Business

LONDON — US card payment processing giant Vantiv has agreed to buy British peer Worldpay for £9.3 billion ($12.1 billion), the pair said on Wednesday.

The deal will create a leading international e-commerce payments provider that will process about $1.5 trillion in payments and 40 billion transactions per year in 146 countries and 126 currencies, they said in a statement.

The new group — which will be called Worldpay — will have a combined stock market value of approximately £22.2 billion.

"The boards of directors of Vantiv and Worldpay are pleased to announce that they have reached agreement on the terms of a recommended merger of Worldpay with Vantiv... in the form of a recommended offer," they said in a statement to the London Stock Exchange.

The announcement, which followed an initial agreement last month, was billed as a merger but will see Vantiv shareholders take a 57 per cent stake of the combined group. Worldpay investors will hold 43 per cent.

The new company will have its global and corporate headquarters in Cincinnati, Ohio, while London will be its international base.

Vantiv will pay 397 pence per share for Worldpay, or £8 billion, plus another £1.3 billion to cover debts.

"This is a powerful combination that is strategically compelling for both companies," added Charles Drucker, Vantiv president and chief executive.

"It joins two highly complementary businesses, and will allow us to achieve even more together than either organisation could accomplish on its own.

"Our combined company will have unparalleled scale, a comprehensive suite of solutions, and the worldwide reach to make us the payments industry global partner of choice."

Worldpay Chief Executive Philip Jansen added that the deal would offer "substantial opportunities to capitalise on the rapid evolution of payments".

The deal will "offer more payment solutions to businesses, whether large or small, global or local, enabling them to meet consumers' increasing demands", he added.

Drucker will be executive chairman and co-chief executive of the new group, with Jansen as co-chief executive.

The combined company will have a secondary listing on the London stock market, but will have its primary listing in New York.

Worldpay was formerly owned by Britain's state-rescued Royal Bank of Scotland, which sold off its remaining stake to private equity firms Advent International and Bain Capital in 2013.

The group was then floated on the London stock market in 2015.

CAIRO — Saudi Arabian billionaire Prince Alwaleed Bin Talal is to invest more than $800 million in hotels in Egypt, the investment ministry in Cairo said on Monday.

The announcement came after parliament in May adopted a new law aimed at attracting foreign investment as the authorities seek to reinvigorate the North African country's struggling economy.

The ministry said in a statement that Bin Talal told Investment Minister Sahar Nasr in the Red Sea resort of Sharm El Sheikh that he would invest in hotels in several locations.

Tourism in the Arab world's most populous nation has yet to bounce back from before the 2011 uprising that toppled longtime ruler Hosni Mubarak.

The fall in tourist arrivals worsened after the terror group Daesh said it bombed a Russian airliner carrying holidaymakers from Sharm El Sheikh in 2015 in a crash that killed all 224 people on board.

The Saudi investment would include expanding the Four Seasons resort in Sharm El Sheikh in the southern Sinai, transforming it into "the biggest resort in the world", the ministry said.

New hotels would also be built in the Mediterranean town of El Alamein and in Madinaty east of Cairo.

The ministry said the amount of Saudi investment was "expected to surpass about $800 million", and the projects would be carried out with Egyptian real estate developer Talaat Moustafa Group.

AMMAN —  Equities in developed and emerging markets continue to offer growth potential for investors seeking to take advantage of tactical investment opportunities, according to Barclays’ Private Bank’s recently released research report. 

The bank’s Q3 2017 “Compass” report examines major asset classes globally.

In the report, its tactical allocation maintains an overweight position in developed markets equities, especially with leading indicators, related to this asset class, according to a bank statement.

Barclays’ strategists believe that both the US and European stock markets (excluding the UK’s) are currently expected to offer superior growth potential for investors.

The report also maintains its overweight allocation to emerging markets equities as the business cycle continues to firm up.

The stabilisation of business confidence surveys and trade data support this view, the statement said.

Korea, Taiwan and China (offshore) maintain their positions as markets of choice, the statement indicated. 

As a result, Barclays’ investment committee lowered its allocation to cash and short-maturity bonds from neutral to underweight.

Similarly, high yield & emerging markets bonds allocation also remained overweight. 

Although relatively expensive, Barclays’ strategists continue to view high yield bonds as attractive in the context of a fixed income complex within a moderate risk portfolio.

