Business

AMMAN — Jordan Telecom revealed lower profit during the first half of this year. In a disclosure to the Amman Stock Exchange, the company said profit declined by 9.8 per cent to JD22.7 million compared with JD25.1 in the same period of last year. Earnings slipped by 2.7 per cent to JD174.1 million from JD178.9 million during the same comparison period. The company attributed the drop  to fierce competition in the market which affected the retail and corporate sectors, whereas revenues in the overall sales sector including international roaming increased. Capital expenditure increased to JD71.4 million versus JD15.1 million in the same period, due to renewing the licence for using the 900 megahertz frequency band for five years against JD52.4 million. The company’s total assets dropped to JD580.8 million at the end of June, down from JD618.2 million at the end of last year. 

AMMAN — The Department of Land and Survey (DLS) announced on Monday that  real estate trading was higher by 18 per cent during the January-July period of this year. According to the DLS data, turnover amounted to JD4.3 billion during the first seven months of this year compared to JD3.7 billion during the same period of last year. Revenues also increased to JD236 million this year, 15 per cent higher than the amount collected during January-July 2013. Purchases by non-Jordanian investors stood at 2,990 transactions during the first seven months of 2014, a 19 per cent  increase over the same period of last year. Iraqis topped the list of non-Jordanian investors (1,259 purchases) followed by Saudis (431), Kuwaitis (316) and Syrians (289). The market value of Iraqi purchases amounted to JD168.6 million, representing 58 per cent of the total amount paid by non-Jordanians.

BASEL, Switzerland — Switzerland's exclusive private banking sector is turning the page on the business model that crafted its fortune and reputation, amid tougher international regulations and a crackdown on tax cheats, insiders say.

Amid international pressure on Swiss banks to make amends for past practices of allowing and even helping foreign nationals hide assets from the taxman at home, the sector has been undergoing a seismic shift and is even bracing to give up its cherished tradition of banking secrecy.

In this climate, there is no point for the tradition-laden private banking sector to "hang on to an idealised but now reevaluated past", said Christophe Gloor, the head of the Association of Swiss Private Banks (ASPB), who also heads the La Roche & Co. private bank.

Instead, he told bankers gathered recently for ASPB's general assembly in Basel, Switzerland's private banks — many of them still controlled by the families that founded them up to two centuries ago — should face the new reality "to better build the future”.

Switzerland agreed weeks ago to phase out its long tradition of banking secrecy over the next two years, caving to pressure from foreign governments who since the international financial crisis kicked in in 2008 have become increasingly eager to lay their hands on hidden assets.

Switzerland reluctantly agreed to opening the way to an automatic exchange of banking data, laying waste to its long-held conviction that accounts should be taxed but that all information about them should remain confidential.

Switzerland cannot impose its views 

"It is time to recognise that, unlike the United States, Switzerland does not have the capacity to impose its views on the rest of the world, even if they are based on reasonable concepts," Gloor said.

The wealthy Alpine nation has reached deals with the United States aimed at ending a dispute over charges Swiss banks in the past helped US citizens hide billions of dollars from tax authorities.

More than a dozen Swiss banks have been under criminal investigation by the US Justice Department, including the country's second largest bank Credit Suisse, which was slapped with a hefty $2.6-billion fine this year.

The country's largest private bank, Julius Baer, is also on that list.

Many other private banks have meanwhile signed up to a programme where they acknowledge they may have unwittingly helped US citizens dodge taxes and say they will agree pay large fines in exchange for avoiding criminal prosecution.

France has also launched a programme to flush out undisclosed French funds, which French Finance Minister Michel Sapin maintains allowed Paris to rake in an extra 10 billion euros last year alone.

Some 23,000 French citizens have come forward under that programme since June 2013 to fess up to undeclared accounts abroad — 80 per cent of them in Switzerland.

Swiss bankers, meanwhile, acknowledge they manage far fewer funds inside Switzerland today than they did in the past, since clients' assets are now being taxed and are therefore shrinking.

Bankers are therefore instead turning their sights abroad, where most institutions are expanding rapidly. 

"Members of our association are relentlessly internationalising," Gloor said. 

