:00:00. > :00:00.telephone directories. Those are the headlines. Let's go to
:00:00. > :00:15.Singapore for all the latest business news.
:00:16. > :00:18.BNP Paribas pleads guilty to breaking US sanctions against
:00:19. > :00:25.blacklisted countries. Can it survive the record fines? Japan pop
:00:26. > :00:26.back biggest manufacturer turns pessimistic after a sales tax
:00:27. > :00:39.increase `` Japan's. Welcome to Asia Business Report.
:00:40. > :00:43.France's largest bank, BNP Paribas, is told it will be fined almost $9
:00:44. > :00:48.billion for transferring funds to blacklisted countries. It is the
:00:49. > :00:52.largest penalty for a case like this in US history. It is accused of
:00:53. > :00:59.breaking sanctions against Iran, Cuba and Sudan between 2002`2009.
:01:00. > :01:07.The record fine quadruples a similar penalty imposed on HSBC 80 years
:01:08. > :01:11.ago. For more, I am joint by an author in Sydney `` HSBC are few
:01:12. > :01:19.years ago. What do you make of this huge fine is that what will the
:01:20. > :01:21.implications be? `` this huge fine? There will be some impact but there
:01:22. > :01:26.will be relieved that the actual fine has been agreed to. There is no
:01:27. > :01:29.more uncertainty. It will impact the profits of the bank this year
:01:30. > :01:34.because, essentially, it equates to roughly what the bank makes in a
:01:35. > :01:39.year. They will have to make a substantial write`down. It will be
:01:40. > :01:44.extraordinary. The capital will be reduced. They are comfortably at
:01:45. > :01:48.10%. We will have to wait and see what happens in the EU with their
:01:49. > :01:51.asset quality review, whether there are implications from that. The
:01:52. > :01:56.damage will come from the fact that they won't be allowed to clear US
:01:57. > :02:01.dollar transactions begin in January next year for one year. It will have
:02:02. > :02:04.franchise issues for them. It is unclear whether it will affect all
:02:05. > :02:10.aspects of the operations of the bank. Those are some of the things
:02:11. > :02:14.affecting BNP Paribas itself. There will be wider implications for the
:02:15. > :02:19.banking industry generally. Let's look at some of those. What will
:02:20. > :02:26.they be? Banks today are looking nervously at the outcome. It won't
:02:27. > :02:31.be the last prosecution. There will be others. We have seen HSBC and ING
:02:32. > :02:39.and Standard Chartered. All foreign banks interest `` interestingly.
:02:40. > :02:43.There are wider investigations outside of these specific ones, to
:02:44. > :02:46.do with the manipulation of different rates, like the foreign
:02:47. > :02:51.exchange rates, the golden rates and so on. The bad news for the banks in
:02:52. > :02:57.terms of prosecutions and fines they will have to pay an over and this
:02:58. > :03:00.will affect the sector's profitability and ultimately their
:03:01. > :03:05.sharemarket performance. This is the biggest fine ever by the US
:03:06. > :03:10.regulator. Are there are concerns the regulator might have
:03:11. > :03:17.extraterritorial reach beyond the US? This is the biggest issue about
:03:18. > :03:21.the BNP Paribas and the previous fines. The US are taking their
:03:22. > :03:27.legislation and applying it to other banks. They are using the primacy of
:03:28. > :03:30.the US dollar and the fact that foreign banks have to clear their US
:03:31. > :03:37.dollars through New York, which has been the weapon they have used. It
:03:38. > :03:44.is a concerted are of US foreign and economic policy and we now risk
:03:45. > :03:52.seeing retaliation. Immediately, it will be in trade talks between
:03:53. > :03:58.Europe and America. Thank you. A financial expert in Sydney.
:03:59. > :04:03.The Bank of Japan's quarterly survey shows business confidence worsened
:04:04. > :04:07.among the largest manufacturers. It fell by five points in the three
:04:08. > :04:12.months to June two plus 12, below market forecast for a plus 15.
:04:13. > :04:19.Overall, there was optimism about the economy. It might be due to the
:04:20. > :04:24.PM 's economic policies, which saw inflation rise 3.4% in May, its
:04:25. > :04:32.fastest pace in 32 years. Household spending fell by 8%, and the sales
:04:33. > :04:40.tax began biting. I asked an analyst what he made of the latest figures.
