Qatar National Bank pays $2.94bn for Finansbank

Qatar’s national bank has agreed to buy Finansbank, a Turkish unit of the National Bank of Greece (NBG), for $2.94bn. Regulatory approval is still required for the acquisition of NBG’s 99.8 percent holding – yet if it does go ahead, it will be the largest takeover by a Persian Gulf lender outside of its domestic market.

It is expected that the deal will be finalised by the second quarter of 2016, having already received approval by the board of directors of both banks, as well as by the Hellenic Financial Stability Fund.

Qatar National Bank (QNB), of which 50 percent is owned by the country’s sovereign wealth fund, has long indicated an interest in Turkey

Qatar National Bank (QNB), of which 50 percent is owned by the country’s sovereign wealth fund, has long indicated an interest in Turkey as part of its expansion plans. News of the bank’s upcoming purchase of Finansbank is the latest in a string of acquisitions made by QNB in recent years. For example, in 2014, the bank became the leading shareholder in Africa’s Ecobank Transnational conglomerate, with a 23.5 percent stake.

“This transaction is a significant milestone in QNB’s vision to becoming a Middle East and Africa icon by 2017 and a leading global bank by 2030,” said Group Chief Executive Officer Ali Ahmed Al-Kuwari, according to Bloomberg.

Unlike US and European banks, which have spent the years following the 2008 financial crisis retreating to their domestic markets, the QNB has expanded throughout Africa and Asia at a remarkable rate, and shows no signs of abating. In fact, QNB is still just midway through a five-year strategy to expand its presence into 20 major cities in the west-east corridor, thereby making it the largest Arab bank in the world. As such, much more investment activity can be expected in 2016 from this budding player on the global financial scene.

Martin Shkreli fired by KaloBios

Chief Executive of US-based KaloBios Pharmaceuticals Martin Shkreli has been fired a mere matter of days after his arrest at the hands of FBI for securities fraud.

The executive was thrust into the spotlight earlier this year when he bought up Turing Pharmaceuticals and overnight hiked the price more than 50-fold on a 62-year old anti-infective HIV drug known as Darapim. Shkreli later stepped down amid the furore.

The new scandal, according to US prosecutors, concerns a Ponzi-like scheme at MSMB Capital Management

The executive later defended his decision to raise the price of the drug, which costs about $1 to produce, from $13.50 to $750. Speaking to the BBC, he said that the company would use the money to research new treatments and added that the $1 price did not take into account marketing and distribution costs, both of which have increased dramatically in recent times.

A short statement released by KaloBios read simply: “On December 17, 2015, Martin Shkreli was terminated as Chief Executive Officer of the Company and resigned from his position as a member of the board of directors.” The scandal, according to US prosecutors, concerns a Ponzi-like scheme at MSMB Capital Management, a fund he helped found, and at Retrophin, where he was CEO.

Shkreli stands accused of using assets from Retrophin to pay off outstanding debts at MSMB, though he has since been released on a $5m bail.

The now-former executive told The Wall Street Journal on December 21 he felt he was being targeted for having raised drugs prices in the past. “‘Trying to find anything we could to stop him’ was the attitude of the government,” he said. “Beating the person up and then trying to find the merits to make up for it – I would have hoped the government wouldn’t take that kind of approach.”

Mining industry slashes jobs

The US Bureau of Labour Statistics released its November employment highlights, and there’s no good news for the mining sector.

After reaching a peak in December 2014, US mining and logging industries have lost 124,000 jobs in the last year alone. 11,000 of those were just in November. The only other industry to post greater losses in the November was the information sector. The movie and sound business lost 12,000 jobs that same month, although there hasn’t been much overall net change in the sector over the last year.

Worst hit by the Anglo American cuts will be South African miners

For mining, things are going to get worse before they get better. Mining Giant Anglo American announced this month it will decrease its workforce by two-thirds and consolidate from six to three businesses. That’s 85,000 jobs cut. The share market responded by driving the mining giant’s stocks down to record lows.

Worst hit by the Anglo American cuts will be South African miners. The company was founded in Johannesburg in 1917, expanded internationally in 1960 and has since maintained a strong local presence. Responding to the planned restructuring, the Congress of South African Trade Unions released a statement that the cuts will result in thousands of job losses.