Commenting on the report, Francesco Grosoli, Barclays’ head of Private Bank for Europe, the Middle East and Africa said: “While the outlook for the global economy continues to improve, as indicated by corporate earnings and trade statistics, investors are best served by continuing to diversify their portfolios across both asset classes and geographies.”

LONDON —  Britain is prepared to pay up to 40 billion euros ($47 billion) as part of a deal to leave the European Union, the Sunday Telegraph newspaper reported, citing three unnamed sources familiar with Britain's negotiating strategy.

The EU has floated a figure of 60 billion euros and wants significant progress on settling Britain's liabilities before talks start on issues such as future trading arrangements.

The government department responsible for Brexit talks declined to comment on the article. So far, Britain has given no official indication of how much it would be willing to pay.

The newspaper said British officials were likely to offer to pay 10 billion euros a year for three years after leaving the EU in March 2019, then finalise the total alongside detailed trade talks.

Payments would only be made as part of a deal that included a trade agreement, the newspaper added.

"We know [the EU's] position is 60 billion euros, but the actual bottom line is 50 billion euros. Ours is closer to 30 billion euros but the actual landing zone is 40 billion euros, even if the public and politicians are not all there yet," the newspaper quoted one "senior Whitehall source" as saying.

Whitehall is the London district where most British government departments and ministers are based.

A second Whitehall source said Britain's bottom line was "30 billion euros to 40 billion euros" and a third source said Prime Minister Theresa May was willing to pay "north of 30 billion euros", the Sunday Telegraph reported.

Britain's Brexit minister David Davis said on July 20 that Britain would honour its obligations to the EU but declined to confirm that Brexit would require net payments.

British foreign secretary Boris Johnson, a leading Brexit advocate, said last month the EU could "go whistle" if it made "extortionate" demands for payment.

Pro-Brexit campaign group Leave Means Leave said speculation about a divorce bill was "unhelpful".

"With the EU Brexit negotiations, nothing is agreed until everything is agreed," said the groups' co-chair Richard Tice.

"The focus should be on accelerating talks with the aim of concluding them at the end of 2017. This would enable businesses to adapt during the 15 months leading to March 2019." 

The Telegraph said advisers in May's office had warned bosses in London's financial sector that Britain walking out of Brexit talks was a "real possibility" if the impasse over the bill cannot be broken.

Former European Commission head Romano Prodi told the Observer newspaper said it would be economic "suicide" for Britain to fail to reach a compromise on Brexit, and called on the EU to preserve as much trade with Britain as possible to avoid damaging both sides. 

If Britain cannot conclude an exit deal, trade relations would be governed by World Trade Organisation rules, which would allow both parties to impose tariffs and customs checks and leave many other issues unsettled.

Last week, the Bank of England said Brexit uncertainty was weighing on the economy. Finance minister Philip Hammond wants to avoid unsettling businesses further.

The EU also wants to have an agreement reached by October on the rights of EU citizens already in Britain, and on border controls between the Irish Republic and the British province of Northern Ireland, before trade and other issues are discussed.

MOSCOW — A ban on Turkish tomato imports that was motivated by geopolitics has inspired Russia to become self-sufficient in tomato production, a windfall for companies who invested in the technology that would increase year-round production.

Russia has been ramping up production of meat, cheese and vegetables since it banned most Western food imports in 2014 as a retaliatory measure for sanctions meant to punish Russia's support of rebels in eastern Ukraine and annexation of Crimea. 

After Turkey shot down a Russian jet near the Syrian border in November 2015, Moscow expanded the ban to include Turkish tomatoes, for which Russia was the biggest export market. 

Ties between Ankara and Moscow have since largely normalised, but the ban remains in place and may not be lifted for another three to five years, officials have said.

That may be too late for Turkish exporters if Russian efforts to ramp up domestic production bear fruit.

Greenhouse projects being built with state support are key to Russia's plans to become self-sufficient for its 144 million population by 2020, industry players, analysts and officials say.

Although Russia only imports about 500,000 tonnes of the 3.4 million tonnes of tomatoes consumed annually, the country's notoriously harsh winters have limited its ability to ramp up to full capacity, IKAR agriculture consultancy said.

Currently only 620,000 tonnes of production comes from "protected ground", or greenhouses, IKAR said. The remainder comes from "open ground" productive only from June to September, and most of that comes from private plots maintained and used by individual families or sold at local farmers' markets.

