BERLIN/PARIS, Nov 18 (Reuters) – France, Germany and Spain have reached agreement on starting the next phase of development of a new fighter jet dubbed FCAS, Europe’s largest defence project at an estimated cost of more than 100 billion euros($103.4 billion), the German government said on Friday.
The Defence Ministry said in a statement that an industrial agreement was achieved after intense negotiations, confirming an earlier Reuters story saying the three countries and their respective industries had struck a deal.
The ministry said it was agreed at the highest government level that a cooperative approach on an equal footing would be pursued in the project, which is under overall French responsibility.
The Spanish Defence Ministry said Madrid would spend 2.5 billion euros ($2.58 billion) on the project, of which 525 million euros ($542 million) would be paid in 2023. The ministry said that the cabinet agreed to this expenditure but did not give other details.
“The political agreement on FCAS is a great step and – especially in these times – an important sign of the excellent Franco-German-Spanish cooperation,” German Defence Minister Christine Lambrecht said.
“It strengthens Europe’s military capabilities and secures important know-how not only for our, but also for the European industry.”
Previously, sources had said that the next development phase for the Future Combat Air System (FCAS) was expected to cost about 3.5 billion euros, to be shared equally by the three countries.
France’s Dassault (AM.PA), Airbus (AIR.PA) and Indra (IDR.MC) – the latter two representing Germany and Spain, respectively – are involved in the scheme to start replacing French Rafale and German and Spanish Eurofighters from 2040.
“Now, a number of formal steps in the respective countries have to be taken in order to allow a speedy contract signature which we will have to adhere to,” Airbus said in e-mailed comments.
French President Emmanuel Macron and then German Chancellor Angela Merkel first announced plans in July 2017 for FCAS, which will include a fighter jet and a range of associated weapons, including drones.
Lately, the project – originally meant to unify Europeans after the migration crisis and Britain’s decision to leave the European Union – has been a source of tension between the two countries.
Last month, Macron cancelled a joint Franco-German ministerial meeting over disagreements with Berlin on a wide range of issues including defence and energy projects.
Both sides had been struggling for more than a year to agree the next stage of FCAS’s development, although the French and German government broadly agreed on the project.
Some sources saw the blame lying with Dassault, as the company had refused to budge in a long-running row over intellectual property rights.
Other sources blamed Airbus for pushing for a bigger workshare of the Dassault-led project, insisting it should be given “equal footing” with the French company.
($1 = 0.9675 euros)
Writing by Sabine Siebold; Editing by Kirsti Knolle, Christoph Steitz, Louise Heavens and Emelia Sithole-Matarise
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FTX bought a 10% stake in IEX with an option to acquire 100%
FTX spent $2 billion on ‘acquisitions for regulatory purposes’
Documents show FTX saw its regulatory status as a way of luring new capital from major investors
Nov 18 (Reuters) – Before it collapsed this month, FTX stood apart from many rivals in the largely unsupervised crypto industry by boasting it was the “most regulated” exchange on the planet and inviting closer scrutiny from authorities.
Now, company documents seen by Reuters reveal the strategy and tactics behind founder Sam Bankman-Fried’s regulatory agenda, including the previously unreported terms of a deal announced earlier this year with IEX Group, the U.S. stock trading platform featured in Michael Lewis’s book “Flash Boys” about fast, computer-driven trading.
As part of that deal, Bankman-Fried bought a 10% stake in IEX, with an option to buy it out completely in the next two and half years, according to a June 7 document. The partnership gave the 30-year-old executive the opportunity to lobby IEX’s regulator, the U.S. Securities and Exchange Commission, on crypto regulation.
That deal and others referenced in the documents, which include business updates, meeting minutes and strategy papers, illuminate one of FTX’s broader goals: quickly crafting a congenial regulatory framework for itself by acquiring stakes in companies that already had licenses from authorities, shortcutting the often drawn-out approval process.
FTX spent some $2 billion on “acquisitions for regulatory purposes,” the FTX documents seen by Reuters from a Sept 19 meeting show. Last year, for example, it bought LedgerX LLC, a futures exchange, which gave it three Commodity Futures Trading Commission licenses in one swoop. The licenses gave FTX access to U.S. commodities derivatives markets as a regulated exchange. Derivatives are securities that derive their value from another asset.
FTX also saw its regulatory status as a way of luring new capital from major investors, the documents show. In documents to support its ask for hundreds of millions of dollars in funds, it held out its licenses as a key competitive advantage. The “regulatory moats,” it said, created barriers for rivals and would give it access to lucrative new markets and partnerships beyond the reach of unregulated entities.
“FTX has the cleanest brand in crypto,” the exchange proclaimed in a June document presented to investors.
Bankman-Fried did not respond to a request for comment on questions about FTX’s regulatory strategy. FTX did not respond to requests for comment.
