in loosening the constraints of its pacifist constitution on its military and how far it will remain from being a "normal nation", unconstrained in overseas military operations by legal limits and a deeply rooted public anti-war mindset.

Some in Japan worry that the gap between what Japan can or will do and what the United States hopes for could cause friction with Washington if a failure to meet overblown expectations means it becomes disillusioned with its Asian partner.

"With these legal changes, we will be able to do almost everything the United States has asked. There is almost nothing we cannot do when it comes to things like providing ammunition and rear-guard support," a Japanese naval officer told Reuters. "But what America really wants is for Japan to fight in the war against terrorism," he added. "If US public opinion rises against Japan, this will be a problem."

Despite public protests and surveys showing a majority of voters object, parliament's upper house is expected as early as this week to enact defence bills Prime Minister Shinzo Abe has called "the first of its kind and a sweeping" reform.

The changes include an end to a decades-old ban on defending a friendly nation under attack, or collective self-defence, when Japan faces a "threat to its survival".

They also expand scope for logistics support for US and other countries' militaries and participation in multinational peacekeeping operations.

The United States has welcomed the shift, while China, where anger over Japan's brutal occupation before and during World War Two is still deep, has said the legislation would "complicate" regional security.

Domestic critics say the changes violate the constitution and open the door to entanglement in US-led conflicts.

Mr Abe, in response, has in principle ruled out sending troops to fight in foreign territory and said Japan would not even provide logistical support for US-led operations against Islamic State.

"Japan is not going to be like Australia, the UK or Germany in that those countries have been providing all sorts of human assets to war zones, Afghanistan, Iraq. That is not going to be a thing that Japan can do," a Japanese government source told Reuters.

STILL NOT "NORMAL"

The changes leave Japan still short of being a "normal nation" by global security standards. Collective self-defence, for example, will only be exercised if three conditions are met including a "threat to Japan's survival".

"It is a big step by Japanese standards but not huge by major power standards," said Narushige Michishita, Japan scholar at the Woodrow Wilson International Centre for Scholars.

That said, closer integration with US forces in particular opens the door not only to expand peace-time patrols and exercises but also to start join planning for conflict.

"It will enhance deterrence and integrate Japan much more closely not just with the United States, but with Australia, the Philippines and other US allies," said Michael Green, Japan chair at the Center for Strategic and International Studies.

"Japan can be integrated in the use of force - not Japan doing offensive missions, but supporting the United States in an emergency that is a threat to Japan's interests and survival."

Mr Michishita said the legislation would allow Japan and the United States to begin planning to defend the "first island chain", an arc of islands enclosing China's coastal waters from the Kuril Islands southward through the Japanese archipelago, Taiwan and the northern Philippines to Borneo.

"From the military operations perspective, this is most important," said Mr Michishita, a former defence official.

Still, some in Japan worry a perception gap with the United States over what Japan can or will do could lead to damaging friction.

"There are experts in the United States who have the misconception that Japan will be able to exercise collective self-defence based on international law and equivalent to what the United States can do," said former defence minister Satoshi Morimoto. "Japan is going to have to make a lot of effort in this area (to avoid friction)."

REUTERS