Swiss banks provide, directly and indirectly, some 260,000 jobs in the wealthy Alpine nation.

But while Swiss private banks have seen their staff sizes swell 6 per cent inside Switzerland over the past 6 years, their employee base abroad has ballooned 67 per cent to nearly 900 in total.

NEW YORK/TOKYO — The world's major central banks are returning to a more opaque and artful approach to policymaking, ending a crisis-era experiment with explicit promises that they found risked their credibility and did not substitute for action.

From Washington to London to Tokyo, the global shift from transparency to flexibility underscores the challenges central bankers face as they test the limits of what monetary policy can achieve.

The return to a more traditional policymaking approach and nuanced statements will challenge the communication skills of central bankers who have been chastened in the last year after some too-specific messages confused and disrupted financial markets.

Complicating things on the world stage, the US Federal Reserve (Fed) and the Bank of England (BoE) are looking to telegraph plans and conditions for raising interest rates, while the European Central Bank (ECB) and the Bank of Japan (BoJ) are heading the other way.

"Central banking used to be an art," said a senior official of a Group of 7 central bank. "It became less so once, globally, but with what's happened at the Fed and the BoE, it may be back to being an art."

Both the Fed and BoE had promised to hold interest rates near zero until their jobless rates had fallen to a particular level. However, unemployment in the United States and Britain fell much more quickly than economists expected and both central banks scrambled to replace their suddenly outdated "forward guidance".

"Too much transparency may sometimes be counter-productive. The balance is always tricky," the official added, requesting anonymity.

The plan had been novel. After driving short-term borrowing costs to historical lows to battle the 2007-2009 financial crisis and deep recessions, Western central banks began offering pledges on the future rate path in an attempt to pull down long-term borrowing costs for automobiles, homes and business expansion.

Fed Chair Janet Yellen and many other policy makers routinely say the plan succeeded on that score, although other factors contributed. But Yellen, who was vice chair of the US central bank before taking the Fed's reins, is leading the charge away from specific policy forecasts.

"The idea of forward guidance was that by being transparent, you got a bigger effect on long-term rates," said Patrick Artus, global chief economist at French bank Natixis.

"But central banks take a risk on credibility," he added. "If something unexpected happens, you have to deviate from what you have been announcing."

The Fed's reputation took a hit last spring when borrowing costs shot up after then Fed chairman Ben Bernanke talked about the prospect of the central bank reducing its stimulative asset purchases "in coming meetings". Emerging markets also sold off sharply as investors priced in an earlier liftoff for US rates.

Several Fed officials felt compelled to walk back the guidance in an episode that prompted criticism from around the world over the Americans' sloppy communications.

The BoE, too, struggled with communication. In February it was forced to reconsider policy two and a half years ahead of schedule. With caveats about the economy, it had promised to keep rates low at least until the unemployment rate fell below 7 per cent, predicting that would take three years. It took six months.

A month after the BoE's reconsideration, in March, the Fed would drop a similar pledge.

The experiences, keenly scrutinised and debated, led to a growing realisation of the dangers of offering policy commitments, said officials familiar with discussions among global central bankers.

"We have to be careful [and] certain that you do not commit to things that we're not sure we can actually produce," Alan Greenspan, Bernanke's predecessor, told the Economic Club of New York in April. "Remember, we don't forecast very well."

From 'cheap talk' to 'useful guidance'

The latest guidance from the Fed and BoE is far less specific.

After Yellen's first policy-setting meeting as Fed chair in March, the US central bank said rates would likely stay at rock bottom for a "considerable time" after it shelves its bond-buying programme and, in a twist on qualitative guidance that leaves the Fed flexibility, it predicted rates would stay below-normal even after the economy has fully healed.

Yet Yellen sent markets tumbling when she stepped out of the Fed meeting that day and told reporters rates could rise "around six months" after a bond-buying programme ends.

Since then, by and large, the Fed has stuck with its broader guidance, closing the book on an era in which it rolled out eight distinct messages since 2008 on when it planned to tighten policy — at times targeting dates, at other times targeting specific unemployment and inflation rates.

The Fed is now moving away from "cheap talk" and towards "useful guidance", said Adam Posen, a former member of the BoE's policy-setting committee who is now president of the Peterson Institute for International Economics.

