04/03/2013 World Business Report


04/03/2013

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next year - and the Olympic Games. Those are the latest headlines from

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BBC World News. Now for the latest financial news with Sally Bundock

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Its reputation battered after a money-laundering scandal, HSBC

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reports profits later this morning. Another damaging strike for Iberia

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but the firm says it will not back down over job cuts. You'll with

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World Business Report. I'm Sally Bundock. -- your wit. Also China's

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taking action to burst a potential property bubble. But in a few hours

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Agers the sea will release its full year results. -- HSBC. They had a

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massive fine imposed for laundering money from Iran and Mexico. How

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much of an impact is it having on The full scale of the money

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laundering came to light as the police started cracking down on

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narcotics gangs in Mexico. A US Senate hearing concluded HSBC and

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Mexico was a conduit for the kingpins of the drugs trade to

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siphoned billions of dollars across the border. Money-laundering

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cheques were inadequate. HSBC managers say the episode has

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crushed its reputation. A few clients have so far with from their

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business in discuss. People in France and Germany aren't going to

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be bothered about what goes on in Mexico -- in disgust. The customers

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won't see these alleged incidences of mismanagement and Miss control

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at HSBC as being representative of the culture of HSBC in general.

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decade or so ago from its base here in London HSBC set out to make

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itself the world's local bank, snapping up subsidiaries in almost

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every country on every continent. But in the past three years it has

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sold off for a dozen of its foreign businesses and shared thousands of

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foreign staff -- four doesn't. -- shed. That has brought it $3

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billion a year in savings -- 4 doesn't. But what is its strategy

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now? We are focused on Asia but then growing to be a global bank.

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The heart is beating heart. Really it is kind of returning to that

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Corps Business. HSBC is scaling back -- core business. It's hoping

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also to live down the damage done in Mexico to its worldwide

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reputation. As soon as we get those earnings we

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will tell you. Ground and five staff at Iberia has begun another

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five-day strike. The Air Line have cancelled 1,400 flights -- flight

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staff. Unions are protesting at the plan to cut 4,000 jobs and

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reorganise services. Despite the industrial action, the parent

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company, IAG, which also owns British Airways, say it will

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continue with their cost-cutting plans. Douglas McNeill is an

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investment expert at Charles Stanley. This strike is hot on the

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heels of another one a few weeks ago. How effective are they? There

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were plenty of strikes last year and the union is struggling here.

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Iberia is in pretty decent financial strengths so far as cash

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reserves are concerned. When it comes to a strike, a union has to

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put serious pressure on the company's cashflow, the heartbeat

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of a business, and it's not doing their at. Despite all the

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destruction, the cancelled flights and the painted passengers, it's

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not really having an effect? -- not doing that. They have EUR500

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million in the bank. They are being cost a few million euros every day.

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It is painful but it is not something they need to be seriously

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worried about. The inconvenience to passengers is not only an issue --

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certainly. But management has enough cash to ride out this issue.

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How will this play out? Will we get to the point where politically the

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Spanish government will get involved? Is that a no-no

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considering where the Spanish government is at the moment. They

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are clearly concerned about the situation. We have seen huge scale

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redundancies. So far it has confined itself to making worried

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comments and it has not sought to get involved. It does have some

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influence because it controls Anglia, the troubled bank, and that

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has a 12% stake in IAG, but 12% only gets you so far. So basically

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the management, IAG, will get its way in the end? I think so. They

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are very well prepared in terms of cash and contingency planning. They

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are very committed to their restructuring plans. Those plans

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are being put into effect at the moment and they are going to be

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pushed through. Thank you for joining us. Again it is a story we

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are keeping an eye on. Switzerland has voted in favour of reining in

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executive pay. A referendum saw Swiss voters approve a package of

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measures including a greater say for shareholders in setting pay and

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a ban on arrival and departure bonuses. There was anger at a plan

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for a company, Novartis, to give its departing chairman $76 million.

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Finance ministers from the 17 nations that make up the euro will

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meet in Brussels today to discuss a bail-out for Cyprus. They have been

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negotiating to solve their financial crisis. Italy will be an

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discussion, especially after last week's election, which did not

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produce a clear winner. Arsenal says its two biggest shareholders

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are not interested in selling their stakes to investors from the Middle

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East. A report at the weekend said a bid worth $2.3 billion has been

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put together backed by firms from Qatar and the UAE. They are

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currently controlled by the American Stan Kroenke. Jack the

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America over the weekend. The Warner Brothers movie costs $200

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million and it took $28 million this weekend. The Chinese

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government wants to curb rising home prices and that has hit the

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stock market today, property shares are down a lot. We can speak to

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Rico Hizon in Singapore. Always nice to see you. Tell us more about

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the impact. A big impact, especially on the Shanghai Stock

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Exchange, which is currently sliding by about 3%. The property

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index tumbling close to 9%. You have the likes of Chris Banksy, a

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property giant, Beijing Capital Development, and other property

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related companies down by 10%. You have Hong Kong property shares

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being affected. China Resources are down between three to 5%. This

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comes after the government said that homeowners who sell their

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homes will be tax to 20% on the profit they make. The state council

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also said they will allow banks to charge higher interest rates on

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mortgages. -- taxed. The loss in the Chinese property sector is

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damaging the stock markets. The retail sector is a major

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contributor to China's economic growth, directly contributing to

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10% of the gross domestic product. Tightening the sector has brought

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in some major concerns on the country's recovery efforts. Apart

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from the property sector, Sally, all eyes are on the National

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People's Congress which starts tomorrow. This is where Xi Jinping

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is expected to be confirmed as president. All eyes on the China

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market and Chinese politics. Sally. Thank you for joining us. Let's

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mentioned in Shanghai and in Hong Kong, we are seeing some losses as

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a consequence of that story. The Hang Seng is down by 1.6%. Another

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story affecting markets as well, this company, the nominee of Shinzo

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Abe, the Japanese Prime Minister. - - this man. He is likely to become

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the new Bank of Japan governor. He said he will do whatever is needed

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to end 15 years of deflation. He has been talking about his plans.

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He said Open ended asset purchases could start sooner than next year.

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It means they are basically going to flush more money into the

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economy through similar measures to quantitative easing, to try to

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