WhatsApp, Brexit, forex cartel: Business news in brief, Wednesday 11 January

Tech firms face tough EU privacy crackdown, London banks take Brexit fight to Europe and US prosecutors poised to charge currency ‘cartel’ traders

WhatsApp is one of several technology firms who will be affected by new EU rules (Reuters)

WhatsApp and Gmail face tough EU privacy proposal

Online messaging and email services such as WhatsApp, iMessage and Gmail will face tough new rules on how they can track users under a proposal presented by the European Union executive on Tuesday.

The web players will have to guarantee the confidentiality of their customers’ conversations and ask for their consent before tracking them online to serve them personalised ads.

The proposal by the European Commission extends some rules that now only apply to telecom operators to web companies offering calls and messages using the internet. The Commission is seeking to close a perceived regulatory gap between the telecoms industry and internet giants such as Facebook, Google and Microsoft.

The proposal would also allow telecom companies to use customer metadata – such as the duration and location of calls – to provide additional services and make more money, something they are barred from doing under the current rules. However the telecoms industry said the proposal still imposed stricter obligations on them than on web companies.

Lise Fuhr, director general of Etno, the European telecoms lobby: “Unlike others, telcos risk being prevented from expanding consumer choice by using traffic and location data for big data analytics, the Internet of Things and connected driving services.”

The review of the so-called e-privacy law will also require web browsers to ask users upon installation whether they want to allow websites to place cookies on their browsers. A previous leaked version would have forced browsers to set the default settings as not allowing cookies.

Reuters

London banks’ Brexit concerns falling on deaf ears

Banks with large London operations say they will step up lobbying European officials because they are running out of arguments to convince the Government the industry needs single market access after Britain leaves the European Union.

Banks have focussed on pressuring British officials to push for as much market access as possible since voters decided seven months ago to leave the EU. They held fewer meetings with European officials, according to several senior sources in the financial services industry.

The focus is shifting because after scores of meetings and research reports, banks, which say they may begin moving staff and operations out of London in the next few months if there is no clarity, feel they are running out of new points to make.

The Prime Minister said on Sunday she was not interested in Britain keeping “bits” of its EU membership, interpreted by some as signalling she will favour immigration controls over access to the single market.

Banks are now planning a new round of lobbying to highlight how a hard Brexit could harm the EU and the UK. They have identified French politicians, EU regulators and government officials, as key groups to win over.

“The battle for Britain is over, the battle for France is about to begin,” said one senior lobbyist.

Another senior lobbyist for one of the major global banks said he will spend more time in Brussels this year to target the EU’s chief Brexit negotiator Michel Barnier and his teams as well as Didier Seeuws, a Belgian diplomat, who is helping coordinate the Brexit negotiations.

Reuters

‘Cartel’ traders set to face rigging charges

Prosecutors are poised to charge the currency traders at the heart of one of the biggest US market-rigging investigations, according to Bloomberg’s sources.

The imminent criminal charges are against members of ‘The Cartel’ chat group, the people said. These traders used instant messages to coordinate the rigging of foreign-exchange benchmarks by sharing confidential customer information, prosecutors have said in antitrust cases that led to guilty pleas by five banks in 2015.

The senior dealers who participated in The Cartel were Richard Usher, formerly of JPMorgan, Rohan Ramchandani, formerly of Citigroup and Chris Ashton, former global head of spot trading at Barclays. Another member, Matt Gardiner, formerly of UBS, has been helping prosecutors build cases against the traders, sources have told Bloomberg.

Lawyers for Mr Ashton, Mr Gardiner and Mr Ramchandani declined to comment. Mr Usher’s lawyer didn’t immediately respond to phone and e-mail requests for comment.

The men are located outside of the US, meaning they would have to be extradited, a process that can take months, if not years. They are probably going to fight back against the charges, one of the sources said.

Bloomberg

Boohoo sees sales soar 55% in bumper Christmas

Online retailer boohoo.com has upgraded its full-year revenue forecasts following a bumper Christmas trading period.

The group said sales in four months to 31 December rose 55 per cent to £114m, driven by a 31 per cent increase in UK sales to £65m.

As a result, boohoo expects sales growth of between 43 per cent and 45 per cent in the year to 28 February 2017 – above previous guidance of between 38 per cent and 42 per cent.

