The Star Online: Business
The Star Online: Business |
- RBS CEO says banks need culture change to regain trust
- Wal-Mart workers tell Street about hard work, low pay
- WTO chief says Doha rescue in U.S., China's hands
| RBS CEO says banks need culture change to regain trust Posted: 01 Oct 2012 06:30 PM PDT LONDON: Banks must undergo a wholesale change in their culture and refocus their behavior on meeting the needs of customers to restore trust in the industry, Stephen Hester, chief executive of part-nationalised Royal Bank of Scotland , said on Monday Speaking at the London School of Economics, Hester said he believed the finance industry's problems had arisen as a result of banks losing sight of their role in serving customers. Britain's banks have been rocked by a series of scandals including interest rate rigging, breaches of anti-money laundering requirements and the mis-selling of loan insurance and complicated interest rate hedging products. "It is possible to look at the many scandals that have hit banking in recent years and see them as individual episodes of bad judgment or wrong behaviors," Hester said. "In fact, I think it's more accurate to say that most of them are related to one big scandal: banks have simply not been good enough servants of their customers in the recent past." Addressing questions after his speech, Hester welcomed plans to reform the process of setting Libor, but said the industry and regulator could have been quicker to respond. "The sadness on adapting to a new way of setting Libor is that it could have been done a while ago, but neither the regulator nor the industry were focused on that particular index in the way that, with hindsight, they should have been." "The other enormous sadness is that the misconduct of individuals is bad because it is used to reinforce people's feelings of what banks are like. All industries can have individuals that are bad apples. All of us need to be clear that this behavior can't be tolerated," he said. The Financial Services Authority on Friday announced a 10-point plan to overhaul Libor, but stopped short of scrapping the benchmark interest rate. RBS is expected to agree a settlement this year with U.S. and UK authorities investigating its role in to Libor rigging. "We cannot afford to just fix Libor, to just fix money laundering controls, or to just fix the way we market our products. We have to address the root cause of the industry's failings," he said. RBS is 82 percent owned by the UK government following a 45 billion pound bailout during the financial crisis in 2008. It is under investigation for its role in a scandal over Libor (the London Interbank Offered Rate) and faces punishment over possible breaches of sanctions against Iran. The bank has also set aside 1.3 billion pounds ($2.10 billion) to compensate customers mis-sold Payment Protection Insurance (PPI) and faces claims over interest rate swap mis-selling. "The bank is a British poster child for what went wrong in banking and to fix it we are engaged in probably the largest and most far-reaching company restructuring ever," he said. Hester said RBS should have largely completed its restructuring by the end of 2013 but had "about 15 months of heavy lifting still to do." Since joining RBS as chief executive following the bailout, Hester has overseen a 700 billion pound reduction in the bank's balance sheet to bolster its financial strength and cut back on risk. Hester said the bank was "out of the mire but not yet out of the woods." RBS shares closed up 3.7 percent at 266.47 pence on Monday, meaning UK taxpayers are currently sitting on a paper loss of 21 billion pounds. - Reuters |
| Wal-Mart workers tell Street about hard work, low pay Posted: 01 Oct 2012 06:26 PM PDT NEW YORK/CHICAGO: Wal-Mart Stores Inc employees who say the world's largest retailer's labor practices are unfair voiced their concerns to Wall Street analysts on Monday, claiming that problems like long lines and empty shelves are systemic. Five employees, two of whom have worked for the chain for more than 20 years, outlined problems they see, including unsafe conditions and low wages. A handful of sell-side analysts turned out to hear from Walmart workers nearly a year after a similar meeting was held near Wal-Mart's headquarters in Bentonville, Arkansas. The meeting, organized by the United Food & Commercial Workers International Union, brought the employees' complaints to an audience that is typically more concerned with Walmart's bottom line. They tried to convince analysts that issues such as low levels of staffing can lead to poor customer service, and therefore can impact sales and profits. Jefferies analyst Scott Mushkin said he was not sure this was a big issue for Wall Street. He said his research showed that store execution, on balance, has improved over the last year or so. One employee, who said she has worked at Walmart for 13 years, including as a salaried manager, said her store threw out 2,000 pounds of leftover Halloween candy this summer after it had been too short-staffed to stock it on time. Management tried to sell the expired candy in discount bins in the electronics department, and threw it out after it did not sell, she said. "Wal-Mart has cut employees' hours and cut the labor costs to a point where it actually is harming not the just the workers, but it affects the operations day to day of the store and it also affects the customers," said the employee, Lori Amos, who helps move goods from delivery trucks to storage shelves. One 24-year employee from a Walmart store in Kenosha, Wisconsin said workers' hours are being cut at her store, with positions either going unfilled or being filled by managers. "There's simply not enough manpower in the stores to fulfill these tasks," she said, adding that some workers are being asked to run power equipment without proper training or certification. The union is urging Walmart workers to speak out more about concerns over labor issues through a group of current and former Walmart employees called OUR Walmart. UFCW members work at grocery stores that compete with Walmart. A Walmart spokesman