Business

LONDON — Britain exited recession with stronger-than-expected growth in the first quarter of 2024, official data showed Friday, in a boost to embattled Prime Minister Rishi Sunak ahead of this year's election.

Gross domestic product expanded by 0.6 per cent in the first three months of this year, the Office for National Statistics (ONS) said in a statement, beating market expectations of 0.4 per cent.

The economy had suffered two successive quarters of contraction in the second half of last year, meeting the technical definition of a recession on the back of elevated inflation and a cost-of-living crisis.

Sunak, whose governing Conservatives are trailing the main opposition Labour Party ahead of a general election, has made economic growth one of his top priorities.

"There is no doubt it has been a difficult few years, but today's growth figures are proof that the economy is returning to full health for the first time since the pandemic," said finance minister Jeremy Hunt.

"We're growing this year and have the best outlook among European G7 countries over the next six years," he added.

Friday's bright news came one day after the Bank of England kept its main interest rate at a 16-year high, but hinted at a cut over the summer as UK inflation cools further — and forecast emergence from recession.

"After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year," said ONS director of economic statistics Liz McKeown.

"There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well.

"Car manufacturers also had a good quarter. These were only a little offset by another weak quarter for construction."

GDP had shrunk by 0.3 per cent in the fourth quarter of 2023 after contracting by 0.1 per cent in the prior three months.

MADRID — Spain's second-largest bank BBVA announced Thursday a hostile takeover bid for smaller rival Banco Sabadell, a move that would create a European giant but was swiftly condemned by the government.

BBVA's new bid came three days after Sabadell's board of directors rejected a merger proposal, saying it was "not in the best interest" of the bank.

The takeover proposal values Sabadell, Spain's fourth-largest banking group in terms of capitalisation, at nearly 11.5 billion euros ($12.3 billion).

"The operation will create one of the best banks in Europe," BBVA said in a statement.

The takeover would be carried out under same conditions as the initial approach — an exchange of one new BBVA share for every 4.83 Sabadell shares, a 30 per cent premium over the April 29 closing price of both banks, BBVA said.

"We are presenting to Banco Sabadell's shareholders an extraordinarily attractive offer to create a bank with greater scale in one of our most important markets," BBVA Chair Carlos Torres Vila said in the statement.

"Together we will have a greater positive impact in the geographies where we operate, with an additional EUR5 billion loan capacity per year in Spain," he said ahead of a press conference later in the day.

A takeover would create a banking powerhouse capable of competing with Santander — Spain's leading bank — as well as with European giants such as HSBC and BNP Paribas.

But Prime Minister Pedro Sanchez's leftist government swifty came out against the takeover attempt, as did the regional government of Catalonia where Sabadell was born and where it has a strong presence.

"This hostile takeover bid by BBVA is an operation contrary to the interests of our country. It would destroy many jobs, cause financial exclusion and more oligopoly," Labour Minister Yolanda Diaz wrote on the X social media platform.

The head of the regional government of Catalonia, Pere Aragones, echoed these concerns, telling Spanish public television the takoever would "affect many jobs in Catalonia".

Aragones is facing a regional election in Catalonia on Sunday, with polls showing he is trailing.

BBVA, which also has operations in Mexico, Argentina and Turkey, is Spain's second-largest banking group in terms of capitalisation and has 74.1 million customers. 

Sabadell operates in 14 countries and has nearly 20 million customers.

The bank had said on Monday that the initial offer "significantly undervalues the potential of Banco Sabadell and its standalone growth prospects".

It added that it was "highly confident in Banco Sabadell's growth strategy and its financial targets". 

Sabadell also pointed to the recent "decline and volatility in the BBVA share price" which reflected "the uncertainty around the value of the proposal". 

BBVA then informed Sabadell in a letter that it had "no room" to improve its offer, which it considered generous.

The two banks had initially announced a plan to merge in November 2020 with the aim of better weathering the economic crisis triggered by the COVID-19 pandemic. 

But it was scrapped just 10 days later, with Sabadell saying that BBVA's offer did not reflect the real value of its business.

In the ensuing months, Sabadell undertook a major restructuring plan to slash costs that resulted in 1,800 redundancies, with BBVA going through a similar process, shedding 3,000 jobs.

