Lufthansa investor Thiele seeks talks with German government: Handelsblatt


FILE PHOTO: Lufthansa presents its new logo during a press event in a maintenance hangar of the airline at the airport in Frankfurt am Main, Germany February 7, 2018. REUTERS/Ralph Orlowski

FRANKFURT (Reuters) – Lufthansa’s (LHAG.DE) biggest shareholder, German billionaire Heinz Hermann Thiele, has reached out to Berlin politicians for talks, Handelsblatt said, the latest step in a standoff over the airline’s 9 billion euro ($10.1 billion) bailout.

Lufthansa shareholders need to approve the rescue package but Thiele, who has ammassed a 15% Lufthansa stake, has criticised bailout terms and is raising more cash by selling down 760 million euros worth of shares in rail and commercial vehicle supplier Knorr-Bremse (KBX.DE).

Thiele and Knorr-Bremse declined to comment.

The entrepreneur is against Germany taking a stake of up to 20% in the airline, terms which Lufthansa and the German government have agreed to as part of the planned rescue of the company.

Lufthansa fears that Thiele’s lack of approval for a bailout deal could bring down the rescue package at next week’s Annual General Meeting on June 25.

Reporting by Holger Hansen in Berlin and Joern Poltz in Munich; Writing by Edward Taylor, editing by Thomas Escritt



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JPMorgan gets China’s nod for first fully foreign-owned futures business


HONG KONG (Reuters) – China on Thursday approved JPMorgan’s (JPM.N) application to operate the first fully foreign-owned futures business, as the world’s second-largest economy pushes ahead with opening its multi-trillion-dollar financial market.

FILE PHOTO: The JP Morgan sign is pictured at its Beijing office, in this picture taken December 13, 2010. Picture taken December 13, 2010. REUTERS/Jason Lee/File Photo

The latest regulatory approval for a U.S. financial services company coincides with tension between Beijing and Washington, increased by the COVID-19 pandemic and China’s move to impose security legislation on Hong Kong.

JPMorgan reportedly sought full control of its China futures joint venture last December as Beijing moved to scrap caps on foreign ownership. The futures industry in China is dominated by local players.

The China Securities Regulatory Commission (CSRC) said in a statement posted on its website the approval would bring in more qualified foreign players.

JPMorgan had no immediate comment.

China’s central bank on Saturday gave the final nod to a network clearing licence for an American Express (AXP.N) joint venture, allowing it to be the first foreign credit card company to launch onshore operations in China.

The approval for JPMorgan to launch its futures business follows on from other licences the bank has received in the last six months to increase its shareholding in other financial services business in China.

Caps on the foreign ownership of futures companies were scrapped at the start of this year.

China is a “critical market” for clients globally, JPMorgan CEO Jamie Dimon said in December when the bank received approval to establish a majority-owned securities joint venture, offering brokerage, investment advisory and underwriting services.

In April, the biggest bank in the U.S. said it would raise its stake in a Chinese mutual fund venture to 100%.

Reporting by Noah Sin and Sumeet Chatterjee in Hong Kong, Lusha Zhang in Beijing and Andrew Galbraith in Shanghai; Editing by Mark Potter and Barbara Lewis



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Google, Fitbit deal may hamper competition: Australian regulator


FILE PHOTO: Fitbit Blaze watch is seen in front of a displayed Alphabet logo in this illustration picture taken November 8, 2019. REUTERS/Dado Ruvic

(Reuters) – Australia’s consumer watchdog said on Thursday it had concerns that Alphabet Inc-owned (GOOGL.O) Google’s planned $2.1 billion acquisition of fitness tracker company Fitbit (FIT.N) may hinder competition in digital advertising and health markets.

The deal would give Google access to consumer health data, which may raise entry barriers for rivals and cement its dominant position, the Australian Competition and Consumer Commission said.

The regulator described its concerns as “preliminary” and will announce the outcome of its review on August 13.