"It doesn't commit you to anything, or constrain you in terms of what you are responding to," he added.

Similarly, BoE Governor Mark Carney has refused to give any clear indication of the timing of a rate hike in recent appearances, instead steering markets to scrutinise both the strength and uncertainties of the economy.

But he too has struggled to sound the right tone: Investors scrambled to adjust their bets in June after Carney said they underestimated the chance of an early rate hike. He sought to soften the comment the following week, prompting one lawmaker to compare him to an "unreliable boyfriend."

Walk the talk

The example of Japanese and European central banks show that verbal commitment could prove ineffective unless backed by bold action.

The BoJ historically favoured opacity over transparency, but its approach failed to pull Japan out of deflation for nearly two decades.

Haruhiko Kuroda, a central banking outsider who took the BoJ's helm in March of last year, married bold action and words when he pledged to hit the bank's 2 per cent inflation target in roughly two years, and the BoJ doubled its aggressive asset purchases.

The double-whammy weakened the yen by 8 per cent against the dollar and lifted consumer inflation about half way to the BoJ's goal.

Even so, Kuroda has responded by following up with vague guidance, saying only that the BoJ will stick to ultra-loose policy until 2 per cent inflation is achieved in a "stable manner". So far markets do not expect a premature change in policy.

As for the ECB, it faces perhaps the greatest test as it struggles to extinguish deflation risks. After spending most of last year teasing financial markets about pending action, it had to put its money where its mouth was in June by adopting negative interest rates.

ECB President Mario Draghi has said more action would come if necessary although it is uncertain how long he can wait without launching a bond-buying programme, known as quantitative easing or QE, which is the last big option left in the bank's depleted war chest.

"There are a lot of people in central banks who are fantasising about forward guidance because it means they can stop QE and still claim they are doing something," said Posen of the US-based Peterson Institute.

"It was very attractive because... it doesn't cost us anything," he added. "And like most things that don't cost anything, it's not worth much."

SINGAPORE — New hiring rules favouring Singaporeans kicked in Friday as part of measures aimed at addressing citizens' complaints about foreigners stealing jobs from them.

Singapore-based companies needing professional workers now have to advertise on an online "Jobs Bank" for at least 14 days before they can seek an employment pass for a foreigner.

The government-run website will match employment opportunities with profiles of locals seeking employment or a change of jobs. 

Singapore citizens and permanent residents looking for employment must create an account on the jobs bank that will allow them to apply for vacancies.

The portal offers vacancies in sectors such as accounting, banking, engineering, the sciences and sales. More than 16,000 positions are currently available, about half of them for professionals, managers and executives.

In a blog post on Thursday, the manpower ministry said it will scrutinise firms that have "a disproportionately low concentration of Singaporeans" at the professional level, as well as those that are accused of "nationality-based or other discriminatory" hiring practices. 

Firms with 25 or fewer staff, or those recruiting for jobs paying Sg$12,000 ($10,000) and above a month, will be exempted from the advertising rule.

The manpower ministry said it will provide support to companies with low numbers of Singaporean employees on "how to go about their training needs and grow a Singaporean core in their workforce". 

The American Chamber of Commerce (AmCham) in Singapore welcomed the new rules. 

"AmCham members anticipate that the new policy will help them reach a larger pool of qualified local applicants," James Andrade, the group's chairman, said in a statement.

Authorities have been phasing in measures to tighten worker inflows after facing criticism from Singaporeans, who accuse foreigners of competing with them for jobs, housing, schools, medical care and space in public transport.

Discontent spilled into general elections in 2011 when the ruling People's Action Party garnered its lowest-ever vote count after more than 50 years in power. 

The city-state's low birth rate had initially prompted the government to grant an average of 18,500 new citizenships every year between 2008 and 2012, helping the population surge by 30 per cent since 2004 to 5.4 million last year.

About 38 per cent of Singapore's total workforce of 3.44 million people are non-residents. There were 175,100 foreigners holding employment passes as of December 2013.

Another 770,000 hold work permits for lower-end jobs in construction, marine industries and other sectors shunned by Singaporeans. Some 215,000 foreign women work as domestic helpers.