An SEC spokesperson declined to comment for this article. The CFTC also declined to comment.
In a text exchange this week with Vox, Bankman-Fried made an about-face on regulatory matters. Asked if his prior praise of regulations was “just PR,” he said in a sequence of texts: “yeah, just PR… fuck regulators… they make everything worse… they don’t protect customers at all.”
An IEX spokesperson declined to confirm details of the transaction with FTX, except to say that FTX’s “small minority stake” in IEX cannot be sold to a third party without its consent. “We are currently evaluating our legal options with respect to the prior transaction,” the spokesperson said.
PATCHWORK OF REGULATORS
FTX collapsed last week after a futile bid by Bankman-Fried to raise emergency funds. It had come under some regulatory oversight through the dozens of licenses it picked up via its many acquisitions. But that didn’t protect its customers and investors, who now face losses totaling billions of dollars. As Reuters reported, FTX had been secretly taking risks with customer funds, using $10 billion in deposits to prop up a trading firm owned by Bankman-Fried.
Four lawyers said the fact that Bankman-Fried was courting regulators while taking massive risks with customer funds without anyone noticing exposes a yawning regulatory gap in the cryptocurrency industry. “It’s a patchwork of global regulators — and even domestically there are huge gaps,” said Aitan Goelman, an attorney with Zuckerman Spaeder and former prosecutor and CFTC enforcement director. “That’s the fault of a regulatory system that has taken too long to adjust to the advent of crypto.”
A person familiar with the SEC’s thinking on crypto regulation said the agency believes crypto firms are illegally operating outside of U.S. securities laws and instead lean on other licenses that provide minimal consumer protection. “Those representations, while nominally true, don’t cover their activity,” the person said.
Reuters Graphics Reuters Graphics
‘STEP 1: LICENSES’
Bankman-Fried had big ambitions for FTX, which by this year had grown to more than $1 billion in revenues and accounted for about 10% of trading in the global crypto market, from a standing start in 2019. He wanted to build a financial app, where users could trade stocks and tokens, transfer money and bank, according to an undated document titled, “FTX Roadmap 2022.”
“Step 1” toward that goal, the “Roadmap” document said, “is to become as licensed as reasonably possible.”
“Partially this is to make sure that we’re regulated and compliant; partially this is to be able to expand our product offering,” the document said.
That’s where FTX’s acquisition spree came in, according to the documents. Instead of applying for every license, which can take years and sometimes uncomfortable questions, Bankman-Fried decided to buy them.
But the strategy also had its limits: At times, the companies it acquired didn’t have the precise licenses it needed, the documents show.
One of FTX’s goals, according to the documents, was to open up the U.S. derivatives markets to its customers in the country. It estimated the market would bring additional trading volume to the tune of $50 billion a day, generating millions of dollars in revenue. To do that, it needed to persuade the CFTC to amend one of the licenses held by LedgerX, FTX’s newly acquired futures exchange.
The application process went on for months, and FTX had to pony up $250 million for a default insurance fund, a standard requirement. FTX anticipated the CFTC could ask it to increase the fund to $1 billion, according to minutes of a March meeting of its advisory board.
FTX collapsed before it could get the approval, and has now withdrawn its application.
Buying companies for licenses also had other advantages, the documents reviewed by Reuters demonstrate: It could give Bankman-Fried the access he desired to regulators.
A prime example is the IEX deal, which was announced in April. In a joint interview to CNBC, Bankman-Fried and IEX CEO Brad Katsuyama said they wanted “to shape regulation that ultimately protects investors.” What matters the most here, Bankman-Fried added, is that “there is transparency and protection against fraud.”
Reuters could not determine how much FTX paid for the stake.
Bankman-Fried was invited to meet SEC Chairman Gary Gensler and other SEC officials along with Katsuyama in March.
A source close to IEX said the purpose of the meeting was to let the SEC know in advance about its deal with FTX, which had not been publicly announced at that point, and to discuss the possibility of IEX creating a trading venue in digital assets, such as bitcoin. FTX’s role was to provide the crypto-trading infrastructure, the source said.
SEC officials outright rejected their initial plan because it would have involved the creation of a non-exchange trading venue that is more lightly regulated, something the agency opposes for cryptocurrencies, the source familiar with the SEC’s thinking said.
Reuters could not determine the extent of Bankman-Fried’s involvement in subsequent conversations with the SEC. In their mind, SEC officials had agreed to meet with Katsuyama in March, and Bankman-Fried was just tagging along, the source familiar with the SEC’s thinking said. He kept mostly silent during the meeting, with Katsuyama in the “driver’s seat,” the source added.
Whatever his involvement, FTX talked up its discussions to its investors. In a September meeting of its advisory board, FTX said talks with the SEC were “extremely constructive.”
“We are likely to have pole position there,” it said, according to the meeting minutes.
