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  • UBS brings back Sergio Ermotti as CEO to oversee Credit Suisse rescue | CNN Business

    UBS brings back Sergio Ermotti as CEO to oversee Credit Suisse rescue | CNN Business

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    Hong Kong/London
    CNN
     — 

    UBS is bringing back its former chief executive, Sergio Ermotti, to manage the hugely complex and risky task of completing the bank’s emergency takeover of rival Credit Suisse

    (CS)    .

    The surprise appointment, announced Wednesday, highlights the scale of the challenge facing the Swiss lender as it executes a first-of-its-kind merger of two global banks with combined assets of nearly $1.7 trillion.

    The Swiss government engineered the rescue 10 days ago as Credit Suisse teetered on the brink of collapse, a failure that would have rocked a global financial system already reeling from the second-biggest American banking collapse in history.

    Ermotti was UBS

    (UBS)     CEO between 2011 and 2020 and is credited with successfully overhauling the bank following its bailout during the 2008 financial crisis. He is seen as a safe pair of hands capable of turning around embattled Credit Suisse.

    His second stint in the top job, which begins April 5, means the end of current CEO Ralph Hamers’ tenure after just two and a half years in the role, during which time the bank has delivered successive record results.

    Hamers “has agreed to step down to serve the interests of the new combination, the Swiss financial sector and the country,” UBS said in a statement. Hamers will remain at the lender for a transition period.

    UBS chairman Colm Kelleher thanked Hamers for his contribution but said the board felt Ermotti was “the better horse” for such a massive integration. “There’s a huge amount of risk in integrating these businesses,” Kelleher said at a press conference.

    As a first order of business, Ermotti will need to cut thousands of jobs and downsize Credit Suisse’s investment bank, while aligning it with a more conservative risk culture — a task he is familiar with.

    During his previous tenure as CEO, Ermotti “transformed” UBS’ investment bank “by cutting its footprint and achieved a profound culture change within the bank which allowed it to regain the trust of clients and other stakeholders, while restoring people’s pride in working for UBS,” the lender said in its statement.

    Kelleher and Hamers both highlighted the cultural differences with Credit Suisse. UBS’ smaller rival has been plagued by scandals and compliance failures in recent years that wiped out its profit and cost several top managers their jobs.

    In a fresh blow to Credit Suisse’s reputation, a US Senate investigation published Wednesday found that the bank is complicit in ongoing tax evasion by ultra-wealthy Americans.

    “We do not want to import a bad culture into UBS,” Kelleher told reporters, adding that UBS would put all Credit Suisse employees “through a culture filter, to make sure we don’t import something into our ecosystem that causes culture issues.”

    Hamers said integrating the banks is something he would have “loved to do,” but that he supported the board’s decision, which was in the best interests of the new entity and its stakeholders — including Switzerland and its financial sector.

    The merger is high-stakes for Switzerland’s economy, too. The combined bank’s assets are worth twice as much as the country’s annual output, while local deposits in the new entity equal 45% of GDP — an enormous amount even for a nation with healthy public finances and low levels of debt.

    In the Wednesday statement, Kelleher said the deal “imposes new priorities on us,” while supporting UBS’ existing strategy.

    He added: “With his unique experience, I am very confident that Sergio [Ermotti] will deliver the successful integration that is so essential for both banks’ clients, employees and investors, and for Switzerland.”

    Ermotti told reporters he felt a “call of duty” to accept the role and that during his previous stint as CEO he had believed that an acquisition of this kind was the “right next move for UBS.”

    “I always felt that the next chapter I wanted to write back then was a chapter of doing a transaction like this one.”

    Ermotti is currently chairman of Swiss Re

    (SSREF)     and intends to step down after the insurer’s annual general meeting next month.

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  • Alibaba’s restructuring and Jack Ma’s homecoming are all part of China’s plan | CNN Business

    Alibaba’s restructuring and Jack Ma’s homecoming are all part of China’s plan | CNN Business

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    Hong Kong
    CNN
     — 

    Alibaba’s landmark restructuring has sent its shares soaring in New York and Hong Kong, as investors bet on the return of regulatory support for China’s tech industry and private businesses after more than two years of a brutal crackdown.

    But the nature of the overhaul, in which the internet conglomerate will split its business into six separate units, is a sign that Beijing’s campaign against Big Tech hasn’t fundamentally changed. Regulators still intend to reduce the monopolistic nature of tech giants and limit their power, even as they urge private companies to do their part to create jobs and boost a flagging economy.

    The news of the restructuring came shortly after the return of co-founder Jack Ma to mainland China. Ma had been spending time overseas and otherwise keeping a low profile since the Chinese government began a fierce crackdown on the tech sector in late 2020.

    “It appears that Alibaba’s break-up has been orchestrated by Beijing,” said Brock Silvers, chief investment officer for Kaiyuan Capital.

    “This idea is reinforced by Jack Ma’s sudden reappearance, which now seems like a planned media event intended to boost market sentiment at a critical moment.”

    It worked. Shares in Alibaba

    (BABA)    , which has a market capitalization of $260 billion, soared 13% in Hong Kong on Wednesday, following a 14% surge on Wall Street overnight, leading the tech sector’s gains in the Asia Pacific.

    Ma is seen as a symbol of China’s tech industry and a barometer of the Chinese government’s support for private business. His presence is perceived as evidence of a more supportive approach to the private sector, at a time when China’s economy badly needs growth.

    In October 2020, the once high-profile entrepreneur criticized the country’s financial regulatory system for being too rigid and unfriendly to small business. As a result, the authorities shelved Ant Group’s planned $35 billion IPO at the last minute.

    A sweeping regulatory crackdown on Big Tech followed, which later engulfed China’s most powerful private companies, wiping huge sums off their market value. Alibaba’s stock is still down 70% from its peak just days before regulators abruptly pulled the Ant Group IPO.

    But almost three years on, the dynamics have changed.

    The Chinese government is now facing significant economic challenges. It’s eager to shore up growth and reinvigorate confidence in the tech sector following its emergence from three years of strict Covid-19 controls.

    Alibaba’s restructuring is “part of [Beijing’s] strategy to shore up confidence in the private sector,” said Hong Hao, chief economist for Grow Investment Group.

    In a policy shift, Chinese leader Xi Jinping recently urged the government to support private businesses, while calling on entrepreneurs to play a role in boosting growth and tech innovation, so that China can better counter what he called “containment” and “suppression” from the West led by the United States.

    Premier Li Qiang, a trusted ally of Xi who was confirmed as the country’s No 2 official this month, followed up by rolling out a series of measures intended to repair ties between the government and the private sector.

    “For a period of time last year, there were some incorrect discussions and comments in the society, which made some private entrepreneurs feel worried,” Premier Li said at his first news conference earlier this month.

    China may need Alibaba now, but it’s not nearly as powerful as it was, according to analysts.

    The breakup appears to “curb the influence of tech titans,” Silvers said. “It would serve as a stark reminder of Beijing’s uncomfortable relationship with the private sector, despite recent reassurances.”

