Business this week

An investigation into the rigging of foreign-exchange rates concluded with more whopping fines for banks. Barclays, Citigroup, JPMorgan Chase and Royal Bank of Scotland agreed to pay more than $5 billion in combined penalties to settle with American and British authorities and pleaded guilty to criminal charges. Bank of America paid a $205m fine but was not criminally charged. Neither was UBS, but it was given a $342m fine. Its immunity from prosecution over LIBOR was also rescinded and it was handed a penalty of $203m for that episode. The traders who manipulated the forex rates communicated via a chat room, sending each other comically self-incriminating messages such as “If you ain’t cheating, you ain’t trying”. See here and here.

A German exit?

Deutsche Bank said it had created a working group to consider relocating parts of its operations in Britain elsewhere should the country vote to leave the European Union in a referendum promised by the Conservatives at the recent election. The German bank employs 9,000 people in Britain. Business leaders this week called on the government to bring the referendum forward from 2017 to lessen the period of uncertainty.

Trading in shares of Hanergy Thin Film, a solar-panel company, were suspended on the Hong Kong stockmarket after their price fell by 47% within 25 minutes. The next day shares in two units of Goldin, a Hong Kong finance and property group, also fell dramatically. Both companies insisted that their businesses were operating normally, and it was unclear as we went to press if there was any link between the falls in their shares. See article.

Japan’s economy grew in the first quarter by a better-than-forecast 2.4% at an annualised rate. Exports, private consumption and investment increased at a healthy pace, but the main factor behind the robust GDP figure was a build-up in inventories. This could spell trouble if consumer demand does not match the supply of goods piling up in warehouses. Still, the news helped to drive the Nikkei stockmarket index to its highest close since April 2000.

Grab your bargains

Britain dipped into deflation in April—consumer prices were 0.1% lower than in the same month last year. The Bank of England’s inflation target is 2%. Like other countries, Britain has been flirting with deflation for months because of lower oil prices. But the government is pointing out the benefits to households of what it insists will be a temporary fall in prices, drawing a distinction with the longer periods of damaging deflation that have occurred elsewhere, such as Japan. See article.

After a few months in the doldrums, America’s house-building industry celebrated as the number of homes on which construction started rose in April by 20.2% compared with March, the biggest such increase since February 1991. Busier construction workers were probably one factor behind Home Depot, America’s biggest DIY chain, ratcheting up a quarterly net profit of $1.6 billion, a 14% increase on the same period last year.

Having shaken up the telecoms industry in his native France, Patrick Drahi entered the American market for the first time when his Altice group bought a 70% stake in Suddenlink, a cable operator, in a deal valued at $9.1 billion. Mr Drahi’s ambitions don’t stop there. He is also rumoured to be interested in making a bid for Time Warner Cable, which recently saw its agreed takeover by Comcast fall apart over antitrust concerns.

Takata, a Japanese company which makes spare parts for cars, doubled its recall in America of vehicles with its airbags installed to 34m, making it the biggest safety recall to date in the American car industry. The deaths of six people worldwide have been linked to metal shards being hurled from Takata’s airbags when they inflate.

South32, a company spun off by BHP Billiton to house some of its poorer-performing mining assets, such as aluminium, made a lacklustre debut on the Australian stockmarket (it did better in secondary listings in London and Johannesburg). Named after the line of latitude along which BHP’s main assets are located in Australia and South Africa, South32 ended its first day of trading valued at A$11 billion ($9 billion), towards the lower end of analysts’ expectations.

Rational consumers

Walmart’s earnings for the first quarter disappointed investors, sending its share price down by 4.4% in a day, the most for three years. A stronger dollar caused revenue to remain flat at $115 billion compared with the same period last year. But the retailer’s chief executive, Doug McMillon, reckons American shoppers just aren’t spending the way they used to and putting any extra money they gain towards paying down debt or boosting savings.