<a href="https://www.wionews.com/world/apple-design-chief-jony-ive-steve-jobs-confidant-to-leave-and-start-own-firm-231020">Apple Inc</a> will likely see a surge in services revenue in the third quarter, charged by app store developer revenue and renewed growth in China, critical areas for the future as the iPhone maker faces a maturing smartphone market, Evercore ISI said on Tuesday.

Rosenblatt Securities on Monday downgraded Apple shares to "sell" from "neutral", citing the probability of disappointing new iPhone sales.

With Apple focusing more on the services business, Evercore said it expects total App Store developer revenue to grow 18 per cent to about $9 billion in the third quarter. Apple is due to report results on July 30.

"We think there is likely upside ahead when it comes to services revenues in the June-quarter, driven by a sizable acceleration in China-centric markets," analyst Amit Daryanani said in a note.

<a href="https://www.wionews.com/world/apple-explores-moving-15-30-of-production-capacity-from-china-to-southeast-asia-report-228703">China is a key market for Apple </a>as well as a major production center for its devices. The company earned nearly 18 per cent of its total revenue from Greater China in the quarter ended March.

"The reacceleration of growth in China is encouraging, while most other growth trends held stable," Daryanani said.

China and services revenue will be key areas as the company shifts its strategy from focusing on hardware sales.

App Store is a key driver of Apple's services segment, which brought in $37.1 billion in revenue last year. The company had earlier this year attempted to reintroduce itself as an entertainment and financial services company with new launches, including a TV streaming service.

Meanwhile, JP Morgan turned positive on its volume outlook for iPhone shipments in 2020 in a note on Monday. The brokerage raised its price target on the stock to $239 from $233.

Apple shares closed down 2.1 per cent at $200.20 on Monday, after Rosenblatt analyst Jun Zhang said: "new iPhone sales will be disappointing".

He expects the company to face "fundamental deterioration" in the next six to 12 months.

Evercore and JP Morgan have a buy or higher rating on the stock.

Apple Inc will likely see a surge in services revenue in the third quarter, charged by app store developer revenue and renewed growth in China, critical areas for the future as the iPhone maker faces a maturing smartphone market, Evercore ISI said on Tuesday.

Apple Inc will likely see a surge in services revenue in the third quarter, charged by app store developer revenue and renewed growth in China, critical areas for the future as the iPhone maker faces a maturing smartphone market, Evercore ISI said on Tuesday. Rosenblatt Securities on Monday downgraded Apple shares to "sell" from "neutral", citing the probability of disappointing new iPhone sales. With Apple focusing more on the services business, Evercore said it expects total App Store developer revenue to grow 18 per cent to about $9 billion in the third quarter. Apple is due to report results on July 30. "We think there is likely upside ahead when it comes to services revenues in the June-quarter, driven by a sizable acceleration in China-centric markets," analyst Amit Daryanani said in a note. China is a key market for Apple as well as a major production center for its devices. The company earned nearly 18 per cent of its total revenue from Greater China in the quarter ended March. "The reacceleration of growth in China is encouraging, while most other growth trends held stable," Daryanani said. China and services revenue will be key areas as the company shifts its strategy from focusing on hardware sales. App Store is a key driver of Apple's services segment, which brought in $37.1 billion in revenue last year. The company had earlier this year attempted to reintroduce itself as an entertainment and financial services company with new launches, including a TV streaming service. Meanwhile, JP Morgan turned positive on its volume outlook for iPhone shipments in 2020 in a note on Monday. The brokerage raised its price target on the stock to $239 from $233. Apple shares closed down 2.1 per cent at $200.20 on Monday, after Rosenblatt analyst Jun Zhang said: "new iPhone sales will be disappointing". He expects the company to face "fundamental deterioration" in the next six to 12 months. Evercore and JP Morgan have a buy or higher rating on the stock.

Apple likely to see surge in third quarter revenue charged by China: Analyst

<a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/european-union-rich-poor-divide-widens-but-still-a-worldwide-low-217922&amp;sa=U&amp;ved=2ahUKEwjs1dmXg6DiAhVJsY8KHXszAnoQFjABegQIDxAC&amp;usg=AOvVaw0hBsJFYXqKFsAl5kCKNlfx">The EU's</a> powerful anti-trust authority on Thursday fined five major banks -- including Barclays and Citigroup -- more than a billion euros for collusion in the massive foreign exchange currency market.

The European Commission sanctioned Barclays, the <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/royal-bank-of-scotland-ceo-ross-mcewan-resigns-after-more-than-five-years-213380&amp;sa=U&amp;ved=2ahUKEwit0qrFg6DiAhVEpI8KHVMXAuEQFjABegQIEBAC&amp;usg=AOvVaw3G1fLU1ztQFdRbBJj8U0qy">Royal Bank of Scotland</a>, Citigroup, JPMorgan and Japan's MUFG Bank a total of $1.2 billion&nbsp;after finding that traders colluded to fix exchange rates using electronic chat rooms, a statement said.

The commission said Swiss giant UBS received no fine as it revealed the collusion to the authorities.

"These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets," said <a href="https://www.google.com/url?client=internal-uds-cse&amp;cx=006054055338965708568:09spwrlibei&amp;q=https://www.wionews.com/world/european-union-supports-iran-nuclear-deal-may-talk-to-uss-pompeo-mogherini-218310&amp;sa=U&amp;ved=2ahUKEwjs1dmXg6DiAhVJsY8KHXszAnoQFjACegQIEBAC&amp;usg=AOvVaw1Igy-Keyh3SfqugD1QW3id">EU </a>Competition Commissioner Margrethe Vestager.

"The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers," she added.

The decision involves two cases of forex manipulation, with the first known as "Essex Express 'n the Jimmy" because all the traders (except Jimmy) lived in the county to the east of London, the commission said.

The other one was called "Three-way banana split", though the EU's executive arm did not explain why.

"Some of the traders created the chat rooms and then invited one another to join, based on their trading activities and personal affinities, creating closed circles of trust," the commission explained.

The collusion took place between 2007 and 2013, roughly the years of the financial crisis and has been sanctioned by other authorities, including the US.

Except Japan's MUFG, the banks cooperated with the commission and in return received lighter fines than the EU's maximum amount.

"We are pleased to resolve this historical matter, which relates to the conduct of one former employee. We have since made significant control improvements," said a spokesperson for JPMorgan.