Both have since recovered as has the wider Spanish banking sector which posted record profits in recent months, despite an exceptional windfall tax imposed by Spain's left-wing government to help households cope with soaring consumer prices.

BBVA posted a 19 per cent rise in first-quarter net profits to 2.2 billion euros ($2.3 billion). 

Sabadell recorded first-quarter net profits of 308 million euros, its highest ever quarterly figure, up 50 per cent from a year ago.

Spain's banking sector underwent a first wave of consolidation during the 2008 financial crisis, with the collapse of provincial savings banks which were absorbed by the bigger players. 

It underwent further consolidation in 2021 when Caixabank took over Bankia, creating Spain's third largest banking group, which was followed by Unicaja's acquisition of Liberbank creating Spain's fifth biggest domestic lender.

SEOUL — South Korean tech giant Samsung said on Wednesday it will buy French artificial intelligence company Sonio to boost its cutting-edge medical diagnostic systems.

The use of AI has exploded in recent years in a wide range of disciplines and industries, including medical care, and firms around the world are investing heavily to incorporate it into their products.

The purchase of Sonio by medical equipment maker Samsung Medison, an affiliate of global chip and smartphone giant Samsung Electronics, would boost maternal care through AI-enhanced ultrasound systems, according to a company statement.

"Collaboration with Sonio will bring together best-in-class ultrasound AI technology and reporting capabilities to bring a paradigm shift in the prenatal ultrasound exam," said Yong Kwan-kim, CEO of Samsung Medison.

Samsung will acquire all Sonio's shares for 126 billion won (around $92 million), according to public financial records.

The deal is subject to regulatory approvals including from France. Once it is concluded, Sonio will remain headquartered in France.

"In addition to close collaboration with Samsung Medison, as an independent company, Sonio will continue to advance medical reporting technology and diagnostic software globally, including for underserved areas in healthcare," Sonio CEO Cecile Brosset said.

Sonio's AI tech uses machine learning to enhance the accuracy, quality and analysis of ultrasounds.

Its Sonio Detect product, approved for use in the United States, helps analyse images of a fetus, including brain and heart structures.

The acquisition marks the latest move by Samsung to strengthen its AI offerings.

Samsung Electronics is the world's biggest producer of memory chips, including versions used in top-of-the-line AI hardware from industry leaders such as Nvidia.

The firm is also one of the world's biggest smartphone makers, and the latest models it unveiled in January are powered by its own Galaxy AI tech.

ZURICH — Swiss banking giant UBS on Tuesday said first quarter net profit rose 71 per cent to nearly $1.8 billion, far exceeding expectations, after two quarters in the red due to the mammoth takeover of Credit Suisse.

Switzerland's biggest bank said its turnover increased by 46 per cent to $12.7 billion, largely thanks to its investment banking arm, which had been the key project in the mega-merger.

Investment banking revenues increased by 16 per cent, driven by a more favourable market climate and by the good performance of IPOs and mergers and acquisitions.

In March 2023, Swiss authorities strongarmed UBS into the $3.25 billion takeover to prevent Credit Suisse from going under with catastrophic consequences for the global financial system.

The results for the first three months of 2024 were a moment for the bank to review progress since the integration of Credit Suisse.

"A little over a year ago, we were asked to play a critical role in stabilising the Swiss and global financial systems through the acquisition of Credit Suisse and we are delivering on our commitments," said UBS Chief Executive Sergio Ermotti.

"This quarter marks the return to reported net profits and further capital accretion — a testament to the strength of our business and client franchises and our ability to deliver significant progress on our integration plans while actively optimising our financial resources."

Cost reductions 

UBS continued its cost reductions, making $1 billion in additional savings during the first quarter, with the cumulative figure since the merger amounting to $5 billion, or nearly 40 per cent of the $13 billion target for 2026.

By the end of the year, the group hopes to achieve another $1.5 billion in savings.

UBS posted a $785 million loss in the third quarter of 2023, and was down $279 million in the fourth quarter.

Many analysts expected UBS's results to return to positive territory following the 2024 first quarter figures published by US banks in the same league.

Analysts surveyed by the Swiss financial newswire AWP had on average expected UBS to post a net profit of $637 million.

But Switzerland's leading bank far exceeded expectations.