:04:41. > :04:43.We are looking closely and this time it is because the sales tax and
:04:44. > :04:49.consumption tax went up. We had a boom before, but we have negative
:04:50. > :04:53.growth now. It is important what companies make out of that. We see
:04:54. > :04:58.the relief that the impact wasn't a strong as expected. The forecast,
:04:59. > :05:02.which has been negative, went down for this quarter, but they are
:05:03. > :05:07.already in terms of outlook going up again. A split between
:05:08. > :05:12.manufacturers, which has received a big hit, and a mob looted outlook on
:05:13. > :05:17.the nonmanufacturers, which are seeing households affected in the
:05:18. > :05:23.long`term. Certainly by the sales tax which took effect in April. What
:05:24. > :05:26.does this say about the PM 's economics? His reform plan to
:05:27. > :05:33.restructure the economy. Is it working? It is working so far. What
:05:34. > :05:39.we see is that basically industry must take over. Last year, we had
:05:40. > :05:43.this expansion in terms of money printing and monetary expansion and
:05:44. > :05:46.fiscal expansion, optimism with talk of structural reforms. Now,
:05:47. > :05:52.implementation has to come in. This depends on invest in `` investment
:05:53. > :05:58.corporations. Companies are saying, we will invest more than 7%
:05:59. > :06:02.traditionally this year. This is close to the number. Companies are
:06:03. > :06:10.investing. They are optimistic that demand will increase again and that
:06:11. > :06:13.business conditions are improving. It is interesting to see where
:06:14. > :06:22.companies are headed next. Will this day to drive the central bank to
:06:23. > :06:26.change their policy? No. The short`term engines of growth, the
:06:27. > :06:30.government pushing the economy, talking up the economy, the Bank of
:06:31. > :06:37.Japan printing more money, lowering the exchange rate, this is done.
:06:38. > :06:42.Stable companies are expected to be stable. The question is, can they
:06:43. > :06:46.sell overseas and in Japan's it depends on if they are investing and
:06:47. > :06:56.coming up with new products `` Japan? They need to put money behind
:06:57. > :06:59.their word and behind their plans. China's factory activity accelerated
:07:00. > :07:04.to a six`month high in June, showing the economy is gaining strength. The
:07:05. > :07:08.purchasing managers index rose to 51 last month, compared with 50.8 in
:07:09. > :07:13.May, which was in line with market estimates. In Japan, no`frills air
:07:14. > :07:21.travel is still a phenomenon which hasn't taken off. Today, the
:07:22. > :07:26.Japanese online retailer Rakuten and air Asia are expected to announce
:07:27. > :07:27.they are teaming up to launch a new airline in the market. Our
:07:28. > :07:34.correspondent reports on what the deal would mean for the companies.
:07:35. > :07:36.Air Asia is expected to it announce a less conventional approach to
:07:37. > :07:45.entering the Japanese market by throwing in its fortunes with the
:07:46. > :07:49.online retailer, Rakutan. It is the answer to Amazon and sells watches,
:07:50. > :07:55.clothing, medical supplies. It has bought dozens of companies and made
:07:56. > :08:04.a billionaire of the founder. Its most recent purchase is the Israeli
:08:05. > :08:11.messaging service, Viper, for 900 million dollars `` Vibr. What might
:08:12. > :08:17.they gain by linking? It could mean a boost to the online travel site of
:08:18. > :08:21.Rakutan's, one of Japan's largest. It could mean a second chance in the
:08:22. > :08:28.lucrative Japanese market for Air Asia. It is among the world's
:08:29. > :08:32.largest. Last year, Air Asia pulled out of a venture with ANA. It is
:08:33. > :08:38.clear the company has had a different approach with Air Asia
:08:39. > :08:44.focusing on cost and 80 and ANA focusing on servers. They bought out
:08:45. > :08:49.the 33% stake and rebranded the low`cost carrier as Vanilla Air.
:08:50. > :08:53.Now, Air Asia will be in competition with the former partner. It will
:08:54. > :08:59.compete with a number of other carriers, including Jet start Japan
:09:00. > :09:03.and Peach. White one of the senior military
:09:04. > :09:09.officials in China has been accused of accepting bribes and has been
:09:10. > :09:13.expelled from the Communist Party. He is under investigation and will
:09:14. > :09:17.face a military court. For the latest development in the crackdown
:09:18. > :09:24.on corruption in government and the armed forces. Our correspondent has
:09:25. > :09:28.more. China is turning its army into a
:09:29. > :09:33.powerful fighting force. Until last year, one of the senior generals in
:09:34. > :09:42.charge of that process was this man. He is retired. Authorities say he is
:09:43. > :09:48.under investigation for corruption. The news was announced on national
:09:49. > :09:54.TV. The general had taken bribes, and so had his family. He promoted
:09:55. > :09:59.his friends. The Communist Party has expelled him. He now faces a
:10:00. > :10:04.military court. The general wasn't just an army man. He was a
:10:05. > :10:08.politician in the Communist Party's decision`making Politburo. He is
:10:09. > :10:15.seen here alongside another corrupt official. He had powerful friends,
:10:16. > :10:21.so the decision to investigate wasn't taken lightly. It was made by
:10:22. > :10:26.the politburo at a meeting presided over by the President himself. The
:10:27. > :10:29.president has promised to root out corruption in the Armed Forces and
:10:30. > :10:35.elsewhere. Nervous officials will be wondering who is next. Michael
:10:36. > :10:39.Bristow, BBC News. That is it for this addition of Asia
:10:40. > :10:51.Business Report. You can follow us on Twitter. Thank you for watching.
:10:52. > :10:54.I'm Adnan Nawaz. The top stories this hour: Israel has vowed to make
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