NEW YORK — A majority of Wall Street's top bond firms see no move by the Federal Reserve (Fed) to raise interest rates before the second half of next year, and most see the US central bank sticking with a range rather than a specific target for the key fed funds rate, a Reuters survey showed on Friday.

The results are otherwise broadly unchanged from a survey taken in early June.

Twelve of 18 primary dealers, or the banks that deal directly with the Fed, said the US central bank's first rate increase would occur between July 2015 and June 2016. All but three of the 22 primary dealers participated in the survey.

The view that ultra-loose policy would continue for some time persisted after Friday's monthly employment report, which showed the US economy added more than 200,000 jobs for a sixth straight month in July — a string of gains not seen since 1997 — and after data earlier in the week showed the economy grew at a faster-than-expected 4 per cent annual rate in the second quarter.

Non-farm payrolls increased 209,000 last month, missing economists' median expectation of a gain of 233,000, after surging by 298,000 in June.

"It fits into [the Fed's] view of the world. There's progress in job growth, but slack is still ample. There was no growth in average hourly earnings," noted Jay Feldman, economist at Credit Suisse in New York.

Concern about wage inflation intensified on Thursday as data showed US labour costs recorded their biggest gain in more than 5-1/2 years in the second quarter. However, Friday's data showed average hourly earnings rose only one cent last month.

In the survey, 15 of 17 Wall Street firms expected the Fed would stop reinvesting the proceeds from maturing bonds it holds on its $4.4 trillion balance sheet after or around the same time as the first rate increase. That compares with 12 out of 17 who responded that way a month ago.

Fed seen setting range 

The most marked difference from June's survey was that most dealers now expect the Fed to target the funds rate at a range, rather than keeping a specific rate level as it customarily did before the latest financial crisis. A month ago just two of 16 dealers saw the Fed opting for a range.

Since December 2008, the Fed has targeted a range of zero to 0.25 per cent for its key funds rate.

In Friday's survey, nine dealers forecast the Fed would target a range of 0.25-0.50 per cent once it begins to raise interest rates. Two more see a range with 0.50 per cent as the upper band, with the lower ends at 0.30 per cent and 0.35 per cent. A sole dealer forecast the range to be between 0.175 per cent and 0.375 per cent.

Among the five dealers that see a specific target for the fed funds rate, three have it pegged at 0.50 per cent and two at 0.25 per cent once it begins to rise.

Among 15 primary dealers, the median forecast for the Fed's long-term neutral target rate, which is seen as a level that promotes growth without firing up inflation, was 3.5 per cent. This was below the current 3.75 per cent estimate from the Federal Open Market Committee, the central bank's policy-setting group.

KUALA LUMPUR — Any airline would struggle with the devastating impact of losing one jet full of passengers, especially if it had already been bleeding money for years.

But losing another just months later is pushing crisis-hit Malaysia Airlines to the brink of financial collapse, airline experts said, spotlighting whether it can steer its way out of extended turmoil as once-troubled carriers such as Korean Air and Garuda Indonesia did before.

The flag carrier needs an immediate intervention from the Malaysian government investment fund that controls its purse strings, and likely deep restructuring, to survive the twin tragedies of flights MH370 and MH17, analysts added.

Malaysia Airlines (MAS) was already struggling with years of declining bookings and mounting financial losses when MH370’s mysterious disappearance in March with 239 people aboard sent the carrier into free-fall.

The July 17 downing of flight MH17 over Ukraine, which killed all 298 people on board, deeply compounds those woes.

“The harrowing reality for Malaysia Airlines after MH17 is that if the government doesn’t have an immediate game plan, every day that passes will contribute to its self-destruction and eventual demise,” Shukor Yusof, an analyst with Malaysia-based aviation consultancy Endau Analytics, told AFP.

Shukor indicated that MAS was losing “$1-$2 million a day”, and has “the bandwidth to stay afloat for about six more months based on my estimates of its cash reserves”.

Image is everything 

While the MH17 disaster was beyond the airline’s control — pro-Russia separatists in Ukraine stand accused of shooting it down with a missile — bookings are expected to take a further significant hit, as they did in MH370’s wake.