Lessening demand from China and an overabundance of supply has hit commodity prices hard in the last 12 months, and mining companies that enjoyed explosive growth now have to re-evaluate their businesses.

Australia is also expecting job cuts in the near future. According to the BIS Shrapnel report Mining in Australia 2015 to 2030, released in late-November, mining investment in Australia is expected to decline by almost 60 percent over the next three years.

“Indeed, we are forecasting a further 20,000 job losses in the mining industry over the next three years, on top of the 40,000 direct job losses since the investment peak,” said Adrian Hart, Senior Manager of the Infrastructure and Mining Unit at BIS Shrapnel.

Seguros Monterrey: Financial education can unlock Mexico insurance potential

The Mexican life insurance industry has evolved dramatically with the maturation of the local regulatory landscape. Gary Bennett, CEO of Seguros Monterrey New York Life, discusses the changes that Solvency II is having on the insurance industry, and how Mexico’s insurance providers need to adapt to reach Mexico’s growing middle class.

World Finance: The Mexican life insurance industry has evolved dramatically with the maturation of the local regulatory landscape. Here to share insight: Gary Bennett.

Now, can you tell me about how the industry has kept pace with the growth of the Mexican population?

Gary Bennett: We’re seeing some dynamic times in Mexico at the moment. Not just from an economic point of view, but particularly in a population growth point of view. Mexico has a dynamic, young population, growing in affluence and acquiring for the first time many things – motorcars, homes, getting in readiness for the education of their children.

And there is a tremendous opportunity for further growth in the insurance industry. So it’s a challenge for us: one, to keep up with that economic environment; and two, ensure that we are providing for all of those things that this growing Mexican population requires.

It’s reported that over the next decade or so, the number of people growing into that affluent middle class range in Mexico will be at its strongest point ever in history.

World Finance: So what are the most significant obstacles the industry is facing?

Gary Bennett: Our market has significantly less than 2.5 percent penetration across all of Mexico. Household ownership of insurance in life insurance is around seven percent per household, and medical, accident and health and 7.5 percent.

The biggest challenge that we have is the fact that information, education and financial literacy as people become more affluent and acquire more things, becomes a really important part of the social fabric, and the awareness and the education of what you need to do.

Like many of us, when we’re younger, people don’t really think about the future. And insurance has been something that’s not been at the top of people’s minds, if you like. So we need to further build out distribution models, opportunities to reach more customers in more locations – both through the traditional methods, through agent advice and qualified people who reach out to customers. Through bancassurance and telemarketing, and now through more innovative digital players, as more consumers have access to digital information.

World Finance: Has government insurance regulation worked to address these issues?

Gary Bennett: We’ve seen a significant raft of government regulations driven by what’s called Solvency II in Mexico over the last couple of years. And it does a number of things for the consumer and the marketplace, in both the financial strengthening of insurance companies to ensure that consumers get a better deal, that there’s more transparency, that there’s more corporate governance, that there’s stronger – and much stronger – financial positioning of insurance companies in the Mexican marketplace.

Now, those things on their own will add significantly to a greater level of trust, and a greater level of confidence, by Mexican consumers, as that solvency process is introduced. And again, I think that the government, in conjunction with Solvency II, has pushed out in a number of areas this concept of financial literacy. Working out how you provide insurance protection, how you build yourself a credit card, how you open a bank account, are not the sorts of things that are being traditionally taught in school, as part of the education process. We are seeing more and more of that take place in Mexico.

World Finance: Now your company of course has more than 70 years of experience in Mexico, more than two million policyholders. How do you address their diverging needs?

Gary Bennett: Seguros Monterrey has led the industry in many areas, and in particular – and I say this with a great deal of pride – female products, children’s education products, specific protection and long-term retirement products – that we’ve listened to consumers and the sorts of things that they saw were important in their lives. And we’ve been leading the industry over a long period of time in developing those products.

Again, most of this comes from the fact that we have been in this business in Mexico for a long time. We have a very diverse and beautifully well-spread customer base. And again, more and more the sophistication and understanding of their needs and their wants, aligned to building satisfactory products, is really what the business is about.

So they’ve been really important, right now to the fact that more and more Mexicans are viewing longer-term retirement as a major challenge. The government is saying that we just can’t provide the benefits, so companies like ours have built attractive, long-term retirement products to adequately satisfy that market segment also.

World Finance: Are you looking at increasing your market penetration? If so, how?

