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July 4, 2014 5:07 pm
A round up of some of the week’s most significant corporate events and news stories.
BNP Paribas fined $8.9bn after sanctions violations
BNP Paribas was handed a $8.9bn fine by US authorities this week in a settlement for conspiring to violate sanctions in Sudan and other countries, prompting calls for a cultural change at France’s largest bank by market capitalisation, writes Michael Stothard in Paris.
The bank was accused by the US authorities of having a “cavalier – and criminal – approach to compliance with US sanctions laws” and also of a “criminal support of countries and entities engaged in acts of terrorism and other atrocities”.
To evade the sanctions imposed by the US on Sudan in 1997, the authorities said BNP stripped its payment messages of any reference to the country and used a network of “satellite bank” relationships to disguise the origins of the transactions.
However, shares in the bank rose 4 per cent on Tuesday as the group said that despite the fine it was set to maintain last year’s dividend. At the same time many large clients indicated they were sticking with the bank.
Jean-Laurent Bonnafé, the chief executive, said that “indications are that at this stage [there will be] no major impact on the business” as a result of the settlement, which includes a temporary suspension of some of its ability to clear US dollars.
In France the media and many politicians pointed out that BNP had broken no European laws, asking if it was fair for the US to hand out such a hefty fine. The bank came under US jurisdiction because it was transacting in US dollars.
Mr Bonnafé expressed “deep regret” and promised to improve BNP’s sanctions compliance procedures, moving the team responsible from Paris to New York. About a dozen BNP employees lost their jobs as part of the settlement.
● Related comment: the decision shows some banks remain too big to jail
Dimon reveals his throat cancer diagnosis
He wrote on Tuesday: “While the treatment will curtail my travel during this period, I have been advised that I will be able to continue to be actively involved in our business, and we will continue to run the company as normal.”
Mr Dimon said that he would undergo radiation treatment and chemotherapy for two months at the Memorial Sloan Kettering Hospital in New York’s Upper East Side.
The bank’s share price dipped about 1 per cent on the news but investors said that they were reassured by the transparency of the announcement.
A person familiar with the events said that Mr Dimon told JPMorgan’s operating committee on Monday and had previously called the lead board director, Lee Raymond, former chief executive and chairman of ExxonMobil.
The level of disclosure around Mr Dimon’s illness prompted praise from Warren Buffett, who himself wrote of his own prostate cancer to shareholders in 2012.
Mr Buffett told the Financial Times on Wednesday: “He handled it exactly right . . . He is a first-class guy, and I think the world of him.”
The news at JPMorgan has raised questions over succession planning at the bank where Mr Dimon holds the dual role of chairman and executive.
Bonomi raises French hackles with Club Med bid
Andrea Bonomi, the Milanese investor, finally declared his intentions with Club Méditerranée this week after he launched a bid that values the French holiday operator’s equity at €790m, writes Adam Thomson in Paris.
Unless Club Med’s management, France’s Ardian Private Equity and China’s Fosun International improve an offer of their own – €17.50 per share against Mr Bonomi’s €21 per share – there is every chance that the Italian will secure his quarry.
Except, of course, that things are never quite that simple. Club Med’s management, headed by Henri Giscard d’Estaing, son of the French former president, mounted a rearguard action yesterday.
Speaking to Le Figaro, Mr Giscard d’Estaing waved the nationalist flag, claiming that a successful bid by Mr Bonomi – the offer comes through Global Resorts, a vehicle comprising Investindustrial, the private-equity fund that Mr Bonomi heads, Brazilian investment company GP Investments and South African hotel entrepreneur Sol Kerzner – would see one of France’s great cultural icons pass into foreign ownership.
“Global Resorts,” he told the Paris daily, “wants sole control of the Club, which would be exclusively in international hands”. By contrast, management’s offer with Ardian and Fosun “is a strict balance, a parity between a French and a Chinese shareholder”.
On Thursday, Club Med’s board of directors named independent advisers to assess Mr Bonomi’s offer.