UBS's figures for the first quarter of 2024 are difficult to compare with those of the same period last year, which reflected its performance as a single entity before the merger was formalised in June 2023.

In the first quarter of last year, UBS had posted a net profit of just over $1 billion.

Regulation on the horizon 

Though Tuesday's first quarter figures are better than expected, investors are waiting for clarification concerning the impact on UBS of the looming tightening of rules for Switzerland's banking sector.

The merger of the two largest banks in the country created a megabank of troubling size in relation to the Swiss economy.

The Swiss government last month unveiled a project aimed at toughening the rules on banks, regarding both bonuses and the capital they must set aside to be able to face a crisis.

In the 12 months following the Credit Suisse takeover, UBS shares gained 59 per cent on the stock market.

However, since April, shares have fallen back as investors worry about the additional amounts that the bank will have to put to one side.

According to calculations by some experts, UBS may need to build an additional liquidity cushion of $15 billion to $25 billion.

In an interview with the Tages-Anzeiger newspaper, Finance Minister Karin Keller-Sutter described these figures as plausible.

Swiss investment managers Vontobel said investors would be eager to hear UBS's views on the government's proposals for new regulation on banks deemed "too big to fail".

"However, given the lack of details, it is unlikely that UBS will be able to provide any guidance," it said.

As for the outlook, UBS said that although monetary easing was expected in the eurozone, the United States and Switzerland, "the timing and magnitude of rate cuts by central banks are unclear, as inflation remains above their target range".

"In addition, the ongoing geopolitical tensions, combined with consequential elections in several major economies, continue to create uncertainty," it said.

SYDNEY — Australian airline Qantas agreed to pay a $66 million fine on Monday after a bruising "ghost flights" scandal, following accusations it kept selling seats on long-cancelled trips.

The country's competition watchdog said Qantas "admitted that it misled consumers" by advertising seats on tens of thousands of flights — despite those flights being cancelled. 

Qantas will also fork out $13 million in compensation to 86,000 travellers impacted by the cancellations and botched rescheduling. 

"Qantas' conduct was egregious and unacceptable," said Australian Competition and Consumer Commission chairperson Gina Cass-Gottlieb. 

"Many consumers will have made holiday, business and travel plans after booking on a phantom flight that had been cancelled." 

Qantas said that, in some cases, customers were booked on flights that had been cancelled "two or more" days prior. 

Qantas chief executive Vanessa Hudson said the airline "let down customers and fell short of our own standards".  "We know many of our customers were affected by our failure to provide cancellation notifications in a timely manner and we are sincerely sorry," she said in a statement.

The US$66 million (Aus$100 million) fine is subject to court approval. 

Long-dubbed the "Spirit of Australia", 103-year-old national carrier Qantas has been on a mission to repair its reputation. It has faced a consumer backlash stirred up by soaring ticket prices, claims of sloppy service and the sacking of 1,700 ground staff during the COVID-19 pandemic. 

Qantas has previously defended selling seats on cancelled flights. 

It argued that rather than buying tickets for specific seats, customers buy a "bundle of rights" and a promise the airline will "do its best to get consumers where they want to be on time". 

Qantas posted an annual profit of $1.1 billion last year, capping a major financial rebound after the travel turbulence of the Covid years. 

Veteran chief executive Alan Joyce announced his early retirement amid a barrage of criticism in September last year.

BEIRUT — EU chief Ursula von der Leyen recently announced $1 billion in aid to Lebanon to help tackle illegal migration, as rights groups warned against forced returns to Syria.

The European Union has already agreed deals with Egypt, Tunisia, Mauritania and others aimed at helping stem flows of irregular migrants.

"I can announce a financial package of $1 billion for Lebanon that would be available from this year until 2027," the European Commission chief said, adding that "we want to contribute to Lebanon's socio-economic stability".

She said the aid was designed to strengthen basic services such as education and health amid a severe economic crisis.

Europe will also support Lebanon's army, with the aid "mainly focused on providing equipment and training for border management".

The EU Commission's spokesman said in Brussels the aid will be disbursed "in grants", with 736 million euros earmarked to support Lebanon "in response to the Syrian crisis".

He said "264 million euros will be for bilateral cooperation", notably to support the security services, including with border management.