“The ACCC’s investigation is focussed on certain online advertising services and nascent data-dependent health markets,” ACCC Chairman Rod Sims said. (bit.ly/3dcfP0a)

“We will explore the uniqueness and potential value that Fitbit’s data poses for Google, and its likely competitors in these advertising and health markets.”

It is the first regulator to voice competition concerns about the deal, although U.S. and European antitrust regulators have said they are looking at the proposed acquisition following concerns from consumer and privacy groups.

The ACCC also outlined worries over whether Google would favour its own wearable devices over competitors when suggesting services on its platforms such as WearOS, Google Maps and Google Play Store.

A spokeswoman for Google declined to comment. Fitbit did not immediately respond to Reuters’ request for a comment.

Reporting by Shashwat Awasthi in Bengaluru and Byron Kaye in Sydney; Editing by Kim Coghill and Edwina Gibbs



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U.S. lawmaker says seeking bipartisan legislation on airline mask rules


FILE PHOTO: A Southwest Airlines Co. employee wears a protective mask while assisting a passenger at Los Angeles International Airport (LAX) on an unusually empty Memorial Day weekend during the outbreak of the coronavirus disease (COVID-19) in Los Angeles, California, U.S., May 23, 2020. REUTERS/Patrick T. Fallon

(Reuters) – A U.S. senator said on Wednesday he was hoping for bipartisan support in Congress for mandatory rules on masks for air travel after the head of the Federal Aviation Administration again resisted calls for a mandate.

While most U.S. airlines are now requiring that passengers wear masks, the Department of Transportation (DOT) has not issued any rules.

Speaking at a Senate Commerce Committee hearing on aircraft certification, FAA Chief Steve Dickson said the DOT and the FAA expect the traveling public to follow individual airlines’ directions and policies on face coverings.

Several lawmakers asked Dickson why it was not made a rule.

“I don’t understand why we are going with a private sector-driven approach here, or a voluntary approach,” Senator Brian Schatz said at the hearing, adding that he would seek legislation.

Dickson said the U.S Centers for Disease Control and Prevention has responsibility for public health, while the FAA has oversight of aviation safety, but noted work with carriers and other U.S. agencies to ensure “consistent guidelines.”

FAA officials have previously told Reuters the agency does not believe it has legal authority to require masks.

In the absence of a federal mandate, U.S. airlines this week stepped up their own enforcement measures, saying that any passenger that does not abide by the rule could be put on individual airlines’ no-fly lists.

Dickson said the government “has been clear that passengers should wear face coverings while traveling by air, for their own protection and the protection of those around them.”

Reporting by David Shepardson in Truro, Massachusetts and Tracy Rucinski in Chicago; additional reporting by Eric M. Johnson in Seattle; editing by Jonathan Oatis



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Lufthansa warns its bailout deal is in jeopardy


BERLIN (Reuters) – German airline Lufthansa (LHAG.DE) warned on Tuesday that it might need to apply for creditor protection if its state-backed bailout failed to win sufficient shareholder support in a vote later this month.

FILE PHOTO: Lufthansa ticket agents help travelers at the Denver International Airport outside Denver, Colorado, U.S. March 13, 2020. REUTERS/Jim Urquhart/File Photo

Its statement came after German investor Heinz Hermann Thiele sharply criticised the 9 billion euro ($10.1 billion)bailout deal, saying he had raised his stake in the company to more than 15% and hoped alternative options could be explored.

Lufthansa said its executive board expected the attendance at its extraordinary general meeting to vote on the package on June 25 to be below 50%, which would mean two-thirds of those present would need to vote in favour.

“In view of the latest public statements by the company’s largest single shareholder, Heinz Hermann Thiele, the board considers it possible that the stabilisation package could fail to achieve the two-thirds majority of votes cast that would be required in this case,” Lufthansa said.

“This would mean that Deutsche Lufthansa AG would possibly have to apply for protective shield proceedings under insolvency law a few days after the annual general meeting if no other solution is found immediately,” the German airline said.