The person familiar with the SEC’s thinking said they would dispute FTX was in the “pole position.” Anything the SEC did to regulate crypto trading would be open to all market participants, the source said.
The source close to IEX said the exchange never entered into any operational agreements with FTX, adding that it never got to that point.
A May FTX document provides a rundown of FTX’s contacts with individual regulators. The document, which has not been previously reported, shows how in most cases FTX was able to resolve the issues that cropped up.
In February, for example, South African authorities published a warning to consumers that FTX and other crypto exchanges were not authorized to operate there. So FTX entered into a commercial agreement with a local exchange to continue providing the services. “FTX is now fully regularised in respect of its current activities in South Africa,” FTX said.
The regulator, South African Financial Sector Conduct Authority, did not respond to a request for comment.
The May document also shows that FTX had a brush with the SEC. The SEC had conducted inquiries earlier this year into how crypto companies were handling customer deposits. Some firms were offering interest on deposits, which the SEC said could make them securities and should be registered under its rules. In the list of its regulatory interactions, FTX noted that the inquiry was looking at whether those assets were being “lent out or otherwise used for operational purposes.”
This month, as Reuters has reported, it emerged that FTX had done just that, moving billions of dollars in client funds to Bankman-Fried’s trading firm, Alameda Research.
In the May document, FTX said the SEC’s exam staff, which scrutinizes market practices that could present a risk to investors, was concerned about a different matter: a rewards program that it offered to customers, under which it paid interest on crypto deposits.
According to the document, FTX told the regulator it did not have the same issues as products from other providers that the agency had investigated.
“We confirmed these were solely rewards based and do not involve lending (or other use) of the deposited crypto,” FTX wrote. The SEC wrote back, saying it had completed its “informal inquiry” and did not need further information “at this time.”
The SEC had no comment on the inquiry. In an email to Reuters, Bankman-Fried wrote: “FTX’s response there was accurate; FTX US’s rewards program did not involve lending out any assets.”
Reporting by Chris Prentice and Hannah Lang in Washington, Angus Berwick in London; editing by Megan Davies, Paritosh Bansal and Chris Sanders
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AMSTERDAM, Nov 17 (Reuters) – Dutch judges convicted two Russian men and a Ukrainian man in absentia of murder for their role in the shooting down of Flight MH17 over Ukraine in 2014 with the loss of 298 passengers and crew, and handed them life sentences.
Ukraine welcomed the ruling, which will have implications for other court cases Kyiv has filed against Russia, while Moscow called the ruling “scandalous” and said it would not extradite its citizens.
Malaysian Airlines Flight MH17 departed from Amsterdam and was bound for Kuala Lumpur when it was shot down over eastern Ukraine on July 17, 2014, as fighting raged between pro-Russian separatists and Ukrainian forces, the precursor of this year’s conflict.
The ruling came as a relief to victims’ family members, more than 200 of whom attended the court in person, wiping away tears as the judgement was read.
“Only the most severe punishment is fitting to retaliate for what the suspects have done, which has caused so much suffering to so many victims and so many surviving relatives,” Presiding Judge Hendrik Steenhuis said.
The three men convicted were former Russian intelligence agents Igor Girkin and Sergey Dubinskiy, and Leonid Kharchenko, a Ukrainian separatist leader.
The three were all found to have helped to arrange the transport into Ukraine of the Russian military BUK missile system that was used to shoot down the plane, though they were not the ones that physically pulled the trigger.
They are fugitives and believed to be in Russia. A fourth former suspect, Russian Oleg Pulatov, was acquitted on all charges.
The incident in 2014 left the plane’s wreckage and victims’ remains scattered across fields of corn and sunflowers.
Russia invaded Ukraine in February and claims to have annexed the Donetsk province where the plane was shot down.
“The families of victims wanted the truth and they wanted justice to be done and those responsible to be punished and that is what happened. I am pretty satisfied,” Piet Ploeg, who heads a foundation representing victims, told Reuters. Ploeg’s brother, his brother’s wife and his nephew died on MH17.
Meryn O’Brien of Australia, who lost her 25-year old son Jack, said she felt relieved. “Everyone was relieved the process has come to an end, and it is very fair, and it has been meticulous.”
“There’s no celebration,” said Jordan Withers of Britain, whose uncle Glenn Thomas died. “Nothing is going to bring any of the victims back.” They came from 10 different countries.
The judgment included a 16 million euro damages award.
Ukrainian President Volodymyr Zelenskiy hailed the first sentences handed down over MH17 as an “important decision” by the court in The Hague.
[1/6] Lawyers attend the judges’ inspection of the reconstruction of the MH17 wreckage, as part of the murder trial ahead of the beginning of a critical stage, in Reijen, Netherlands, May 26, 2021. REUTERS/Piroschka van de Wouw/Pool
“But it is necessary that those who ordered it also end up in the dock because the feeling of impunity leads to new crimes,” he wrote on Twitter. “We have to dispel this illusion. Punishment for all Russian atrocities – both then and now – will be inevitable.”