    Beijing’s major concern is that private tech firms have become too big and powerful. During its years-long clampdowns, the government sought to reduce the monopolistic nature of many prominent tech companies, slapping them with big fines, banning apps from stores and demanding that some firms completely overhaul their businesses.

    “[Alibaba’s restructuring plan] offers a way to limit monopoly power and platform sway,” Hong said.

    It could serve as a model for other Chinese tech giants going forward.

    “Tencent is the obvious [one] next,” Hong said, adding that the social media and gaming giant has already started reducing its stake in portfolio companies, including food delivery company Meituan.

    Investors and analysts have cheered Alibaba’s restructuring.

    The move marks the most significant overhaul in the company’s 24-year history and will “unlock the value” of its various businesses, it said on Tuesday.

    Alibaba’s business will be split into six units: domestic e-commerce, international e-commerce, cloud computing, local services, logistics, and media and entertainment.

    The domestic e-commerce group, which includes Taobao and contributes to a majority of the company’s revenues, will remain a wholly-owned unit. The other five, meanwhile, will have their own CEOs and can pursue separate public listings.

    “The market is the best litmus test, and each business group and company can pursue independent fundraising and IPOs when they are ready,” Alibaba CEO Daniel Zhang said in an email to employees.

    Some analysts welcomed the move, believing it will lead investors to reassess the valuation of Alibaba.

    Citi analysts said Tuesday their target price for Alibaba’s US-listed stock was $156 per share, which is nearly 60% higher than Tuesday’s closing level.

    -— CNN’s Riley Zhang contributed reporting.

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  • Kakao wins control of K-pop powerhouse SM Entertainment | CNN Business

    Kakao wins control of K-pop powerhouse SM Entertainment | CNN Business

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    Hong Kong/Seoul
    CNN
     — 

    South Korean internet company Kakao has become the largest shareholder of SM Entertainment, winning a battle for control of one of the country’s most iconic music agencies.

    Kakao and its entertainment unit have increased their stake in SM to 39.9%, they said in a Tuesday regulatory filing. Previously, the firm had held 4.9% of SM.

    Kakao purchased the additional shares for about 1.25 trillion Korean won ($963 million) through a tender offer launched earlier this month.

    In securing a controlling stake, Kakao has seen off rival HYBE, South Korea’s top music agency and home to boy band sensation BTS, after a bruising takeover battle.

    In a separate Tuesday filing, HYBE said it had sold some of its SM shares to Kakao, reducing its stake to 8.8%.

    Kakao CEO Hong Eun-taek acknowledged the acquisition, telling shareholders Tuesday that the companies would work to combine the strengths of Kakao’s tech expertise and SM’s intellectual property and production skills “to expand our collective growth.”

    “After the swift and amicable completion of the acquisition, we will form the business cooperation plans between Kakao, Kakao Entertainment and SM Entertainment, and share them with our investors,” he added.

    Kakao raised eyebrows earlier this month by doubling down on its quest to take control of SM, seeking to get a bigger piece of the music label just days after a previous share sale agreement between the two parties was blocked by a South Korean court.

    SM was founded by Lee Soo-man, a legendary music producer who is widely referred to in South Korea as “the godfather of K-pop” for introducing the genre to a mass audience. The company is known for representing hit artists such as NCT 127, EXO, BoA and Girls’ Generation.

    Recently, however, it’s made headlines for a different reason: shareholder battles.

    Lee has tussled with his firm’s management on multiple fronts this year — including how much of the company should be sold to either Kakao or HYBE. He sold most of his shares to HYBE for 422.8 billion Korean won ($334.5 million) in February, giving the agency a 14.8% stake.

    HYBE had also tried to increase its stake in the company in recent weeks, with its own tender offer that failed to gain traction.

    After that, Kakao swooped in by offering SM shareholders 150,000 won ($115) per share, significantly more than HYBE’s previous offer of 120,000 won ($92) per share. HYBE then formally called off its takeover bid.

    SM’s management said it wanted to move forward with Kakao because the two parties were aligned on how the agency should operate.

    SM Entertainment’s stock rose 3.5% on Tuesday following the news, while Kakao’s shares were little changed.

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  • The company behind Johnnie Walker and Guinness appoints first female CEO | CNN Business

    The company behind Johnnie Walker and Guinness appoints first female CEO | CNN Business

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    London
    CNN
     — 

    One of the world’s largest alcoholic drinks companies has appointed its first female CEO.

    Diageo, which makes Guinness beer and Johnnie Walker whisky, said Tuesday that chief operating officer Debra Crew would succeed Ivan Menezes, who will retire from the company after 10 years at the helm.

    Crew is to take over on July 1, the company said in a statement. Her appointment means women will make up more than 50% of Diageo’s executive committee, it added.

    Diageo is the seventh-largest member of the FTSE 100

    (UKX)     index and will now become the largest UK-listed company led by a woman. There are just nine other FTSE 100

    (UKX)     companies led by women, including pharmaceutical company GlaxoSmithKline

    (GLAXF)     and bank NatWest.

    Diageo is the world’s fourth biggest alcoholic drinks company by market value, after AB InBev

    (BUD)     and China’s Wuliangye Yibin and Kweichow Moutai. It is fifth biggest if French luxury goods group LVMH

    (LVMHF)    , which sells Moët champagne and Hennessy cognac, is included.

    Menezes is stepping down following a very successful tenure at Diageo, during which the company’s share price has almost doubled. It sells more Scotch whisky, tequila, vodka and gin by net sales value than any other business in the world.

    “Ivan has transformed Diageo’s global footprint, brand portfolio and strategic focus, positioning our business as a clear leader in premium drinks,” chairman Javier Ferrán said in the statement.

    “The Board has diligently planned for Ivan’s successor, and we are delighted to have appointed a leader of Debra’s calibre to the role,” he added. “I have no doubt that Diageo is in the right hands for the next phase of its growth.”

    Crew joined Diageo in 2020 from Pepsi

    (PEP)    Co. She is the former CEO of tobacco company Reynolds American and has worked at Kraft Foods, Nestle

    (NSRGF)     and Mars.

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  • The US case against Binance calls out one of the worst-kept secrets in crypto | CNN Business

    The US case against Binance calls out one of the worst-kept secrets in crypto | CNN Business

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    Editor’s Note: A version of this story appeared in CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.


    New York
    CNN
     — 

    If you live in America, you’re not allowed to trade crypto derivatives. And if you’re a big international platform for trading crypto derivatives, you can’t let Americans trade those products if you haven’t registered with the boring-sounding but not-to-be-trifled-with federal regulator known as the Commodity Futures Trading Commission, or CFTC.

    Today, that regulator sued Binance, the world’s largest cryptocurrency exchange, for allegedly doing just that. (And if that name sounds familiar, it may because back in November, Binance briefly flirted with bailing out its smaller rival, FTX. Obviously, Binance took one look under the hood at FTX, now at the center of a massive federal fraud investigation, and promptly bailed.)

    Here’s the deal: The CFTC alleges that Binance and its CEO violated US trading laws by, among other things, secretly coaching “VIP” customers within the United States on how to evade compliance controls.