Under German protective shield proceedings, a company’s management remains in charge and typically gets up to three months to come up with a plan to avoid insolvency.

Lufthansa shareholders must register to attend the shareholder meeting by June 20 and if more than 50% attend, a simple majority would suffice, Lufthansa said.

In an interview with the Frankfurter Allgemeine Zeitung newspaper, Thiele said he was not satisfied with the deal that gives the German government a 20% stake in Lufthansa, as well as two seats on its supervisory board.

Thiele, who declined to say whether he would vote against the deal, said an indirect state participation via German state-owned development bank KfW could be an alternative to an outright government stake.

With many of its planes grounded because of the coronavirus pandemic, Lufthansa said on Monday it was seeking to strike agreements with worker representatives by June 22 on how to make job cuts equivalent to 22,000 full-time positions.

Reporting by Michelle Martin in Berline and Ilona Wissenbach in Frankfurth; Editing by Keith Weir and David Clarke



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Senate bill aims to improve aircraft certification after 737 MAX crashes


SEATTLE/CHICAGO/TRURO, Mass. (Reuters) – U.S. senators introduced legislation on Tuesday that would strengthen FAA oversight of aircraft certification following fatal Boeing Co 737 MAX crashes, though a victim’s father said the bill, while a positive step, “still lacks teeth.”

FILE PHOTO – Dozens of grounded Boeing 737 MAX aircraft are seen parked in an aerial photo at Boeing Field in Seattle, Washington, U.S. July 1, 2019. Picture taken July 1, 2019. REUTERS/Lindsey Wasson

The measure seeks to eliminate the ability of aircraft makers like Boeing to unduly influence the certification process. It marks the most significant step toward reforms following the 2018 and 2019 crashes in Indonesia and Ethiopia that killed 346 people and sparked demands to change how the Federal Aviation Administration approves new airplanes.

U.S. Senate Commerce Committee chair Roger Wicker, a Republican, and ranking member Maria Cantwell, a Democrat, said the proposal draws on crash reports, recommendations from aviation experts, reports from victims’ families, and a series of hearings over the past year.

“A primary goal of this legislation is to make sure the FAA remains in the driver’s seat when it comes to certification,” said Cantwell, of Washington state, where Boeing manufactures most of its aircraft.

The proposal includes only technical changes from a draft circulated last week and first reported by Reuters.

Boeing has struggled to win regulatory approvals to resume commercial service of its money-spinning 737 MAX since the plane was grounded worldwide in March 2019, plunging the Chicago-based company into a crisis compounded by the COVID-19 pandemic.

Boeing also faces lawsuits, an ongoing criminal probe and a Transportation Department investigation.

Boeing and the FAA both declined to comment.

FAA chief Steve Dickson will tell Wicker’s committee at a hearing on Wednesday transparency is key to restoring the public’s trust in the FAA and Boeing, and that the FAA must have a culture where employees can raise safety issues “without fearing retaliation,” according to a copy of his written testimony seen by Reuters.

The text indicated Dickson would also tell lawmakers the air transportation system remains safe despite COVID-19 health challenges, and that passengers are expected to follow individual airlines’ policies on face coverings.

The legislation, called the Aircraft Safety and Certification Reform Act of 2020, would give the agency new authority to hire or remove Boeing employees conducting FAA certification tasks, and grant new whistleblower protections to employees, among other provisions.

While victims’ family members applauded such reforms, they are also demanding that critical aircraft systems – like the MCAS flight control system linked to both crashes – be approved by the FAA, not just Boeing, and that manufacturers must be required to re-certify new aircraft derived from earlier models.

“The bill still lacks teeth,” said Chris Moore, whose daughter died in the Ethiopia crash.