Several of the banks, including Barclays, had already provisioned for the fines in earlier filings.

The EU's powerful anti-trust authority on Thursday fined five major banks -- including Barclays and Citigroup -- more than a billion euros for collusion in the massive foreign exchange currency market.

The EU's powerful anti-trust authority on Thursday fined five major banks -- including Barclays and Citigroup -- more than a billion euros for collusion in the massive foreign exchange currency market. The European Commission sanctioned Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan and Japan's MUFG Bank a total of $1.2 billion after finding that traders colluded to fix exchange rates using electronic chat rooms, a statement said. The commission said Swiss giant UBS received no fine as it revealed the collusion to the authorities. "These cartel decisions send a clear message that the commission will not tolerate collusive behaviour in any sector of the financial markets," said EU Competition Commissioner Margrethe Vestager. "The behaviour of these banks undermined the integrity of the sector at the expense of the European economy and consumers," she added. The decision involves two cases of forex manipulation, with the first known as "Essex Express 'n the Jimmy" because all the traders (except Jimmy) lived in the county to the east of London, the commission said. The other one was called "Three-way banana split", though the EU's executive arm did not explain why. "Some of the traders created the chat rooms and then invited one another to join, based on their trading activities and personal affinities, creating closed circles of trust," the commission explained. The collusion took place between 2007 and 2013, roughly the years of the financial crisis and has been sanctioned by other authorities, including the US. Except Japan's MUFG, the banks cooperated with the commission and in return received lighter fines than the EU's maximum amount. "We are pleased to resolve this historical matter, which relates to the conduct of one former employee. We have since made significant control improvements," said a spokesperson for JPMorgan. Several of the banks, including Barclays, had already provisioned for the fines in earlier filings.

European Union fines five major banks $1.2 billion for currency collusion

<a href="http://www.wionews.com/india-news/major-general-6-others-sentenced-to-life-in-1994-assam-fake-encounter-case-171489">Army court sentences Major General, 6 others to life in </a><a href="http://www.wionews.com/india-news/major-general-6-others-sentenced-to-life-in-1994-assam-fake-encounter-case-171489">fake</a><a href="http://www.wionews.com/india-news/major-general-6-others-sentenced-to-life-in-1994-assam-fake-encounter-case-171489"> encounter case</a>

Army court sentences Major General, 6 others to life in fake encounter caseA Summary General Court Martial (SGCM) of the Indian Army convicted seven personnel, including a Major General for their alleged involvement in a 1994 fake encounter case in Assam.

<a href="http://www.wionews.com/world/jp-morgan-ceo-james-dimon-ford-chairman-to-pull-out-of-saudi-conference-over-khashoggi-case-171488">JP Morgan CEO, Ford chairman to pull out of Saudi conference over Khashoggi case: Report</a>

After several media bigwigs pulled out of the international conference in Riyadh over journalist Jamal Khashoggi's disappearance, US media reported that JP Morgan CEO James Dimon and Ford chairman Bill Ford will also boycott the event.

<a href="http://www.wionews.com/world/russia-and-china-meddled-in-2016-presidential-elections-trump-171491">Russia and China meddled in 2016 presidential elections: Trump</a>

Last month, chairing a UN Security Council meeting on the sidelines of the UN General Assembly in New York, Trump had alleged that China was trying to interfere in the 2018 mid-term polls and that it did not want him to be the president. China has denied these allegations.

<a href="http://www.wionews.com/india-news/india-china-joint-training-programme-for-afghan-diplomats-to-begin-today-171487">India-China joint training programme for Afghan Diplomats to begin today</a>

The inauguration of the first India-China joint training programme for Afghan Diplomats will be held today at the Indian Foreign Service Institute here, according to Chinese Ambassador to India, Luo Zhaohui.

<a href="http://www.wionews.com/entertainment/journalist-vinod-dua-accused-of-sexual-misconduct-daughter-mallika-says-she-stands-by-the-metoo-movement-171494">Journalist Vinod Dua accused of sexual misconduct, daughter Mallika says she stands by the #MeToo movement</a>

Veteran journalist Vinod Dua has been named by filmmaker Nishtha Jain in her #MeToo story. The filmmaker has accused Dua of sexual misconduct in an incident that took place in 1989.&nbsp;

&nbsp;

Army court sentences Major General, 6 others to life in fake encounter case Army court sentences Major General, 6 others to life in fake encounter caseA Summary General Court Martial (SGCM) of the Indian Army convicted seven personnel, including a Major General for their alleged involvement in a 1994 fake encounter case in Assam.

Army court sentences Major General, 6 others to life in fake encounter case Army court sentences Major General, 6 others to life in fake encounter caseA Summary General Court Martial (SGCM) of the Indian Army convicted seven personnel, including a Major General for their alleged involvement in a 1994 fake encounter case in Assam. JP Morgan CEO, Ford chairman to pull out of Saudi conference over Khashoggi case: Report After several media bigwigs pulled out of the international conference in Riyadh over journalist Jamal Khashoggi's disappearance, US media reported that JP Morgan CEO James Dimon and Ford chairman Bill Ford will also boycott the event. Russia and China meddled in 2016 presidential elections: Trump Last month, chairing a UN Security Council meeting on the sidelines of the UN General Assembly in New York, Trump had alleged that China was trying to interfere in the 2018 mid-term polls and that it did not want him to be the president. China has denied these allegations. India-China joint training programme for Afghan Diplomats to begin today The inauguration of the first India-China joint training programme for Afghan Diplomats will be held today at the Indian Foreign Service Institute here, according to Chinese Ambassador to India, Luo Zhaohui. Journalist Vinod Dua accused of sexual misconduct, daughter Mallika says she stands by the #MeToo movement Veteran journalist Vinod Dua has been named by filmmaker Nishtha Jain in her #MeToo story. The filmmaker has accused Dua of sexual misconduct in an incident that took place in 1989.

News brief: Big stories of the day

Asian stocks pulled back on Tuesday, brushing off a firmer Wall Street lead and pausing a recent rally, as investors remained cautious about key economic and political risks, while supply concerns kept crude oil prices near 3-1/2-year highs.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.65 percent after rising the previous day to its highest since late March.

The index had rallied for three straight sessions prior to Tuesday.

"The markets appear to be taking a breather after their recent surge, awaiting fresh developments in matters such as US-China trade issues and Washington's upcoming summit with North Korea," said Yoshinori Shigemi, global markets strategist at JP Morgan Asset Management in Tokyo.

