Good morning! Here’s what you need to know in markets on Monday.
1. Two failing Italian banks, Popolare di Vicenza and Veneto Banca, are being wound up. Italy began winding up two failed regional banks on Sunday in a deal that could cost the state up to 17 billion euros ($US19 billion) and will leave the lenders’ good assets in the hands of the nation’s biggest retail bank, Intesa Sanpaolo. The government will pay 5.2 billion euros to Intesa, and give it guarantees of up 12 billion euros, so that it will take over the remains of Popolare di Vicenza and Veneto Banca.
2. Stricken lender Co-op Bank is
close to a £700m rescue deal with a group of US hedge funds, Sky News reports. Sky’s Mark Kleinman reports that the upcoming deal comes “amid ongoing talks about the separation of the vast pension scheme it shares with the Co-op Group.”
3. Brexit secretary David Davis has said he is “pretty sure” but not “100 per cent certain” that he can negotiate a free trade deal when the United Kingdom leaves the European Union. “It’s a negotiation… you can be sure there’ll be a deal [but] the deal I want is the free trade agreement, the customs agreement and so on,” Davis said on the BBC’s Andrew Marr Show on Sunday.
4. Royal Bank of Scotland is planning to cut 443 jobs dealing with business loans and many of them will move to India, the bank said on Sunday. The Edinburgh-based bank said the cuts were part of a restructuring aimed at becoming a smaller bank.”We realise this will be difficult news for staff and we will do everything we can to support those affected,” the bank said in a statement.
5. Although a better economy is helping global banks to turn the corner a decade after the financial crisis began, euro zone lenders remain a dampener on the sector’s recovery, the Bank for International Settlements said on Sunday. “The financial sector faces an improving but still challenging environment,” the BIS, a forum for central bankers, said in its annual report.
6. In the same report, the BIS also said that major central banks should press ahead with interest rate increases while recognising that some turbulence in financial markets will have to be negotiated along the way. The BIS said in one of its most upbeat annual reports for years that global growth could soon be back at long-term average levels after a sharp improvement in sentiment over the past year.
7. Activist investor Daniel Loeb’s Third Point LLC on Sunday unveiled a more than 1% stake in Switzerland’s Nestle SA and urged the world’s largest packaged foods maker to improve its margins, buy back stock and shed non-core businesses. The stake, worth around 3.28 billion Swiss francs ($US3.4 billion), is one of the largest taken by the hedge fund, which pressed for change in recent years at U.S. internet firm Yahoo and Japan’s Sony Corp.
8. Activity levels across Japan’s manufacturing sector grew at the slowest pace in seven months in June. The Nikkei-IHS Markit flash manufacturing Purchasing Managers Index (PMI) fell to 52.0 from 53.1, leaving it at the lowest level since December last year. Indicative of the slowdown in the headline index, the improvement across most categories was weaker than what was reported in May with output levels growing at the slowest pace seen in nine months.
9. Iranian President Hassan Rouhani voiced support on Sunday for Qatar in its confrontation with Iran’s rival Saudi Arabia and its allies, saying a “siege of Qatar is unacceptable”, the state news agency IRNA reported. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut ties with Qatar on June 5, accusing it of support for Islamist militants, an allegation Qatar denies.
10. Japan’s Takata Corporation decided on Monday to file for bankruptcy protection in Japan with liabilities of more than 1 trillion yen ($US9 billion), Japanese media reported. The news comes as the auto parts supplier has struggled due to its defective air bag inflators at the centre of the auto industry’s biggest ever product recall.