Reporting by Eric M. Johnson in Seattle, Tracy Rucinski in Chicago and David Shepardson in Truro, Massachusetts; Editing by Leslie Adler; Editing by Chris Reese, Bernadette Baum and Tom Brown



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U.S. bank profits plunge 70% on coronavirus loss provisioning


FILE PHOTO: Jelena McWilliams, chairman of the Federal Deposit Insurance Corporation, testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on “Oversight of Financial Regulators” on Capitol Hill in Washington, U.S., December 5, 2019. REUTERS/Erin Scott

WASHINGTON (Reuters) – U.S. bank profits fell by 69.6% to $18.5 billion in the first quarter of 2020 from the year prior as banks felt the economic impact of the novel coronavirus pandemic, according to data from a banking regulator.

The Federal Deposit Insurance Corporation reported that “deteriorating economic activity” caused lenders to write off delinquent debt and set aside billions of dollars to guard against future losses. Over half of all banks reported a profit decline, and 7.3% of lenders were unprofitable.

The new report, the first government survey of the industry since the pandemic shut down large parts of the economy, shows banks set aside $38.8 billion to cover potential loan losses in the future, up nearly 280% from the year prior. The amount of loans banks charged off as delinquent was up nearly 15%, driven by an 87% increase in charge-offs for commercial and industrial loans.

The amount of non-current loans rose 7.3% from the previous quarter, the biggest increase since 2010.

Despite the setbacks, FDIC Chairman Jelena McWilliams said banks had been able to effectively serve clients in the downturn, and were a “source of strength for the economy.”

“The FDIC was born out of a crisis, and we now find ourselves in the midst of another unprecedented period,” she told reporters.

As many investors cashed out of the stock market, banks saw a $1.2 trillion, or 8.5%, spike in deposits from the previous quarter.

Loan balances also jumped as companies tapped credit lines with banks, led by a 15.4% increase in commercial and industrial loans.

The total number of “problem banks” monitored by the FDIC increased for the first time since 2011, growing from 51 to 54 firms in the first quarter.

Reporting by Pete Schroeder; Editing by Chizu Nomiyama, Jonathan Oatis and Nick Zieminski



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Stimulus splurge restarts stocks rally


LONDON (Reuters) – The global stocks rally was back on track on Tuesday, with more support from the Federal Reserve and the Bank of Japan helping end a bumpy few days for financial markets.

FILE PHOTO: A man wearing a protective face mask walks past the London Stock Exchange Group building in the City of London financial district, London, Britain, March 9, 2020. REUTERS/Toby Melville

A nearly 5% jump by Japan’s Nikkei ensured the best day for Asian equities since late March and almost 2% rises from London, Paris and Frankfurt got Europe off to a fast start. <0#.INDEXE>

Talk that U.S. firms may be allowed to work with China’s Huawei on new 5G standards eased trade jitters, and a report of a new $1 trillion U.S. infrastructure programme also boosted markets.

“It is a buy-the-dip mentality,” John Hardy, head of FX strategy at Saxo Bank, said after risk-sensitive currencies such as the Australian dollar also made gains overnight.

“But the degree and the speed that things are melting back in FX now is telling… you feel like you can’t really trust these moves.”

That melt saw the dollar firm up at 96.62, having dropped almost 1% from Monday’s high of 97.396. The Aussie was also backsliding, having risen more than 2% off a two-week low in Asian trading.

The euro and yen were both barely budging at $1.1333 and 107.33 yen per dollar. The Bank of Japan had increased its lending packages for cash-strapped firms to $1 trillion from about $700 billion, but had also kept rates steady, sticking to its view that the Japanese economy will gradually recover from the impact of the coronavirus pandemic.

The Fed also announced on Monday eagerly-awaited details of its programme to lend funds directly to companies.

The facility, which began purchasing shares of exchange-traded funds in mid-May, is one of the Fed’s recently created tools meant to improve market functioning after the coronavirus.

Benchmark 10-year Treasury yields notes edged up to 0.74% in response, and the spread between two-year and 10-year yields widened to 54 basis points in another sign of improving risk appetite.

German, French, Dutch and other core yields rose in Europe too, and riskier Italian yields fell to their lowest since the end of March.

“In absence of a further surge in new (coronavirus) infections in China or the US, the market hopes about monetary and fiscal tailwinds alongside improving sentiment indicators should prevail,” Commerzbank strategists wrote.