Australian stocks were down 0.35 percent after briefly touching a four-month high and South Korea's KOSPI shed 0.55 percent.

Japan's Nikkei was a shade lower, its surge to a three-month peak bogging down.

Hong Kong's Hang Seng lost 0.5 percent, pulling back from a two-month peak to snap a five-day winning run and Shanghai inched up 0.05 percent.

Investors in Chinese equities will likely re-jig their exposure after MSCI, the U.S. index publisher, published its latest index weighting.

MSCI said on Tuesday that 234 Chinese large caps will be partially included in its global and regional indexes on June 1, following an index review ahead of China's inclusion in MSCI's widely tracked equity benchmarks.

Wall Street scraped out gains on Monday after weakness in defensive stocks offset optimism following US&nbsp;President Donald Trump's conciliatory remarks toward China's ZTE Corp that helped calm US-China trade tensions.

While higher oil prices sometimes raise inflation concerns, the recent crude oil surge - Brent has risen 17 percent so far in 2018 - was seen to be generally supportive for equities.

"The recent rise in prices of crude oil won't have a broadly negative impact on equity markets if it continues at the current pace," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

"The rise in oil prices is boding well for certain stock sectors like energy shares."

Brent crude added 4 cents to $78.27 a barrel and in close reach of $78.53, the 3-1/2-year high marked on Monday. US&nbsp;crude oil futures advanced 0.4 cents to $71.00 a barrel and in reach of $71.89, the highest since November 2014 scaled on Thursday.

Oil prices received their latest lift as OPEC reported that the global oil glut has been virtually eliminated.

Tensions in the Middle East and uncertainty about output from Iran amid renewed US&nbsp;sanctions have contributed to the recent rise in oil prices.

"The commitment of Saudi Arabia and the rest of OPEC to the production cuts are a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions," said William O'Loughlin, investment analyst at Rivkin Securities.

In currencies, the dollar index against a basket of six major currencies nudged up 0.05 percent to 92.643.

The greenback took a knock against the euro earlier on Monday after European Central Bank policymaker Francois Villeroy de Galhau said the ECB could give fresh timing guidance of its first rate hike as the end of its exceptional bond purchases approaches.

The US&nbsp;currency managed to bounce back, however, after Cleveland Federal Reserve President Loretta Mester reiterated support for gradual interest rate increases.

The euro stood little changed at $1.1933 after pulling back sharply from the previous day's high of $1.1996.

The dollar was a shade higher at 109.745 yen, adding to the previous day's gains.

The currency drew support as US&nbsp;Treasury yields rose amid the easing of US-China trade tensions.

The 10-year Treasury note yield was at 2.998 percent after rising about 2.5 basis points overnight.

Hong Kong's Hang Seng lost 0.5 percent, pulling back from a two-month peak to snap a five-day winning run and Shanghai inched up 0.05 percent

Asian stocks pulled back on Tuesday, brushing off a firmer Wall Street lead and pausing a recent rally, as investors remained cautious about key economic and political risks, while supply concerns kept crude oil prices near 3-1/2-year highs. MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.65 percent after rising the previous day to its highest since late March. The index had rallied for three straight sessions prior to Tuesday. "The markets appear to be taking a breather after their recent surge, awaiting fresh developments in matters such as US-China trade issues and Washington's upcoming summit with North Korea," said Yoshinori Shigemi, global markets strategist at JP Morgan Asset Management in Tokyo. Australian stocks were down 0.35 percent after briefly touching a four-month high and South Korea's KOSPI shed 0.55 percent. Japan's Nikkei was a shade lower, its surge to a three-month peak bogging down. Hong Kong's Hang Seng lost 0.5 percent, pulling back from a two-month peak to snap a five-day winning run and Shanghai inched up 0.05 percent. Investors in Chinese equities will likely re-jig their exposure after MSCI, the U.S. index publisher, published its latest index weighting. MSCI said on Tuesday that 234 Chinese large caps will be partially included in its global and regional indexes on June 1, following an index review ahead of China's inclusion in MSCI's widely tracked equity benchmarks. Wall Street scraped out gains on Monday after weakness in defensive stocks offset optimism following US President Donald Trump's conciliatory remarks toward China's ZTE Corp that helped calm US-China trade tensions. While higher oil prices sometimes raise inflation concerns, the recent crude oil surge - Brent has risen 17 percent so far in 2018 - was seen to be generally supportive for equities. "The recent rise in prices of crude oil won't have a broadly negative impact on equity markets if it continues at the current pace," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo. "The rise in oil prices is boding well for certain stock sectors like energy shares." Brent crude added 4 cents to $78.27 a barrel and in close reach of $78.53, the 3-1/2-year high marked on Monday. US crude oil futures advanced 0.4 cents to $71.00 a barrel and in reach of $71.89, the highest since November 2014 scaled on Thursday. Oil prices received their latest lift as OPEC reported that the global oil glut has been virtually eliminated. Tensions in the Middle East and uncertainty about output from Iran amid renewed US sanctions have contributed to the recent rise in oil prices. "The commitment of Saudi Arabia and the rest of OPEC to the production cuts are a major factor in supporting the price at the moment as well as the possibility of reduced exports from Iran due to sanctions," said William O'Loughlin, investment analyst at Rivkin Securities. In currencies, the dollar index against a basket of six major currencies nudged up 0.05 percent to 92.643. The greenback took a knock against the euro earlier on Monday after European Central Bank policymaker Francois Villeroy de Galhau said the ECB could give fresh timing guidance of its first rate hike as the end of its exceptional bond purchases approaches. The US currency managed to bounce back, however, after Cleveland Federal Reserve President Loretta Mester reiterated support for gradual interest rate increases. The euro stood little changed at $1.1933 after pulling back sharply from the previous day's high of $1.1996. The dollar was a shade higher at 109.745 yen, adding to the previous day's gains. The currency drew support as US Treasury yields rose amid the easing of US-China trade tensions. The 10-year Treasury note yield was at 2.998 percent after rising about 2.5 basis points overnight.

Global Markets: Asia stocks pull back as investors eye new risks; oil higher

Authors: Co-Pierre Georg and Qobolwakhe Dube*

With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment.

Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value.

Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created &ndash; up to an agreed limit &ndash; by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain.

Bitcoin, like other assets like gold, doesn&rsquo;t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer.

Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable.

The more immediate fears about bitcoin center on the recent dramatic rise in its value. There&rsquo;s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800.

The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world&rsquo;s largest investment banks declared that he would fire any employee trading bitcoin for being stupid.

In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed.

All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts.

The blockchain factor

There is no doubt that Bitcoin &ndash; and in particular blockchain, the technology behind it &ndash; has the potential to revolutionise the financial services industry.

A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network.

Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role.

The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain.

But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin.

Volatility versus returns

The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times.

When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds.

Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile.

The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn&rsquo;t hold true. More and more private investors have been flocking to bitcoin &lsquo;exchanges&rsquo; that have sprung up all over the internet and that are aggressively advertised on social media.

Overvalued

There is a huge risk that bitcoin is already overvalued.

The practical use cases for bitcoin are limited. It doesn&rsquo;t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn&rsquo;t offer any functionality other than pseudonymous transactions &ndash; transactions where the true identity of the counterparties is hidden.

Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.)

Regulatory risk

The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling.

Despite the claim that bitcoin is a &ldquo;global currency&rdquo;, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion.

Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown.

Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology.

The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers.

A classic bubble

There are real risks that many consumers investing in cryptocurrency don&rsquo;t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin.

Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble &ndash; from the dotcom bubble to the tulip mania. It&rsquo;s also true in every pyramid scheme.

As always, investors should be extremely wary with any scheme that promises quick returns.

This article was originally published on <a href="http://theconversation.com" rel="nofollow">The Conversation</a>. Read the <a href="https://theconversation.com/bitcoin-is-a-highly-speculative-investment-why-caution-is-required-88440" rel="nofollow">original article</a>.

Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town.

(Disclaimer: The author writes here in a personal capacity).

The astronomic rise of the price of bitcoin over the past 12 months raises fears that the cryptocurrency is set to crash which could see many people lose money

Authors: Co-Pierre Georg and Qobolwakhe Dube* With the price of a bitcoin reaching record highs of more than $10,000, more and more ordinary people consider investing in the cryptocurrency. The recent price surge, however, comes with tremendous risks. Investors should be prepared for the possibility that they could lose their entire investment. Bitcoin was launched in 2008 by an anonymous author under the name of Satoshi Nakamoto as a means of transacting among participants without the need for intermediaries. Since the beginning of this year, the price of bitcoin has increased by 1300 per cent as more and more consumers flock to it hoping to profit off its increasing popularity and the associated increase in value. Cryptocurrencies are not currencies at all. As the Financial Times explains, bitcoin is a string of computer codes which means that new bitcoins can be created – up to an agreed limit – by computers that gain the right to do so by solving complex puzzles. Transactions are recorded in a database called a blockchain. Bitcoin, like other assets like gold, doesn’t yield income. You have to sell it to realise any value. And, like gold and other currencies, it can be transferred peer-to-peer. Part of the nervousness about bitcoin is that, along with other cryptocurrencies, it challenges the traditional role of banks and central banks. In the classical world, banks act as intermediaries by providing loans out of the deposits they took and from funding from the central bank. The central bank uses the rate at which it provides this funding as a lever to ensure price stability. The introduction of cryptocurrencies threatens this model because banks are no longer necessary to intermediate funds and there is no central bank to ensure that prices are stable. The more immediate fears about bitcoin center on the recent dramatic rise in its value. There’s nervousness in the market that a flash crash might be imminent after the cryptocurrency tumble by more than $1,300 in minutes on the bitcoin exchange Bitfinex. It did recover to levels above $10,800. The flash crash echoes long-standing warnings that the bitcoin party is set to end in tears. Most recently Jamie Dimon, CEO of JPMorgan, one of the world’s largest investment banks declared that he would fire any employee trading bitcoin for being stupid. In a highly unusual alliance, his words were echoed by economics Nobel Laureate Joseph Stiglitz, who has gone even further arguing that bitcoin ought to be outlawed. All of these are clear warning signs that the professionals do not trust the lofty promises of crypto enthusiasts. The blockchain factor There is no doubt that Bitcoin – and in particular blockchain, the technology behind it – has the potential to revolutionise the financial services industry. A blockchain functions as a transparent and incorruptible digital ledger of economic transactions, recorded in chronological order, that operates on a peer-to-peer network. Fundamentally, the technology allows an exchange of value to occur in an environment of peers with conflicting interests without the need for trusted intermediaries. That, in effect, wipes out the need for banks or financial services companies which fulfil this role. The use of the technology is not limited to financial transactions. Virtually anything of value can be traded on a blockchain. But no matter how useful the underlying blockchain technology is, or how widely it can be applied, there are real and substantial risks involved in bitcoin. Volatility versus returns The first and most significant risk is that compared to any currency, share, or gold, bitcoin is extremely volatile. The volatility of bitcoin to US dollar is almost six times the volatility of the Rand to US dollar. While this is great in good times, it is potentially devastating for investors in bad times. When professional investors decide on which assets to hold, they look at both the return and the volatility of the asset. Only investors with a healthy appetite for risk are willing to invest in risky, volatile assets. Usually these are finance professionals, for example in large investment banks or hedge funds. Investors with a lower risk appetite, such as asset managers or pension funds, prefer assets with a somewhat lower return, but which are less volatile. The rule of thumb is that the sophistication of an investor increases with the volatility of the asset she invests in. But with bitcoin, this rule of thumb doesn’t hold true. More and more private investors have been flocking to bitcoin ‘exchanges’ that have sprung up all over the internet and that are aggressively advertised on social media. Overvalued There is a huge risk that bitcoin is already overvalued. The practical use cases for bitcoin are limited. It doesn’t enable enough transactions to take place per second to be used as a replacement for a modern payment system. And it doesn’t offer any functionality other than pseudonymous transactions – transactions where the true identity of the counterparties is hidden. Bitcoin is favoured by pyramid schemes, including the infamous MMM pyramid scheme in Nigeria. In a recent article, the Financial Times called bitcoin itself a pyramid scheme, much to the dismay of crypto enthusiasts. (A pyramid scheme is usually an illegal operation in which participants pay to join and profit mainly from payments made by subsequent participants. If no new people come in, it collapses.) Regulatory risk The third, and possibly biggest risk is regulatory. In September 2017, the Chinese government outlawed bitcoin exchanges in mainland China, sending the price of bitcoin tumbling. Despite the claim that bitcoin is a “global currency”, the reality is that 58 per cent of all bitcoin mining happens in China. If at any point the Chinese government should decide to make Bitcoin mining illegal the price is likely to plunge into oblivion. Other countries have also voiced concern. The Russian Central Bank recently issued a warning to investors on the risks of investing in cryptocurrencies, citing concerns about a bubble. This suggests that there might be a concerted crackdown. Cryptocurrencies are banned in India as their use is a violation of foreign exchange rules. The Australian Reserve Bank has taken a different approach. It monitors the cryptocurrency market in a bid understands the underlying technology. The South African Reserve Bank has expressed its openness to blockchain technologies. But it has also highlighted potential risks to consumers. A classic bubble There are real risks that many consumers investing in cryptocurrency don’t fully understand. Advertisements promise that bitcoin can make you rich fast. And social media is alive with stories about friends of neighbours or distant cousins who have made a lot of money through bitcoin. Without a doubt, these cases are real, and those who invested early can reap large benefits. But this is true in every bubble – from the dotcom bubble to the tulip mania. It’s also true in every pyramid scheme. As always, investors should be extremely wary with any scheme that promises quick returns. This article was originally published on The Conversation. Read the original article. Qobolwakhe Dube: A PhD student at the African Institute of Financial Markets and Risk Management at University of Cape Town. (Disclaimer: The author writes here in a personal capacity).

