Deutsche Bank layoffs; British Airways fine; Lira falls

Posted at 2:51 AM, Jul 08, 2019
and last updated 2019-07-08 04:51:02-04

1. Deutsche Bank: Deutsche Bank will cut 18,000 jobs and dramatically shrink its investment bank as part of a costly overhaul that marks a retreat from Wall Street.

The German bank said Sunday that it would shutter its equities sales and trading business, while creating a “bad bank” for €74 billion ($83 billion) in assets that eat up too much capital.

“We have announced the most fundamental transformation of Deutsche Bank in decades,” CEO Christian Sewing said in a statement, calling the moves a “restart.”

It’s a dramatic shift for the 149-year-old bank, a pillar of European finance that has struggled to produce consistent profits despite undergoing a series of overhauls.

The company’s stock rose 4% in early trading Monday.

2. British Airways fine: GDPR fines have arrived in a big way.

UK regulators said Monday that they intend to hit British Airways with a record £183.4 million ($230 million) penalty after the data of 500,000 customers was compromised in 2018.

The UK Information Commissioner’s Office said shoddy security measures were partly to blame.

The fine amounts to 1.5% of British Airways’ global annual sales. Companies can face penalties of up to 4% of their annual revenue under GDPR, the strict EU data rules that came into effect last year.

British Airways said it would contest the fine. Shares of parent company IAG fell 1%.

“British Airways responded quickly to a criminal act to steal customers’ data,” the company’s CEO said in a statement. “We have found no evidence of fraud [or] fraudulent activity on accounts linked to the theft.”

3. Lira weakens: The Turkish lira weakened 2.5% against the dollar Monday before recovering slightly after President Recep Tayyip Erdogan ousted the governor of Turkey’s central bank.

No reason was given for his firing, But the bank and Erdogan had clashed over whether to cut interest rates.

The lira has dropped more than 8% this year. The currency hit a record low last summer, sparking fears that investor unease would spread throughout the region.

4. Markets dip: US markets are poised to drop again with attention squarely focused on what the Federal Reserve will do at its meeting later this month. Chair Jerome Powell will testify in front of Congress on Wednesday and Thursday.

The Dow is set to drop 50 points, or 0.2%. The S&P 500 is also tracking down 0.2%, while the Nasdaq could fall 0.3%.

Markets in Europe including Britain’s FTSE 100 and Germany’s DAX opened flat after a tough trading session in Asia. Hong Kong’s Hang Seng index dropped 1.7%. Japan’s Nikkei fell roughly 1%, and the Shanghai Composite lost 2.6%.

All three major US indexes fell Friday after a strong jobs report, indicating that investors think the Fed may not cut rates by as much as they had hoped.

5. Coming this week:

Monday — Germany balance of trade
Tuesday — China inflation data; PepsiCo earnings
Wednesday — US oil inventories; Fed minutes; Bed Bath & Beyond earnings; Powell testifies in the House
Thursday — US inflation rate; China balance of trade; Delta earnings; Powell testifies in the Senate
Friday — US producer prices