DealBook Today's Top Headlines - June 24, 2016: Britain Votes to Leave EU
Friday, June 24, 2016
TODAY'S TOP HEADLINES
By AMIE TSANG
Britain has voted to leave the European Union,
stunning the world with a historic decision that will reshape its place
in the world, rattle the Continent and rock political establishments
throughout the West, Steven Erlanger reports in The New York Times.
Prime Minister David Cameron, who led the campaign to remain in the bloc, announced that he would step down by October, saying the country deserved a leader committed to carrying out the will of the people.
The margin of victory startled many, with 52 percent of people voting to leave and 48 percent voting to remain in the bloc.
The value of the pound plummeted to its lowest level since 1985, and stock markets were
roiled worldwide as they reeled from the uncertainty that the vote unleashed.
Investors fled volatility for haven assets, pushing up the
The flight for safety has exacerbated troubles for the Japanese
government, which wants a weaker currency to spur exports and economic
growth. It may also tighten credit as investors choose to put their
money only in safe places like United States Treasuries, making
borrowing costs higher for heavily indebted nations, like Greece, Italy
and Portugal. Emerging markets may find it more difficult to secure
investment, hampering their economic growth.
Few expect that Britain's departure from Europe will set off a full
financial crisis like that seen after the collapse of Lehman Brothers in
2008, but no one knows enough to rule that out either, Peter S. Goodman writes in The New York Times.
Thomas Lam, the chief economist for industrialized countries at RHB Securities Singapore, said he
expected global growth to suffer, while other countries would hold off doing business in Britain until the volatility subsided.
The euro followed the pound down, sinking to $1.1071 early in the
European morning. Stock markets across Asia recoiled, as the Nikkei 225
plunged nearly 8 percent and shares of British banks plummeted on the
Hong Kong stock markets.
European markets shuddered on opening, David Jolly reports in The New York Times.
The FTSE 100 index in London fell 7.5 percent, led by shares in
Barclays, which dropped 26 percent. The Euro Stoxx 50, a benchmark for
eurozone blue-chips, fell 7.2 percent in early trading and the Dax in
Germany opened down 8 percent. Yields on British and German government
bonds slid, another indication of investors looking for the havens. The price of gold rose 6.6 percent.
Mark Carney, the governor of the Bank of England, pledged to support the
financial system and the economy. He said the bank would "not hesitate
to take any measures required to meet our responsibility." The central bank had earmarked 250 billion pounds, or about $344 billion, to unleash as needed for stability.
Markets took some solace, as they continued to pare back their losses
for the day. Mr. Carney added that the central bank, the Treasury and
banks had done enough contingency planning to be well prepared.
The vote is likely to prompt multinational banks to shift significant numbers of jobs from Britain to competing financial centers
in the European Union, led by Paris, Frankfurt, Dublin and Amsterdam.
Many experts assume Brussels will move quickly to restrict trading of
euro-denominated assets - a major business for Britain. Prominent banks
including JPMorgan Chase and Citigroup have already warned that a
decision by Britain to withdraw from the European Union would push them
to transfer some operations elsewhere.
The impact of the vote will last well beyond the immediate tumult in the
financial markets. Once Britain begins the formal process of
withdrawal, it has two years to negotiate the terms under which it will
leave and unravel its ties with Europe.
Uncertainty now reigns, as the world reels in the face of this break-up.
You can read our
live updates in detail here.
Deutsche Börse Reaffirms Plan to Buy L.S.E. After 'Brexit' Vote"The decision
of the U.K. to leave the E.U. makes it ever more important to maintain
and foster ties between the U.K. and Europe," said Joachim Faber, the
chairman of Deutsche Börse.
Cerberus Offers to Buy G.E.'s French Consumer Finance BusinessThe sale of GE
Money Bank in France would be the latest exit in General Electric's
retreat from finance as it focuses on its industrial roots.
Credit Suisse Tries to Overhaul Its Image, but Problems RemainThe appointment
of an executive involved in soured deals sends the wrong message about
the values and behavior that a Wall Street bank should be rewarding.
Deutsche Bank Clears Labor Hurdle for 3,000 German Job CutsThe bank struck
an agreement with its works council in Germany to eliminate about 3,000
full-time positions, including 2,500 at its private and commercial
Public Home for the Papers of the City's Fiscal SaviorIn the 1970s,
Felix Rohatyn, an investment banker, engineered the rescues first of the
New York Stock Exchange and then of the city itself, which was on the
verge of financial collapse.
Hong Kong's Likely Return as Top I.P.O. Market Not All RosyPotential
investors in two I.P.O.s that began this week - Citigroup's China
securities joint-venture partner, Orient Securities, and the leasing arm
of one of China's biggest banks - are asking for the listings to be
priced at the bottom or middle of their respective offering ranges, The
Wall Street Journal reports, citing people familiar with the situation.
Nation's Biggest Banks Would All Withstand Recession, Fed SaysIn its annual
stress tests, the Fed looked at how the 33 largest banks in the United
States would do in a recession with sustained high unemployment and
negative interest rates.
Buybacks by Companies Like Apple May Signal Danger, Not GrowthWhen companies
funnel money into their own shares, earnings per share look better, but
the buybacks can siphon money away from investments in innovation.
Former JPMorgan Executive Pleads Not Guilty to Embezzlement A former
JPMorgan Chase executive who was indicted eight years ago, accused of
embezzling about $5.4 million from clients at the bank and his prior
employer UBS, pleaded not guilty after being extradited from Argentina.
Volkswagen to Pay More Than $10 Billion to Settle Emissions Claims Volkswagen is
nearing a $10 billion civil settlement, the largest in the auto
industry's history, to compensate United States owners of vehicles
affected by the carmaker's emissions cheating scandal, The Wall Street
Journal reports, citing people familiar with the matter.
South Korean Prosecutors Arrest Volkswagen Executive Prosecutors on Friday
arrested an executive surnamed Yoon, 52, and put him in custody on
charges of submitting manipulated data to the South Korean authorities,
said a spokesman for the Seoul Central District Prosecutor's Office.
Lyft's $27 Million Accord with Drivers Wins Court Approval The
ride-hailing service Lyft moved a step closer to sealing a $27 million
deal with drivers that leaves them classified as independent