The ruling found that Russia had “overall control” over the forces of the Donetsk People’s Republic in Eastern Ukraine from mid May 2014.
“This is groundbreaking,” said Marieke de Hoon, assistant professor of international law at Amsterdam University. The ruling was “authoritative” and would likely boost Ukraine’s other international cases against Russia relating to the 2014 conflict.
‘NO REASONABLE DOUBT’
Judge Steenhuis said there was ample evidence from eyewitness testimony and photographs which tracked the missile system’s movements into and back out of Ukraine to Russia.
“There is no reasonable doubt” that MH17 was shot down by a Russian missile system, Steenhuis said.
Moscow denies any involvement or responsibility for MH17’s downing and in 2014 it also denied any presence in Ukraine.
In a statement, the Russian foreign ministry said “throughout the trial the court was under unprecedented pressure from Dutch politicians, prosecutors and the media to impose a politically motivated outcome”.
“We deeply regret that the District Court in The Hague disregarded the principles of impartial justice in favour of the current political situation, thus causing a serious reputational blow to the entire judicial system in the Netherlands,” it added.
Prosecutors had charged the four men with shooting down an airplane and with murder in a trial held under Dutch law, as more than half of the victims were Dutch. Phone call intercepts that formed a key part of the evidence suggested the men believed they were targeting a Ukrainian fighter jet.
Steenhuis said that, while that counted for something in terms of lessening the severity of their criminal responsibility, they still had a murderous intent and the consequences of their actions were huge.
Of the suspects, only Pulatov had pleaded not guilty via lawyers he hired to represent him. The others were tried in absentia and none attended the trial.
The police investigation was led by the Netherlands, with participation from Ukraine, Malaysia, Australia and Belgium.
Thursday’s ruling is not the final word on holding people accountable for MH17, Dutch and Australian authorities said.
Andy Kraag, the head of the police investigation, said research was continuing into possible suspects higher in the chain of command. Investigators are also looking at the crew of the missile system which launched the fatal rocket.
The Dutch and Australian governments, which hold Russia responsible, have started a proceeding against the Russian Federation at the International Civil Aviation Organization (ICAO).
Reporting by Toby Sterling, Stephanie van den Berg and Bart Meijer; Editing by Jon Boyle, Alex Richardson, Toby Chopra, Alexandra Hudson
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WASHINGTON, Nov 15 (Reuters) – A deadly explosion occurred in NATO member Poland’s territory near its border with Ukraine on Tuesday, and the United States and its allies said they were investigating unconfirmed reports the blast had been caused by stray Russian missiles.
The explosion, which firefighters said killed two people, raised concerns of Russia’s war in Ukraine becoming a wider conflict. Polish authorities said it was caused by a Russian-made rocket, but Russia’s defense ministry denied involvement.
If it is determined that Moscow was to blame for the blast, it could trigger NATO’s principle of collective defense known as Article 5, in which an attack on one of the Western alliance’s members is deemed an attack on all, starting deliberations on a potential military response.
As a possible prelude to such a decision, however, Poland has first requested a NATO meeting on Wednesday under the treaty’s Article 4, European diplomats said. That is a call for consultations among the allies in the face of a security threat, allowing for more time to determine what steps to take.
The following is an explanation of Article 5 and what might occur if it is activated:
WHAT IS ARTICLE 5?
Article 5 is the cornerstone of the founding treaty of NATO, which was created in 1949 with the U.S. military as its powerful mainstay essentially to counter the Soviet Union and its Eastern bloc satellites during the Cold War.
The charter stipulates that “the Parties agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.”
“They agree that, if such an armed attack occurs, each of them, in exercise of the right of individual or collective self-defense recognized by Article 51 of the Charter of the United Nations, will assist the Party or Parties so attacked by taking forthwith, individually and in concert with the other Parties, such action as it deems necessary, including the use of armed force, to restore and maintain the security of the North Atlantic area,” it says.
AND WHAT IS ARTICLE 4?
Article 4 states that NATO members “will consult together whenever, in the opinion of any of them, the territorial integrity, political independence or security of any of the Parties is threatened.”
Within hours of the blast in Poland on Tuesday, two European diplomats said that Poland requested a NATO meeting under Article 4 for consultations.
[1/4] Zuzana 155 mm gun howitzer of NATO Enhanced Forward Presence battle group takes position before live fire exercise, during Iron Spear 2022 military drill in Adazi, Latvia November 15, 2022. REUTERS/Ints Kalnins
HOW COULD THE UKRAINE WAR TRIGGER ARTICLE 5?
