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Royal Bank of Scotland Pays $4.9B for Crisis-era Misconduct

Royal Bank of Scotland will pay $4.9 billion to settle U.S. claims that it misled investors on residential mortgage-backed securities between 2005 and 2008, the U.S. Justice Department said Tuesday.

The Justice Department said the penalty was the largest ever imposed on a bank for misconduct leading up to the financial crisis. The bank announced in May that it had reached the settlement in principle.

The government alleges RBS misled investors in underwriting and issuing residential mortgage-backed securities, understating the risks behind many of the loans and providing inaccurate data.

“Despite assurances by RBS to its investors, RBS’s deals were backed by mortgage loans with a high risk of default,” Andrew E. Lelling, U.S. attorney for the District of Massachusetts, said in a statement.

The Justice Department said that RBS disputes the allegations and does not admit wrongdoing, although the bank said in a statement it was happy to move on.

“There is no place for the sort of unacceptable behavior alleged by the DoJ at the bank we are building today,” RBS Chief Executive Ross McEwan said.

Dividend

In conjunction with the settlement, the bank also said it would be paying out an interim ordinary dividend of 2 pence per share on October 12 to shareholders.

The dividend is the bank’s first since its near-collapse and 45.5 billion-pound ($58 billion) state bailout in 2008.

The DOJ settlement and the resumption of dividends were two of the last big milestones in RBS’s decade-long journey back to normality. The looming Justice Department fine had weighed on the bank’s share price and prevented it from paying out to its shareholders.

Together with hefty cuts made to its investment bank and international business, a return to dividends could help shift the bank’s profile with investors from a risky bet into a safe, predictable value stock.

It also expands the market for future government share sales by enabling a broader array of investors to look at buying the bank’s shares.

Tuesday’s announcement marked the latest in a long-running series of massive settlements struck between the U.S. government and large global banks over conduct leading up to the financial crisis.

On August 1, the Justice Department struck a settlement with Wells Fargo, which agreed to pay $2.09 billion to settle similar claims.

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Ruble Slump Hits Russians’ Wallets, Not Their Support for Putin

Alexei Nikolayev, one of more than 56 million Russians who re-elected President Vladimir Putin in March, is already counting the likely cost of a weaker ruble: less spending power abroad, higher prices at home and

another round of belt tightening.

But Nikolayev, 56, a graphic designer who enjoys foreign travel and imported wine, blames the West, not Putin, for the pain and has no regrets about voting for a politician he sees as the right man to guide Russia through trubled times.

“It’s painful and it’s unpleasant, but it won’t change my politics,” Nikolayev said of the ruble shedding 10 percent of its value against the dollar since the end of July, driven down largely by new U.S. sanctions on Russia. “In fact, as strange as it may sound, it will only strengthen my convictions. They [the West] are trying to break Russia.”

Nikolayev’s view that Putin is not to blame is held widely among Russians, according to Stepan Goncharov, a sociologist at the Levada Center pollster.

“People don’t really understand the dynamics behind it and the president, traditionally, is safe from criticism,” Goncharov told Reuters.

The narrative in Russia that the ruble’s slide is the result of a Western plot has direct echoes with Russian ally Turkey, whose lira currency slid to a record low Monday. Turkish President Recep Tayyip Erdogan has said that his country is the target of an economic war and that Turkey will boycott some U.S. imports in retaliation.

In Russia, the falling ruble causes pain for some. The price of imported goods is likely to rise. Foreign vacations have also become more expensive.

Irina Turina, a spokeswoman for the Russian Travel Industry Union, said travel agents saw demand for package holidays fall 10 to 15 percent last week because of the ruble’s volatility.

“People who have not yet paid in full for their holidays are rushing to pay off the rest even if they have no obligation to do so,” Turina told Reuters, saying people were worried that the outstanding balance would be recalculated according to a higher, less favorable exchange rate.

“People who have not yet bought package holidays are also pausing for thought,” she said. “It’s not just about paying for your holiday. You need spending money once you get there, and people take dollars.”

​’Nothing is forever’

Nevertheless, early and anecdotal signs suggest many Russians, long inured to a volatile national currency, are stoic, even defiant, in the face of a falling ruble.

Russian Foreign Ministry spokeswoman Maria Zakharova said last week that the sanctions on Russia had nothing to do with Moscow’s behavior in places like Ukraine or Syria but were motivated by a U.S. need to keep economic rivals down.

