Every weekend we round up the week’s biggest business stories. This week: a woman will be on the next US $10 bill; the British government cuts its RBS losses; HSBC lays-off 50 000; Japan exceeds expectations; Canada’s largest pension fund buys GE’s finance wing; Yellen hints at rate rise; and Greece on brink of bank ruin.
New $10 Bill
A woman will be on the next $10 bill in the United States, the US Treasury Department announced. The redesigned note (released in 2020) will mark a century since the 19th amendment was passed. The 19th Amendment extended the right to vote to women. It has not yet been announced who will adorn the new bill and the Treasury has asked for public input.
Britain Sells RBS Stake
Britain looks to sell its shares in the Royal Bank of Scotland (RBS). The bank was bailed out by the British government following the 2008 banking crisis and has struggled to regain its value. If George Osborne, the Chancellor of the Exchequer, does choose to sell, the taxpayers could lose out on billions as share prices remain far below their pre-bailout levels. Meanwhile Iceland, which was the epicenter of the 2008 crisis, has begun gradually rolling back the strict capital controls it had imposed following the collapse of its three largest banks seven years ago.
HSBC’s chief executive Stuart Gulliver has announced 50 000 layoffs following a restructuring of the bank. Half of the losses will come from costly operations in Brazil and Turkey. Despite hopes that the move would boost stock prices, they fell by 1% following the announcement.
Japan’s GDP Rises
Japan’s GDP rose by 3.9%, exceeding the expected 2.4% growth that was reported in May. Concerns persist that the country may have an oversupply of goods and that the recent economic success may turn sour.
GE Sells Finance Wing
The Canada Pension Plan Investment Board is set to buy the private equity lending portfolio of GE Capital. General Electric has begun to roll-back its involvement in the finance industry and concentrate on its more traditional businesses. The sale is expected to cost Canada’s largest pension fund $12 billion.
Yet again Janet Yellen, the chair of the Federal Reserve, has held interest rates at the record low levels they have maintained since 2008. Despite this, the Fed did provide a strong hint that rates would rise in the coming months but Yellen insisted that any rise “should not be overblown, whether it is [in] September or December or March.” A rise in interest rates could strengthen the USD, but also hurt exports and cool the housing markets as the cost of mortgages and other loans will rise.
Greece has under two weeks to avoid defaulting on its €1.6 billion IMF loan. Failure to pay back the loan could result in greater economic uncertainty and an increase in the risk of a Grexit. On Friday the European Central Bank (ECB) lent the Greek government a further $2billion to buttress the country’s vulnerable banking system as fearful Greek citizens have begun withdrawing their savings to the tune of €4 billion. If Greece fails to agree to structural reforms, including a reduction in the country’s pension expenditure which swallows 16% of GDP, then it risks losing out on a €7.2 billion tranche which has been delayed since February.
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