Since Ukraine is not part of NATO, Russia’s invasion in February did not trigger Article 5, though the United States and other member states rushed to provide military and diplomatic assistance to Kyiv.
However, experts have long warned of the potential for a spillover to neighboring countries on NATO’s eastern flank that could force the alliance to respond militarily.
Such action by Russia, either intentional or accidental, has raised the risk of widening the war by drawing other countries directly into the conflict.
IS INVOKING ARTICLE 5 AUTOMATIC?
No. Following an attack on a member state, the others come together to determine whether they agree to regard it as an Article 5 situation.
There is no time limit on how long such consultations could take, and experts say the language is flexible enough to allow each member to decide how far to go in responding to armed aggression against another.
HAS ARTICLE 5 BEEN INVOKED BEFORE?
Yes. Article 5 has been activated once before – on behalf of the United States, in response to the Sept. 11, 2001, hijacked-plane attacks on New York and Washington.
WHAT HAS BIDEN SAID ABOUT ARTICLE 5 COMMITMENTS?
While insisting that the United States has no interest in going to war against Russia, President Joe Biden has said from the start of Moscow’s invasion that Washington would meet its Article 5 commitments to defend NATO partners.
“America’s fully prepared with our NATO allies to defend every single inch of NATO territory. Every single inch,” Biden said at the White House in September.
He had declared earlier that there was “no doubt” that his administration would uphold Article 5.
Reporting by Matt Spetalnick;
Editing by Kieran Murray, Grant McCool and Bradley Perrett
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AMSTERDAM, Nov 5 (Reuters) – More than 100 environmental activists wearing white suits stormed into an area where private jets are kept at Amsterdam’s Schiphol Airport on Saturday and stopped several aircraft from departing by sitting in front of their wheels.
The protest was part of a day of demonstrations in and around the airport organised by environmental groups Greenpeace and Extinction Rebellion to protest over greenhouse gas emissions and other pollution caused by the airport and aviation industry.
No delays to commercial flights were reported as of the early afternoon.
“We want fewer flights, more trains and a ban on unnecessary short-haul flights and private jets,” said Greenpeace Netherlands campaign leader Dewi Zloch.
The environmental group says Schiphol is the largest source of carbon dioxide emissions in the Netherlands, emitting 12 billion kilograms annually.
[1/5] Climate activists protest against environmental pollution from aviation at Amsterdam’s Schiphol Airport, in Schiphol, Netherlands November 5, 2022. REUTERS/Piroschka van de Wouw
Hundreds of other demonstrators in and around the airport’s main hall carried signs saying “Restrict Aviation” and “More Trains”.
Responding to the protest, Schiphol said it aims to become an emissions-free airport by 2030 and supports targets for the aviation industry to reach net zero emissions by 2050.
Military police tasked with airport security said in a statement they had “made a number of detentions of persons who were on airport property without being allowed”.
The Dutch government announced plans in June for a cap on annual passengers at the airport at 440,000, around 11% below 2019 levels, citing air pollution and climate concerns.
Transportation Minister Mark Harbers told parliament last month his office could not control growing private jet traffic, and the government is considering whether to include the issue in its climate policy.
Reporting by Toby Sterling
Editing by Toby Chopra and Helen Popper
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Oct 31 (Reuters) – Some euro zone countries have eased rules for the banks that manage the trading of their government debt to help them cope with some of the most challenging market conditions in years, officials told Reuters.
Out of 11 major euro area debt agencies Reuters contacted, officials in the Netherlands and Belgium told Reuters they have loosened various market-making obligations dictating how actively these banks should trade their debt.
France, Spain and Finland said their rules are already structured to automatically take account of market tensions. Germany and Austria said they do not set such rules.
As the European Central Bank unwinds years of buying the region’s debt, while the war in Ukraine, an energy shock and turmoil in Britain are making investors wary of loading up on government bonds, debt managers are adjusting to a less liquid, more volatile market.
That in turn, could raise borrowing costs for governments, already squeezed by climbing interest rates and energy-related spending, and bring more uncertainty for institutions, such as pension funds, which seek in government debt safety and stability.
Euro zone government debt bid-ask spreads, the difference between what buyers are offering and sellers are willing to accept and a measure of how smooth the trading is, have risen up to four-fold since the summer of 2021, data compiled by MarketAxess (MKTX.O) for Reuters showed. The data tracked German, Italian, French, Spanish and Dutch bonds, markets which account for the vast majority of euro zone debt with nearly 8 trillion euros outstanding.
Bond bid-ask spreads soar
LOOSENED OBLIGATIONS
Wider spreads mean more volatility and higher transaction costs. So governments expect, and some formally require their primary dealers – banks that buy government debt at auctions and then sell to investors and manage its trading – to keep those tight.
In markets with formal requirements, they also face other “quoting obligations” to ensure the best possible liquidity. Those obligations have been loosened in some countries to account for heightened market stress.