“I’m not considering going to Malaysia in the next few years. Not unless Malaysia Airlines acts or does something in the future that will allow people to feel more relaxed about travelling there,” said Zhang Bing, a Chinese national in Beijing. 

Jonathan Galaviz, a partner at the US-based travel and tourism consultancy Global Market Advisors, said “perception is key in the airline industry”.

“Unfortunately for Malaysia Airlines, potential international customers are now going to link the brand to tragedy,” he added.

The airline already has announced refunds for ticket cancellations following MH17, which Galaviz noted would cost millions of dollars.

Speculation is rife that state investment vehicle Khazanah Nasional, which owns 69 per cent of the airline, will delist its shares and take it private, which could set the stage for painful cost cutting measures and other reforms. 

Analysts have long blamed poor management, government interference, a bloated workforce, and powerful, reform-resistant employee unions for preventing the airline from remaining competitive.

MAS lost a combined 4.1 billion ringgit ($1.3 billion) from 2011-13. It bled a further 443 million ringgit in the first quarter of this year, blaming MH370’s “dramatic impact” on bookings.

Khazanah declined to comment on future plans for the airline.

But writing in Britain’s Sunday Telegraph on Sunday, Hugh Dunleavy, Malaysia Airlines’ commercial director, stated that the carrier “will eventually overcome this tragedy and emerge stronger”.

The Malaysian government had begun to speed up its review of the airline’s future — started after the disappearance of MH370 — following the second tragedy, Dunleavy wrote.

“There are several options on the table but all involve creating an airline fit for purpose in what is a new era for us, and other airlines,” he indicated. “With the unwavering support we have received from the Malaysian government, we are confident of our recovery, whatever the shape of the airline in future.” 

Rising from the ashes 

Other airlines have risen from the ashes, lessons that could be instructive for MAS, experts said.

Indonesia’s state-owned Garuda Indonesia was plagued by a series of problems in the 1990s and early 2000s, including heavy debts and the murder of a prominent human rights campaigner mid-air in 2004. 

Safety problems also blighted its image, including a 1997 crash on Sumatra Island that killed all 234 aboard and remains Indonesia’s deadliest air disaster.

Former banker Emirsyah Satar was appointed in 2005 to turn around the airline, and he undertook a massive exercise to nurse it back to health. In 2010, it was named the world’s most improved airline by London-based consultancy Skytrax.

Korean Air was in trouble after a period during the 1980s and 1990s when several accidents left more than 700 people dead.

It embarked on a major reform push, bringing in retired Delta Air Lines Vice President David Greenberg in 2000, who subsequently revolutionised its safety and operational practices.

Korean Air is now widely respected worldwide.

Shukor said Malaysia’s government and Khazanah face a “mammoth task” but that the airline could learn much from carriers that have faced similar challenges. 

“Its name is now synonymous with disaster, mismanagement, lack of discipline and many negative elements,” he added.

With most of the passengers on MH370 Chinese, tourist arrivals from China — an increasingly important travel-industry market on which Malaysia has pinned much of its hopes for visitor growth — dropped in the aftermath.

According to observers, Malaysia could be associated with calamity in the eyes of travellers,  putting the tropical destination’s vital tourism sector at risk.

“Malaysia’s competency and governance are not under the spotlight to the same degree as in MH370,” Bridget Welsh, a Malaysia researcher at National Taiwan University, told AFP.

“This said, Malaysia Airlines and travel to Malaysia will be affected outside of Malaysia. The effects will not be as serious as MH370 but overall negative,” she said.

In some Asian societies such as China, deeply held superstitions cause people to shun anything associated with death, and Beijing resident Quan Yi summed up a commonly held Chinese view towards Malaysia.

“I’m definitely not considering travelling to Malaysia,” he said. “I had a few friends who went there for their honeymoon. People who wanted to go there are reconsidering because Malaysia is too dangerous to go now.”

Some in the tourism sector, however, say any impact may be short-lived as Malaysia’s pristine rainforests and beaches, vibrant multi-culturalism and food scene and an overall safe and visitor-friendly environment continue to draw discerning travellers.