Sergey Korolyov, the head of National Fruit and Vegetable Producers' Union, estimated that greenhouse projects that have already started growing tomatoes could start seeing their money back in 8-9 years thanks to state support, which includes partial investment compensation and favourable loan rates.

"Now greenhouses which were originally built for cucumbers are being repurposed for tomatoes," Korolyov told Reuters. 

Mega-greenhouses 

Although the greenhouse sector is dominated by dozens of small-size firms, several big players have also stepped in.

Russian conglomerate Sistema, bought the country's largest Yuzhnyi greenhouse complex in December 2015, when the ban on Turkish supplies was announced. 

The 144-hectare complex produces more than 45,000 tonnes of tomatoes and cucumbers per year.

"We were slightly lucky in this case — we bought the asset which was already working with good quality, customers and employees," said Sistema's Senior Vice President Ali Uzdenov.

The decline of the rouble currency against the dollar since mid-2014 has helped by making tomato imports less competitive, he said.

Other large vegetable producers include Russia's second biggest food retailer Magnit, with a 84-hectare complex.

Deputy Prime Minister Arkady Dvorkovich, who is in charge of the agriculture sector, said the government is fully behind the effort.

"We need to achieve a certain share of independence from import supplies to stabilise the domestic market.  And we will be supporting these projects," Dvorkovich told Reuters in June. 

But with so much of tomato production taking place in people's private plots, imports will continue to be important in the near-term, he added.

The plan does not bode well for Turkey. As much as 70 per cent of the country's tomato exports went to Russia in 2015, earning Turkish growers $259 million, according to the Turkish Statistical Institute.

When the ban was put in place, most of the slack was taken up by Morocco, Azerbaijan and Belarus. 

Ankara proposed in May that Moscow lift the ban outside of the main harvest season.

Asked about Turkey's proposal, Dvorkovich said it might work, but only for local production of tomato paste or juices.

LONDON — Gold demand slumped 14 per cent in the first half of 2017 to hit the lowest level in eight years as US traders exited the haven investment, the World Gold Council (WGC) said on Thursday.

Global demand dropped to 2,004 tonnes in the first six months of the year compared with the first half of 2016, the WGC said in its latest quarterly report.

"The last time H1 demand was lower... was in 2009 when it totalled 1,853 tonnes,” a spokeswoman confirmed to AFP.

Most of the drop in demand came in the second quarter, with it sliding 10 per cent to 953.4 tonnes compared with the April-June period in 2016, the WGC added.

John Mulligan, a council director, noted US investors had exited exchange-traded funds (ETFs) for gold at a greater extent than their European peers, as the Federal Reserve embarks on a course of raising interest rates.

"The European ETF investor is a lot less volatile, a lot more stable and a lot less likely to to-and-fro in terms of liquidation than their US counterparts," he said.

ETFs allow investment without trading on the futures market.

"Demand for the first half of 2017 was down 14 per cent compared to last year, but in some respects the market was in better shape," added Alistair Hewitt, the WGC's head of market intelligence.

Last year's growth was solely down to record ETF inflows, while consumer demand slumped. 

"So far this year, we have seen steady ETF inflows in Europe and the US. Jewellery demand has recovered with good growth in India, while retail investment and technology demand is up too," Hewitt said.

Gold demand had slumped 18 per cent in the first quarter from a year earlier as US investors abandoned the precious metal after Donald Trump's presidential election win.

Gold is viewed as a haven investment in times of economic uncertainty, but there is now less market focus on Trump's ability to pass through reforms compared with a few months ago.

A stronger dollar, thanks in part to higher US rates, has also led investors to move away from gold and into the greenback.

OSLO/MOSCOW — A gap in US sanctions allows Western companies to help Russia develop some of its most technically challenging oil reserves, and risks undermining the broad aim of the measures, a Reuters investigation has found.

When Washington imposed the sanctions on Moscow in 2014 over its annexation of Crimea and role in the Ukraine conflict, the US Treasury said it wanted to "impede Russia's ability to develop so-called frontier or unconventional oil resources".

The restrictions were designed to prevent Russia countering declining output from conventional wells by tapping these hard-to-recover reserves which require newer extraction techniques like fracking, an area where it relies on Western technology.

Three years on, however, Norway's Statoil is helping Kremlin oil giant Rosneft develop unconventional resources while British major BP is considering a similar project.

Statoil is not breaching sanctions, nor would BP be doing so.

