Banking Sector Rebounds
Investors realized that regional lenders are in better condition than initially feared following the collapse of Silicon Valley Bank. Bank shares rallied on Monday and U.S. Treasury prices fell after First Citizens Bancshares (NASDAQ:FCNCA) reached a deal to buy large pieces of Silicon Valley Bank (NYSE:SVB). Analysts are increasingly confident that the selloff in banks has hit bottom, with no new bank failures over the past two weeks, and concerns focused on only one midsize lender, First Republic Bank. Options traders who bet that shares of Signature Bank (OTC:SBNY) and SVB Financial Group would plummet have been stuck in limbo, but the banks are expected to start trading in the over-the-counter market on Tuesday, potentially allowing traders to exit positions.
German Probe Against Microsoft
Germany’s federal cartel office, or Bundeskartellamt, has launched a probe into Microsoft (NASDAQ:MSFT) to investigate whether the tech giant should be designated of “paramount significance for competition across markets”. The probe is being launched under Section 19a of the German Competition Act, and could signal a regulatory crackdown against Big Tech. This move puts Berlin at the forefront of European attempts to restrict the power of large tech companies.
BP, Adnoc Buy NewMed
BP (NYSE:BP) and the Abu Dhabi National Oil Company have teamed up to launch a $2bn bid for a 50% stake in Israeli natural gas group, NewMed, which has a market capitalisation of $2.4bn. The move is part of a plan to jointly pursue gas projects in the eastern Mediterranean. BP said that it intends to form a new joint venture with Adnoc focused on gas development in international areas of mutual interest, including the east Mediterranean. This acquisition would be a significant first step in establishing the joint venture.
William Hill’s Record Fine
William Hill has been fined a record £19.2m for failing to protect consumers and weak anti-money laundering controls. The regulator issued three fines against separate parts of William Hill, which is owned by online gaming group 888 (LSE:888). The failings uncovered were “so widespread and alarming, serious consideration was given to licence suspension”. The three businesses owned by the company which were fined were William Hill’s online operation, sister site Mr Green, and the division behind William Hill’s 1,344 betting shops.
Alibaba to Restructure
Alibaba (NYSE:BABA) has announced plans to split off its logistics, cloud, and local services from its main ecommerce business to improve the company’s share price. The reorganisation will turn Alibaba into a holding group with six main business units, each led by a separate chief executive and board, which will be empowered to bring in outside capital or list publicly. The group has experienced a difficult past two years, facing a record $2.8bn fine for monopolistic behaviour, stuttering Chinese economic growth, and competition from new rivals.
French Banks Face Fines
French banks, including Societe Generale (PA:GLE) , BNP Paribas (PA:BNP), HSBC (NYSE:HSBC) and Natixis (NASDAQ:VNSYX), are facing collective fines of over €1bn ($1.1bn) in connection to a probe into tax fraud and money laundering relating to dividend payments. The fines include penalties and back interest. The raids relate to a dividend arbitrage strategy known as Cum-Cum, where shareholders transferred stock for a short period to investors based abroad to avoid a dividend tax. The prosecutor’s office in Paris launched preliminary investigations in December 2021.
Multinationals Worry EU
Some multinational companies, including Intel Corp. and Raytheon Technologies Corp (NYSE:RTX), have expressed concern over new European Union rules for reporting foreign subsidies. The companies warned that the rules could disrupt mergers and acquisitions and impede public tendering. Although the companies support the overall aim of the new rules, they believe that their implementation will be an extremely complex administrative ordeal. The new foreign-subsidy rules are set to take effect later this year, giving regulators new tools to bar companies from making certain acquisitions or winning large public contracts if they previously benefited from government aid that was distortive.
Walgreens Profits Decline
Pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) reported a drop in profits in the third quarter due to a sharp decline in demand for Covid-19 related products. The Illinois-based retailer reported earnings per share of 81 cents in the three months to February, down by a fifth from a year ago. Walgreens Boots Alliance’s profits were impacted by the plunge in demand for Covid-19 tests and vaccines.
Germany Buys Howitzers
The German government plans to purchase 10 self-propelled, rapid-fired howitzers from Krauss-Maffei Wegmann (SS:600579) in a deal worth €185 million. The deal could be expanded to 18 more of the artillery systems at a cost of about €290 million, taking the total investment to roughly €475 million. The plan is expected to be approved by parliament’s budget committee at a meeting on Wednesday in Berlin. The purchase of the howitzers will provide the German military with a modernized and effective artillery system.
Disney Reaches Agreement
Walt Disney Co. (NYSE:DIS) has reached a tentative labor agreement with union employees at its Florida theme parks. The agreement guarantees janitors, ride operators, and food-service staff minimum pay of $18 an hour. Under the multiyear agreement, employees will receive an increase of as much as $8.60 an hour by the end of the contract, with the first $3 coming this year. The Service Trades Council Union, which represents some 45,000 staffers at the Walt Disney World resort, has been in negotiations with the company for months. In 2018, the group secured a pay hike to $15 an hour, and that contract expired in October.