30/06/2014 World Business Report


30/06/2014

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After a week of talks to minimise the cost of sanctions, French bank

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BNP Paribas is expected to pay the biggest ever fine of a foreign bank,

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for falling foul of US regulations. And, a critical deadline looms large

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for Argentina. Its economy is on the brink of default but the government

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says it wants to pay its debts. Welcome to World Business Report.

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I'm Sally Bundock, also in the programme, the World Bank gets a

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make`over. We'll have the details. Firstly, let's talk about one of

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France's biggest lenders. French bank BNP Paribas is expected to pay

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a record $9 billion fine for years of dealing with US`blacklisted Sudan

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and Iran, in a case that has strained ties between Paris and

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Washington. Today, US regulators are expected to dish out the largest

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penalty on a foreign bank after a week of negotiations between lawyers

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at BNP and in the US. So, how does this compare with other foreign

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banks who have fallen foul of US authorities?

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The most recent case was Credit Suisse, it was fined 2.6 billion

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dollars in May this year for helping rich Americans avoid paying taxes,

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and in 2012 HSBC had to pay 1.9 billion dollars to avoid prosecution

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on charges similar to those facing BNP. But those fines are still way

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below the amounts paid by US banks for actions leading to the financial

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crisis. Wall Street's former poster child,

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JP Morgan Chase, paid $13 billion in November 2013 to resolve a series of

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US and state lawsuits over the sale of toxic mortgage`backed securities.

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And the list goes on. Alexandre Baradez is Chief Market Analyst for

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IG and he joins me now from Paris. Give us your take on this, the CEO

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of BNP Paribas told his staff on Friday that they have a big penalty

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coming, it will not affect their roadmap, how will it affect BNP

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Paribas though? It could impact BNP Paribas, even if the CEO tells

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employees that this measure will not impact the bank. The CEO warned

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about heavy sanctions, and he talked about dysfunction, and mistakes made

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from the US, we have seen the impact of it on the stock market. We have

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seen BNP Paribas shares coming in at 50 euros per share, that is the

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first impact. That will be heavy for the bike, they will maybe have two

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plead guilty in this matter. `` they will have to. They will get a huge

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fine, other about eight `10 billion, he will have to dismiss the

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executive. `` they will have two. It could have a huge impact. This is

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the financial sector in France, it is huge and returns, it takes a huge

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percentage of the economy. With these sanctions, maybe if the market

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knew of the sanctions before they were announced today after the

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market closed, there will be a psychological impact on the next

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day. Also, tell us about the ban on US dollar trading, how will that

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work? How damaging is it for the bank? I think that this measure, if

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confirmed, it could be the heaviest measure. BNP Paribas works in

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Europe, Asia, and the US, and is working with huge US companies, they

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work between two, `` they work between two continents, they work in

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a specific area, like gas and oil, it could affect production and

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Paris, and Singapore. The bank may lose clients, and work with

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competitors. That is why I think the US authorities worked after the US

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markets closed, the stock market could be affected. Thank you.

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The timing is critical as to when an announcement comes through, when we

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get that announcement, we will update you. Argentina is set to

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enter a technical default for the second time in 15 years today,

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unless it can strike a last minute deal with creditors.The South

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American nation was ordered by a US court to make interest payments to

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holders of its defaulted bonds, which it has been trying to avoid

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through a lengthy legal battle. Argentina would lose access to

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international markets if it defaults on its payments. Ignacio de los

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Reyes reports from Buenos Ayres on the ongoing battle to escape the

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problems of its original default, all those years ago.

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Argentina defaulted on its debts after an economic meltdown that put

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hunger and unemployment to the country. `` that brought. It decided

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it could not pay its bills any more. Nearly 15 years later, it is

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still dealing with the consequences. Things have changed since then.

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Now, the country is nowhere near a crisis like the one in 2001.

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Argentina says that this time, it has the money and the will to pay

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its debts. But, what of the country just is not allowed to? `` what if.

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Even though most have long since agreed to write off part of what

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they are owed. The US courts have ruled that if Argentina pays

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anyone, it has to pay the holdouts as well. Argentina says that it

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cannot afford it. This leaves the country at the break of a technical

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default, that some fear could hold foreign investment, harm growth, and

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trigger unemployment. TRANSLATION: The impact of the 2001 crisis was

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huge, many people felt it, and many people lost their jobs. Right now we

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are starting to feel worried. Our salaries aren't like they used to

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be. There's high inflation, and the economy does not fulfil our needs. I

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think it is inevitable, the situation is really serious. We

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should have dealt with debts earlier. We had to negotiate, but we

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need luck from the other side well. This is a hard situation, I don't

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want my grandchildren to suffer a crisis like my children lived

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through some years ago. Argentina has the support of unlikely allies,

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like the International Monetary Fund, as the country 's default

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would set a dangerous precedent, with effects on other nations. This

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is one of the problematic aspects of the ruling, it means that any

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country contemplating default should be careful as to where it eventually

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restructures the debt. I think that New York is the place to be avoided

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now. That will have an impact on US financial markets.

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Argentina has 30 days to negotiate with debt holders, and find a way to

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avoid default. The government says that Argentina wants to pay, but is

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figuring out how to do it before the economy grinds to a halt.

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In other news: The Bulgarian president, Rosen Plevneliev has said

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that he'll dissolve parliament and appoint an interim government. It's

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the latest development in a crisis over the banking system. After talks

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with the head of the central bank and the finance minister, the

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president said money deposited with the country's banks is safe. Five

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people have been arrested on suspicion of spreading rumours that

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triggered a run on two banks. The World Bank has been making loans

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to poor countries since it was founded in 1945. But the world's

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most famous lender is now undergoing its first restructuring in nearly

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two decades. Starting this week, it will divide itself into 14 global

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practices that focus on areas such as energy and agriculture. Let's

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have a look at the markets today in Asia, we are headed higher across

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the board. We have a stronger yen against the dollar, that has been

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helping trade in Japan a bit. We have had good trade figures from

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Japan. Strong data in the month of May. We will see you later as we

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look through the papers. It's the latest playground craze

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being enjoyed not just by children in the UK ` but all around the

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world. They're called Loom Bands, and if you have young children

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you'll probably already know about the small rubber bands that can be

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woven into wristbands, necklaces, key rings ` just about anything.

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John Maguire has been finding out more. Right now, right around

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