Trump and Juncker put their differences over tariffs behind them
Business Week: also in the news were the banks, Ryanair, Facebook and Kerrygold
US president Donald Trump met European Commission president Jean-Claude Juncker at the White House, claiming the US and EU “love each other”.
The Central Bank is seeking legislative change to give it extra powers to drive cultural change in the banks. Photograph: Matt Kavanagh.
Facebook’s founder Mark Zuckerberg saw $120 billion (€103 billion) wiped off the value of his company in the biggest one-day sell-off of a listed company in US stock market history. Photograph: Charles Platiau/Reuters.
US president Donald Trump had one of his trademark changes of heart this week.
“Tariffs are the greatest!” he tweeted ahead of a crucial meeting with European Commission president Jean-Claude Juncker at which both men sought to avert the transatlantic trade war that has been brewing for many months.
In the event, a compromise was reached. “We have come to a very strong understanding and are all believers in no tariffs, no barriers and no subsidies,” Trump tweeted afterwards.
The u-turns didn’t end there either. After recently calling the EU an “economic foe”, he tweeted there was “great warmth and feeling in the room” with Juncker, and that “obviously” the EU and the US “as represented by yours truly, love each other!”
The joint declaration from the meeting hailed a “new phase in the relationship between the United States and the EU – a phase of close friendship, of strong trade relations . . . a $1 trillion bilateral trade relationship”.
German markets were reassured and upbeat EU officials returning from Washington DC spoke of a “win-win” deal and “de-escalation”. The agreement promised no major trade war and no escalation in the tariff war that the US kicked off on steel and aluminium.
Separately, Paul Coulson, chief executive of Irish-led packaging giant Ardagh, backed Trump’s plans to hit some Chinese imports with tariffs, blaming cheap imports from China and Mexico for ongoing problems at his North American glass business.
Less enthused was telecoms firm Qualcomm, which became the highest-profile American victim of the US-China trade war after admitting defeat in its attempted $44 billion (€37.6 billion) takeover of Dutch chipmaker NXP.
It would have been the semiconductor industry’s largest ever takeover, but it failed to win approval from Chinese regulators, despite the deal being signed off by eight other regulators around the world.
Back home, the Government is hoping a new direct route from Moscow to Dublin will boost trade with the Kremlin. Aeroflot’s low-cost subsidiary Pobeda got the go-ahead from regulators for the route, which will initially fly four times a week.
Meanwhile, Dublin Port is to increase investment in facilities from €600 million to €1 billion over the next 10 years as cargo volumes in the first half surpassed projections and it increased its average annual growth rate projections.
Central Bank delivers sober reminder on ‘distance to travel’
Hot on the heels of recent reports of a return to the era of banker bonuses, the Central Bank of Ireland delivered a sobering reminder this week that the State’s financial institutions still have a “distance to travel” when it comes to treatment of customers.
The regulator’s report, which was ordered on foot of the tracker mortgage scandal, found that top banking executives retain too much of a crisis-era “firefighting” mindset to place customers at the heart of all decisions.
The Central Bank, which is seeking legislative change to give it extra powers to drive cultural change in the banks, said top bankers still struggle to shake off “directive leadership styles” and give senior staff more power to speak up and make decisions.
The report also warned against backslapping, with the banks viewing their emergence from the crisis as a “significant achievement”, meaning they may underestimate the work required to transform cultures.
Certainly the balance sheets are looking a lot better. AIB reported a €762 million pre-tax profit for the first half of the year, helped by a €140 million gain from the sale of non-performing loans to a group led by US distressed-debt firm Cerberus.
The lender’s profits were boosted as rising property values and a strong economy helped it free up €130 million of provisions that had previously been set aside for bad loans.
It wasn’t all good news though, as the bank was forced to set aside another €32 million to cover refunds and compensation relating to the tracker mortgage scandal. It has now set aside a total of €262 million to deal with the issue.
Over at Permanent TSB, the lender announced that its chief risk officer Stephen Groarke is to leave in the coming months to become the European chief financial officer for US credit card transactions processor Elavon at its base in Dublin.
Elsewhere, Bank of Ireland is likely to cut as many as 2,180 jobs by the end of 2021 as it aims to slash its cost base under targets unveiled last month by the lender’s chief executive Francesca McDonagh, according to analysts at Investec Ireland.
Week to forget for O’Leary and Zuckerberg
Two members of the billionaire’s club had a week to forget as recent controversies continued to dog their respective companies.
Ryanair reported that lower air fares and higher costs left profits trailing by 20 per cent at €319 million in the three months up to June 30th. The carrier’s revenue rose 9 per cent to €2 billion over the quarter from €1.9 billion during the same period last year.
Chief executive Michael O’Leary blamed the drop to lower air fares, higher oil prices and pilot costs, and the fact that half the Easter weekend fell outside the quarter this year.
The airline on Wednesday issued 90 days’ protective notice to more than 100 pilots and 200 cabin crew based at Dublin Airport, partly blaming the impact of recent pilot strikes on Irish bookings and fares. Worse still, it said it could not rule out further job cuts.
Across the Atlantic, Facebook chief Mark Zuckerberg could only look on as $120 billion (€103 billion) was wiped off the value of his company in the biggest one-day sell-off of a listed company in US stock market history.
Zuckerberg’s own stake in the social media giant plummeted $16 billion over the course of the day. The fall came a day after the company warned of slower revenue growth. Talk about a bad day at the office.
Elsewhere, dairy giant Kerrygold is facing a class-action lawsuit in California over its marketing claim that Irish dairy cows whose milk makes the butter are fed on grass.
San Diego-based real-estate executive Dyami Myers-Taylor filed the case against Ornua, the co-operative that owns the brand, claiming he would never have bought Kerrygold if had known Irish cows were not exclusively grass-fed.