    The commission, which regulates US derivatives trading, said the company and its CEO, Changpeng Zhao, “instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.”

    Which, you know, isn’t something you want to be caught doing. The CFTC can’t bring criminal charges, but it can seek heavy fines and potentially ban Binance from registering in the US in the future.

    Binance said the lawsuit was “unexpected and disappointing,” adding that it has made “significant investments” in the past two years to ensure that US-based investors are not active on the platform.

    As news of the lawsuit broke Monday, Zhao, known as “CZ,” tweeted the number 4, pointing to a part of a previous statement: “Ignore FUD, fake news, attacks, etc.” (FUD is a commonly used acronym among crypto folks that stands for “fear, uncertainty, doubt.”)

    Binance has long argued that it isn’t subject to US laws because it doesn’t have a physical headquarters in America. Or anywhere, really — CZ claims that the company’s headquarters are wherever he is at any point in time, “reflecting a deliberate approach to attempt to avoid regulation,” according to the CFTC’s lawsuit.

    The CFTC’s lawsuit is certainly not great news for Binance, or for crypto more broadly. But it’s not quite the seismic event that was FTX’s collapse, or even the Terra/Luna meltdown. (You can read more about those here and here but, tl;dr: Those 2022 events were, to use a technical term, holy-crap-sell-everything-call-your-dad-and-cry moments for crypto investors.)

    Prices of bitcoin and ethereum, the two most popular cryptocurrencies, fell more than 3% Monday. Which is to say, it was just another day trading virtual currencies.

    Perhaps the most significant part of the lawsuit is the way the CFTC loudly calls out one of the worst-kept secrets in all of crypto: That not only are US customers gaining access to risky offshore crypto derivatives they shouldn’t be allowed to access, but it’s also pretty darn easy to do so. All anyone needs is a VPN and an iron stomach, because crypto derivatives are leveraged bets on wildly unstable assets. (And like everything in this newsletter, that shouldn’t be taken as any kind of advice.)

    The likely outcome, said Timothy Cradle, a crypto compliance and regulation expert at Blockchain Intelligence Group, will be that Binance ends up paying “hundreds of millions of dollars” in fines and will be prevented from registering a derivatives exchange in the future. That’s “a terminal blow for users of their service located in the US and a significant hit to Binance’s revenue” as the suit alleges US users make up 16% of the revenue for Binance’s derivatives product.

    Monday’s news adds yet another layer of regulatory scrutiny on crypto’s biggest players. The Internal Revenue Service and Securities and Exchange Commission are also reportedly also investigating Binance, per Bloomberg.

    Meanwhile, Coinbase, the largest US-listed crypto exchange, received a so-called Wells notice (typically a precursor to enforcement action) last week from the SEC for possible securities law violations.

    And just to pile on: The crypto industry earlier this month lost two of its biggest connections to the mainstream finance world — Silvergate and Signature Bank.

    All in all, not a great month for the industry that is perpetually straining credibility even when it’s hot. And right now, it is decidedly not.

    Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day work week around here.)

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  • This is why SVB imploded, says top Fed official | CNN Business

    This is why SVB imploded, says top Fed official | CNN Business

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    New York
    CNN
     — 

    Silicon Valley Bank imploded due to mismanagement and a sudden panic among depositors, a top Federal Reserve official plans to tell lawmakers at a hearing on Tuesday.

    In prepared testimony released on Monday, Michael Barr, the Fed’s vice chair for supervision, details how SVB leadership failed to effectively manage interest rate and liquidity risk.

    “SVB’s failure is a textbook case of mismanagement,” Barr says in testimony to be delivered before the Senate Banking Committee.

    The Fed official points out that SVB’s belated effort to fix its balance sheet only made matters worse.

    “The bank waited too long to address its problems and, ironically, the overdue actions it finally took to strengthen its balance sheet sparked the uninsured depositor run that led to the bank’s failure,” said Barr, adding that there was “inadequate” risk management and internal controls.

    Depositors yanked $42 billion from SVB on March 9 alone in a bank run, a panic that appeared to be fueled in part by venture capitalists urging tech startups to pull their funds.

    “Social media saw a surge in talk about a run, and uninsured depositors acted quickly to flee,” said Barr.

    The Fed official echoed comments from other top regulators in assuring the public about the safety of banks.

    “Our banking system is sound and resilient, with strong capital and liquidity,” Barr said. “We are committed to ensuring that all deposits are safe. We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools for any size institution, as needed, to keep the system safe and sound.”

    Facing questions over how regulators — including at the Fed itself — missed red flags at SVB, the Fed has launched a review of oversight of the bank. Barr, who is leading that review, promised to take an “unflinching look” at the supervision and regulation of SVB. He said the review will be thorough and transparent and officials welcome and expert external reviews as well.

    In his testimony, Barr discloses that near the end of 2021, bank supervisors found “deficiencies” in the bank’s liquidity risk management. That resulted in six supervisory findings linked to SVB’s liquidity stress testing, contingency funding and liquidity risk management.

    Then, in May 2022, supervisors issued three findings related to “ineffective” board oversight, risk management weaknesses and internal audit function lapses, Barr said. Bank supervisors took further steps last year that show regulators were aware of problems at SVB.

    Barr’s testimony indicates the Fed’s review will examine how the 2018 rollback of Dodd-Frank may have contributed to SVB’s failure. That rollback, under then-President Donald Trump, allowed SVB to avoid tougher stress testing and rules on liquidity, funding, leverage and capital.

    Barr said the Fed will weigh whether the applying those tougher rules to SVB would have helped the bank manage the risks that led to its failure.

    Looking ahead, Barr said the recent events have underscored how regulators must enhance rules applying to banks and study banking has been changed by social media, customer behavior, rapid growth and other developments.

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  • IMF chief warns of ‘risks’ to global financial stability, but China showing signs of recovery | CNN Business

    IMF chief warns of ‘risks’ to global financial stability, but China showing signs of recovery | CNN Business

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    Hong Kong
    CNN
     — 

    The head of the International Monetary Fund called for greater vigilance over the global financial system during a speech in China on Sunday in which she also pointed to “green shoots” emerging in the world’s second-largest economy.

    “Risks to financial stability have increased,” IMF Managing Director Kristalina Georgieva said during remarks at the China Development Forum in Beijing.

    Georgieva lauded how policy-makers had acted swiftly in response to the banking crisis, citing the recent collaboration by major central banks to boost the flow of US dollars around the world.

    “These actions have eased market stress to some extent,” she said. “But uncertainty is high, which underscores the need for vigilance.”

    Global investors have been on high alert about the health of the banking sector following the sudden downfalls of Credit Suisse, Silicon Valley Bank and US regional lender Signature Bank.

    Last week, concerns about Deutsche Bank and speculation over one of its bond payments also weighed on markets, prompting EU leaders to reassure the public over the resilience of Europe’s banking system.

    Georgieva said Sunday that the IMF was continuing to watch the situation, and assess potential implications for the global economic outlook.

    Meanwhile, she reiterated an IMF projection that the world economy will see growth slow to just under 3% this year, due to continued fallout from the pandemic, the war in Ukraine and tighter monetary policies.