Malaysia drew 25 million visitors in 2013 and 65 billion ringgit ($20 billion) in tourism receipts, according to official data.

Hopes were high for 2014, which the government declared “Visit Malaysia Year” with plans to ramp up international promotional efforts centring on its years-long “Malaysia: Truly Asia” campaign familiar across the region.

Goals of 28 million visitors and 76 billion ringgit in receipts were set.

Most visitors are day-trippers from neighbouring Singapore but Malaysia is targeting bigger-spending arrivals from the Middle East, Europe and particularly China.

MH370 anger 

hits China arrivals 

Chinese arrivals have soared, hitting nearly 2 million last year — seven per cent of the total.

But Chinese anger over MH370 caused arrivals to drop 20 per cent in April, according to the latest Malaysian figures.

The China Business News reported this month that concern over travelling on Malaysia Airlines, a major feeder of visitors to the country, has crimped arrivals by more than 40 per cent since MH370, citing figures collected from Chinese travel agencies.

“The crash of the Malaysia Airlines flight [MH17]... has deepened consumers’ concerns over the carrier,” the report cited an official with China Environment International Travel Service as saying.

The official added that MH17 had led to a “large number” of new Malaysia travel cancellations “because a lot of tourists no longer trust Malaysia Airlines’ safety”.

Malaysia’s tourism ministry said it is “monitoring the market situation closely”.

“International tourists are definitely going to be thinking twice, thrice about flying on Malaysia Airlines,” said Jonathan Galaviz, a partner with the US-based travel and tourism consultancy Global Market Advisors. 

Malaysia’s image has not been helped by a wave of kidnappings and other deadly violence on the coast of Malaysian Borneo, normally popular for scuba-diving and nature enthusiasts. Bandits from the nearby Philippines are blamed. 

While the country’s flag carrier has taken a beating, Tan Kok Liang, vice president of the Malaysian Association of Tour and Travel Agents, said agencies are hoping tourists will continue to visit the country on different airlines.

“Our outlook is that the average tourist will still want to come to Malaysia. The latest incident has got nothing to do with the safety of Malaysia and there is no reason why people will stay away,” he added.  

That seems to bear out with many foreign travellers arriving at Kuala Lumpur International Airport after the latest incident, who mostly said they were unperturbed.

“Sadly there is a lot of scepticism about coming to Malaysia... This is my first time. I came because I am attracted to its multi-cultural society,” Alfred McDonnell, a 60-year-old American teacher, told AFP. 

LONDON — An asset management firm has been told to repay customers after using their money to settle its market data bill, Britain’s Financial Conduct Authority (FCA) said in a crackdown on commission charges.

The watchdog’s chief executive acknowledged that it is losing patience with firms that fail to comply with stricter rules imposed to help safeguard the UK’s position as a leading centre for asset management — a sector crucial to government efforts to encourage more people to save for their old age.

British asset managers pay brokers about 3 billion pounds ($5.1 billion) a year in dealing commission, which is passed on to customers, but FCA investigations found that many firms have been using this as cover to get customers to pay for market data and research of questionable value.

Only trading fees and useful research can be passed on to customers as dealing commission, but the watchdog’s Chief Executive Officer Martin Wheatley said the review of 17 investment managers and 13 brokers found that only two investment managers were fully in line with the new rules.

“We are in active discussion with one firm on redress for clients after we found it used dealing commission to pay for market data services in full, despite clear statements that this was not consistent with our rules,” Wheatley said.

Given poor compliance with the regulations, Wheatley added that the FCA is now backing a European Union (EU) law to separate research and trading fees to encourage greater competition and transparency.

Britain must comply with EU law in any case, but in the past the watchdog had been willing to “work with the grain of an industry-led solution”.

“The UK is a global centre for asset management — to keep this position it is crucial that investors are confident that they get a fair deal,” Wheatley stressed.

The Investment Management Association sought in February to head off a tougher regime by issuing its asset management members with guidance on dealing commission.

It said this month that it is considering the FCA review and remains committed to supporting a regime that operates in the best interests of investors.

Also this month, the FCA launched a wide-ranging review of competition in wholesale financial markets, which will also take in investment firms. 