Jaap Teerhuis, head of dealing room at the Dutch State Treasury, said several of its quoting obligations, including bid-ask spreads, had been loosened.
“Volatility is still significantly higher compared to before the (Ukraine) war and also ECB uncertainty has also led to more volatility and more volatility makes it harder for primary dealers to comply,” he said.
Liquidity has been declining since late 2021 as traders started anticipating ECB rate hikes, Teerhuis said. The Netherlands then loosened its quoting obligations following the invasion of Ukraine.
Belgium’s quoting obligations also move with changes in trading conditions. But it has relaxed since March the rules on how many times per month dealers are allowed to fail to comply with them and has also reduced how much dealers are required to quote on trading platforms, its debt agency chief Maric Post said.
The two countries also loosened rules during the COVID-19 pandemic. Belgium’s Post said that lasted only four months in 2020, but it has kept obligations looser for much longer this time.
Finland said it has not changed its rules, but could not rule out acting if conditions persist or worsen.
Outside the bloc, Norway has also allowed dealers to set wider bid-ask spreads.
In Italy, debt management chief Davide Iacovoni said on Tuesday it was considering adjusting the way it ranks primary dealers each year to encourage them to quote tight spreads. Such rankings can affect which banks get to take part in lucrative syndicated debt sales.
Debt offices where obligations adapt automatically said attempts to enforce pre-determined bid-ask spreads in volatile markets would discourage primary dealers from providing liquidity and cause more volatility.
“If the market is too volatile, if it’s too risky, if it’s too costly, it’s better to adjust the bid-offer to what is the reality of the market than to force liquidity,” France’s debt chief Cyril Rousseau told an event on Tuesday.
Britain’s September sell-off highlighted how liquidity can evaporate fast in markets that are already volatile when a shock hits. In that case, the government’s big spending plans triggered large moves in debt prices, forcing pension funds to resort to fire sales of assets to meet collateral calls.
‘FRAGMENTED MARKET’
Allianz senior economist Patrick Krizan said with bond volatility nearing 2008 levels, a fragmented market for safe assets was a concern.
The euro zone is roughly 60% the size of the U.S. economy but it relies on Germany’s 1.6 trillion euro bond market as a safe haven – a fraction of the $23-trillion U.S. Treasury market.
In the case of a volatility shock “you can very easily fall into a situation where some markets are really drying up,” Krizan said. “For us it’s one of the biggest risks for the euro area.”
For example, the Netherlands like Germany has a top, triple A rating. But like other smaller euro zone markets it does not offer futures, a key hedging instrument, and so far this year the premium it pays over German debt has doubled to around 30 basis points.
Smaller governments pay premium over bigger rating peers
Efforts by debt officials are welcomed by European primary dealers, whose numbers have dwindled in recent years because of shrinking profit margins and tougher regulation.
Two officials at primary dealer banks said that fulfilling the quoting obligations in current conditions would force them to take on more risk.
“If (issuers) want private sector market-making, it needs to be profitable, or why would anyone do it? And it can’t be if rates move around 10-15 basis points a day,” one said of moves of a scale that had rarely been seen in these markets in recent years.
($1 = 0.9970 euros)
Reporting by Yoruk Bahceli and Dhara Ranasinghe; additional reporting by Belen Carreno in MADRID, Lefteris Papadimas in ATHENS and Padraic Halpin in DUBLIN; editing by Tomasz Janowski
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Oct 24 (Reuters) – A Korean Air Lines Co Ltd (003490.KS) jet with 173 people on board overshot the runway at Cebu International Airport in the Philippines late on Sunday, the airline said, adding that there were no injuries and all passengers had evacuated safely.
The Airbus SE (AIR.PA) A330 widebody flying from Seoul to Cebu had tried twice to land in poor weather before it overran the runway on the third attempt at 23:07 (1507 GMT), Korean Air said in a statement on Monday.
“Passengers have been escorted to three local hotels and an alternative flight is being arranged,” the airline said of flight KE361. “We are currently identifying the cause of the incident.”
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Video from the scene verified by Reuters showed widespread damage to the plane. The nose landing gear appeared to have collapsed.
Korean Air President Keehong Woo issued an apology on the airline’s website, saying a thorough investigation would be carried out by Philippine and South Korean authorities to determine the cause.
Response crews gather around a Korean Air Airbus A330 widebody flying from Seoul to Cebu, which tried to land twice in poor weather before it overran the runway on the third attempt on Sunday, in Lapu-Lapu City, Cebu, Philippines October 24, 2022 in this picture obtained from social media. Randyl Dungog/via REUTERS
“We remain committed to standing behind our promise of safe operations and will do our very best to institute measures to prevent its recurrence,” Woo said.