That view finds favor with many Russians who have listened via state TV and taken in the Kremlin’s anti-Western rhetoric for years.

Other Russians were simply sanguine about a ruble drop that has taken few by surprise because they have seen worse before.

“Nothing is forever; things will change somehow,” said Moscow resident Gennady Tsurkan. “Everything will always change for the better. I think that these days are not far off, I believe that.”

The fall in the ruble is much less severe than the currency crisis after 2014, when an economic slump coincided with the fallout from Russia’s annexation of Ukraine’s Crimea.

Since that time, Russian companies have reduced their foreign borrowing, the state has cut the amount it needs to raise on Western debt markets, and the country imports fewer goods that it needs to pay for in dollars.

Putin’s still-high approval rating has slipped in the past few months, but pollsters put that down to an unpopular proposed pension reform, not the weakness of the ruble.

Pollsters say while the ruble’s weakness may fuel an emerging sense of discontent among some Russians that was sparked by the pension reform, it is unclear if it will lead to protests or influence a political landscape that Putin has bestrode for over 18 years.

“If it does have an effect, it will be an indirect one, magnifying discontent over falling living conditions,” said Levada Center’s Goncharov.

Nikolayev, the Putin-supporting graphic designer, was philosophical:

“It’s like sunshine or snow. I can’t influence it. Maybe I’ll have to drink a different kind of wine. Or maybe I’ll have to buy one instead of two pairs of shoes. It’s painful, but not that painful.”

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Sprint Partners with LG to Launch 5G Smartphone in 2019

Sprint said Tuesday it has partnered with phone manufacturer LG Electronics to launch a 5G smartphone in the first half of next year, marking the first 5G device deal for the No. 4 U.S. wireless carrier.

Sprint is working to persuade antitrust regulators to approve its merger with larger rival T-Mobile US Inc in a $26 billion deal, which the companies say will help them more quickly build the next-generation wireless network. That network is expected to eventually pave the way for new technologies like autonomous cars.

The LG phone will be customized to Sprint’s planned 5G network, and will be compatible with T-Mobile only on that carrier’s existing 4G network, John Tudhope, Sprint director of product development, said in an interview.

The price of the phone and exact launch date will be announced later, Sprint said in a news release.

Last month, Sprint introduced new unlimited wireless plans bundled with video streaming platform Hulu and music streaming service Tidal, in an effort to attract more customers with media content.

Tudhope said Sprint will continue to use content as a way to “bring to life the value of 5G,” as one of the benefits of the 5G network will be faster download times of video content on smartphones.

The company had previously announced it would initially launch its 5G network in nine cities in 2019, including New York City and Los Angeles.

Sprint is the fourth-largest cellphone service provider in terms of number of customers, after Verizon Communications, AT&T and T-Mobile.

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Survey: Vienna Tops Melbourne as World’s Most Liveable City

Vienna has dislodged Melbourne for the first time at the top of the Economist Intelligence Unit’s Global Liveability Index, strengthening the Austrian capital’s claim to being the world’s most pleasant city to live in.

The two metropolises have been neck and neck in the annual survey of 140 urban centers for years, with Melbourne clinching the title for the past seven editions. This year, a downgraded threat of militant attacks in western Europe as well as the city’s low crime rate helped nudge Vienna into first place.

Vienna regularly tops a larger ranking of cities by quality of life compiled by consulting firm Mercer. It is the first time it has topped the EIU survey, which began in its current form in 2004.

At the other end of the table, Damascus retained last place, followed by the Bangladeshi capital Dhaka, and Lagos in Nigeria.

The survey does not include several of the world’s most dangerous capitals, such as Baghdad and Kabul.

“While in the past couple of years cities in Europe were affected by the spreading perceived threat of terrorism in the region, which caused heightened security measures, the past year has seen a return to normalcy,” the EIU said in a statement about the report published on Tuesday.

“A long-running contender to the title, Vienna has succeeded in displacing Melbourne from the top spot due to increases in the Austrian capital’s stability category ratings,” it said, referring to one of the index’s five headline components.

Vienna and Melbourne scored maximum points in the healthcare, education and infrastructure categories. But while Melbourne extended its lead in the culture and environment component, that was outweighed by Vienna’s improved stability ranking.

Osaka, Calgary and Sydney completed the top five in the survey, which the EIU says tends to favor medium-sized cities in wealthy countries, often with relatively low population densities. Much larger and more crowded cities tend to have higher crime rates and more strained infrastructure, it said.