Separately, the Bank of England (BoE) said British banks had a “dreadful record” on mis-selling complex interest rate hedging products to small businesses and warned that it would keep a close eye on them.

Before the financial crisis, many businesses bought the products to protect against interest rate rises, but ended up facing crippling costs after the BoE cut rates to a record-low 0.5 per cent in March 2009.

Last year, the FCA ordered Barclays, Royal Bank of Scotland , HSBC and Lloyds Banking Group to investigate nearly 30,000 cases of potential mis-selling.

To date, the banks have paid out just a third of the 3.75 billion pounds ($6.38 billion) they set aside to pay compensation.

BoE Governor Mark Carney, speaking to a panel of lawmakers about financial stability, said there had been clear malpractice and that firms’ problems should not be viewed as an inevitable side-effect of low interest rates.

“This just goes right back into the mis-selling issue and it’s not a monetary policy issue,” he said.

Andrew Bailey, the BoE deputy governor responsible for bank regulation, said the “dreadful record of British banks and selling hedging products to customers” meant he would be looking closely to see if they bent new rules meant to stop this.

“We will have to be very vigilant about this,” he remarked.

British banks have also set aside more than 20 billion pounds to compensate individual borrowers who were mis-sold so-called payment protection insurance policies to help them service loans if they fell ill or lost their job.

Some lawmakers were not happy with the BoE’s assurances that it was keeping an eye on allegations of malpractice in high-frequency trading of shares in London.

New York’s attorney general has filed a securities fraud lawsuit against Barclays, accusing the bank of giving an unfair edge to US high-frequency traders.

Carney and Bailey said the FCA was looking at high-frequency trading in London, something that was not a BoE responsibility.

Some lawmakers said that kind of approach was responsible for the central bank’s delay in spotting the risk of malpractice in currency markets, something it is now investigating.

Referring to a previous committee hearing where this topic had come up, Labour Party lawmaker George Mudie said Carney had appeared disingenuous. 

“Your face... was just so sly, I would have never played cards with you,” Mudie said.

Carney and Bailey said the current set-up — where the FCA is responsible for rooting out malpractice and the BoE is in charge of financial stability — had been agreed by lawmakers.

Last month, Mudie’s party colleague Pat McFadden had described the BoE under Carney as an “unreliable boyfriend” because of the mixed signals he had given on interest rates.  

LONDON/PARIS — Britain's BSkyB  has agreed to pay $9 billion to buy the Rupert Murdoch's pay-TV companies in Germany and Italy, taking its hunt for growth into Europe by creating a media powerhouse with 20 million customers.

Under the deal, BSkyB will pay Murdoch's 21st Century Fox  for the pay-TV companies using cash, debt, its stake in a TV channel and a placing of shares that represents around 10 per cent of its issued share capital. Murdoch is also the largest shareholder of BSkyB.

The deal, which will make BSkyB the leading pay-TV provider in Europe, adds to a flurry of consolidation in the global media sector as traditional entertainment companies seek to bulk up to compete against more nimble Internet rivals.

Fox is expected to use the proceeds to fuel its pursuit of Time Warner, which recently rejected a bid by Fox of  $80 billion.

BSkyB had flagged a possible deal for Sky Deutschland and Sky Italia in May. The price announced on Friday was slightly lower than expected by some analysts and the cost and revenue benefits higher.

But BSkyB's shares fell 5 per cent, pulled lower by the plan to issue stock and suspend a share buy-back.

"It is a bit of a step in the unknown for Sky," said Conor O'Shea, an analyst at Kepler Capital Markets. "For the first time, it will go from UK-focused to European and be asked to prove that it can add value from being larger."

O'Shea has a "buy" rating on BSkyB shares.

Facing the toughest market conditions in its 25-year history, BSkyB has decided its future growth lies in creating a European pay-TV leader that will operate in Britain, Ireland, Germany, Austria and Italy.

BSkyB dominates British pay-TV, offering its premium sports, movies and US drama programming to more than 10 million homes. Of 97 million households in the five countries it wants to target, 66 million are yet to take pay-TV.

"Sky is clearly taking the strategic view that pay TV, already ingrained in the US culture, will become prevalent in Europe," said Richard Hunter, head of equities at Hargreaves Lansdown.