Gary Bennett: Definitely. And I think that this is a really interesting and challenging time that we live in.

I think that, one, financial literacy is really important. Two, to ensure that we have an incredibly and impeccably well trained advisor network, so that people can get quality advice from the right people in the right place. Ensuring that as Mexico continues to grow in lots of different geographic locations that we continue to expand our business and look for opportunities to physically be in the right places at the right times, to support customers as those customer pools start to increase.

And our strategic plan over the next few years is to continue to grow in multiple distribution channels, in multiple geographic locations, and to significantly continue to increase and improve our agent advisor network right across Mexico.

You know, it’s without doubt, those challenges as well, in a digital world where more and more players are entering financial services, to ensure that we have the right spread, the right product solution, and access for customers anywhere, anytime, anyhow; to be able to allow them to get the information they need to go forward.

World Finance: Finally, what’s next in terms of the life insurance products you plan on offering?

Gary Bennett: It’s as much about allowing access to consumers through a digital format. Every single one of us now lives with some form of cellular device that allows consumers to do things that they’ve never done before.

I think that we are unique enough and sophisticated enough to continue to listen to the voice of the customer about the sorts of product offerings that they need. The challenge, as we move into a more digital world, is providing those sorts of access through that digital environment, through the mobile environment, which will really take both the industry and consumer access to the next level.

Advanced Innovation Centre: Social innovation can solve business challenges

Social innovation is not charity, says Alfredo Zolezzi, Chief Innovation Officer for the Advanced Innovation Centre: it is how corporations can continue growing profits in the future. He discusses the Advanced Innovation Centre’s latest project, its ethical ethos, and the kind of partners the business is looking for.

World Finance: Linking social innovation with corporate sustainability is Chile’s exclusive contribution to community uplifting programming in the world. Now, one such trailblazer joins me now: Alfredo Zolezzi, thank you so much for joining me.

So first, let’s start with what’s so different about the innovation that you’ve created, that we haven’t seen in successive forms?

Alfredo Zolezzi: Well, when we’re doing this test linking all this incredible amount of technology and knowledge that is available today to tackle all problems – but with the aim of creating real impact.

World Finance: Why should corporations care about social innovation?

Alfredo Zolezzi: Because social innovation is not charity. Social innovation is addressing in a different way the problems that they are facing, with the community, for the community, but for their own benefit.

In the near future, most of these large corporations will not be able to really run their projects, or develop their projects.

World Finance: Also, can you tell me about some of the emerging trends in Latin America that have helped facilitate your project?

Alfredo Zolezzi: There’s important things happening there: not only innovation is important for all governments, but there is a new economic bloc there called the Pacific Alliance – Mexico, Colombia, Peru and Chile. And the four governments, and business people from the four countries, are giving lots of importance to innovation. In fact, I’m proposing some programmes for the Pacific Alliance, and they are allowing me to address the social issues, together with the economic issues that they’re addressing.

Corporations should understand that they have to create value – but not only for them: also for the communities, and the environment.

World Finance: So, before we start talking about the technological innovation that you’ve created, tell me about why innovation matters?

Alfredo Zolezzi: We have so many problems today: social unrest, mounting social unrest everywhere. It means that current models are not working. So it’s the time to innovate, to create different approaches to these problems.

World Finance: So how do we begin addressing global issues?

Alfredo Zolezzi: I think that we need to open our eyes. It’s not possible that we have the Curiosity Rover on Mars – on a different planet! – and we have children dying every 201 seconds.

World Finance: It’s important that you’ve brought up all of these issues, as using an integrated approach has really become a nascent trend, particularly among emerging nations. So tell me about where you draw innovation inspiration among your neighbouring countries?

Alfredo Zolezzi: I’m not getting any inspiration from countries. But the problems – common problems that all these countries are facing – it’s incredible, the amount of social issues that are not just hurting the lives of people, but their relationship with the economy.

We’re seeing this social unrest hurting the economy of countries. And we’re not fighting effectively against poverty.

World Finance: Based on your mission, tell me what the next wave is? In terms of technological innovation coming out of your centre.

Alfredo Zolezzi: We created a technology that is very important, because it can sanitise water – a continuous flow of polluted water – at a very low cost.

So, instead of taking this technology to the market, what we’re doing is showing to the market that there is a way to take technology first to the people who need the technology the most.