London for instance ranks 48th.

Vienna, once the capital of a large empire rather than today’s small Alpine republic, has yet to match its pre-World War I population of 2.1 million. Its many green spaces include lakes with popular beaches and vineyards with sweeping views of the capital. Public transport is cheap and efficient.

In addition to the generally improved security outlook for western Europe, Vienna benefited from its low crime rate, the survey’s editor Roxana Slavcheva said.

“One of the sub-categories that Vienna does really well in is the prevalence of petty crime … It’s proven to be one of the safest cities in Europe,” she said.

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Maduro: Venezuela Gasoline Prices Should Rise to International Levels

Venezuela’s heavily subsidized domestic gasoline prices should rise to international levels to avoid billions of dollars in annual losses due to fuel smuggling, President Nicolas Maduro said in a televised address on Monday.

“Gasoline must be sold at an international price to stop smuggling to Colombia and the Caribbean,” Maduro said in a televised address.

Venezuela, like most oil-producing countries, has for decades subsidized fuel as a benefit to consumers. But its fuel prices have remained nearly flat for years despite hyperinflation that the International Monetary Fund has projected would reach 1,000,000 percent this year.

That means that for the price of a cup of coffee, a driver can now fill the tank of a small SUV nearly 9,000 times.

Recently, the average price of a coffee with milk was 2.2 million bolivars, or about 50 cents, local media has reported.

Smugglers do brisk business reselling fuel in neighboring countries.

Maduro said the government would still provide “direct subsidies” to citizens holding the “fatherland card,” a state-issued identification card that the government uses to provide bonuses and track use of social services.

He said the subsidy was only available to those who registered their cars in a vehicle census being conducted by the state.

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Mexico’s Lopez Obrador Pledges More Than $11B for Refineries

Mexican President-elect Andres Manuel Lopez Obrador said on Monday his administration will invest more than $11 billion to boost refining capacity in order to curb growing fuel imports.

Lopez Obrador, who will take office on Dec. 1, told reporters his government plans to invest $2.6 billion to modernize existing domestic refineries owned and operated by national oil company Pemex, and spend another $8.4 billion to build a new one within three years.

The $8.4-billion figure is higher than a $6 billion estimate provided by a key energy advisor during the campaign.

Lopez Obrador, set to become Mexico’s first leftist president in decades, did not detail how the projects would be financed or whether private capital would be involved, but he has often said he will not raise taxes or grow government debt.

Mexico is among Latin America’s largest crude exporters, but is also the biggest importer of U.S. refined products. The country’s next president has pledged to lift refining capacity, which he says has declined due to corruption and neglect.

Pemex, formally known as Petroleos Mexicanos, has six domestic refineries with a total processing capacity of some 1.6 million barrels per day (bpd), but the facilities are only operating at about 40 percent of capacity so far this year.

Meanwhile, gasoline and diesel imports have sky-rocketed in recent months amid planned and unplanned refinery stoppages.

Pemex has posted losses in its refining division for years but Lopez Obrador aims to boost crude processing enough to halt imports within three years.

Lopez Obrador also said he plans to invest another $4 billion to drill new onshore and shallow-water oil wells in the states of Veracruz, Tabasco and Chiapas.

Pemex production has consistently declined in recent years to fall below 2 million bpd after hitting peak output of 3.4 million bpd in 2004.

President Enrique Pena Nieto passed a reform to open up Mexico’s state-run energy industry to private producers, which has led to a series of competitive auctions that have awarded more than 100 oil exploration and production contracts.

Lopez Obrador has said he will respect those contracts as long as an ongoing review does not find signs of corruption. He is widely expected to slow down the process of offering more contracts to private players.

($1 = 19.1100 Mexican pesos)

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Khamenei: Mismanagement More Harmful Than US Sanctions

Iranian Supreme Leader Ayatollah Ali Khamenei said Monday government mismanagement has hurt Iran’s economy more than U.S. sanctions.

U.S. President Donald Trump last week reimposed a set of sanctions that had been lifted as part of the 2015 nuclear deal Iran struck with world powers to limit the country’s nuclear program in exchange for relief from measures that had badly hurt its economy.

Those sanctions target Iran’s automotive sector, its trade in gold and other precious metals, along with its currency, the Iranian rial, and other financial transactions.