Oil prices also steadied in commodity markets as lingering concerns over fuel demand from the resurgence of new coronavirus infections were cushioned by hopes of further cuts in crude supplies.

U.S. crude was trading up 1.2% at $37.58 a barrel, after falling 1.2%, and Brent crude also rose 1.5% to $40.34 per barrel.

Improving sentiment also pushed up Wall Street futures with e-Minis for the S&P 500 rising 1.6%. U.S. markets had made a late dash to finish higher on Monday.

Additional reporting by Elizabeth Howcroft in London, Editing by Timothy Heritage



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Oil prices ease as coronavirus infections rise


TOKYO (Reuters) – Oil prices dipped on Tuesday on jitters that a rise in coronavirus infections around the world could hurt fuel demand, but hopes that production cuts could be extended kept declines in check.

FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant

Brent crude was down 14 cents, or 0.4%, at $39.58 a barrel at 0027 GMT, having gained 2.6% on Monday. U.S. oil fell 24 cents, or 0.7%, to $36.88 a barrel, after closing 2.4% higher in the previous session.

Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks.

“Renewed optimism that OPEC+ production cuts could remain in place if we see second wave concerns intensify have oil prices refusing to enter freefall,” said Edward Moya, senior market analyst at OANDA.

Oil prices rose on Monday after the United Arab Emirates’ energy minister expressed confidence that OPEC+ producers that have not been in full compliance with agreed cuts would up their game. He also said there were signs that oil demand was increasing as countries eased lockdowns in some parts of the world.

The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a grouping known as OPEC+, agreed this month to extend production cuts of 9.7 million barrels per day through July.

They also called on members that have not been complying to make up their commitments with extra cuts later.

U.S. shale producers are also cutting back on drilling amid the collapse in demand for oil.

Production from seven major U.S. shale formations is likely to drop to close to a two-year low of 7.63 million barrels per day by July, the U.S. Energy Information Administration said on Monday.

U.S. drillers have slashed production and the number of oil rigs fell below 200 last week, the lowest since June 2009, according to energy services company Baker Hughes Co. [RIG/U]

Reporting by Aaron Sheldrick; editing by Richard Pullin



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Exclusive: U.S. to allow companies to work with Huawei on 5G standards – sources


FILE PHOTO: The U.S. flag and a smartphone with the Huawei and 5G network logo are seen on a PC motherboard in this illustration taken January 29, 2020. REUTERS/Dado Ruvic/Illustration/File Photo

(Reuters) – The United States will amend its prohibitions on U.S. companies doing business with China’s Huawei [HWT.UL] to allow them to work together in standards setting for next-generation 5G networks, according to people familiar with the matter.

The U.S. Commerce Department and other agencies signed off on the rule change, and it is awaiting publication in the Federal Register, the people said.

The Commerce Department did not immediately respond to requests for comment. A Huawei spokeswoman, Michelle Zhou, had no immediate comment.

The amendment comes a little more than a year after the United Stages placed Huawei on the Commerce Department’s so-called “entity list,” thereby restricting sales of U.S. goods and technology to the company. The U.S. government cited national security concerns in taking the action.

Industry officials say the rule change should not be viewed as a sign of weakening U.S. resolve against Huawei, the world’s largest telecommunications equipment maker. They say the Huawei entity listing backfired in standards settings, where companies develop specifications to allow equipment from different companies to function together.

With U.S. companies uncertain what technology or information they could share after the listing, engineers from some U.S. technology firms stopped engaging, giving Huawei a stronger voice in some standards bodies.

The amendment “will be a significant help to U.S. companies maintaining leadership in international standards groups without affecting the government’s objectives regarding Huawei,” said Washington trade lawyer Kevin Wolf.

Reuters exclusively reported last month that the amendment had been drafted and was awaiting approval.

Reporting by Karen Freifeld; Editing by Chizu Nomiyama and Jonathan Oatis



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