World Finance: Finally, what’s next for the Advanced Innovation Centre?

Alfredo Zolezzi: It’s a very important step. We should select a new industrial partner to take this globally.

We don’t want to be picked by a large corporation, or by the one that has the most money. We want to select who’s going to be that industrial partner. They’d have to subscribe to our vision, and also have all the necessary capacities.

World Finance: Fabulous. Well thank you so much for joining me today.

Alfredo Zolezzi: Thank you, Kumutha.

World leaders continue to excessively burn fossil fuels

Oil Change International (OCI) took a moment around the midpoint of COP 21 to shine a light on subsidies and how support for fossil fuels among the world’s wealthiest threatens to derail outstanding commitments to climate finance. The findings, which take into account spending in the G7 countries and Australia, show that the annual combined spend on fossil fuel subsidies numbers around $80bn, whereas support for the Green Climate Fund – as a means for comparison – numbers around $2bn.

Following on from a some-would-say enlightening two weeks in which talk of climate finance has divided negotiators, fossil fuel subsidies – particularly on the exploration side – has been criticised by some as a relic of days past. Surely now is the time to address the disconnect that exists between government actions and ambitions.

The case against exploration subsidies reads simply: the world economy cannot afford to burn any more fossil fuels than it has on its books

The same old story
Six years ago, G20 leaders gathered in Pittsburgh and promised to phase out unnecessary government-given support for fossil fuels. This failed promise, together with recent studies showing the world is fast approaching its carbon budget, has riled critics – for whom action on climate change has come too slow.

“The big problem with producer subsidies is that we can’t afford to use all of the fossil fuel still buried in the ground – not without triggering runaway climate change,” said Chris Beaton of the IISD, speaking to World Finance earlier in the year. “Claims that helping the fossil-fuel industry is good for the economy and jobs are often inflated, or simply not substantiated with published analysis.”

For the very same reasons highlighted in the OCI report, fossil fuel subsidies are under fire, and while not all support should be tarred with the same brush, the case for exploration subsidies is growing thinner by the day.

One report, penned last year by the Overseas Development Institute and OCI, stated “G20 governments’ exploration subsidies marry bad economics with potentially disastrous consequences for climate change.” Chief among its findings was that governments were spending $88bn a year to support exploration, more than double what the recipients were investing in exploration themselves. By supporting exploration in this manner G20 countries are creating a “triple-lose” scenario and diverting funds into potentially damaging investments.

Carbon budgeting
“The world already has a large stockpile of unburnable carbon. If countries intend to meet their commitments to the 2ºC climate target, at least two-thirds of existing proven reserves of oil, gas and coal need to be left in the ground,” says the report. “Yet governments continue to invest scarce financial resources in the expansion of fossil fuel reserves, even though cuts in such subsidies are critical for ambitious action on climate change and low-carbon development.”

The case against exploration subsidies reads simply: the world economy cannot afford to burn any more fossil fuels than it has on its books. Even still, the $2.6bn in US exploration subsidies for 2009 almost doubled to $5.1bn by the time 2013 hit, as policymakers there looked to cash in on runaway growth in the local oil and gas sector. Likewise the UK Government has deemed oil and gas majors worthy of additional financial support, and all in a period where subsidies for clean energy have been scaled back.

The central question in this matter is whether policymakers, not to mention fossil fuels majors, will acknowledge the existence of a carbon budget and, if so, whether they’ll take steps to reduce their spending so to speak. As it stands, needless government-given support for fossil fuel exploration is actively incentivising an overspend, and for as long as these subsidies exist, producers are seemingly exempt from the consequences.

If governments truly are serious about keeping emissions “well below” 2ºC, they must consider the way in which their actions on this point conflict with the ambitions outlined in the climate deal last week.

For more on the subject of fossil fuel subsidies and tax breaks for Big Oil see the below World Finance articles.

Fossil fuels aren’t going anywhere

Could tax breaks be on the agenda for big oil companies?

People’s Bank Sri Lanka: We are led by social responsibility, not profit

Sri Lanka’s economy is undergoing a dramatic transformation, with infrastructure development and migration boosting the numbers. N Vasantha Kumar and Deepal Abeysekera from Sri Lanka’s People’s Bank discuss the good ratings coming out of the sector and the role that People’s Bank has played in the development of the country.