Opinion: Bitcoin is a highly speculative investment. Why caution is required

The EU&#39;s top anti-trust regulator on today slapped fines on banks HSBC, JP Morgan and Credit Agricole for rigging the Euribor interest rate benchmark used for a wide range of financial instruments.

The European Commission, the EU&#39;s executive arm, fined the banks &quot;a total of 485 million euros (USD 520 million) for participating in a cartel in euro interest rate derivatives,&quot; according to a statement.

The decision is the latest example of authorities trying to punish malpractice by the world&#39;s biggest banks in the years running up to the financial crisis in 2008.

The three banks had held out from a settlement with the EU in 2013 that saw Deutsche Bank, Societe Generale and Royal Bank of Scotland accept responsibility in the case.

&quot;Today&#39;s message sends a clear message: banks and all companies have to respect EU rules,&quot; said the EU&#39;s competition chief Margarethe Vestager at a news briefing.

The Euribor case is one of many involving the complicated business of setting benchmark rates, such as the Libor or the Yen Libor, that are used everyday to set the price of a wide range of assets including mortgages or student loans.

In recent years about a dozen of the world&#39;s biggest banks have admitted widespread collusion to fix the rates illegally and were slapped with huge fines and even prison terms.

Four former Barclays bankers were jailed by a British court in July for manipulating the Libor interest rate between 2005 and 2007.&nbsp;

(AFP) 
&nbsp;

EU fined HSBC, JP Morgan and Credit Agricole a total of 485 million euros for manipulating the Euribor interest rate

The EU's top anti-trust regulator on today slapped fines on banks HSBC, JP Morgan and Credit Agricole for rigging the Euribor interest rate benchmark used for a wide range of financial instruments. The European Commission, the EU's executive arm, fined the banks "a total of 485 million euros (USD 520 million) for participating in a cartel in euro interest rate derivatives," according to a statement. The decision is the latest example of authorities trying to punish malpractice by the world's biggest banks in the years running up to the financial crisis in 2008. The three banks had held out from a settlement with the EU in 2013 that saw Deutsche Bank, Societe Generale and Royal Bank of Scotland accept responsibility in the case. "Today's message sends a clear message: banks and all companies have to respect EU rules," said the EU's competition chief Margarethe Vestager at a news briefing. The Euribor case is one of many involving the complicated business of setting benchmark rates, such as the Libor or the Yen Libor, that are used everyday to set the price of a wide range of assets including mortgages or student loans. In recent years about a dozen of the world's biggest banks have admitted widespread collusion to fix the rates illegally and were slapped with huge fines and even prison terms. Four former Barclays bankers were jailed by a British court in July for manipulating the Libor interest rate between 2005 and 2007. (AFP)

EU fines three major banks over interest rate rigging

Trump&rsquo;s transition team is having a hard time filling its seats and his campaign call to&nbsp;&quot;drain the swamp&quot; of Washington might make the process even more difficult.

According to a First Post report Trump&#39;s credo&nbsp;plan would ban all executive-branch officials from lobbying for five years after leaving their government jobs. The policy is aimed at checking the influence of lobbyists.&nbsp;

&ldquo;The ban also applies to the transition team members charged with helping to find, vet and hire for the incoming Republican administration,&quot; Trump spokesman Sean Spicer said late Wednesday according to the&nbsp;First Post report.&nbsp;

There is also conflicting information on whether JPMorgan Chase &amp; Co (JPM.N) chief executive Jamie Dimon could become the next US treasury secretary in President-elect Donald Trump&rsquo;s cabinet, and this has pushed the nation&rsquo;s largest bank into uncertainty.&nbsp;

On Wednesday, tweets from Fox Business News reporters indicated that Dimon was still in the race for the job. Fortune, however, reported that Dimon has formally told the Trump transition team that he is not interested in being the treasury secretary.

JPMorgan spokespeople have not made any official comment.

While a Trump transition team source told Reuters that Dimon is &quot;pitching hard&quot; for the Treasury role,&nbsp;two other sources indicated that he is not interested.&nbsp;

The speculations over his departure have put JPMorgan&rsquo;s investors in a state of frenzy. Dimon has run JPMorgan for a decade and is viewed as a torchbearer for Wall Street. He does not have a clear successor.

&quot;He is one of the best CEOs in the industry and corporate America, so if there were to be a quick departure that would be troubling,&quot; Walter Todd, chief investment officer at Greenwood Capital Management, which owns&nbsp;JPMorgan shares told Reuters. &quot;It is very difficult to replace someone like him.&quot;

&nbsp;

Education secretary

US media also reports&nbsp;that Trump is considering west Michigan donor and school choice advocate Betsy DeVos&nbsp;for the position of education secretary.&nbsp;

According to The Detroit News,the 58-year-old billionaire power broker has strong political connections and is rooting for charter schools and vouchers which, proponents claim, give parents and students more freedom to seek a higher-quality education. Critics on the other hand view charter schools as an effort to privatise education at the expense of public schools.

