:00:02. > :00:05.shortly 400 kilometres above Earth. It's carrying supplies and
:00:05. > :00:08.experiments and astronauts from Japan, Russia and the United States.
:00:08. > :00:15.Those are the latest headlines from BBC World News. Now for the latest
:00:15. > :00:23.financial news with Sally and World Business Report. Welcome to World
:00:23. > :00:26.Business Report. The headlines: Money laundering and doing business
:00:26. > :00:36.with firms linked to terrorism, the headlines couldn't get any worse of
:00:36. > :00:38.
:00:38. > :00:47.HSBC. I'm Rico Hizon. Falling investment in the Chinese property
:00:47. > :00:57.sector and rising production costs. Third time lucky? Yahoo poaches a
:00:57. > :01:00.
:01:00. > :01:03.top Google executive to become CEO number three in the space of a year.
:01:03. > :01:12.Europe's largest bank HSBC allowed drug money to be laundered through
:01:12. > :01:20.its American operations for nearly a decade. That's the conclusion of
:01:20. > :01:22.a US Senate investigation. Between 2007 and 2008 $7 billion was moved
:01:22. > :01:26.from the bank's Mexican operations, an amount authorities claim could
:01:26. > :01:34.only have come from the drugs trade. Suspicious funds from Syria, the
:01:34. > :01:37.Cayman Islands, Iran and Saudi Arabia also passed through the bank.
:01:37. > :01:42.HSBC says its executives will apologise for the lapses at a
:01:42. > :01:44.hearing in the US later today and promises to fix the problems. The
:01:44. > :01:49.US Justice Department said it is conducting a criminal investigation
:01:49. > :01:53.into the bank's operations. Let's go live to Hong Kong, the original
:01:53. > :01:57.home of HSBC, and speak to the BBC's Juliana Liu, who has been
:01:57. > :02:07.talking to the bank. What has been their reaction? I received a
:02:07. > :02:10.
:02:10. > :02:15.statement from her -- HSBC in the morning. They report from the
:02:15. > :02:20.Senate sub-committee was leaked ahead of the actual hearing on
:02:21. > :02:26.Tuesday. Washington felt they had to respond. This is what they are
:02:26. > :02:32.saying, we will apologise. Acknowledge these mistakes. We will
:02:32. > :02:37.give our commitment to fixing what went wrong. They also said they
:02:37. > :02:41.would be putting a lot more money globally into compliance operations.
:02:41. > :02:50.It seems like they plan to acknowledge what went wrong and try
:02:50. > :03:00.to move on. Shares in Hong Kong were up 2%. Banking analysts say it
:03:00. > :03:00.
:03:00. > :03:03.is too early for them to give their reaction. Thank you. Joining me now
:03:03. > :03:13.is James Bevan, Chief Investment Officer at CCLA Investment
:03:13. > :03:13.
:03:13. > :03:20.Management. You hear about these headlines today and it -- I imagine,
:03:20. > :03:27.what else are they up to? If it is extraordinary. Can it get worse?
:03:27. > :03:37.This Senate report, over 300 pages long, has taken a very long time to
:03:37. > :03:47.come to press. HSBC have made very little changes. This is closing the
:03:47. > :03:47.
:03:47. > :03:52.door after the horse has bolted. There will be a substantial fine.
:03:52. > :03:59.These excesses came during the boom years for the banking sector.
:03:59. > :04:05.will say we are sorry. Changes are being made. The report says
:04:06. > :04:14.pervasively polluted culture at HSBC. This HSBC. This nd
:04:14. > :04:23.time again. This is very serious. Of course. The eyes of regulators
:04:23. > :04:30.and others were not on what is going on. Let's roll D clock back.
:04:30. > :04:40.They were not worried about what they were buying. Did you check
:04:40. > :04:43.
:04:43. > :04:53.carry on regardless. A lapse of concentration from management.
:04:53. > :05:01.you think this is enough, headlines are coming in daily.
:05:01. > :05:06.it is enough to see change in the long-term? When the bad headlines
:05:06. > :05:11.go away, go away, we are in another boom time, let's say that is in years to
:05:11. > :05:20.come, will it collapse again? Governments need to take the
:05:20. > :05:27.regulation of banks much more seriously. How will this happen?
:05:27. > :05:33.How did this happen? Regulators were not on their game. We have got
:05:33. > :05:39.a fast banking sector, it is paying the bills, let's keep it going.