World Finance: Sri Lanka’s economy is undergoing a dramatic transformation, with infrastructure development and migration boosting the numbers. As a result the banking industry is strong with good ratings coming out of the sector. 

With me now are N Vasantha Kumar and Deepal Abeysekera, from the People’s Bank to discuss.

Well Vasantha If I might start with you, what impact has the recent positive economic performance of the country had on the banking sector?

N Vasantha Kumar: In the recent past there has been a palpable change beginning from the presidential election held in January 2015. With that our rating by Fitch Ratings has been BB stable. So economic indicators are all showing good progress. So we in the banking sector have to go along with that.

So as a state bank, People’s Bank, we taking a major leading role in that aspect.

World Finance: And Deepal what role would you say the People’s Bank has played?

Deepal Abeysekera: People’s Bank has been always in the forefront of Sri Lanka’s national development agenda. Whether it comes to multiple development projects, supporting entrepreneurship, or developing industry.

We have been very focused on the national agenda of the country, either when it comes to disadvantaged and under-privileged communities, or small and micro industries. We have played a very, very major role in the past, because the very same reason why People’s Bank came into being, was to really strengthen the underprivileged sectors and to get their contribution to the national economy.

World Finance: N.Vasantha when it comes to risk management, what is your approach?

N Vasantha Kumar: Normally we do have a predetermined risk appetite, and we do not go in silos. We take the industry and how we impact on the industry, we take into consideration. And we have in our system the compliance and the risk, everything in a regulated framework, the IFRS and all those things.

So we go accordingly and also we take the risk to return basis in the industry. As a bank we have to think about why People’s Bank was established. So that focused we take the risk but also to go along with our business, vis-à-vis a focus on our strategy.

World Finance: Deepal you have a strong CSR programme – tell me about this?

Deepal Abeysekera: As I told you, the very reason why People’s Bank came into operation is really led by corporate social responsibility. There wasn’t a bank in Sri Lanka, but if you go and look back into the history, to do the banking in the native language, in Sri Lanka.

When we were established in 1961, we were the first bank to introduce chequebooks which could be transacted with the family language of the people. And from that point onwards, our entire operation was led by corporate social responsibility, not profits.

CSR per se, we look into three areas mainly: that is developing well-rounded personalities in children, that include their education, and extra-curricular activities.

We do support – in many ways – their education: scholarships and encouragement. And also we support the arts and culture, because national identities are really important for us to be at a very competitive nation in the world. And also the protection of our environment – we are in the forefront of introducing green banking in Sri Lanka.

World Finance: And moving forward, how do you see the banking sector evolving?

N Vasantha Kumar: The banking sector, as I mentioned earlier: Fitch Ratings has advised that the banking sector is very stable. So with that, the banking sector has been leading the economic growth in the country.

As we are concerned, major banks have a big role to play, and medium sized banks will face competition. But the very small sized banks, it is like they will find themselves in a difficult situation to read the market.

I think the banking sector… fortunately the growth is there. And most banks are now depending on deposits. But I think with this growth, financing all the infrastructure projects and things like that, banks might tend to go for borrowings may insure some bonds or something like that, a lot of chances for capital market improvement.

World Finance: Finally Vasantha, the banking sector in Sri Lanka still facing challenges. How you are approaching the call for better financial reporting in the country?

N Vasantha Kumar: In Sri Lanka we have standard reporting. And these are checked regularly by the audit firms, and by our regulator, the central bank.

And also we are following the IFRS standards. And in addition to that we are going for Basel II. So all in all, a very regulated framework is there.

World Finance: Vasantha, Deepal, thank you

Deepal Abeysekera: Thank you very much. Thanks.

N Vasantha Kumar: Thank you, thank you.

 

Newell Rubbermaid and Jarden to join forces

Consumer goods giant Newell Rubbermaid is set to combine with its close competitor Jarden in a cash, debt and equity deal that will see the Atlanta-based enterprise acquire many more “power brands” including Breville and Sunbeam. The deal, according to Newell Rubbermaid, will create a $16bn consumer goods company and make it easier for the two, under the new name of Newell Brands, to make continued price cuts and satisfy retailers.

Not all news was positive however, and shares in Newell Rubbermaid fell seven percent on hearing of the news

Wal-Mart for example has asked its suppliers to reduce prices and the Newell Rubbermaid/Jarden merger should go some way towards that end by making $500m in savings for the first four years.