    That’s compared to the historic average of 3.8%, according to Georgieva, and down from 3.2% in 2022.

    But she also pointed to the emergence of “green shoots” in China, where the IMF expects the recently reopened economy to expand by 5.2% this year. That’s roughly in line with Beijing’s official target of 5%.

    Such growth would mark a historic low. But it would still be a significant improvement on the 3% logged by the world’s second-largest economy last year — and help prop up the global economy.

    China’s rebound this year will allow it to contribute roughly one third of global growth, according to Georgieva. Any 1% increase in Chinese GDP growth would also help lift other Asian economies’ growth by an average of 0.3%, she added.

    But the IMF chief urged Chinese policymakers to take steps to shift its economy and “rebalance” it toward more consumption-driven growth.

    Leaning toward that model would be “more durable, less reliant on debt, and will also help address climate challenges,” Georgieva said.

    “To get there, the social protection system will need to play a central role through higher health and unemployment insurance benefits to cushion households against shocks.”

    Georgieva also called for reforms to help “level the playing field between the private sector and state-owned enterprises, together with investments in education.”

    “The combined impact of these policies could be significant,” she said.

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  • Grime, dirt, stink and funk: Tween boys are skincare’s hottest market | CNN Business

    Grime, dirt, stink and funk: Tween boys are skincare’s hottest market | CNN Business

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    New York
    CNN
     — 

    Check the aisles at Walmart, Target or your neighborhood drug store and you’ll find them chock full of scented, lathering, moisturizing, bubbling – even glittering – face and body cleansers for kids and adults.

    But, until recently, there’s been a glaring shortage of products targeting the skincare needs of one key demographic – tween boys.

    “It’s a huge white space in the market,” said Carson Kitzmiller, senior beauty and personal care analyst with market research firm Mintel. It’s a missed opportunity, she said, because “we’re seeing teen boys becoming more interested in their own skincare needs than in the past and they’re really leaning into it,” she said.

    A handful of boutique companies and entrepreneurs have spotted the gap and, in the absence of big brands, are trying to fill it. Some of them happen to be moms.

    Dr. Sheilagh Maguiness said the lack of products for the evolving cleansing and hygiene needs of her two sons, ages nine and 11, inspired her to develop Stryke Club.

    Maguiness, a board-certified pediatric dermatologist, and three other co-founders launched the boys skincare brand in 2020, at the height of the pandemic. The affordable line, which includes a face wash, body wash, moisturizer and topical acne treatment priced under $25, rolled into Target stores and online the following year.

    “Walmart then came to us recognizing there was this gap in the market and picked us up,” she said. “Our sales have increased by 45% year-over-year since 2020, and our ballpark sales for 2023 are projected to be around $3 million.”

    Still, Stryke Club, which Maguiness said uses gentle ingredients that won’t irritate young skin, remains one of the few brands for male consumers ages 7 to young adulthood, while store shelves continue to overflow with options for girls’ needs.

    “Whether it’s young sensitive skin, or acne, eczema or their first shave, boys have specific skin needs,” said Maguiness. “We also have to help them overcome this stigma about being a boy and engaging in self care.”

    The personal care products market overall in the US amounts to more than $25 billion annually (according to market research firm NPD), but very little of it caters to boys.

    The void is there because body care brands largely prioritize female shoppers even as several indie or boutique brands championing adult male grooming – Harry’s, Dollar Shave Club, Bevel – have proven to be big successes.

    According to Dr. Rhonda Klein, a board certified dermatologist, “Brands follow spending power, and until rather recently boys weren’t very interested in skincare,” said Klein. “It’s easier to invest in products and marketing toward an audience that is seeking it.”

    But older boys are becoming more aware and invested in their personal care needs thanks in large part to social media influencers.

    “Social media has its pitfalls [but] it has also brought skincare to the mainstream conversation across gender and age,” said Dr. Deanne Mraz Robinson, assistant clinical professor of dermatology at Yale New Haven Hospital.

    “For better or worse it’s also brought our outward appearance to larger audiences than ever before, something that in my opinion has everyone, including teen and tween boys, becoming more aware and caring more how their skin looks,” she said.

    Julie Bowen and Jill Biren were friends first before they became business partners through a shared quest to provide their sons with skin care products they would actually be excited to use.

    In January, Bowen and Biren launched direct-to-consumer brand JB SKRUB, a collection of five products (priced at $16 to $20) – face wash, face lotion, body wash, body spray and oil-control face wipe pads – formulated and packaged for boys 10 to 16 years old.

    “We met when our sons were in elementary school together. Jill and I were at a birthday party together and started talking about why there isn’t a body product for our boys that’s not overly scented,” said Bowen, a mom to three teenage sons. Jill said let’s do something.”

    If Bowen’s name seems familiar, it’s because she is an actress, producer and director, perhaps most famous for starring as Claire Dunphy in the ABC sitcom “Modern Family.”

    Biren, a mom to both a tween and teen son, is a former long-time Conde Nast executive, who led marketing campaigns for beauty and fashion companies.

    JB SKRUB cofounders Julie Bowen, left, and Jill Biren, right.

    Bowen and Biren said they wanted their products to help change the approach that tween and teen boys adopt when it comes to personal hygiene.

    “Typically in most households, boys are either using whatever products their parents or sisters have bought,” said Bowen. “So either it smells like strawberries or is too babyish, or isn’t meeting them where they are in terms of how their skin and body are developing as puberty hits.”

    “Our goal with JB SKRUB was to simplify. Simple and frank language, clean and sustainable ingredients and easy-to-use packaging,” she said.

    The women bootstrapped the business and took three years to develop the products, working in consultation with skincare experts. The products are made with clean ingredients. The body wash, for example, contains prebiotic chia eed extract, which acts as an anti-inflammatory and anti-microbial ingredient, said Biren.

    Bowen said the packaging was also developed with the end-user, and sustainability in mind. “We put the face lotion in a pump tube instead of a jar to make it easier for boys to use,” she said. The brand also expected to launch product refills later this year.

    The women hope to eventually get JB SKRUB into retail stores.

    “We have proof of concept and we know we are addressing a need in the market,” said Bowen, who projects sales to hit seven figures by the end of the first year.

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  • Small US banks see record drop in deposits after SVB collapse | CNN Business

    Small US banks see record drop in deposits after SVB collapse | CNN Business

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    Deposits at small US banks dropped by a record amount following the collapse of Silicon Valley Bank on March 10, data released on Friday by the Federal Reserve showed.

    Deposits at small banks fell $119 billion to $5.46 trillion in the week ended March 15, which was more than twice the previous record drop and the biggest decline as a percent of overall deposits since the week ended March 16, 2007.

    Borrowings at small banks, defined as all but the biggest 25 commercial US banks, increased by $253 billion to a record $669.6 billion, the Fed’s weekly data showed.

    “As a result, small banks had $97 billion more in cash on hand at the end of the week, suggesting that some of the borrowing was to build war chests as a precautionary measure in case depositors asked to redeem their money,” Capital Economics’ analyst Paul Ashworth wrote.