&ldquo;As chairwoman of the Michigan Republican Party, DeVos was a driving force behind a failed 2000 ballot proposal that would have amended the Michigan Constitution to create a voucher system allowing taxpayer funds to follow students to nonpublic schools,&rdquo;&nbsp;the Detroit News said in one of its reports.

The report also cited federal records showing that&nbsp;DeVos donated more than $320,000 to the Republican Party, candidates and political organizations in 2016. The Detroit News&nbsp;added, however, that she did not contribute to Trump after giving to both former Florida Governor Jeb Bush and former Hewlett Packard CEO Carly Fiorina during the GOP primary.

Trumo has said that he wants to invest $200 billion in school choice and he might consider eliminating or significantly reducing the size of the department of&nbsp;education.&nbsp;

(WION)

 
&nbsp;

JPMorgan CEO Jamie Dimon reportedly turns down Treasury secretary post; Michigan mega donor Betsy DeVos rumoured for education secretary

Trump’s transition team is having a hard time filling its seats and his campaign call to "drain the swamp" of Washington might make the process even more difficult. According to a First Post report Trump's credo plan would ban all executive-branch officials from lobbying for five years after leaving their government jobs. The policy is aimed at checking the influence of lobbyists. “The ban also applies to the transition team members charged with helping to find, vet and hire for the incoming Republican administration," Trump spokesman Sean Spicer said late Wednesday according to the First Post report. There is also conflicting information on whether JPMorgan Chase & Co (JPM.N) chief executive Jamie Dimon could become the next US treasury secretary in President-elect Donald Trump’s cabinet, and this has pushed the nation’s largest bank into uncertainty. On Wednesday, tweets from Fox Business News reporters indicated that Dimon was still in the race for the job. Fortune, however, reported that Dimon has formally told the Trump transition team that he is not interested in being the treasury secretary. JPMorgan spokespeople have not made any official comment. While a Trump transition team source told Reuters that Dimon is "pitching hard" for the Treasury role, two other sources indicated that he is not interested. The speculations over his departure have put JPMorgan’s investors in a state of frenzy. Dimon has run JPMorgan for a decade and is viewed as a torchbearer for Wall Street. He does not have a clear successor. "He is one of the best CEOs in the industry and corporate America, so if there were to be a quick departure that would be troubling," Walter Todd, chief investment officer at Greenwood Capital Management, which owns JPMorgan shares told Reuters. "It is very difficult to replace someone like him." Education secretary US media also reports that Trump is considering west Michigan donor and school choice advocate Betsy DeVos for the position of education secretary. According to The Detroit News,the 58-year-old billionaire power broker has strong political connections and is rooting for charter schools and vouchers which, proponents claim, give parents and students more freedom to seek a higher-quality education. Critics on the other hand view charter schools as an effort to privatise education at the expense of public schools. “As chairwoman of the Michigan Republican Party, DeVos was a driving force behind a failed 2000 ballot proposal that would have amended the Michigan Constitution to create a voucher system allowing taxpayer funds to follow students to nonpublic schools,” the Detroit News said in one of its reports. The report also cited federal records showing that DeVos donated more than $320,000 to the Republican Party, candidates and political organizations in 2016. The Detroit News added, however, that she did not contribute to Trump after giving to both former Florida Governor Jeb Bush and former Hewlett Packard CEO Carly Fiorina during the GOP primary. Trumo has said that he wants to invest $200 billion in school choice and he might consider eliminating or significantly reducing the size of the department of education. (WION)

Trump's transition team struggles to find takers to 'drain the swamp'

German engineering group Siemens has agreed to buy U.S.-based Mentor Graphics in a $4.5 billion deal that will bolster its industrial software operations and help it keep pace with changes to manufacturing technology.

Siemens will pay Mentor Graphics shareholders $37.25 per share, a 21-per cent premium to Friday&#39;s closing price, and expects to fund the deal from cash reserves, it said on Monday.

Siemens Chief Executive Joe Kaeser has set out to reshape the group, a household name in Germany, to make it more profitable and agile by selling off non-core businesses and investing in areas such as software that promise faster growth and fatter margins.

Kaeser has so far managed to reassure investors that he will improve on his predecessor Peter Loescher&#39;s weak track record on making acquisitions pay off in the longer run.

Mentor Graphics makes software that helps semiconductor companies design and test their chips before they manufacture them and represents Siemens&#39;s biggest deal in the industrial software sector since it bought UGS for $3.5 billion in 2007.

Siemens said it now had all software that its customers needed to develop complex electronic machinery such as aeroplanes, trains and cars.

&quot;Our customers are driving a paradigm shift towards more and more complex and smart connected products such as autonomous vehicles,&quot; Siemens finance chief Ralf Thomas told analysts and journalists during a conference call on Monday.

&quot;This acquisition is our answer to this development,&quot; he added.

Baader Helvea analyst Guenther Hollfelder, who has a &quot;buy&quot; recommendation on Siemens shares, said the acquisition did not appear overly expensive at a valuation of 18.5 times operating profit.

Activist shareholder support

Shares in Mentor Graphics jumped 18.5 per cent to $36.37 in early U.S. trading, while Siemens was 1.1 per cent higher by 1435 GMT.

Mentor Graphics has been under pressure since activist hedge fund Elliott Management Corp reported an 8.1 per cent stake in the company in September and said its shares were deeply undervalued.

Elliott said on Monday it supported the deal and saw it as &quot;great outcome&quot; for Mentor Graphics&#39; shareholders and customers.

People familiar with the matter had flagged the planned deal to Reuters, saying Siemens would pay $4.5 billion to $4.6 billion for Mentor Graphics, which competes with Synopsys and Cadence.

Siemens said last week that it planned a public listing of its $15 billion healthcare business, which pushed its shares to a 16-year high as investors hoped for an injection of capital to boost its valuation while funding new investments.

Siemens said it expected the acquisition to add to its earnings per share within three years and to lift earnings before interest and tax (EBIT) by more than 100 million euros ($107.21 million) within four years.

About half of the earnings boost will come from revenue synergies and the other half from lower costs, including from some job cuts, Siemens CFO Thomas said.

The deal will boost its software revenue by about a third from 3.3 billion euros, to around 6 per cent of group revenue.

Deutsche Bank and JP Morgan advised Siemens on the transaction, which is expected to close in the second quarter of 2017. Bank of America advised Mentor Graphics.