“The scale of our combined businesses in key categories, channels and geographies creates a much broader canvas on which to leverage our advantaged set of brand development and commercial capabilities for accelerated growth and margin expansion,” said Newell Rubbermaid’s CEO and President Michael Polk in a statement. Jarden’s CEO James Lillie added, “This combination is focused on driving shareholder value and accelerating the growth and profitability of both businesses.”

Not all news was positive, however, and shares in Newell Rubbermaid fell seven percent after the news – given that the deal was to be financed by $5bn in debt and 221 million new shares. Upon its closing, expected in the second quarter of 2016, Polk will assume the chief executive role and the Newell Brands board will be expanded to include three representatives of the Jarden board.

The deal, which needs shareholder approval from both companies, falls in step with a series of acquisitions conducted recently by Newell Rubbermaid. According to the company, the deal will add immediately to earnings.

Cuba reaches historic Paris Club pact

On December 12, Cuba concluded a “historic accord” regarding its outstanding loans to the Paris Club, an informal group of countries that give credit to developing countries. After two years of negotiations, an agreement has been reached to restructure the debt owed to 15 states since Cuba’s default in 1986. One such caveat of the new pact pledges that Cuba will pay the $2.6bn owed to France over the next 18 years (assuming that it is financially able), while the cumulative interest of $4bn has been waived.

The conclusion of the talks and the normalisation of relations with Cuba’s debtors indicates another milestone in the state’s reintroduction to the global economy

“This accord helps to definitively resolve the issue of Cuba’s medium-term debt… which has not been honoured since the 1980s,” said French Finance Minister Michel Sapin, according to the AFP.

At present, a total of $11.1bn is owed to the UK, France, Japan, Russia, Canada, Australia, Italy, Spain, the Netherlands, Switzerland, Belgium, Sweden, Denmark, Finland and Austria. The majority of Cuba’s debtors have shown great flexibility in the talks, which can be attributed to their growing interest in doing business with the Caribbean island.

The conclusion of the talks and the normalisation of relations with Cuba’s debtors indicates another milestone in the state’s reintroduction to the global economy. The long-awaited process started one year ago, to the surprise of the international community, when the US and Cuba announced the restoration of their diplomatic relations. In the months that have followed, the two states have struck other agreements also, including the loosing of telecommunication restrictions and a joint project for marine conservation.

Despite the year-long détente, a strict trade embargo with the US still exists, which is continuing to stunt the financial growth of the communist state. That said, the end seems more likely now than ever before. And when trade restrictions with the US are finally eradicated, Cuba will benefit from a huge economic boost, including a new impetus its vital tourism sector, which is expected to triple to nine million tourists a year.

Oil to fall further as global demand growth wains

The price of Brent crude oil opened today at $39.55, but saw its price slip to a day low of $38.90 – the furthest the commodity has fallen seen since December 2008.

Investors were likely reacting to the release of the International Energy Agency’s (IEA) final Oil Market Report of the year, which indicated that global demand growth of 1.2 million barrels a day (mb/d) is forecasted in Q1 2016, down from a peak of 2.2 mb/d recorded in Q3 2015.

OPEC’s rationale for keeping production high is that depressed prices will eventually drive up demand in 2016

The decrease in the growth of global demand, however, has not been met with a decrease in supply. The Organisation of the Petroleum Exporting Countries (OPEC) is unwilling to adopt price support measures and has pumped more oil in November than it has done in any month in the last three years.

OPEC’s rationale for keeping production high is that depressed prices will eventually drive up demand in 2016. But in its most recent monthly report, it admitted that its “oil demand forecast for 2016 is subject to considerable uncertainties, depending on the pace of economic growth, development of oil prices, and weather conditions, as well as the impact of substitution and energy policy changes”.

Back in July, the IMF projected a 3.3 percent rise in global output for 2015 and expects to see world GDP growth strengthen to 3.8 percent in 2016. But those estimates look a little too generous, as “the slowdown in global trade and the continuing weakness in investment” has weakened world GDP to just 2.9 percent this year, according to the OECD.

With emerging markets slowing down and the pace of economic growth in China expected to shrink again next year, combined with the fact that OPEC is reluctant to restrict supply, it is looking likely that oil will continue its downward spiral, with some oil producers preparing for prices to fall below £20 a barrel.