The United States, having itself experienced a spike in oil output from tapping shale rock over the past decade, worded the measures to prohibit Western companies from helping Russia develop "shale reservoirs". It did not mention other lesser-known forms of unconventional deposits. 

The EU followed suit by banning cooperation on projects "located in shale formations by way of hydraulic fracturing". 

Rosneft and its Western partners are not targeting shale, but are instead drilling to reach oil reserves known as limestone — deeper reservoirs that lie beneath shale oil. 

Geologists are unanimous that even though shale and limestone formations are different geological structures, they both constitute unconventional oil resources. Both are extracted through hydraulic fracturing, or fracking.

Experts say limestone deposits in Russia's Domanik formation, where Statoil and Rosneft are drilling, could yield billions of barrels of crude. 

Spokesmen for the US Treasury, and for European Commission foreign affairs and security policy, both declined to comment on Russian projects, the wording of the sanctions or if any change was planned to include other unconventional oil resources. 

Statoil changes words

When Statoil and Rosneft agreed to develop 12 blocks in Russia's Samara region in 2013, a year before the sanctions were imposed, they described the venture as a shale project. 

Statoil, in media releases issued in June and December 2013, and its annual report for that year, said the venture would explore "shale oil" opportunities in the Samara region, which is situated on the Volga River.

After sanctions were imposed in 2014, the company amended all the releases on its website to replace "shale" with "limestone", though it did not alter the 2013 annual report. It described the venture as limestone from that point on. 

"In the original press release, and communication following that, we used an imprecise geological term," a Statoil spokesman told Reuters. "We became attentive to this after the introduction of sanctions." 

"We have since corrected it, and now use the precise and correct term — limestone," he added about the project, which saw its first well drilled in January this year. 

"The Domanik formation is a limestone formation and is not covered by European or US sanctions."

Under EU sanctions, which Norway signed up to, companies have to ask for clearance from their governments to enter new Russian oil projects.

Statoil, which is majority owned by the Norwegian government, said it had "applied for and received a pre-authorisation related to the Domanik project by the Norwegian Ministry of Foreign Affairs".

Rosneft also started describing the venture as a limestone project after sanctions were imposed, but has not amended its previous statements which described it as shale.

"It would not be correct to call these sediments shale in the meaning of those being explored in the United States," a Rosneft official told Reuters in emailed comments. 

BP looks to explore

The Moscow Institute of Physics and Technology's Centre for Engineering and Technology for Hard-to-Recover Reserves estimates Russia's Domanik oil deposits are around a tenth the size of the giant Bazhenov shale resources — which themselves could yield over 70 billion barrels of oil, according to the US Energy Information Administration.

In May 2014, just months before the toughest sanctions were imposed on Russia; BP signed a similar agreement with Rosneft to explore in the Domanik formation in the region of Orenburg, about 400km south east of Samara. 

The project has yet to get off the ground but a BP spokesman in Russia said the company remained interested in exploring hard-to-extract resources in the Volga-Urals region. 

He declined to comment further but a BP source said the company was currently seeking an approval from the British government to start work on the project. 

The American shale revolution has seen US firms flood the market with crude since the start of the decade — and Russian oil executives say their country could have shale and other unconventional resources as big as those in the United States.

Such deposits would allow Russia to maintain its output as production from mature, conventional fields in West Siberia is declining.

THE HAGUE — Europe’s biggest oil refinery will remain shut for another couple of weeks after a power station on the site was hit by a huge fire, oil giant Shell said on Tuesday.

It is hoped the Shell Pernis refinery in Rotterdam will be back up and running “at the earliest in the second half of August”, a Shell spokesman told AFP. 

Most of the units on the site have been closed since Monday “for security measures” after the pre-dawn fire broke out overnight on Saturday to Sunday, the company added in a statement.

The refinery covers an area equivalent to 800 football pitches, and its pipework, if laid end to end, would be long enough to circle the Earth four times.

It has 60 factories on-site, making it also one of the largest refineries in the world.

Firefighters brought the blaze under control in the early hours of Sunday. Shell has not confirmed media reports that the fire was started by a short circuit.

But a second incident occurred on Monday during the cleaning of one of the factories when there was a leak of a colourless, highly reactive gas, hydrogen fluoride.

“The source of the leak was detected and it was staunched,” the company said. Both the fire and the leak are now being investigated.

“We expect to restart our operations at the earliest in the second half of August,” the Shell spokesman added.

The power station must also be repaired before the refinery can be go back into service.

