01/11/2013 World Business Report

new supertax broke down. Those are the headlines. It is time

for the latest money news. America's mortgaging and financing

giant Fannie Mae Susan nine of the world's biggest banks over alleged

interest rate manipulation. Recapitalise or else. The

International Monetary Fund puts an ultimatum to Slovenia's ailing

banking industry. A warm welcome to you. This is World

Business Report. In just a minute we will also be taking a look at the

privatisation of Nigeria's actress said Esat. America's biggest

mortgage giant Fannie Mae is suing nine of the world's largest banks.

It accuses them of colluding to manipulate interest rates. It is

seeking $800 million in damages. The troubles of the financial

services industry continues with the latest development that US mortgage

finance company Fannie Mae is suing nine of the world's biggest banks

for manipulating the interest rates. We are talking about what is known

as LIBOR, standing for London interbank offered rate. It is a

global benchmark interest rate that is used around the world to set a

range of financial transactions, worth an estimated $300 trillion.

Some of the banks that are being sued, they have a ready the admitted

to wrongdoing in order to settle with the wrong doing `` the

regulators. Fannie Mae is seeking more than $800 million in damages.

Its smaller rival, Freddie Mac, also filed a similar lawsuit. It accused

them of knowing about the manipulation and not doing anything

to stop it. The banks to face private lawsuit as well, but Amla

said that Fannie and Freddie are the type of plaintiffs that can be

expected to put up a tough fight. `` but analysts.

Slovenia has been warned by the IMF that it urgently needs to

recapitalise its troubled banks as the country tries to avoid an

international bailout. Slovenia's largely state owned banking sector

is carrying 8 billion euros of bad debt, that is waiting for the

results of external stress testing before taking any action. But

analysts worried that the country may not have sufficient reserves in

order to do so. Just how bad is the situation? It is pretty bad.

Slovenia has had a banking crisis for the last five years. It does

have some real strengths. The banking it self, although the

problems are big, the sector it self is small in relation to the economy.

The government's debt levels are fairly low. Why has it got to the

stage? Is it a failure of government policy? Definitely so. They join the

euro in 2007, there was a conversion process. They went on a lending

boom, particularly to the construction set. All of those

things went badly during the financial crisis and they have not

really dealt with it. The economy has been and a slump. Now the IMF

has told the bank that they have to recapitalise, but can it afford to

do that? It has to put aside 1.2 billion euros in order to

recapitalise the banks. The consensus is that the hole in the

bank balance sheets will be substantial glee bigger than that.

`` substantial glee. If it acts aggressively, it will be able to

raise capital on the markets. It has a good chance that it will do. There

is also the question of timing. How do you transfer the bad loans from

the banks? It is quite complex. You can decide to recognise losses now

or later. The timing of it can be quite flexible.

Africa's biggest privatisation will be completed on Friday, with the

handover of the former Power Holding Company of Nigeria to a series of

private consortia. But the $3 billion sell`off has upset many of

the country's electricity workers. They are threatening to plunge

Nigeria into darkness on Friday, in a strike of the unpaid redundancy.

The droning of generators is a sound that you have to get used to when

you live in Nigeria. The State provides very few hours of

electricity every day, Sir Nigerians are forced to rely on these noisy

machines to get back `` to get by every day. 60 million Nigerians rely

on generators, both at home and at work. They are run by fuel, which

makes running business very expensive. Nigeria produces one

tenth of the electricity that South Africa produces. And its population

is three times larger. It is a pop `` problem that has gone on for

decades. There has been little to show for the government's reform.

Money has gone down the drain with corruption. In the past few years,

after a lot of deliberation, the government is now privatising the

powers that. The assets belonging to the state are being handed over to

private investors, both local and international, who will take over a

generation and distribution of electricity. Economists say that if

this is successful, it could bring down the cost of business by 40%. It

could be attractive to big businesses, particularly

manufacturers, who will be able to provide jobs and it will create a

boost for the economy. Labour unions are saying before the state`run

agency becomes defunct and the workers are laid off, these workers

have to be paid their allowances. The unions are threatening to go on

strike if these workers do not let their pay.

China's near `` manufacturing activity grew at its fastest paced

in 18 months. It is leading to signs of recovery.

Some good Dato coming out of China. Economic fundamentals, if you take a

look at the numbers, they are improving on the mainland. The

official index rose to 51.4 in the month of October. That is compare to

51.1 the month before. A reading above 50 indicates an expansion. But

their row still some sceptics who were cautioning that the underlying

Dato suggests a strong economic rebound. `` there were still.

Monetary policy tightening will likely continue. Also today, HSBC's

index is being released. It surged to a seven`month high in October.

China is on track for a gradual growth of recovery. The stronger

manufacturing growth momentum has helped employment expand for the

first time since March. They believe it will support private consumption

growth in the coming months. Despite the positive news, this is welcomed

cautiously by the markets. A bit of our venues. The UK's Royal

Bank of Scotland has suspended two trade is in connection to a growing

investigation into the possible mutilation of foreign exchange

rates. The news follows reports that London based executives at three

other major banks have been placed... Regulators in the UK, the

US and Switzerland, are looking at whether the banks colluded to set

exchange rates. Let's have a look at the Asian

markets. They are quite mixed on Friday. Tokyo was hit by an 11%

slump in Sony. It's cut its profit forecast by 40%. Shanghai and Hong

Kong were being lifted by those better than expect Chinese

manufacturing data, but they are down across the board.

A big story in the UK is the exams regulator for England has announced

changes to the GCSE, which it says are the most mythic and for a

generation. The first subjects to be affected are English literature,

English language and maths. Assessment will be by exam only.

Instead of grade a star