“If oil goes to $20, we will need to do additional [spending] cuts. Clearly we have shown that we are very willing to cut fiscal spending in line with an oil price at $60, for example,” Alexei Moiseev, Russia’s deputy finance minister told Reuters. “In order for us to be long-term sustainable [with the] oil price at $40, we need to do additional cuts, but if the oil price goes to $20 we need to do even more cuts.”

Egypt and Russia sign nuclear deal

Egypt has taken its first steps towards a nuclear power programme by signing a new deal with Russia’s state-owned nuclear firm, Rosatom. The plant will be comprised of four power units that each generates 1,200 megawatts and is expected to be fully operational within the next 12 years. Together with the construction of the plant, Rosatom has agreed to finance the $20bn project, which will be payable over 33 years, starting with an 11-year grace period.

With relations between Turkey and Russia expected to worsen, Egypt’s role as Russia’s regional partner Russia is likely to augment in the coming years

The plant will be built in the sea port town of Dabaa, on a site that was looted and occupied by locals in protest when plans were first announced in 2012. Egyptian armed forces regained access to the site the following year.

The deal, which was announced shortly after the Turkish attack on a Russian fighter jet, indicates a significant shift in Egypt’s geopolitical standing. With relations between Turkey and Russia expected to worsen, Egypt’s role as Russia’s regional partner Russia is likely to augment in the coming years. And while Russia stands to benefit from regaining a vital foothold in the region, the potential financing of various infrastructure projects would be invaluable for the Egyptian state.

Egypt has sought energy independence for some time, particularly given its frequent power shortages, which continue to wreak social and economic havoc in the country. As such, given the exponential growth of demand and swift decline of gas production, Egypt is now at a critical point in its energy strategy. With a nuclear programme now firmly afoot, it would appear that greater energy securitisation is imminent for Egypt, which will act as a much-needed catalyst to its struggling economy.

One of banking’s most senior women steps down

According to a memo released by banking heavyweight, JPMorgan, Eileen Serra, its CEO of Chase Card Services, will be leaving the role in January 2016. Serra, who has led the unit since 2012, will be replaced by Kevin Watters, the bank’s incumbent CEO of mortgage banking.

Watters has a large task ahead matching Serra’s achievements in the division

Under the helm of Serra, JPMorgan’s credit card division has emerged as an industry leader with a finely tuned marketing strategy that actively promotes cardholder services to the bank’s 60 million users. Serra’s success in the role has also secured her reputation in the industry, having been ranked among the 25 Most Powerful Women in Banking for the past three consecutive years.

Before her promotion at JPMorgan, Serra headed card consumer-branded products and was responsible for the bank’s mass affluent and high net worth customer divisions. Prior to joining JPMorgan in 2006, Serra served as the Managing Director and Head of Private Client Banking Solutions at Merrill Lynch, and has also held executive roles American Express and McKinsey & Company.

Watters has a large task ahead matching Serra’s achievements in the division, but being a JPMorgan veteran himself and having successfully managed business banking during a very difficult period, it seems he is certainly up for the challenge. “He took over the business at perhaps the most challenging time in the cycle and transformed it into a profitable, customer focused, less volatile business with strong controls and an excellent leadership team,” wrote Gordon Smith, JPMorgan’s CEO of consumer and community banking, in the memo – according to Business Insider.

The top 5 biggest family-owned businesses

For some, the idea of being in business with family members is nightmarish. History shows numerous examples of feuding families that have caused internal mayhem and cost an organisation far more than money. Yet, in other cases, the ties of family have proven to provide a strong bond that can withstand recessions, industry decline and even war. World Finance reviews those that have done it best, according to the 2015 Global Family Business Index, a list compiled by the Centre for Family Business at the University of St Gallen, and EY’s Global Family Business Centre of Excellence.

History shows numerous examples of feuding families that have caused internal mayhem and cost an organisation far more than money

1. Wal-Mart Stores
Sam Walton established Wal-Mart in July 1962 with the first store in the US state of Arkansas. Walton transformed the retail industry with a strategy of offering lower prices, while still maintaining a good service – something that his competitors at the time thought would never work. Yet, work it did and by the 1970s, Wal-Mart had become a public listed company and went nationwide. The chain has since grown to epitomise the face of retail with 2,200,000 employees worldwide and an annual revenue of $476.3bn. The Walton family owns 50 percent of the company’s shares.