(Reuters)

Siemens will pay Mentor Graphics shareholders $37.25 per share, a 21-per cent premium to Friday's closing price

German engineering group Siemens has agreed to buy U.S.-based Mentor Graphics in a $4.5 billion deal that will bolster its industrial software operations and help it keep pace with changes to manufacturing technology. Siemens will pay Mentor Graphics shareholders $37.25 per share, a 21-per cent premium to Friday's closing price, and expects to fund the deal from cash reserves, it said on Monday. Siemens Chief Executive Joe Kaeser has set out to reshape the group, a household name in Germany, to make it more profitable and agile by selling off non-core businesses and investing in areas such as software that promise faster growth and fatter margins. Kaeser has so far managed to reassure investors that he will improve on his predecessor Peter Loescher's weak track record on making acquisitions pay off in the longer run. Mentor Graphics makes software that helps semiconductor companies design and test their chips before they manufacture them and represents Siemens's biggest deal in the industrial software sector since it bought UGS for $3.5 billion in 2007. Siemens said it now had all software that its customers needed to develop complex electronic machinery such as aeroplanes, trains and cars. "Our customers are driving a paradigm shift towards more and more complex and smart connected products such as autonomous vehicles," Siemens finance chief Ralf Thomas told analysts and journalists during a conference call on Monday. "This acquisition is our answer to this development," he added. Baader Helvea analyst Guenther Hollfelder, who has a "buy" recommendation on Siemens shares, said the acquisition did not appear overly expensive at a valuation of 18.5 times operating profit. Activist shareholder support Shares in Mentor Graphics jumped 18.5 per cent to $36.37 in early U.S. trading, while Siemens was 1.1 per cent higher by 1435 GMT. Mentor Graphics has been under pressure since activist hedge fund Elliott Management Corp reported an 8.1 per cent stake in the company in September and said its shares were deeply undervalued. Elliott said on Monday it supported the deal and saw it as "great outcome" for Mentor Graphics' shareholders and customers. People familiar with the matter had flagged the planned deal to Reuters, saying Siemens would pay $4.5 billion to $4.6 billion for Mentor Graphics, which competes with Synopsys and Cadence. Siemens said last week that it planned a public listing of its $15 billion healthcare business, which pushed its shares to a 16-year high as investors hoped for an injection of capital to boost its valuation while funding new investments. Siemens said it expected the acquisition to add to its earnings per share within three years and to lift earnings before interest and tax (EBIT) by more than 100 million euros ($107.21 million) within four years. About half of the earnings boost will come from revenue synergies and the other half from lower costs, including from some job cuts, Siemens CFO Thomas said. The deal will boost its software revenue by about a third from 3.3 billion euros, to around 6 per cent of group revenue. Deutsche Bank and JP Morgan advised Siemens on the transaction, which is expected to close in the second quarter of 2017. Bank of America advised Mentor Graphics. (Reuters)

Siemens boosts software business with $4.5 billion deal with Mentor Graphics

Italy&#39;s Banca Monte dei Paschi di Siena came a distant last in European Union bank stress test results released on Friday, as the world&#39;s oldest bank announced sweeping reforms in a bid to stay afloat. 
 
Under the European Banking Authority&#39;s economic shock scenario, BMPS would suffer a 14.23 per cent plunge in its core capital ratio, a measure of stability, by 2018. That would bring the ratio for BMPS, which is both the world&#39;s oldest bank and Italy&#39;s third largest, down to minus 2.23 per cent, the only one of the 51 banks tested to end up in negative territory. 
 
The announcement came shortly after the bank&#39;s board announced a rescue plan for shifting the billions of euros in bad loans that have weighed down on the embattled lender, which was founded in 1472. 
 
Some analysts fear that the bank&#39;s bad debts may trigger a banking crisis in Italy and eurozone turmoil. Shares in BMPS, which has become the eurozone banking sector&#39;s problem child, had soared on the Milan stock exchange earlier Friday, boosted by a possible new lifeline tabled by a veteran Italian banker and Swiss giant UBS. 
 
After days of discussion leading up to a 10-hour meeting on Friday, the BMPS board of directors announced a plan to offload 9.2 billion Euros ($10.3 billion) of bad loans&nbsp;or amounts owed to a creditor that are unlikely to be paid. 
 
The plan aims to &quot;reach a structural, definitive solution&quot; for bad loans, said the bank&#39;s CEO Fabrizio Viola. 
 
Even before the plan was finalised, BMPS&#39;s stock rose over 10 per cent, as it was seen as a welcome alternative to drastic restructuring measures demanded by the European Central Bank. It closed the day at just under 0.31 Euros, up 6.3 per cent. 
 
The ECB had told BMPS, Italy&#39;s third-biggest bank, this month that it must offload 9.6 billion Euros of non-performing assets within two years. The bank, working with US bank JP Morgan and Italy&#39;s Mediobanca, has submitted a plan to shift the bad loans with the help of the Atlante fund, created specifically to take on doubtful banking assets. 
 
The plan also calls for a capital increase of five billion Euros to boost capital reserves. But late Thursday, BMPS said it had received an alternative proposal from UBS and Corrado Passera, a former chief executive of the Intesa Sanpaolo bank and ex-minister for economic development. 
 
Meanwhile, the second worst performer in the EBA tests, Allied Irish Banks, would see a ratio fall of 8.47 per cent. &quot;The EBA&#39;s 2016 stress test shows the benefits of the capital strengthening done so far are reflected in the resilience of the EU banking sector to a severe shock,&quot; said Andrea Enria, chair of the London-based EBA. But he added: &quot;This is not a clean bill of health&quot;. 
 
Deutsche Bank, Germany&#39;s top lender, would fall by 5.4 per cent and Royal Bank of Scotland by 7.46 per cent. &quot;We come out of the 2016 stress test stronger than in 2014, although this year&#39;s exercise was more demanding,&quot; Deutsche Bank&#39;s chief executive John Cryan said. &quot;The stress test shows that the bank is well equipped for tough times,&quot; he said. 
 
The 51 banks tested account for 70 per cent of the sector. They showed an average core capital ratio of 13.2 per cent in 2015. Under an adverse economic scenario this would fall to 9.4 per cent by the end of 2018. 
 
The sector&nbsp;would, therefore, remain above EU legal minimum levels in case of the shock being tested, an EU economic contraction of 1.2 per cent in 2016 and 1.3 per cent in 2017 followed by 0.7 per cent growth in 2018. 
 