Trump has threatened another round of sanctions on November 5 against Iran’s energy-related transactions and business that foreign financial institutions conduct with the Central Bank of Iran.

Khamenei said Monday with better management Iran can resist the U.S. sanctions and overcome them.

Trump has been a frequent critic of the Iran nuclear deal and put the sanctions back in place after pulling the United States from the agreement. He says Iran must change the way it operates, including its activities in Syria and Yemen.

Iran and the other signatories of the nuclear deal have said they intend to continue to abide by the agreement.

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Turkey Announces ‘Action Plan’ to Ease Market Concerns

Asian and European markets were rattled by the Turkish lira’s record low of 7.24 to the dollar overnight. The markets began to recover Monday, however, when Turkey’s Central Bank said it was ready to take “all necessary measures” to help Turkish banks manage their liquidity.

The bank’s announcement followed the finance minister’s disclosure that Turkey has prepared an “action plan” scheduled to roll out Monday that is intended to ease market concerns that led to the slump in the value of Turkish currency.

The lira recovered to 6.61 to the dollar following the Central Bank’s announcement.

Turkish President Recep Tayyip Erdogan, embroiled in a bitter dispute with the U.S., a NATO ally, contended Sunday the plunging value of his country’s lira currency amounted to a “political plot” against Turkey.

Erdogan, speaking to political supporters in the Black Sea resort of Trabzon, said, “The aim of the operation is to make Turkey surrender in all areas, from finance to politics. We are once again facing a political, underhand plot. With God’s permission we will overcome this.”

U.S. President Donald Trump has feuded with Erdogan over several issues, including the detention of an American pastor in Turkey, whom Turkey has held since 2016 and accused of espionage. Turkey last month released the evangelical preacher from a prison, but is still detaining him under house arrest pending his trial, despite the demands of the U.S.

With the dispute intensifying, Trump on Friday doubled steel and aluminum tariffs on Turkey, sending the beleaguered lira plunging 16 percent, part of a 40 percent plummet for the currency this year. In early Asian trading Monday, the lira fell to a record low of 7.06 against the dollar.

“What is the reason for all this storm in a tea cup?” Erdogan said. “There is no economic reason for this … This is called carrying out an operation against Turkey.”

Erdogan renewed his call for Turks to sell dollars and buy lira to boost the currency, while telling business owners to not stockpile the American currency.

“I am specifically addressing our manufacturers: Do not rush to the banks to buy dollars,” he said. “Do not take a stance saying, ‘We are bankrupt, we are done, we should guarantee ourselves.’ If you do that, that would be wrong. You should know that to keep this nation standing is… also the manufacturers’ duty.”

Erdogan signaled he was not looking to offer concessions to the United States, or financial markets.

“We will give our answer, by shifting to new markets, new partnerships and new alliances,” said Erdogan, who in recent years has built closer ties with countries in Latin America, Africa and Asia. “Some close the doors and some others open new ones.”

He indicated Turkey’s relationship with Washington was imperiled.

“We can only say ‘goodbye’ to anyone who sacrifices its strategic partnership and a half century alliance with a country of 81 million for the sake of relations with terror groups,” he said. “You dare to sacrifice 81-million Turkey for a priest who is linked to terror groups?”

American pastor Andrew Brunson, if convicted, faces a jail term of 35 years. Trump has described his detention as a “total disgrace” and urged Erdogan to free him immediately.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Washington DC Reconsiders Cashless Approach

American businesses have long been preparing for a cashless economy as the use of credit and debit cards, instead of cash, become more widespread. But the move towards a cashless economy may have hit a snag in the nation’s capital. Some Washington DC council members say the cashless trend has gone too far. And if a new bill, introduced by DC Council member David Grosso, passes — some cashless businesses could end up paying big fines. Mariia Prus has the story narrated by Joy Wagner.

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Iran: French Firm Out of South Pars Gas Project, China’s Is In

Iran’s official IRNA news agency is reporting that China’s state-owned petroleum corporation has taken a majority share of the country’s South Pars gas project after French oil and gas company Total announced it would pull out because renewed U.S. economic sanctions against Iran.

The Saturday report quotes Mohammad Mostafavi, an official in Iran’s state oil company, as saying CNPC now owns 80 percent of the shares in the $5 billion project, having bought shares from Total.

CNPC originally had about 30 percent of shares in the project.

The renewal of U.S. sanctions took effect on Tuesday.