European tie-up

Fox owns 100 per cent of Sky Italia, 57 per cent of Sky Deutschland and 39 per cent of BSkyB. BSkyB will pay £2.45 billion ($4.2 billion) for Sky Italia and £2.9 billion for Fox's 57 per cent stake in Sky Deutschland.

Under German takeover law, BSkyB also has to make an offer for the minority investors in Sky Deutschland, but with only a small premium on the table, analysts doubt that many will sell. The overall price for the deal would rise to around £7 billion if German investors did sell out.

For Sky Italia, the price will be made up of cash and BSkyB's 21 per cent stake in the National Geographic Channel, valued at around £382 million.

Fox said it would subscribe to the share issue to keep its stake in BSkyB stable, meaning it will take net proceeds from the deal of around $7.2 billion. The placing raised £1.4 billion, according to traders.

In the eyes of many media executives and investors, programming and content are now seen as more valuable than the infrastructure that carries it to people's homes.

That change has been driven in part by firms such as Netflix  and Google's Youtube, which have taken away viewers from traditional pay-TV services delivered by satellite operators or cable companies.

The shift has led some like Murdoch's Fox to concentrate more on content, but for those like BSkyB that remain in both content and distribution, they need to invest heavily in technology and fresh programming to see off the challenge.

Drive down costs

BSkyB's deal is a bet that it can squeeze out costs on everything from set-top boxes to broadcasting rights. It aims to reap £200 million of annual cost savings by the end of the second financial year, with revenue synergies coming after that.

It will compete with John Malone's Liberty Global, which is available in 12 European markets.

Analysts said the deal could make BSkyB an attractive takeover target in the future for a group such as Vodafone  which has been buying fixed-line assets in Europe to bolster its mobile offering.

Vodafone Chief Executive Vittorio Colao told reporters the deal could make BSkyB more appealing in terms of the content sharing agreements the two companies already have.

"It demonstrates that in a world which is increasingly digital it is important to have scale and cross-country presence, which is exactly what Vodafone has," he said.

The increased scale, and the fact the group has not hiked its leverage too high, should also bolster BSkyB when it goes up against telecom group BT in the next auction for English Premier League rights — its most important offering for many of its subscribers.

Risks involved

The deal is not without risks, however, and it could take a while for the creation of a "Sky Europe" to pay off.

Sky Italia, Italy's biggest pay-TV operator, has lost 220,000 customers since its peak in 2011 as the country's prolonged economic downturn led more people to ditch their monthly TV packages.

Sky Deutschland is growing strongly in terms of customer additions and revenue, helped by the appeal of its domestic and European soccer matches, but the percentage of those willing to pay for TV in Germany remains low — below 20 per cent.

The company's credit rating is likely to be downgraded. Its ratio of debt to core earnings will also move to just below 3 from the current level of 1. As a result, the group said it would not resume share buybacks or do any further acquisitions until its leverage target was achieved.

Chief Executive Jeremy Darroch said he did not envisage any regulatory problems with the deal. 

AMMAN — The Housing Bank announced Saturday in a press statement that net profit went up 16.4 per cent during the first half (H1) of this year.

According to the statement, net profit after provisions and after tax amounted to JD61.1 million compared to JD52.5 million achieved during the H1 of last year. 

“Total assets at the end of last month rose by 5 per cent to JD7.6 billion and customer deposit balances increase by 3.6 per cent to JD 5.3 billion,” Chairman Michel Marto indicated in the statement. 

“The net balance of credit facilities portfolio amounted to JD2.8 billion, 5.2 per cent higher than the amount at the end of 2013,” he pointed out.

He said that the bank achieved positive results in various performance indicators, noting that capital adequacy ratio stood at 17.6 per cent, a rate that is higher than the 12 per cent minimum required by the Central Bank of Jordan. 

The chairman pointed to a 53 per cent ratio of net facilities to customer deposits to highlight the bank’s high liquidity.

“Figures confirm the strength of the bank's financial position, and its ability to continue to achieve greater achievements and growth rates in various activities,” the statement said, noting that the results are preliminary and subject to the approval of the Central Bank of Jordan."