“We regret the impact this may cause for our customers, and we are doing everything we can to minimise impact to our customers,” he added, asking not to be named, and also refusing to comment on whether there would be any impact on the oil markets.

The refinery has now ceased flaring off stocks of gas as part of the safety procedures taken during a shutdown.

There will be a new “flareoff when the site is relaunched”, Shell said, adding it would seek to “limit any inconvenience” to those nearby.

The facility, based in the port of Rotterdam, can process more than 400,000 barrels of petroleum products a day.

AMMAN — Jordan Petroleum Refinery Co. (JPRC)  posted JD13.9 million in net profit during the first half of 2017,  according to the JPRC financial statement, the Jordan News Agency, Petra, reported on Tuesday. Oil refining activity and gas cylinder filling  generated around JD6,8 million,  followed by mineral oil manufacturing  at  JD4.5 million while the sale and  marketing of petroleum products accounted for JD2.5 million.

CEO of JPRC Abdul Karim Al Aween said the company is working to develop its production lines and laboratories, in addition to the company’s  marketing activity. Also, other companies debts to the JPRC have been reduced, Petra indicated.

HONG KONG — HSBC said its profits were up in the first half of the year after a turbulent 2016 which saw huge writedowns and restructuring costs as it laid off thousands of staff.

The Asia-focused giant has been on a recovery drive over the past two years, streamlining its operations and exiting unprofitable businesses.

Like many global banks it has struggled to boost profits as China's economy slows and uncertainty caused by Britain's looming exit from the European Union casts a shadow over the sector.

In addition, HSBC has grappled with stricter capital rules, low interest rates and scandals stemming from its own misbehaviour. 

However, Monday's results were an improvement as analysts said its overhaul was bearing fruit. 

Reported pre-tax profit for the six months to June rose 5 per cent to $10.2 billion compared with $9.7 billion for the same period last year.

Shares closed up 2.62 per cent at HK$78.45 ($10.06) in Hong Kong on Monday. 

The half-year results showed operating expenses dropped 12 per cent to $16.4 billion, partly stemming from a sell-off of its Brazil operations. 

Chairman Douglas Flint described the performance as "extremely pleasing".

Flint said there were still uncertainties due to increasing geopolitical tensions and "ambiguous predictions" around Britain's future relationship with the EU post-Brexit, but described HSBC's performance as resilient. 

In his last statement as chairman before stepping down in October, Flint warned over the possible repercussions of the Brexit deal.

"The essential questions that have to be addressed are whether, at the conclusion of the negotiations, the economies of Europe will continue to have access to at least the same amount of financing capacity and related risk management services, and as readily available and similarly priced, as they have enjoyed with the UK as part of the EU," he said in a statement.

Flint also called for more progress on preventing "bad actors" from accessing the financial system. 

"As digitalisation of commercial activity increases, the risks of confidence-threatening disruption and economic loss, not least from cyber attacks, are amplified," Flint said. 

Unacceptable failings 

Analysts said Monday's results had outstripped predictions. 

"HSBC's earnings are definitely better than market expectations," said Dickie Wong of Hong Kong-based Kingston Securities.

He described the firm as in "very good shape" after wide-ranging restructuring programmes following the global financial crisis in 2008.

Net profit for the first half of the year rose 10 per cent to $6.99 billion from $6.36 billion for the same period in 2016.

Pre-tax profits for the second quarter rose $1.7 billion to $5.3 billion year on year, beating Bloomberg analysts' estimates, which had averaged out at a $4.6 billion forecast. 

HSBC also announced a share buyback of up to $2 billion, expected to be completed in the second half of the year.

The bank announced the appointment of a new chairman in March as part of a management overhaul that will also see it choose a new chief executive to replace Stuart Gulliver, following a massive drop in 2016 profits.

British businessman Mark Tucker, currently group chief executive and president of insurance group AIA, will take over from Flint. 

Gulliver has said he will step down in 2018. 

Gulliver and Flint were grilled by British lawmakers in 2015 and apologised for "unacceptable" failings at HSBC's Swiss division following allegations the unit helped rich clients hide billions of dollars from the taxman.

HSBC was one of six major US and European banks that were fined a total of $4.2 billion by global regulators in a November 2014 crackdown for attempted manipulation of the foreign exchange market. 

It was also fined $1.92 billion by US prosecutors in 2012 to settle allegations that it failed to enforce anti-money laundering rules, exposing it to exploitation by drug cartels and terrorist organisations.