● Interview with Bonomi: Italian wants to return Club Med to its roots
ExxonMobil to pump $1bn into Europe
Europe’s troubled oil refining sector received a rare boost this week as ExxonMobil revealed plans to invest more than $1bn in a new facility in Belgium, writes Michael Kavanagh in London.
The US oil major, the world’s biggest by market value, is to build a coker to process heavy oil into diesel and marine fuel in Antwerp, countering a trend of majors shutting or selling European refineries.
Steve Hart, Exxon refining director for Europe, Africa and Asia, described the regional market as “very challenging” but said that the group had some of the lowest-cost refineries in Europe and was taking a long-term view of demand.
The US group argues demand in Europe for the fuel grades to be produced at the refinery is set to increase even as demand for petrol declines.
The facilities could still be in use in 50 years, Mr Hart said.
A global squeeze on refining margins and competition from lower-cost rivals in North America and more capacity coming on stream in the Middle East has led to the European industry losing 8 per cent of its capacity and 10,000 jobs in the past six years.
Depressed market conditions prompted Murphy Oil of the US to stop taking in any more crude at its refinery at Milford Haven in south Wales in April.
Mr Hart said that the facility at Antwerp would strengthen the competitive position of Exxon’s other refineries in the UK, France and the Netherlands. It will take heavy residue from other refining processes and convert it into usable fuel.
Ashley’s Sports Direct bonus approved in 6 minutes
After three attempts and two shareholder rebellions, the billionaire founder of Sports Direct finally convinced investors that he should share in a bonus pot of 25m shares along with other staff.
The Association of British Insurers had called on investors to vote against the bonus package. However, after a six-minute general meeting during which Mr Ashley did not speak, it was revealed that 60 per cent of shareholders had voted against the scheme. Mr Ashley then left the meeting in a helicopter.
But now the billionaire owner of Newcastle United football club faces another fight with shareholders at the retailer’s upcoming annual meeting.
Aggrieved investors are expected to criticise Sports Direct’s board at the AGM, arguing that they have failed to rein in Mr Ashley, who owns 58 per cent of the group.
Corporate governance at the sports retailer has come under scrutiny from investors. Mr Ashley’s important strategy role within the business belies his title of “executive deputy chairman”.
Some investors were annoyed at the manner in which the bonus was proposed, saying that they had not been consulted on the terms. Others complained that because Mr Ashley’s bonus was mixed in with the rest of Sports Direct’s shop floor staff, voting against the scheme would have “hung the staff out to dry”.
Because the latest bonus vote took place in a general meeting, a simple majority was required. Previous attempts had required 75 per cent as they took place at an extraordinary general meeting.
Sports Direct declined to reveal how many of the 25m shares Mr Ashley will receive in the bonus scheme.
Related Lombard: Ashley bonus railroaded round the City
And finally ... the lighter side of the news
● Social media site Facebook has dabbled in an area reserved for conspiracies involving cold war CIA and KGB agents. It admitted to conducting a psychological experiment on nearly 700,000 of its unwitting users, finding those exposed to fewer positive stories were more likely to write negative posts. Harmless? Très creepy.
● Like the characters in Field of Dreams, Merlin Entertainment believes that if it builds it, “they will come”. Hoping to lure more children to the addictive, brightly coloured world of Lego, the entertainment and attractions operator is planning its eighth Legoland theme park in Nagoya, Japan’s third largest city.
● Arctic Monkeys fans won’t be left out in the cold. Not yet anyway. YouTube has postponed a plan to block certain record labels which refused to sign new licensing terms from its video platform. It is allowing more time to negotiate a solution with labels, one of which includes Domino, the label behind the Arctic Monkeys.
● Silence is golden for the ‘tube’ commuters packed like sardines during rush hour, but there is a market for conversation on long journeys. BlaBlaCar, which connects drivers with spare seats travelling between cities with passengers looking for a cheaper, more sociable journey, managed to raise $100m with investors.
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