said that labor unions have been trying to organize the company's workers for years. "OUR Walmart is a union-funded, union-backed group using a small fraction of the 1.4 million total people that work for us to further their own political and financial agenda," said Walmart spokesman Dan Fogleman. Suggesting that some workers' stories represent the experiences of all Walmart employees "would be completely inaccurate," he said. MANY ANALYSTS RATE WAL-MART A BUY The gathering comes ahead of Wal-Mart's annual investor meeting on October 10. Wal-Mart's labor practices have garnered criticism among consumers and in the press, but so far have not impacted investors. Roughly half of Wal-Mart's stock is controlled by descendents of company founder Sam Walton. More than 30 analysts follow Wal-Mart shares. Of 28 analysts whose recommendations on Wal-Mart are tracked by Thomson One, seven have "Strong Buy" ratings, four rate it a "Buy", 16 rate it a "Hold" and one has an "Underperform" rating on the stock. Wal-Mart shares are up roughly 23.5 percent this year through Friday's close, nearly in line with the 23.9 percent rise in competitor Target Corp and outperforming a roughly 15 percent gain for the Standard & Poor's 500 index <.SPX> over the same period. Wal-Mart has annual sales of about $444 billion, and 2.2 million associates worldwide. In the United States, Wal-Mart has about 1.4 million employees in more than 4,480 stores including large supercenters, discount stores, grocery stores, small format stores and Sam's Club warehouse club stores. Separately on Monday, some 650 people gathered in Elwood, Illinois, to support employees of an outside contractor on strike at a distribution center outside Chicago that supplies Walmart stores. The workers have been on strike since September 15 to protest what Warehouse Workers for Justice called "management's illegal retaliation against workers attempting to present the company their concerns about wage theft, unsafe conditions and discrimination". Workers at a Southern California warehouse that supplies Wal-Mart also went on strike last month, for 15 days. - Reuters |
| WTO chief says Doha rescue in U.S., China's hands Posted: 01 Oct 2012 06:24 PM PDT WASHINGTON: World Trade Organization Director General Pascal Lamy on Monday acknowledged the Geneva-based grouping has been a "disappointing" forum for trade liberalization but placed the blame for moribund world trade talks on both China and the United States. Lamy, in a speech to the Brookings Institution, said it was clear a comprehensive agreement in the Doha round of world trade talks launched in 2001 "is out of reach in the short term." But it may still be possible for WTO members to make advances in some areas, such as expanding the 1996 Information Technology Agreement to eliminate duties on more high-tech trade and negotiating a new international services agreement among an interested set of WTO members, he said. Lamy also said he has assembled a panel of 12 experts, including U.S. Chamber of Commerce President Tom Donohue, to recommend by early next year a future course for the WTO. Last month, U.S. Ambassador to the WTO Michael Punke told Washington lawmakers the WTO was "at a crossroads" because of its failure to reach a Doha agreement as well as the resistance of China, Brazil and India to the proposed services talks. "Our view is the WTO can't fix its problems without first acknowledging them," Punke said. The United States puts much of the blame for the impasse in the Doha round on major developing countries, which it says failed to offer sufficient new market openings in exchange for proposed cuts in U.S. farm subsidies and tariffs. Developing countries say Washington demanded too rich a price for its reforms and the Doha negotiations were launched primarily to help poor countries increase trade. Lamy said the main obstacle to a Doha round agreement was a dispute between the United States and China over how much to cut industrial tariffs for rich and developing countries. "If the U.S. and China would agree on a compromise on industrial tariff problems, I would tell you the whole picture would change," he said. Lamy conceded the WTO has fallen short of expectations in opening new markets, but defended its other operations. "If the WTO's negotiating function has been disappointing, our organization has become more effective in other areas," such as the monitoring and reporting of trade restrictive measures imposed since the crisis began, he said. He also lauded the WTO's role in defusing trade tensions. "In an atmosphere of escalating trade tensions, the Dispute Settlement Mechanism has taken the heat out of disputes through a process, which is rules-based, predictable and respected. It is no accident that we have already had three times as many cases filed this year as in all of 2011," he said. Lamy, who steps down as WTO head next year, said a new global consensus was needed to tackle a proliferation of regulatory trade barriers, while recent tariff increases by "certain WTO members" show why it would be valuable to reach a new global deal cutting tariff ceilings. He did not mention countries by name, but Brazil has increased tariffs on a number of goods this year. The geopolitical landscape is increasingly complex, but tough challenges did not deter the United States 50 years ago when President John F. Kennedy signed legislation creating what became the U.S. Trade Representative's office, Lamy said. "The world was gripped by the Cuban missile crisis. The U.S. was looking with some perplexity at the consolidation of the European Common Market. Yet, President Kennedy noted it was no time to stagnate behind tariff walls, but to promote increased economic activity through increased trade," Lamy noted. The WTO will hold its next ministerial meeting in Indonesia in late 2013. Lamy resisted setting that as a deadline for scaled-down Doha package, but added it was possible to achieve for negotiators to achieve several agreements by then, including China's accession to the WTO government procurement pact. - Reuters |
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