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Wednesday, February 06, 2013

UK banks break-up

UK's big banks will be broken up if they fail to follow new rules to ring-fence risky investment operations from High Street outlets, Chancellor George Osborne has announced. He said taxpayers were angry at banks' behaviour and would never again be expected to bail them out. His speech comes on the same day the government introduces its Banking Reform Bill in parliament. Customers will also be able to switch bank accounts to a rival within a week. Mr Osborne said the banking system was not working for its customers, particularly small businesses and individuals. He pointed to the fact that large banking transactions could be done instantly, whereas small businesses could wait days for money to pass through the system. Mr Osborne had previously warned against "unpicking the consensus" over structural reform of the sector.

Big loss for lender

COMMERZBANK, Germany's second biggest lender, has said it will post a large loss for the fourth quarter. The bank expects a net loss of EUR720million ($F1.713billion) after a revision of its medium-term profits forecast had a negative effect on its tax accounting. Full-year net profit will be just EUR6m ($F14.2m) down from EUR638m ($F1.51b) in 2011, because of extraordinary charges totalling EUR980m ($F2.33b) for the year, the bank said. Restructuring charges would cost it a further EUR500m ($F1.18b) in early 2013. Commerzbank, which was downgraded by ratings agency Moody's in June 2012, intends to cut 4000 to 6000 jobs by 2016 and to invest more than EUR2b ($F4.7b) revamping its retail banking operation.

Price freeze

THE Argentine government has put a temporary price freeze on all products sold in the country's main supermarket chains to try to fight inflation. A group representing two-thirds of Argentina's supermarkets agreed to keep prices steady until April 1. The move comes days after the International Monetary Fund (IMF) censured Argentina for issuing inaccurate economic data. The government says inflation is below 11 per cent but economists say it is double. Analysts have accused Argentina specifically of understating the rate of inflation since 2007 in order to keep interest rate payments on its debt low, and to flatter the political regime.

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