Tuesday, April 20, 2021 Headlines
Burc Oran
April 20, 2021
  1. Bank of China did not Change Benchmark Lending Rate
  2. ABN AMRO Accepts 480 Million Euro Fine
  3. Brexit Warning from the British Aviation Industry

Bank of China did not Change Benchmark Lending Rate

Bank of China did not Change Benchmark Lending Rate

The Bank of China did not change benchmark lending rate this month either.

Twenty-seven traders and analysts, or 90%, of 30 participants in a Reuters poll conducted on Monday predicted no change in either the one-year Loan Prime Rate (LPR) or the five-year tenor.

The benchmark 1-year loan reference interest rate (LPR) for loans to companies and households was kept at 3.85 percent.

The bank has not changed the benchmark interest rate for the last 12 months. The 5-year LPR also remained at 4.65 percent.

Additionally, the concern that the digital yuan, which China is under development, will dethrone the dollar, the world’s reserve currency, is on the agenda.

China’s Deputy Governor Li Bo said in a forum on Sunday that they are not aiming to dethrone the digital yuan and the dollar. Li said that e-yuan is only intended to be used in the domestic market for now, and cross-border use may also be possible in the long term.

The Bank of China is in the process of testing the “digital yuan” in various pilot programs across the country. The bank started testing digital money in 11 cities.

Last week, it was stated that the Biden government in the US took a closer look at China’s steps on the digital yuan.

Li also announced that they are planning to use the digital Yuan in the 2022 Beijing Winter Olympics.

To be noted, the UK Treasury with the BoE also is considering the possibility of a digital currency for use by households and businesses.

ABN AMRO Accepts 480 Million Euro Fine

ABN AMRO Accepts 480 Million Euro Fine

The third largest bank in the Netherlands, ABN AMRO, reported that it will pay 480m euros for failing to meet various requirements regarding the prevention of money laundering and corruption practices.

In the statement made by ABN AMRO, it was stated that an agreement was reached in the investigation carried out by the Netherlands Public Prosecution Service (NPPS) on the grounds that they had “serious negligence” in the prevention of money laundering and corruption practices.

Under the agreement, a total of 480 million euros will be paid, including 300 million euros in fines and 180 million euros from income from money laundering transactions.

In the statement, it was stated that ABN AMRO acknowledged serious deficiencies in the implementation of customer due diligence policies to prevent financial economic crimes in the period 2014-2020.

ABN AMRO CEO Robert Swaak: “As a bank we do not merely have a legal, but also a moral duty to do our utmost to protect the financial system against abuse by criminals. In fulfilling this duty, we aim to make a meaningful contribution to a safer society. Regretfully, I have to acknowledge that in the past we have been insufficiently successful in properly fulfilling our important role as gatekeeper. This is unacceptable and we take full responsibility for this.”

In the statement made by the prosecutor’s office, it was stated that 3 senior officials of the bank were responsible for “money laundering negligence”.

According to the NPPS, ABN AMRO should have observed that certain flows of money through bank accounts held at the bank possibly originated from crime. The bank failed to act upon this sufficiently. The NPPS reproaches the bank of violating the AML/CTF Act and culpable money laundering.

The total amount of EUR 480 million will impact the bank’s first quarter results in 2021.

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Brexit Warning from the British Aviation Industry

After the Brexit agreement failed to settle issues concerning design approval for plane parts, the UK aerospace industry trade lobby ADS threatened that Britain might lose business to the European Union.

About four months after the trade agreement, ADS announced that companies were struggling for the approval of British-designed aircraft parts.

ADS Manager Jonathan Hawkings pointed out that there is a risk of activities shifting to the EU unless British companies get approval.

While some companies, including Airbus and Rolls-Royce Holdings Plc, have shifted some of their activities to Europe, some companies prefer not to take a step in this direction without seeing how the relations will evolve in the long term.

Technical talks on applications in the space and aviation industry are ongoing and may resolve some design-approval issues. The agreement excludes aircraft maintenance, which is a major focus for Britain, and ADS wants the agreement to be expanded in that field.

“It’s too early to tell whether this is a major perturbation in the business model or a temporary blip,” said Kevin Craven, ADS’s interim chief.

Following the establishment of an effective trade border in the Irish Sea to prevent the need for politically incendiary restrictions on roads into the Irish Republic, Northern Ireland’s aerospace industry faces new challenges.

Although the sector is normally tariff-free, an appendix to the Brexit agreement imposes levies on raw materials entering Northern Ireland that are then processed to create another commodity. According to ADS, this costs about 65 million pounds ($91 million) a year to about 90 small businesses.

Almost four months after the trade deal was struck, firms are still struggling to secure EU signoff for British-designed parts and approval for maintenance work on planes registered in the bloc, ADS said. At the same time, the U.K. Civil Aviation Authority is granting automatic recognition to rival European players.

“We’re in a no man’s land,” Jonathan Hawkings, the industry group’s policy director, said in an interview. “If U.K. companies are unable to demonstrate how they’ll get approvals but a competitor in the EU can, there’s a real risk that work just moves to the EU27.”

While the CAA assumed responsibility for certifying aircraft parts and design after Brexit, the European Union Aviation Safety Agency has yet to grant it full recognition, saddling British firms with red tape and higher costs. Companies including Airbus SE and Rolls-Royce Holdings Plc have shifted design-approval functions to the Continent to get round the issue, but some businesses don’t want to do so without clarity on what the long-term relationship will look like.

Technical talks on implementation of the aerospace aspects of the trade deal are ongoing and may resolve some design-approval issues. Aircraft maintenance, for which Britain is a major focus, is not part of the accord and ADS wants the agreement to be developed further in that area.

“It’s too early to tell whether this is a major perturbation in the business model or a temporary blip,” said Kevin Craven, ADS’s interim chief.

The U.K. Department for Transport said the government is actively supporting industry over the aviation safety agreement and that technical implementation procedures “will be in place as soon as practically possible” under the Brexit trade arrangements. The CAA said it couldn’t immediately comment.

Aerospace firms in Northern Ireland face further issues after the creation of an effective trade border in the Irish Sea to avoid the need for politically incendiary controls on roads into the Irish Republic.

While the sector is ordinarily exempt from tariffs, an annex to the Brexit deal imposes levies on raw materials entering Northern Ireland that are then processed to form another product. ADS say that’s costing 90 or so mainly small companies about 65 million pounds ($91 million) a year.

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