03/04/2012 World Business Report

Report. Hello and welcome to World Business Report. US regulators

accuse Royal Bank of Canada of a fraudulent trading scheme running

to hundreds of millions of dollars. RBC calls the allegations baseless.

Hello from Singapore. So is a treasure largest food company is

expanding. Clearing the way for future profits. The London Stock

Exchange looks to close a lucrative deal bringing in vital income in

unpredictable markets. One of Canada's most powerful financial

institutions, the Royal Bank of Canada is being sued by American

regulators. The Commodity Futures Trading Commission accused the

Toronto based lender of orchestrating a sham trading scheme

worth hundreds of millions of dollars to take advantage of

Canadian tax benefits. According to US regulators, a small group of

senior bank officials bought and sold millions of dollars of shares.

This took place between 2007 and 2010. The effect was to create a

lot of trading without increasing the investment. The goal was to try

and take advantage of tax credits. The US authorities say they are

trying to distort the market. And violating rules of competitive

pricing and rules about negotiating transactions. A spokesperson for

the Royal Bank of Canada has dismissed the allegation saying the

lawsuit is merit to less -- married to last. The suit is being brought

by the agency. The shareholders of the London Stock Exchange meet

later to decide whether to approve a $600 million takeover, giving the

LSE control of clearing company - LCH Clearnet. Clearing sounds

pretty dull, back office stuff. But it's a profitable and increasingly

important part of securing financial transactions in today's

unpredictable markets. Our Europe business correspondent Nigel

Cassidy has more. With turnover down and Since slipping out of its

has long been at risk of falling behind in the global exchange.

Not so long ago, the future of the London Stock Exchange was about

mergers. Now, several deals have fallen through, trading is slack

and the London Stock Exchange is looking at the invisible world of

clearing which could provide a more profitable direction. It's slowly

eroding market could be improved by taking control of a central

clearing house which protects buyers and sellers from default in

the 'Twilight' zone between the buy and sell button and the transaction

complete. It is profitable and increasingly demanded by regulators.

The takeover is a calculated gamble. The New York Stock Exchange decided

to move much of its clearing business and move it in house.

Nonetheless, these commentators said the move should pay a dividend

because the demand for clearance services is rising. Trade between

banks have been set up by naturally - trades between to individual

banks. With regulations, trade will move towards a centrally plead

model. That will naturally increase the amount of work clearing houses

will have to do. The LSE is closing in on LCH Clearnet. Last night, it

said it had won backing from necessary majority of backers and

could complete the takeover by the end of the year. The Philippines

flight carrier that has been making losses the year is getting a

helping hand from a beverage company. Tell us more. The company

is firming up a deal to acquire an almost 50% stake in the parent firm

of the flight career. Media reports are saying there $0.5 billion

investment will give the management control. Negotiations have on going

for the past three months and there are reports it could be sealed as

early as today. Philippine Airlines has been suffering from Labour

problems, competition and Highfield prices the years. In the last

quarter of 2011 it recorded a loss of 33.5 million US dollars. It may

help in the re fleeting and modernisation of the Air flight in

preparation for the projected influx of interest in the coming

years which would be beneficial for the country's tourism. They have

diversified expanding into intensive sectors such as

infrastructure, power, mining and telecommunications over the last

few years. Faster profit growth after dominating the local and

regional food and beverage sector. The outgoing president of the World

Bank - Robert Zoellick - has been defending the lender from critics

who say it is out of touch with the developing world. Traditionally run

by an American, the Bank's leadership is being challenged this

time by candidates from Africa and Latin America. Speaking to the

BBC's Juliana Liu at the Boao forum in China, Mr Zoellick says the

developing world is well represented within the bank. What

we tried to do at the bank is to bring in more people from

developing world all throughout. To have a successful system, you need

people from Europe, Asia, and America, these regional banks are

intended to be headed by people from the individual regions. I

believe it is a good thing for the system to allow but it is also

important for Europeans and Americans to have a place in it as

well. You will never see the head of a US -- of the IMF from the US

or the UN. Is that a glass ceiling? I do not know if I would use glass

ceiling. It reflects the old power system. Within the US government,

to be engaged in institutions over 25 years is, in some of those

institutions could have US leadership because it keeps US

engaged. They have a quarter of the world's economy. It may not be the

bank. Countries have expressed an interest in creating a bank like

the World Bank? The Brit bank will have different purposes. For India

it is infrastructure, for China it may be the interest in trying to

internationalise, Brazil sees it as an interaction with the other two

partners. Russia is trying to determine its role. My feeling is

that if it is created, there will be issues to work through. The head,

the capital base, the staffing. But the World Bank should work with it

as a partner just as we do other institutions because where we are

unique is in addition to the financing, a lot of or work is

knowledge. In other business news - shares of cosmetics firm Avon

Products closed up more than 17% on Monday after rival Coty disclosed

it had made a $10 billion takeover bid. Coty - the maker of Calvin

Klein fragrances and perfumes from Beyonce and Lady Gaga - says went

public with its bid after private approaches were rejected. Door to

door cosmetics seller Avon has been struggling with falling profits and

a bribery investigation. But it says the offer is too low. The

market had been fairly mixed. When Japan are not following the trend.