In December, the online retailer revealed plans to acquire the brand of collapsed US fashion firm Nasty Gal in a $20m (£16m) deal.

It came weeks after boohoo acquired rival fashion website Pretty Little Thing for £3.3m and upped its profit outlook following bumper Black Friday trading.

Including Pretty Little Thing, the firm now expects group revenue growth to be between 46 per cent and 48 per cent.

Joint chief executives Mahmud Kamani and Carol Kane said: “Trading in the four months to 31 December 2016 has been strong across all regions. Our strategy offering great pricing, enticing promotions and an ever-broader range of the latest fashion continues to drive growth and enhance customer lifetime value.

“In particular, sales momentum in the USA has continued robustly, helped by our strong customer proposition across the Black Friday weekend.”

PA

Majestic Wine reports best ever Christmas

Majestic Wine has notched up its best ever Christmas trading figures as boss Rowan Gormley presses ahead with a transformation plan following a difficult six months.

The warehouse wine retailer said like-for-like sales rose 7.5 per cent in the 10 weeks to 2 January, an improvement on the 7.3 per cent increase it recorded last year.

Total sales were up 12.4 per cent during the period, with Majestic saying it is on track to meet full year expectations.

Mr Gormley said: “Our transformation plan is working and we remain on track to achieve our £500m sales goal. We said that we would be better prepared for Christmas than ever – and the numbers show that we did what we said we would do.

“At this stage we are not predicting a change to long-term margin expectations, but we need to retain flexibility to compete in a competitive market.”

Majestic Wine swung into the red in November, racking up half-year losses of £4.4m, but said it was at a “tipping point” in its return to profit growth.

The company has embarked on a three-year turnaround plan aimed at expanding and retaining its customer base, slowing down branch network expansion, and acquiring new customers for Naked Wines.

PA

Toshiba ‘asks creditors not to call in loans’

Toshiba met creditors on Tuesday and asked them not to use provisions in debt agreements to call in their loans early, giving the troubled company time to work out a turnaround plan, sources with knowledge of the matter said.

It was the first such meeting since the conglomerate, which is still recovering from a $1.3bn (£1.07bn) accounting scandal, shocked investors last month by announcing cost overruns at a US nuclear business bought in 2015 which could now mean a charge against profit topping $4bn.

About 80 creditors, including regional banks and life insurance companies, attended the meeting, said the sources, who declined to be identified as they were not authorised to discuss the matter publicly.

Toshiba executives briefed creditors about the background leading up to the massive write-down and the schedule of how it would work out the matter, the sources added.

The laptops-to-engineering conglomerate confirmed the meeting, but did not provide any further details.

Bankers said such a meeting was rather routine for a company in trouble and that, even though credit-rating downgrades after the write-down warning put Toshiba in violation of loan covenants, it was routine for them to grant waivers in such cases to avoid a funding crisis.

Toshiba is expected to hold its next meeting with creditors in February, when the company is scheduled to have finalised write-down figures, the sources said.

Reuters

Pharmaceutical firm sells £1.6bn in assets to begin paying down debt

Canadian pharmaceutical firm Valeant will sell just over $2bn (£1.64bn) in assets as it pays down debts after a year and a half of bruising backlash against some of its drug prices and government probes into the way it does business.

Shares of the Canadian pharmaceutical company, down 80 per cent in the past year, jumped 12 per cent before the opening bell.

The company said on Tuesday that it would sell three skincare brands to L’Oreal for $1.3bn. The three product lines, CeraVe, AcneFree and Ambi, generate about $168m in annual revenue.

The announced sale comes a day after Valeant said it would sell Dendreon to China’s Sanpower Group for about $820m.​

AP

VW Group sales hit record despite ‘dieselgate’

Volkswagen Group sales jumped 12 per cent in December to take the annual figure to a record 10.3 million vehicles, the carmaker said on Tuesday, even as it grappled with its emissions scandal.

Volkswagen Group deliveries including luxury brands Audi and Porsche increased to 933,300 vehicles last month from 834,700 a year earlier, fuelled by double-digit gains in China and the United States, with the total for the year up 3.8 per cent from 9.93 million in 2015, it said.

Toyota said last month it expected to end 2016 with sales of 10.09 million vehicles, slightly below an initial forecast of 10.11 million. The Japanese rival had already slipped behind VW on six-month figures and is expected to report full-year deliveries in early February.

Reuters