The A330-300 jet involved in the accident was delivered new to Korean Air in 1998, according to flight tracking website FlightRadar24, which said that other flights to Cebu had diverted to other airports or returned to their origin.
The Cebu airport said on its Facebook page that it had temporarily closed the runway to allow for the removal of the plane, meaning all domestic and international flights were cancelled until further notice.
Korean Air has not had a fatal passenger crash since 1997, according to Aviation Safety Network, a website that compiles aviation accidents.
The airline had a poor safety record at that time but sought outside help from Boeing Co (BA.N) and Delta Air Lines Inc (DAL.N) to improve its standards.
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Reporting by Jamie Freed in Sydney and Karen Lema in Manila; Editing by Mark Porter and Diane Craft
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NEW YORK, Oct 18 (Reuters) – French cement maker Lafarge pleaded guilty on Tuesday to a U.S. charge that it made payments to groups designated as terrorists by the United States, including Islamic State.
The admission in Brooklyn federal court marked the first time a company has pleaded guilty in the United States to charges of providing material support to a terrorist organization. Lafarge, which became part of Swiss-listed Holcim (HOLN.S) in 2015, agreed to pay $778 million in forfeiture and fines as part of the plea agreement.
U.S. prosecutors said that Lafarge paid Islamic State and al Nusra Front, through intermediaries, the equivalent of approximately $5.92 million.
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Lafarge is also facing charges of complicity in crimes against humanity in Paris for keeping a factory running in Syria after a conflict broke out in 2011.
Lafarge eventually evacuated the cement plant in September 2014, U.S. prosecutors said. At that point, Islamic State took possession of the remaining cement and sold it for the equivalent of $3.21 million, prosecutors said.
U.S. Deputy Attorney General Lisa Monaco said on Tuesday during a news conference that the company’s actions “reflect corporate crime that has reached a new low and a very dark place.”
“Business with terrorists cannot be business as usual,” Monaco added.
The cement maker previously admitted after an internal investigation that its Syrian subsidiary paid armed groups to help protect staff at the plant. But it had denied charges that it was complicit in crimes against humanity.
Lafarge Chair Magali Anderson said in court on Tuesday that from August 2013 until November 2014 former executives of the company “knowingly and willfully agreed to participate in a conspiracy to make and authorize payments intended for the benefit of various armed groups in Syria.”
“The individuals responsible for this conduct have been separated from the company since at least 2017,” she said.
Monaco said that French authorities have arrested some of the executives involved but did not provide names. Court records refer to six unnamed Lafarge executives.
In a statement, Holcim noted that none of the conduct involved Holcim, “which has never operated in Syria, or any Lafarge operations or employees in the United States, and it is in stark contrast with everything that Holcim stands for.”
Holcim said that former Lafarge executives involved in the conduct concealed it from Holcim, as well as from external auditors.
The SIX Swiss Exchange suspended trading in Holcim shares before the news.
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Reporting by Luc Cohen in New York and Karen Freifeld;
Editing by Noeleen Walder and Lisa Shumaker
Our Standards: The Thomson Reuters Trust Principles.
Luc Cohen
Thomson Reuters
Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.
GENEVA, Oct 13 (Reuters) – Moscow has submitted concerns to the United Nations about an agreement on Black Sea grain exports, and is prepared to reject renewing the deal next month unless its demands are addressed, Russia’s Geneva U.N. ambassador told Reuters on Thursday.
The agreement, brokered by the United Nations and Turkey in July, paved the way for Ukraine to resume grain exports from Black Sea ports that had been shut since Russia invaded. Moscow won guarantees for its own grain and fertiliser exports.
The agreement helped stave off a global food crisis: Russia and Ukraine are two of the world’s biggest grain exporters and Russia is the number one fertiliser exporter. But Moscow has repeatedly complained about its implementation, arguing it still faces difficulty selling fertiliser and food.
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In an interview with Reuters, Gennady Gatilov, Russia’s ambassador to the United Nations in Geneva, said Moscow had delivered a letter to U.N. Secretary-General Antonio Guterres on Wednesday setting out a list of complaints. U.N. officials are due in Moscow on Sunday to discuss the renewal of the agreement.
“If we see nothing is happening on the Russian side of the deal – export of Russian grains and fertilisers – then excuse us, we will have to look at it in a different way,” he said.
Asked if Russia might withhold support for the grains deal’s renewal over the concerns, he said: “There is a possibility…We are not against deliveries of grains but this deal should be equal, it should be fair and fairly implemented by all sides.”
Gatilov declined to make a copy of the letter available.
U.N. speokesperson Stephane Dujarric said: “We remain in constant touch with Russian officials, as well as with officials from the European Union, the United Kingdom and the United States in order to remove the last obstacles to facilitate the export of Russian grain and fertiliser.”
He said Guterres was committed to those efforts and to having an extended and expanded Black Sea Grain Initiative.