2. Volkswagen
In 1931, a young mechanic named Ferdinand Porsche founded an automobile design company called Porsche; with a flair for design, his earliest models were soon successful. A turning point then came when the demand for an affordable car in financially stricken Germany burgeoned and Porsche was appointed by Adolf Hitler to design the ‘volks wagen’ – the ‘people’s car’. The company Volkswagen was created in 1937 and in the decades that have followed, it has expanded to become the biggest car manufacturer in the world with Bentley, Bugatti, Lamborghini, Audi, SEAT and Škoda also under its umbrella. Today, Volkswagen earns $261.6bn each year and has 572,800 employees worldwide. The Porsche family has a shareholding of 32.2 percent of the public listed company.

3. Berkshire Hathaway
Berkshire Hathaway, a multinational holding company headquartered in Nebraska, has roots stretching back to the 1880s as Berkshire Fine Spinning Associates. In 1955, the textile company merged with Hathaway Manufacturing Company in what would eventually become the investment behemoth that we all know today. Following the general decline of the textile industry, incumbent CEO Warren Buffett began expanding into insurance and other investments in the 1960s. Today the company earns $182.2bn per annum and has 330,745 employees. With Buffet still firmly at the helm, Berkshire Hathaway now has stakes in hugely successful organisations, ranging from American Express, General Electric and Goldman Sachs to Kraft, Twentieth Century Fox and even Wal-Mart. The Buffet family currently owns 34.5 percent of the company’s shares.

4. Exor
Giovanni Agnelli co-founded the Fabbrica Italiana Automobili Torino (FIAT) in 1899 and then created Istituto Finanziario Italiano (IFI) in 1927 to draw together and manage his holdings in various companies. In 2008, a reorganisation of the Agnelli family’s holdings led to the merger of IFI and its partner company IFIL to create Exor. With 301,441 employees, a majority stake in Juventus FC, as well as large stakes in Fiat Chrysler Automobiles and CNH, among others, Exon is now the second biggest company in Italy. Exor earns $151.1bn every year; with the Agnelli family still holding 51.4 percent of the company’s publicly listed shares.

5. Ford
With 12 investors and 1000 shares, Henry Ford founded the Ford in 1903. Despite almost all of the $28,000 cash investment being spent by the time the first car was sold, the company began turning a profit within a matter of months. Thanks to its rapid expansion in North America, the first overseas branch was opened in France just five years later. Then in a pivotal moment in automobile history, in 1913, Henry Ford introduced the integrated moving assembly line to mass production. The company continued to expand rapidly and diversify its product portfolio throughout the years and today it makes $146.9bn a year and has around 181,000 employees around the globe. The Ford family owns 40 percent of the shareholding at present.

Japan revises recession figures

In November, Japan’s third quarter GDP figures revealed that the economy had again contracted, thereby indicating that it had officially dipped into recession. Just weeks later, however, the numbers have now been revised to tell a very different story: Japan’s GDP did not shrink by 0.2 percent between July and September, it actually grew by 0.3.

Capital spending can be attributed to the welcome revision

The initial data represented an annualised decline of 0.8 percent and a big blow to prime minister Shinzo Abe’s fiscal strategy to instigate GDP growth. Japan’s new GDP figures, which are known for being unreliable, instead show the economy’s promising annualised growth of 1.0 percent. Capital spending can be attributed to the welcome revision, thus indicating the success of Abe’s tactic to push companies to invest more of their profits. According to Reuters, capital expenditure increased by 0.6 percent during the third quarter, contrary to 1.3 percent decline previously suggested.

Despite the figures indicating that Japan could very well be back on the path to sustainable economic growth, the GDP growth upgrade should not be overstated. It is worth noting that the revision was increased further by an unexpected decline in inventory, which implies that companies are struggling to sell their goods, and thus, weak demand continues.

Moreover, the state is still under pressure to implement stimulus measures, such as compelling companies to increase wages, which will boost consumption and demand. Meanwhile, the inflation target of two percent has been delayed once more due to stagnant prices, which may force the Bank of Japan to expand its quantitative easing programme.

While there is still a long way to go for Japan to escape years of stagnation, December’s amended figures show that it is finally heading in the right direction – and that Abenomics may indeed work after all.