Von der Leyen said the EU was committed to maintaining "legal pathways open to Europe" and resettling refugees, but "at the same time, we count on your good cooperation to prevent illegal migration and combat migrant smuggling".

Lebanon's economy collapsed in late 2019, turning it into a launchpad for migrants, with Lebanese joining Syrians and Palestinian refugees making perilous Europe-bound voyages.

Lebanon says it currently hosts around two million people from neighbouring Syria — the world's highest number of refugees per capita — with almost 785,000 registered with the United Nations.

"We understand the challenges that Lebanon faces with hosting Syrian refugees and other displaced persons," said von der Leyen, adding the EU had supported Lebanon with 2.6 billion euros to host them.

The Syria war erupted in 2011 after the government repressed peaceful pro-democracy protests and has killed more than half-a-million people and displaced around half of the pre-war population.

Eight rights groups including Amnesty International and Human Rights Watch warned before von der Leyen's Beirut visit that Syria was not safe for returns.

EU assistance "geared to enabling or incentivising returns to Syria risks resulting in forced returns of refugees", a statement said.

EU aid bolstering Lebanese security agencies so they can curb migration to Europe "could result in Syrians resorting to even longer and more dangerous routes", they added.

Lebanon has also faced nearly seven months of border clashes between its powerful, Iran-backed Shiite movement Hizbollah and Israel that flared after the Hamas-Israel war began in October.

People smuggling 

Lebanon remains essentially leaderless, without a president and headed by a caretaker government with limited powers amid deadlock between entrenched political barons.

Von der Leyen was accompanied by Cyprus President Nikos Christodoulides.

Cyprus, the EU's easternmost member, is less than 200 kilometres from Lebanon and Syria, and wants to curb migrant boat departures from Lebanon towards its shores.

Nicosia says the Israel-Hamas war has weakened Beirut's efforts to monitor its territorial waters.

"I am very confident that this package announced today will enhance the capacity of Lebanese authority to handle various challenges including controlling land and maritime borders, ensuring the safety of its citizens, fight against people smuggling and continue their fight against terrorism," Christodoulides said.

Some Lebanese politicians have blamed Syrians for their country's worsening troubles, and pressure often mounts ahead of an annual conference on Syria in Brussels, with ministers meeting this year on May 27.

Lebanese Prime Minister Najib Mikati said: "We reiterate our request to the European Union... to help displaced people in their own countries to encourage them to return voluntarily and thus guarantee them a decent life in their country of origin.

"If we insist on this issue, it is to warn against Lebanon becoming a transit country from Syria to Europe, and the problems at the Cypriot border are just one example of what could happen if this issue is not radically resolved."

BEIJING — China's Fujian aircraft carrier took to the water for maiden sea trials on Wednesday, state media said, a key next step in a vast naval build-up by Beijing as it carves out a more assertive role for itself in the Pacific and beyond.

The Fujian is China's third aircraft carrier after the Liaoning and the Shandong vessels and is the Chinese navy's largest-ever ship.

It departed from eastern Shanghai's Jiangnan Shipyard at around 8:00 am, state news agency Xinhua said.

The trials will "primarily test the reliability and stability of the aircraft carrier's propulsion and electrical systems", it added. 

China has stepped up a massive expansion of its naval forces in recent years, as it seeks to expand its reach in the Pacific and challenge a US-led alliance system.

Tensions have notably flared in the disputed South China Sea, which Beijing claims almost in its entirety, and near the self-ruled island of Taiwan, where it has deployed the Shandong aircraft carrier.

A January report by the Congressional Research Service, citing the Pentagon, described it as the largest navy in the world and said it projected it to grow to 435 ships by 2030.

The build-up is aimed at "addressing the situation with Taiwan militarily, if need be" as well as "achieving a greater degree of control or domination over China's near-seas region, particularly the South China Sea", the report said.

China wants its navy to be able to deter "US intervention in a conflict in China's near-seas region over Taiwan or some other issue, or failing that, delay the arrival or reduce the effectiveness of intervening US forces," it added.

Analysts at Washington-based think tank CSIS have said the Fujian is expected to feature more advanced take-off systems, allowing the Chinese air force to deploy jets carrying larger payloads and more fuel.

"The vessel is slated to become the largest surface combatant in the Chinese People's Liberation Army Navy and significantly upgrade China's naval capabilities," they wrote.