Gatilov, a career diplomat who was deputy minister of foreign affairs before taking up the Geneva post, said that he saw fading prospects for a negotiated settlement to the nearly eight month war in Ukraine. He cited what he called “terrorist acts” such as an explosion on a bridge to Crimea.
“All this makes it more difficult to reach a political solution,” he said.
Washington has said that Russian claims to be open to talks on the war’s future amount to “posturing” as it continues to strike Ukrainian cities. read more
Asked about the prospect of a meeting between President Vladimir Putin and U.S. President Joe Biden, Gatilov said it was not feasible given the levels of U.S. military support for Ukraine. “It makes the U.S. a part of the conflict,” he said.
However, he was more upbeat on other negotiated outcomes such as on aid access and a further prisoner swap, calling these “a possibility”. He said a delegation of the International Committee of the Red Cross had met with Russia’s defence ministry in Moscow recently about a possible swap, without giving further details. The ICRC did not immediately respond to a request for comment.
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Reporting by Emma Farge
Editing by Peter Graff
Our Standards: The Thomson Reuters Trust Principles.
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PARIS, Sept 23 (Reuters) – Europe’s Airbus (AIR.PA) clashed on Friday with U.S. giant Raytheon Technologies (RTX.N) over plans for a record leap in jetliner output, after the industry’s largest contractor questioned whether a battered supply chain could keep up.
The world’s largest planemaker said it was sticking with a two-part plan to raise output by 50% from current levels in 2025 – a goal that would contribute to Airbus becoming the first civil planemaker to deliver 1,000 planes in a single year.
Chief Executive Guillaume Faury said demand was likely to outstrip supply for the most-produced medium-haul models where Airbus enjoys a lead over U.S. rival Boeing (BA.N).
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But speaking at the company’s first full-scale investor event for four years, he acknowledged worries from inflation to interest rates and said the wide-body recovery was less certain.
“We are in a period where things are accelerating; we have multiple crises to manage,” Faury said.
He talked of a possible share buyback as Airbus rebuilds cash depleted by what he called the “existential crisis” of COVID-19, but cautioned “we are not there yet”.
Airbus shares floated in and out of positive territory and by mid-afternoon were up 0.4%.
A travel bounce-back outside China has seen demand for medium-haul A320neo and Boeing 737 MAX jets recover faster than expected. But Airbus’ plans to build 75 A320neo-family jets a month in 2025, up from around 50 now, have met with some scepticism.
The head of Raytheon Technologies, which owns engine maker Pratt & Whitney, told a conference last week that Faury “might say rate 75, but we think rate 65 is doable” by 2025.
Faury called the comments “really unhelpful” and said engine makers were worried by the timing, not the number. “They believe in 75. I can be quoted because I checked,” he told investors.
Raytheon had no immediate comment.
Reuters reported this week Airbus had relaxed pressure on suppliers to commit to the 2025 deadline, leaving room for it to slip to 2026, but was sticking to targets for now. The company has not said when in 2025 it might hit the 75 goal. read more
The key, suppliers say, is when targets can be hit consistently.
“We will see when we plan to hit rate 75, in (20)25 hopefully. I am committed to (20)25. That’s probably something we will be communicating more precisely on at our full-year results,” Faury said on Friday.
A220 UPGRADE
Airbus meanwhile gave the strongest hint yet that it plans to launch a bigger version of its 110-to-130-seat A220 passenger jet but gave no clues about the decision’s timing.
A stretched version of the lightweight airplane makes a lot of sense, “but we don’t want to be right too early”, Faury said.
The A220 was developed with an eye on the main part of the jet market but Canada’s Bombardier struggled to keep up with the investments needed to displace Airbus and Boeing and sold its aerospace jewel to Airbus in 2018.
Airbus has faced higher-than-expected costs on the loss-making programme but believes it can break even by mid-decade.
An A220-500 would begin the process of replacing the 150-seat-plus A320neo, Europe’s aerospace cash-cow and a major battleground in the transatlantic war for sales with Boeing.
Airbus has seized a commanding lead in the main part of the single-aisle market, most recently through the larger A321neo, which finance chief Dominik Asam said would have an increasing proportion of sales.
Although Airbus was born as a producer of wide-body long-haul jets with the A300, which took flight 50 years ago next month, its biggest commercial success by far has been in workhorse single-aisle jets made popular by budget carriers.
Improvements in the largest single-aisle jets have eaten into the lower end of a market reserved for decades for wide-body jets like Boeing’s 747, 777 and 787 or the Airbus A350.
Faury said Airbus aimed to step up competition with Boeing in the wide-body market, starting with the new A350 Freighter. Experts say Boeing dominates air cargo and has so far outsold the A350 with its future 777X Freighter.
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Reporting by Tim Hepher; Editing by Edmund Blair and Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
