27/03/2014 World Business Report

Those are the latest headlines from BBC World News. Now for the latest

financial news with Sally. A blow for banking giant Citigroup

as it fails a stress test by the Federal Reserve.

Plus the rise and rise of Etihad. How Abu Dhabi's booming airline is

muscling in on the European market. Welcome to World Business Report.

I'm Sally Bundock. Also in the programme: what can Malaysian

Airlines do to rebuild its reputation. We get expert advice.

We start with global banking giant Citigroup which once again faces

questions about how it is run and the risks it takes. Citi has failed

an annual "stress test" by the US Federal Reserve, designed to stop a

repeat of the 2008 crisis. The Fed pointed to "multiple deficiencies"

in the bank's financial planning practices. And it has vetoed Citi's

plans to hand money back to shareholders this year by raising

its dividend and buying back shares. That's a big blow to the bank's

drive to win back the confidence of investors. The Fed's announcement

came after the closing bell on Wall Street but Citi's shares were down

more than 5% in after`hours trading wiping around $8 billion off the

value of the company and signalling a rocky days trading ahead today.

Citi was not the only organisation singled out but was by far the

biggest as Michelle Fleury explains. The good news is the Federal Reserve

has approved the plans of 25 of America's largest financial

institutions. The bad news is that Citigroup was among the five that

failed. The Fed said it had followed the track fallen short. Citigroup

boss said the company was deeply disappointed. The problem is, this

is not the first time the bank has fallen short. The last time was two

years ago and then it hastened the departure of the chief executive at

the time. Today, Citigroup is the largest US lender to fail the stress

test but it was not the only one. The US arm of HSBC and Royal Bank of

Scotland. So what have we learnt from the results of these stress

test? With some notable exceptions, America's largest financial

institutions are in better shape today than they were going into the

Pennetta crisis. `` financial crisis. We're also looking today at

the rise of Etihad Airways. The Abu Dhabi`based airline could be

poised to take control of European budget carrier Air Berlin which it

already has a major stake in. We may get news of that along with Air

Berlin's annual results, which are out shortly. It would be the latest

aggressive move by the Gulf airline into the European market, a trend

that has European rivals worried. Air Berlin is a troubled airline. A

low`cost carrier, it has been outcompeted in Europe by other

airlines and has been running at a loss. Etihad currently owns a stake

in it and according to reports in the German media, the Abu Dhabi

carrier is repairing to increase its stake. This would make Etihad the

single biggest shareholder. What does he had wanted with Air Berlin?

Etihad is getting inside the European market. It can use this

market to feed into international services. From there it can take

passengers into the far east and Austral Asia. Etihad has taken

stakes in other airlines. It bought a four to% share of Air Serbia. It

says it could soon take a big stake in an Italian airline which would

please the carrier very much because it would provide the cash it needs

to play down its debt pile. But other European carriers would like

to stop Etihad from muscling in on their market. It is primarily Times

who is raising this argument. They believe it is circumventing law by

bypassing government funding. It is using government funding from an

entity outside of the EU and they are not sure if that complies with

the letter of the EU law. Etihad will need the approval of the EU if

it is to extend its stake in Air Berlin all by a stake in the Italian

airline. But regulators seem to have a stark choice. Either to except

Etihad's increasing ownership of European airlines or risk seeing

troubled airlines going to the wall. Let's stay with the airline industry

and turn to one of our top stories here on BBC World News ` which is

the search for Malaysian Airlines flight 370. On Wednesday US lawyers

filed preliminary papers for lawsuits against both the airline

and plane maker Boeing. Whoever is found to be liable ` the damage to

the reputation of Malaysian Airlines is already huge. So what can they do

to try and rebuild it? Ian Henderson is from AML Group which specialises

in brand management. We are all still extremely concerned and

worried and feeling for those families who are waiting for news.

But in terms of how Malaysian airlines have handled this

situation, what is your take on that? This is an impossible

communications task because the families want information. The

textbook approach of being transparent and open is difficult to

work. They have done a lot of things right. They have taken the colour

out of their logos and social media feeds. It is small but respectful.

They have done something is badly. On the whole, they have done it

pretty well. It is interesting because here at the BBC we have been

covering this from day one and a lock of the coverage has been about

the frustration. Families and those protesting field the airline could

have handled it better. Of course. They need somewhere to vent that

frustration and that is understandable. If we were advising

the airline it would be... They are a victim too. To stand alongside the

families instead of in opposition. To make it clear that they have lost

people as well. They are a victim. I think that is a very sensible and

strong and tenable position to take. Hopefully in the new future we will

find MH370 but once this has moved on as a story and there are answers

out what has happened, in the long`term how does Malaysian

airlines rebuild its reputation? When it comes to an airline, trust

is a key issue for passengers. Safety is the big unspoken in

airline brand management. In a way, if they are seen as victims, that

helps the long`term damage to the brand. Airline brands are about

looking after people. About caring for people. The more that they can

be seen to be doing that, helping the families, as I think they are

doing to a great extent, it is almost an opportunity to show how

much they care. To show how much they can do for people which is what

airline brands are all about. And give very much. Here on the BBC we

will keep you up`to`date with the news as we get it on that story.

In other news. The IMF could announce a bailout for Ukraine as

early as today. Talks between the two sides concluded on Wednesday as

Ukraine announced it would increase gas prices for domestic customers by

50%, bowing to IMF pressure to remove subsidies. Ukraine says it

needs a bailout of between 15 and 20 billion dollars amid fears it will

default on its debts. The maker of the hit mobile phone

game Candy Crush Saga saw it shares tumble on their debut on the New

York Stock Exchange. King Digital shares ended down almost 16%. Candy

Crush was the most downloaded free mobile app last year but investors

are concerned it could be a "one hit wonder".

The global launch of Samsung's latest smartphone is being upstaged

by South Korean mobile network companies. SK Telecom, South Korea's

largest mobile carrier, will start selling the Galaxy S5 today. That's

two weeks before the scheduled sales launch on April 11. Two rival

operators are also releasing the phone early. The move is a bid to

get around 45`day bans on signing up new customers ` imposed by

regulators for breaking competition rules ` which coincide with the S5's

official launch. Many of the stocks are sliding in

Asia today, Tencent is among them. A lot of that is to do with the

sentiment about Candy Crush. Facebook shares were hit hard on

Wall Street as well. The yen is at a one week high against the dollar.

You can see in the US, we saw falls across the board. Today we will get

the final reading on US GDP. I will see you soon to review the papers in

a few minutes. We will get her papers in a while

but first Nick Clegg and Nigel Farage have gone head`to`head in the

first of two broadcast debates about Britain's future in the European

Union. The Liberal Democrat leader insisted Britain was better off in

Europe. But the UKIP leader accused Mr Clegg of being part of a tired

status quo defending a crumbling EU. Garnier's report contains flash