    SVB collapsed after it was unable to meet a swift and massive run by depositors who took out tens of billions of dollars in a matter of hours.

    Deposits at large US banks rose $67 billion in the week to $10.74 trillion, the Fed data showed.

    Overall US bank deposits have been in decline after sharply rising in the wake of pandemic aid in 2020 and early 2021.

    The reversal in the trend for large banks was notable. The rise equates to about half as much as the deposit decline at small banks, suggesting some of the cash may have gone into money market funds or other instruments.

    Large banks also increased borrowings in the week, by $251 billion.

    It was unclear if the shift in deposits out of small banks will persist.

    “Deposit flows in the banking system have stabilized over the last week,” Fed Chair Jerome Powell said on Wednesday.

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  • TikTok and its CEO are fighting to save the app in the US | CNN Business

    TikTok and its CEO are fighting to save the app in the US | CNN Business

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    As a growing number of lawmakers raise national security concerns about TikTok’s ties to China, and some experts worry about the app’s impact on young people’s mental health, CNN is hosting a special to dig into these issues. Watch “CNN Primetime: Is time up for TikTok?” Thursday, March 23 at 9 p.m. ET.



    CNN
     — 

    At a Harvard Business Review conference earlier this month, where executives, professors and artists appeared for talks on corporate leadership and emotional intelligence, Shou Chew attempted to save his company.

    In his talk, Chew, the CEO of TikTok, said the social network would not provide US user data to the Chinese government and has never been asked to do so. Chew stressed the steps TikTok has taken to protect US user data. And four separate times, Chew told the audience that the platform’s mission was to “inspire creativity and bring joy” to users.

    The Harvard event is just one of several media appearances Chew has made in recent weeks amid mounting scrutiny of TikTok and of himself. Chew is set to testify on Thursday for the first time before a Congressional committee about “TikTok’s consumer privacy and data security practices, the platforms’ impact on kids, and its relationship with the Chinese Communist Party,” according to a statement last week from the committee. Meanwhile, federal officials are now demanding the app’s Chinese owners sell their stake in the social media platform, or risk facing a US ban of the app.

    Chew, a Singaporean who has largely stayed out of the spotlight since taking over TikTok in 2021, recently sat for interviews with multiple US newspapers and this week showed up in a video on the corporate TikTok account to highlight the vast reach of the app, which he revealed now has more than 150 million users in the United States.

    “That’s almost half the US coming to TikTok to connect, to create, to share, to learn, or just to have some fun,” said Chew, wearing in a hoodie and t-shirt like any other American tech executive in the clip. “This comes at a pivotal moment for us. Some politicians have started talking about banning TikTok, now this could take TikTok away from all 150 million of you.”

    Chew’s heightened visibility appears to be part of a larger messaging campaign by TikTok to bolster its reputation in the US and remind voters – and their representatives – how essential the social network is to American culture.

    A press conference is planned for Wednesday with dozens of social media creators on the steps of the Capitol, some of whom have been flown out there by TikTok. The company is paying for a blitz of advertisements for a Beltway audience. And last week it put out a docuseries highlighting American small business owners who rely on the platform for their livelihoods.

    Behind the scenes, Chew has also met with members of Congress and TikTok recently invited researchers and academics to its Washington, D.C., offices to learn more about how it is working to address lawmakers concerns over its ties to China through its parent company, ByteDance. Its parent company has also ramped up federal lobbying, spending more than $5 million last year, according to data tracked by OpenSecrets.

    “It’s life or death for TikTok, from their perspective,” said Justin Sherman, the CEO of Global Cyber Strategies, D.C.-based research and advisory firm, who was among the researchers TikTok invited to be briefed on “Project Texas,” the company’s $1.5 billion initiative to address lawmakers’ security concerns. “They are throwing everything they can at the problem.”

    In a statement, TikTok spokesman Jamal Brown said: “A U.S. ban on TikTok could have a direct impact on the livelihoods of millions of Americans. Lawmakers in Washington debating TikTok should hear firsthand from people whose lives would be directly affected by their decisions.”

    For much of the past year, TikTok has been rolling out new features and policies to address privacy and security concerns that the Chinese government could gain access to US user data, as well as broader fears that its app, like other social platforms, can be harmful to some younger users.

    TikTok recently set a default one-hour daily screen time limit on every account for users under 18 in one of the most aggressive moves yet by a social media company to prevent teens from endlessly scrolling. It rolled out a feature that aimed to offer more information to users about why its powerful algorithm recommends certain videos. And the company pledged more transparency to researchers.

    Facing concerns about its parent company’s ties to China, TikTok has also taken a number of steps to more clearly separate its US operations and user data from other parts of the organization. That includes moving all its US user data to Oracle’s cloud platform, where it says it hosts “100% of US user traffic.”

    The messaging campaign has only ramped up this week ahead of the hearing. TikTok rolled out refreshed Community Guidelines for content, which the company framed as being “based on our commitment to uphold human rights and aligned with international legal frameworks.” And Chew once again stressed TikTok’s independence from China.

    “I understand that there are concerns stemming from the inaccurate belief that TikTok’s corporate structure makes it beholden to the Chinese government or that it shares information about U.S. users with the Chinese government,” Chew said in prepared remarks ahead of his testimony before Congress. “This is emphatically untrue.”

    At the same time, TikTok is now betting on a strategy from American tech companies who have faced scrutiny for other reasons, playing up the impact it has on small businesses in the United States, including with the CEO’s prepared remarks and a mini docuseries it released last week titled “TikTok Sparks Good.”

    The series spotlighted inspiring stories of American small business owners and creators. The first of the 60-second clips features a Mississippi soap maker with a deep Southern accent who built her company on the app, and the second features an educator who quit his job to focus on sharing informational videos on TikTok aimed at teaching toddlers how to read.

    “Because of TikTok, I’m reaching millions of families who want to teach their toddlers how to read,” the educator says.

    Dozens of TikTok creators who oppose a ban will also be holding a press conference on Capitol grounds on Wednesday evening with Congressman Jamaal Bowman, a Democrat from New York. TikTok flew out some of the creators, the company confirmed to CNN. (The Information was first to report the move.)

    The list of expected attendees includes a disabled Asian American creator using her platform to combat ableism, a small business owner from South Carolina who launched a greeting card company via TikTok, and an Ohio-based chef who built her bakery business via the app. Some of the creators have hundreds of thousand or even millions of followers on TikTok.

    Even with these efforts, Sherman expressed some skepticism about how persuasive the PR push will be, mostly because of how divided Washington is right now.

    “Not everyone wants a ban,” he said. “For some lawmakers, it will matter that TikTok is taking all these steps to address security concerns.”

    But for others, it won’t move the needle. “Some lawmakers, frankly, do not care what ads TikTok is taking out, what pledges it’s making on its blog about independence, data privacy … They see an unmitigable risk of Chinese government access to data and/or influence over content, and so are going to push for a complete ban.”

    Lindsay Gorman, a senior fellow for emerging technologies at the German Marshall Fund’s Alliance for Securing Democracy and a former Biden administration adviser, said that “by and large, TikTok’s lobbying efforts so far have been pretty ineffective.”