:05:39. > :05:49.That was the mistake. We will be covering more on what is going on
:05:49. > :05:53.
:05:53. > :05:56.with banking. Later today Federal Reserve Chairman, Ben Bernanke,
:05:56. > :06:00.delivers his semi-annual Monetary Policy report to Congress. But
:06:00. > :06:05.analysts will be just as interested to hear what he has to say about
:06:05. > :06:08.the LIBOR scandal. The stakes for US financial regulators have risen
:06:08. > :06:11.since the Federal Reserve Bank of New York released documents last
:06:11. > :06:14.Friday showing it learned of manipulation by the banks nearly
:06:14. > :06:16.five years ago. Some US local authorities are now considering
:06:17. > :06:19.suing banks accused of manipulating interest rates. The scandal over
:06:19. > :06:29.the wrecking of the rates banks charge each other for loans has
:06:29. > :06:35.
:06:35. > :06:41.crossed the Atlantic. -- rigging. have a responsibility to make sure
:06:41. > :06:48.that every tax dollar is well spent. In this case $13 million of
:06:48. > :06:52.taxpayers' money has been wasted. Possibly stolen. It is likely to be
:06:52. > :06:58.one of many local American authorities who decide to sue over
:06:59. > :07:03.this latest scandal. That could be just a start. Trillions of dollars
:07:03. > :07:10.of transactions are depended on LIBOR. The bill for legal damages
:07:10. > :07:13.could be enormous. American financial regulators are under fire.
:07:13. > :07:22.Especially since the New York Federal Reserve, which supervises
:07:22. > :07:27.Wall Street, knew about manipulation of LIBOR since 2008.
:07:27. > :07:34.There is a tendency on banking regulators to be cheerleaders as
:07:34. > :07:39.watchdogs of the banks under their jurisdictions. It is a cosy network.
:07:39. > :07:44.I do think that the American regulators were more proactive than
:07:44. > :07:53.their British counterparts. Maybe. That does not get much sympathy for
:07:53. > :08:00.banks or US financial regulators. They condoned these practices for
:08:00. > :08:04.many years. They have damaged municipalities and public trust in
:08:04. > :08:11.the financial system. Barclays was the first bank to settle, it will
:08:11. > :08:21.not be the last. Next in line for an of -- for an expensive line will
:08:21. > :08:38.
:08:38. > :08:42.be the Swiss banking giant, UBS. -- expensive fine. Internet giant,
:08:42. > :08:45.Yahoo reports earnings later today. The numbers are likely to be
:08:45. > :08:48.overshadowed by the news that Marissa Mayer, one of the top
:08:48. > :08:58.executives at Google, will be the next chief executive of Yahoo. She
:08:58. > :09:04.
:09:04. > :09:07.was Google's 20th employ either stuck she -- employee. She faces an
:09:07. > :09:14.uphill battle with Yahoo, re- establishing it as an internet
:09:14. > :09:22.leader. Yahoo has struggled to turn its presence on the internet into
:09:22. > :09:29.revenue. A glaring hole his mobile. Can they be successful? A lot of
:09:29. > :09:38.money can be wasted chasing that product. Marissa Mayer is a product
:09:38. > :09:43.person. It is going to be a very risky proposition. Filling the top
:09:43. > :09:53.spot has been a headache for Yahoo. It has been threw four chief
:09:53. > :09:56.
:09:56. > :10:05.executives in less than four years. Morrison -- Marissa Mayer is the
:10:05. > :10:11.5th. Year who has struggled to retain top talent. -- Yahoo. The
:10:11. > :10:21.job may be challenging, but she now joins a select group at the top of
:10:21. > :10:25.
:10:25. > :10:28.Silicon Valley. What is going on in China? The fall in foreign direct
:10:28. > :10:36.investment was due to declining investment in the real estate
:10:36. > :10:40.market. Increasing production costs as well. Speculation has driven
:10:40. > :10:50.property prices to unaffordable levels in many places across the
:10:50. > :10:52.
:10:53. > :11:02.country. Premier Wen Jiabao has promised to keep proper in prices
:11:03. > :11:03.
:11:03. > :11:09.to reasonable levels. -- property. Investment from major countries,
:11:09. > :11:19.including Hong Kong, Macau and the Philippines was down 2.8%. US
:11:19. > :11:20.
:11:20. > :11:28.investment was down by 3.2%. A rise came from the European Union,
:11:28. > :11:35.despite their debt crisis. markets in Asia are all higher.