The EBA said the scenario remained valid following Britain&#39;s vote last month to leave the European Union since its tests were with worse growth figures that the worst-case Brexit scenario. 
 
&quot;The results of EU-wide bank stress tests show that euro area banks improved their resilience,&quot; the European Central Bank said in a statement. &quot;Overall supervisory capital expectations will remain broadly stable compared to 2015,&quot; it added. 
 
(AFP) 
&nbsp;

The bank's board has announced a rescue plan for shifting the billions of euros in bad loans that have weighed down on BMPS

Italy's Banca Monte dei Paschi di Siena came a distant last in European Union bank stress test results released on Friday, as the world's oldest bank announced sweeping reforms in a bid to stay afloat. Under the European Banking Authority's economic shock scenario, BMPS would suffer a 14.23 per cent plunge in its core capital ratio, a measure of stability, by 2018. That would bring the ratio for BMPS, which is both the world's oldest bank and Italy's third largest, down to minus 2.23 per cent, the only one of the 51 banks tested to end up in negative territory. The announcement came shortly after the bank's board announced a rescue plan for shifting the billions of euros in bad loans that have weighed down on the embattled lender, which was founded in 1472. Some analysts fear that the bank's bad debts may trigger a banking crisis in Italy and eurozone turmoil. Shares in BMPS, which has become the eurozone banking sector's problem child, had soared on the Milan stock exchange earlier Friday, boosted by a possible new lifeline tabled by a veteran Italian banker and Swiss giant UBS. After days of discussion leading up to a 10-hour meeting on Friday, the BMPS board of directors announced a plan to offload 9.2 billion Euros ($10.3 billion) of bad loans or amounts owed to a creditor that are unlikely to be paid. The plan aims to "reach a structural, definitive solution" for bad loans, said the bank's CEO Fabrizio Viola. Even before the plan was finalised, BMPS's stock rose over 10 per cent, as it was seen as a welcome alternative to drastic restructuring measures demanded by the European Central Bank. It closed the day at just under 0.31 Euros, up 6.3 per cent. The ECB had told BMPS, Italy's third-biggest bank, this month that it must offload 9.6 billion Euros of non-performing assets within two years. The bank, working with US bank JP Morgan and Italy's Mediobanca, has submitted a plan to shift the bad loans with the help of the Atlante fund, created specifically to take on doubtful banking assets. The plan also calls for a capital increase of five billion Euros to boost capital reserves. But late Thursday, BMPS said it had received an alternative proposal from UBS and Corrado Passera, a former chief executive of the Intesa Sanpaolo bank and ex-minister for economic development. Meanwhile, the second worst performer in the EBA tests, Allied Irish Banks, would see a ratio fall of 8.47 per cent. "The EBA's 2016 stress test shows the benefits of the capital strengthening done so far are reflected in the resilience of the EU banking sector to a severe shock," said Andrea Enria, chair of the London-based EBA. But he added: "This is not a clean bill of health". Deutsche Bank, Germany's top lender, would fall by 5.4 per cent and Royal Bank of Scotland by 7.46 per cent. "We come out of the 2016 stress test stronger than in 2014, although this year's exercise was more demanding," Deutsche Bank's chief executive John Cryan said. "The stress test shows that the bank is well equipped for tough times," he said. The 51 banks tested account for 70 per cent of the sector. They showed an average core capital ratio of 13.2 per cent in 2015. Under an adverse economic scenario this would fall to 9.4 per cent by the end of 2018. The sector would, therefore, remain above EU legal minimum levels in case of the shock being tested, an EU economic contraction of 1.2 per cent in 2016 and 1.3 per cent in 2017 followed by 0.7 per cent growth in 2018. The EBA said the scenario remained valid following Britain's vote last month to leave the European Union since its tests were with worse growth figures that the worst-case Brexit scenario. "The results of EU-wide bank stress tests show that euro area banks improved their resilience," the European Central Bank said in a statement. "Overall supervisory capital expectations will remain broadly stable compared to 2015," it added. (AFP)

EU bank stress test: World's oldest bank, BMPS ends in negative

JPMorgan Chase &amp; Co said on Friday it has won approval from India&#39;s central bank to open three more branches in the country even as most foreign banks are scaling back their operations in India. 
 
The bank&#39;s press released said the new branches will be located in the capital New Delhi and in the southern cities of Bengaluru and Chennai, and&nbsp;are expected to be operational in the next few months. 
 
&quot;This is another significant milestone for growing our Indian franchise and deepening our banking footprint,&quot; said Kalpana Morparia, CEO, South &amp; South East Asia, JPMorgan, in the statement.&nbsp; 
 
&quot;The expansion endorses our long-term commitment to India, a key market for JP Morgan, as well as for many of our clients,&quot; she said in the statement. 
 
JP Morgan said it will provide all existing products and services through the new branches, including cash management, trade finance 
and foreign-currency payments. 
 
In the last few years, India has seen almost an exodus of foreign banks from a host of services that they provided in the country. 
 
In January, British bank Barclays Plc said it would shut its India equities business to cut costs and boost profits. 
 
Later in May HSBC Holdings Plc said it planned to close 24 branches in India as part of its strategic review of its retail banking and wealth management business. 
 
(Reuters)

The bank plans to expand its business in India at a time when other foreign banks like Barclays Plc are scaling down or closing shop

JPMorgan Chase & Co said on Friday it has won approval from India's central bank to open three more branches in the country even as most foreign banks are scaling back their operations in India. The bank's press released said the new branches will be located in the capital New Delhi and in the southern cities of Bengaluru and Chennai, and are expected to be operational in the next few months. "This is another significant milestone for growing our Indian franchise and deepening our banking footprint," said Kalpana Morparia, CEO, South & South East Asia, JPMorgan, in the statement. "The expansion endorses our long-term commitment to India, a key market for JP Morgan, as well as for many of our clients," she said in the statement. JP Morgan said it will provide all existing products and services through the new branches, including cash management, trade finance and foreign-currency payments. In the last few years, India has seen almost an exodus of foreign banks from a host of services that they provided in the country. In January, British bank Barclays Plc said it would shut its India equities business to cut costs and boost profits. Later in May HSBC Holdings Plc said it planned to close 24 branches in India as part of its strategic review of its retail banking and wealth management business. (Reuters)

JP Morgan to open 3 new branches in India

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