    The problem, she said, is two-fold. First, even if TikTok takes steps to bolster its safeguards today, as it has been doing with Project Texas, concerns remain that it’s always “one update away from becoming a vulnerability.” And second, TikTok’s PR efforts in Washington won’t undo previous moments when the company “shot itself in the foot” by making what she said were “inaccurate statements” to Congress, “and then having revelations come out showing that those were inaccurate.”

    After the initial, Trump-era calls for a TikTok ban appeared to fade in Washington, BuzzFeed reported in 2021 that US user data was repeatedly accessed from China and that “everything is seen in China.” The details in the report were seemingly at odds with remarks a TikTok executive gave before a Senate panel earlier that year, claiming that a US-based security team decides who can access US user data from China. Following the report, TikTok once again became a hot button issue in the nation’s capital.

    But even as suspicion among US lawmakers grew, so did the app’s popularity in the country.

    “I do think TikTok’s strongest argument to date is drawing on its creator user base,” Gorman said. But for some lawmakers with security concerns, the latest push “may be too little too late.”

    In his TikTok video on Tuesday, Chew appealed directly to users of the app. The CEO asked them to write in the comments section to share “what you want your elected representatives to know about what you love about TikTok.”

    The top comment on the clip, which has received upwards of 50,000 likes, simply reads: “You know something went wrong when the boss has to show up 😂”

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  • What the banking crisis means for mortgage rates | CNN Business

    What the banking crisis means for mortgage rates | CNN Business

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    Washington
    CNN
     — 

    Mortgage rates have taken would-be buyers on a ride this year — and it’s only March.

    Generally, home buyers can anticipate mortgage rates to move down through the rest of this year as the banking crisis drags on, which could cool down inflation.

    But there are bound to be some bumps along the way. Here’s why rates have been bouncing around and where they could end up.

    After steadily rising last year as a result of the Federal Reserve’s historic campaign to rein in inflation, the average rate for a 30-year fixed-rate mortgage topped out at 7.08% in November, according to Freddie Mac. Then, with economic data suggesting inflation was retreating, the average rate drifted down through January.

    But a raft of robust economic reports in February brought concerns that inflation was not cooling as quickly or as much as many had hoped. As a result, after falling to 6.09%, average mortgage rates climbed back up, rising half a percentage point over the month.

    Then in March banks began collapsing. That sent rates falling again.

    Neither the actions of the Federal Reserve nor the bank failures directly impact mortgage rates. But rates are indirectly impacted by actions that the Fed takes or is expected to take, as well as the health of the broader financial system and any uncertainty that may be percolating.

    On Wednesday, the Federal Reserve announced it would raise interest rates by a quarter point as it attempts to fight stubbornly high inflation while taking into account recent risks to financial stability.

    While the bank failures made the Fed’s work more complicated, analysts have said that, if contained, the banking meltdown may have actually done some work for the Fed, by bringing down prices without raising interest rates. To that point, the Fed suggested on Wednesday that it may be at the end of its rate hike cycle.

    Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.

    Following the Fed’s announcement on Wednesday, bond yields — and the mortgage rates that usually follow them — fell.

    But the relationship between mortgage rates and Treasurys has weakened slightly in recent weeks, said Orphe Divounguy, senior economist at Zillow.

    “The secondary mortgage market may react to speculation that more financial entities may need to sell their long-term investments, like mortgage backed securities, to get more liquidity today,” he said.

    Even as Treasurys decline, he said, tighter credit conditions as a result of bank failures will likely limit any dramatic plunging of mortgage rates.

    “This could restrict mortgage lenders’ access to funding sources, resulting in higher rates than Treasuries would otherwise indicate,” Divounguy said. “For borrowers, lending standards were already quite strict, and tighter conditions may make it more difficult for some home shoppers to secure funding. In turn, for home sellers, the time it takes to sell could increase as buyers hesitate.”

    Inflation is still quite high, but it is slowing and analysts are anticipating a much slower economy over the next few quarters — which should further bring down inflation. This is good for mortgage borrowers, who can expect to see rates retreating through this year, said Mike Fratantoni, Mortgage Bankers Association senior vice president and chief economist.

    “Homebuyers in 2023 have shown themselves to be quite sensitive to any changes in mortgage rates,” Fratantoni said.

    The MBA forecasts that mortgage rates are likely to trend down over the course of this year, with the 30-year fixed rate falling to around 5.3% by the end of the year.

    “The housing market was the first sector to slow as the result of tighter monetary policy and should be the first to benefit as policymakers slow — and ultimately stop — hiking rates,” said Fratantoni.

    In second half of the year, the inflation picture is expected to improve, leading to mortgage rates that are more stable.

    “Expectations for slower economic growth or even a recession should bring inflation down and help mortgage rates decline,” said Divounguy.

    That’s good news for home buyers since it improves affordability, bringing down the cost to finance a home. It also benefits sellers, since it reduces the intensity of an interest-rate lock-in.

    Lower rates could also convince more homeowners to list their home for sale. With the inventory of homes for sale near historic lows, this would add badly needed inventory to an extremely limited pool.

    “Mortgage rates are steering both supply and demand in today’s costly environment,” said Divounguy. “Home sales picked up in January when rates were relatively low, then slacked off as they ramped back up.”

    But with cooling inflation comes a higher risk of job losses, which is typically bad for the housing market.

    “Of course, much uncertainty surrounding the state of inflation and this still-evolving banking turmoil remains,” said Divounguy.

    In his remarks on Wednesday, Fed Chair Jerome Powell said estimates of how much the recent banking developments could slow the economy amounted to “guesswork, almost, at this point.”

    But regardless of the tack the economy and banking concerns take, their impact will quickly be seen in mortgage rates.

    “Evidence — in either direction — of spillovers into the broader economy or accelerating inflation would likely cause another policy shift, which would materialize in mortgage rates,” said Divounguy.

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  • King Charles state visit to France postponed amid violent pension protests | CNN

    King Charles state visit to France postponed amid violent pension protests | CNN

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    CNN
     — 

    King Charles’s state visit to France has been postponed amid planned protests over the French government’s controversial pension reforms.

    Both France’s Élysée Palace and Buckingham Palace confirmed the trip had been shelved on Friday morning.

    The British monarch and Queen Consort were supposed to visit the country from Sunday through Wednesday, and they would have traveled to Paris and the southwestern city of Bordeaux. However a decision to postpone the visit was made after demonstrations turned violent in some areas, including Bordeaux, on Thursday.

    Clashes between groups of protesters angry over proposed pension reforms and police broke out after workers staged a national strike throughout Thursday, with flare-ups in Paris and regional capitals. In Bordeaux, demonstrators set fire to the entrance of the city hall during skirmishes with police, according to CNN affiliate BFMTV.

    The Élysée Palace said in a statement that the King’s state visit “will be rescheduled as soon as possible.”

    “In view of yesterday’s announcement of a new national day of action against pension reform on Tuesday, March 28 in France, the visit of King Charles III, originally scheduled for March 26-29 in our country, will be postponed,” the statement read.

    “This decision was taken by the French and British governments, after a telephone exchange between the President of the Republic and the King this morning, in order to be able to welcome His Majesty King Charles III in conditions that correspond to our friendly relationship,” it continued.

    A Buckingham Palace spokesperson confirmed the postponement to CNN, adding: “Their Majesties greatly look forward to the opportunity to visit France as soon as dates can be found.”

    A UK government spokesperson also confirmed the King would not travel to France next week, adding that “this decision was taken with the consent of all parties, after the President of France asked the British Government to postpone the visit.”

    Charles and Camilla were due to travel from France to Germany on Wednesday for a state visit. The second leg of the trip is still expected to go ahead.

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  • China says it ‘firmly opposes’ a potential forced sale of TikTok | CNN Business

    China says it ‘firmly opposes’ a potential forced sale of TikTok | CNN Business

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    Hong Kong
    CNN
     — 

    China said it would “firmly oppose” any forced sale of TikTok, in its first direct response to demands by the Biden administration that the app’s Chinese owners sell their share of the company or face a ban in its most important market.

    The comments came as TikTok CEO Shou Chew testified in front of US lawmakers amid mounting scrutiny over the app’s ties to Beijing.

    China’s commerce ministry said Thursday that a forced sale of TikTok would “seriously damage” global investors’ confidence in the United States.

    “If the news [about a forced sale] is true, China will firmly oppose it,” Shu Jueting, a spokeswoman for the ministry, told a Thursday news conference in Beijing, adding that any potential deal would need approval from the Chinese government.

    “The sale or divestiture of TikTok involves technology export, and administrative licensing procedures must be performed in accordance with Chinese laws and regulations,” she said.

    “The Chinese government will make a decision in accordance with the law.”

    Previously, Beijing didn’t weigh in directly on a potential forced sale. However, starting in 2020, it had signaled it wanted to protect Chinese technology by adding recommendation algorithms, which could include TikTok’s, to a list of technologies restricted for export.

    On Thursday, Chew, in his first congressional hearing, sought to provide nuanced answers and tried to assuage lawmakers’ worries about the company and its parent, Beijing-based Bytedance.

    But he was frequently interrupted and called evasive by lawmakers. After more than five hours of testimony, the lawmakers expressed deep skepticism about his company’s attempts to protect US user data and ease concerns about its ties to China.

    That means there will likely be more calls by Washington to ban TikTok if the company does not spin itself off from its Chinese parent, analysts said.

    The Chinese government may have veto power on the sale, according to Shu’s latest response and Beijing’s previous actions.

    In December, Chinese officials proposed tightening the rules that govern the sale of content-based recommendation algorithms to foreign buyers.

    TikTok’s algorithms, which keep users glued to the app, are believed to be key to its success. The algorithms give recommendations based on users’ behavior, thus pushing videos they actually like and want to watch.

    Chinese regulators first added algorithms to the restricted list of technologies in August 2020, when the Trump administration threatened to ban TikTok unless it was sold.

    Analysts and legal experts believe that Beijing may ultimately prefer for TikTok to leave the US market rather than surrender its algorithm.

    See how TikTok compares to China’s heavily censored version, Douyin

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  • Too big for Switzerland? Credit Suisse rescue creates bank twice the size of the economy | CNN Business

    Too big for Switzerland? Credit Suisse rescue creates bank twice the size of the economy | CNN Business

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    London
    CNN
     — 

    The last-minute rescue of Credit Suisse may have prevented the current banking crisis from exploding, but it’s a raw deal for Switzerland.

    Worries that Credit Suisse’s downfall would spark a broader banking meltdown left Swiss regulators with few good options. A tie-up with its larger rival, UBS

    (UBS)    , offered the best chance of restoring stability in the banking sector globally and in Switzerland, and protecting the Swiss economy in the near term.

    But it leaves Switzerland exposed to a single massive financial institution, even as there is still huge uncertainty over how successful the mega merger will prove to be.

    “One of the most established facts in academic research is that bank mergers hardly ever work,” said Arturo Bris, a professor of finance at Swiss business school IMD.

    There are also concerns that the deal will lead to huge job losses in Switzerland and weaken competition in the country’s vital financial sector, which overall employs more than 5% of the national workforce, or nearly 212,000 people.

    Taxpayers, meanwhile, are now on the hook for up to 9 billions Swiss francs ($9.8 billion) of future potential losses at UBS arising from certain Credit Suisse assets, provided those losses exceed 5 billion francs ($5.4 billion). The state has also explicitly guaranteed a 100 billion Swiss franc ($109 billion) lifeline to UBS, should it need it, although that would be repayable.

    Switzerland’s Social Democratic party has already called for an investigation into what went wrong at Credit Suisse, arguing that the newly created “super-megabank” increases risks for the Swiss economy.

    The demise of one of Switzerland’s oldest institutions has come as a shock to many of its citizens. Credit Suisse is “part of Switzerland’s identity,” said Hans Gersbach, a professor of macroeconomics at ETH university in Zurich. The bank “has been instrumental in the development of modern Switzerland.”

    Its collapse has also tainted Switzerland’s reputation as a safe and stable global financial center, particularly after the government effectively stripped shareholders of voting rights to get the deal done.

    Swiss authorities also wiped out some bondholders ahead of shareholders, upending the traditional hierarchy of losses in a bank failure and dealing another blow to the country’s reputation among investors.

    “The repercussions for Switzerland are terrible,” said Bris of IMD. “For a start, the reputation of Switzerland has been damaged forever.”

    That will benefit other wealth management centers, including Singapore, he told CNN. Singaporeans are “celebrating… because there is going to be a huge inflow of funds into other wealth management jurisdictions.”

    At roughly $1.7 trillion, the combined assets of the new entity amount to double the size of Switzerland’s annual economic output. By deposits and loans to Swiss customers, UBS will now be bigger than the next two local banks combined.

    With a roughly 30% market share in Swiss banking, “we see too much concentration risk and market share control,” JPMorgan analysts wrote in a note last week before the deal was done. They suggested that the combined entity would need to exit or IPO some businesses.

    The problem with having one single large bank in a small economy is that if it faces a bank run or needs a bailout — which UBS did during the 2008 crisis — the government’s financial firepower may be insufficient.

    At 333 billion francs ($363 billion), local deposits in the new entity equal 45% of GDP — an enormous amount even for a country with healthy public finances and low levels of debt.

    On the other hand, UBS is in a much stronger financial position than it was during the 2008 crisis and it will be required to build up an even bigger financial buffer as a result of the deal. The Swiss financial regulator, FINMA, has said it will “very closely monitor the transaction and compliance with all requirements under supervisory law.”

    UBS chairman Colm Kelleher underscored the health of UBS’s balance sheet Sunday at a press conference on the deal. “Having been chief financial officer [at Morgan Stanley] during the last global financial crisis, I’m well aware of the importance of a solid balance sheet. UBS will remain rock-solid,” he said.

    Kelleher added that UBS would trim Credit Suisse’s investment bank “and align it with our conservative risk culture.”

    Andrew Kenningham, chief Europe economist at Capital Economics, said “the question of market concentration in Switzerland is something to address in future.” “30% [market share] is higher than you might ideally want but not so high that it’s a major problem.”

    The deal has “surgically removed the most worrying part of [Switzerland’s] banking system,” leaving it stronger, Kenningham added.

    The deal will have an adverse affect on jobs, though, likely adding to the 9,000 cuts that Credit Suisse already announced as part of an earlier turnaround plan.

    For Switzerland, the threat is acute. The two banks collectively employ more than 37,000 people in the country, about 18% of the financial sector’s workforce, and there is bound to be overlap.

    “The Credit Suisse branch in the city where I live is right in front of UBS’s, meaning one of the two will certainly close,” Bris of IMD wrote in a note Monday.

    In a call with analysts Sunday night, UBS CEO Ralph Hamers said the bank would try to remove 8 billion francs ($8.9 billion) of costs a year by 2027, 6 billion francs ($6.5 billion) of which would come from reducing staff numbers.

    “We are clearly cognizant of Swiss societal and economic factors. We will be considerate employers, but we need to do this in a rational way,” Kelleher told reporters.

    The Credit Suisse headquarters in Zurich

    Not only does the deal, done in a hurry, fail to protect jobs in Switzerland, but it contains no special provisions on competition issues.

    UBS now has “quasi-monopoly power,” which could increase the cost of banking services in the country, according to Bris.

    Although Switzerland has dozens of smaller regional and savings banks, including 24 cantonal banks, UBS is now an even more dominant player. “Everything they do… will influence the market,” said Gersbach of ETH.

    Credit Suisse’s Swiss banking arm, arguably its crown jewel, could have been subject to a future sale as part of the terms of the deal, he added.

    A spinoff of the domestic bank now looks unlikely, however, after UBS made clear that it intended to hold onto it. “The Credit Suisse Swiss bank is a fine asset that we are very determined to keep,” Kelleher said Sunday.

    At $3.25 billion, UBS got Credit Suisse for 60% less than the bank was worth when markets closed two days prior. Whether that ultimately turns out to be a steal remains to be seen. Large mergers are notoriously fraught with risk and often don’t deliver the promised returns to shareholders.

    UBS argues that by expanding its global wealth and asset management franchise, the deal will drive long-term shareholder value. “UBS’s strength and our familiarity with Credit Suisse’s business puts us in a unique position to execute this integration efficiently and effectively,” Kelleher said. UBS expects the deal to increase its profit by 2027.

    The transaction is expected to close in the coming months, but fully integrating the two institutions will take three to five years, according to Phillip Straley, the president of data analytics company FNA. “There’s a huge amount of integration risk,” he said.

    Moody’s on Tuesday affirmed its credit ratings on UBS but changed the outlook on some of its debt from stable to negative, judging that the “complexity, extent and duration of the integration” posed risks to the bank.

    It pointed to challenges retaining key Credit Suisse staff, minimizing the loss of overlapping clients in Switzerland and unifying the cultures of “two somewhat different organizations.”

    According to Kenningham of Capital Economics, the “track record of shotgun marriages in the banking sector is mixed.”

    “Some, such as the 1995 purchase of Barings by ING, have proved long-lasting. But others, including several during the global financial crisis, soon brought into question the viability of the acquiring bank, while others have proven very difficult to implement.”

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  • Tom Brady buys partial stake in WNBA’s Las Vegas Aces | CNN

    Tom Brady buys partial stake in WNBA’s Las Vegas Aces | CNN

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    CNN
     — 

    Seven-time Super Bowl champion Tom Brady has acquired an ownership stake in the WNBA’s Las Vegas Aces, team owner Mark Davis announced Thursday.

    “I am very excited to be part of the Las Vegas Aces organization,” said Brady in a statement on Thursday. “I have always been a huge fan of women’s sports, and I admire the work that the Aces’ players, staff, and the WNBA continue to do to grow the sport and empower future generations of athletes. To be able to contribute in any way to that mission as a member of the Aces organization is an incredible honor.”

    Brady said his love for women’s sports grew out of watching his older sisters, who were “by far the best athletes in our house!”

    Brady announced his retirement from the NFL in February after 23 seasons with the New England Patriots and Tampa Bay Buccaneers. During his long career, the three-time league MVP set almost every passing record, including regular season passing yards (89,214) and passing touchdowns (649). He has also amassed the most wins of any player in NFL history (251).

    “Since I purchased the Aces, our goal has been to win on and off the court,” said Davis, who also owns the NFL’s Las Vegas Raiders. “Tom Brady is a win not only for the Aces, and the WNBA, but for women’s professional sports as a whole.”

    Davis purchased the WNBA franchise before the 2021 season. Brady’s partial acquisition of the team is subject to WNBA approval.

    The Aces enter the upcoming season as reigning WNBA champions. The team opens the season against the Seattle Storm on May 20 at Climate Pledge Arena in Washington.

    In October, Brady joined the ownership group of an expansion Major League Pickleball team, along with former tennis World No. 1 Kim Clijsters, who in December attended the draft to support their new squad, the Las Vegas Night Owls.

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  • Opinion: Why France is fuming at Macron | CNN

    Opinion: Why France is fuming at Macron | CNN

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    Editor’s Note: Catherine Poisson is an associate professor of Romance Languages at Wesleyan University in Middletown, Connecticut. Her research has focused on literature and culture of France from the 19th century to the present. The views expressed in this article are her own. Read more opinion at CNN.



    CNN
     — 

    As a native of France who has lived in America for many years, I never fail to be shocked at the sight of older workers packing groceries at the supermarket. It suggests to me a deplorable lack of social supports that could allow aged people to enjoy a dignified retirement.

    While it’s true that some people choose to work past retirement, most of us in this country, at some point or the other, have seen elderly people hard at work in occupations that people many years younger would find taxing.

    And yet, many Americans somehow seem to be puzzled by the recent protests over retirement benefits that are roiling the country of my birth.

    For the past three months, a spasm of demonstrations has gripped France over moves by the government to raise the retirement age from 62 to 64. In recent days, French indignation led to a no-confidence vote that President Emmanuel Macron only narrowly survived. A new round of mass protests called by organized labor took place on Thursday — the ninth day of strikes since the bill was introduced in January.

    Schools are closed because teachers are on strike. Transportation, including France’s usually reliable train service, is suddenly erratic because of the work stoppages. On top of all this, Parisians have seen their city’s streets strewn with tons of trash, after sanitation workers launched a labor action in solidarity.

    I return to France for several weeks each year, but have lived in the United States some 30 years and know both countries well. One thing that seems clear to me is that the kind of upheaval playing out in the country of my birth would be almost unthinkable in America. Americans seem not to be able to understand the source of the boiling national rage felt by the French over the planned increase in the retirement age.

    The closest analogy in the United States to anything like what my compatriots are experiencing would be the decision four decades ago to raise the age at which Social Security benefits are doled out.

    And that’s exactly what happened: The US government announced in 1983 that it would gradually raise the age for collecting full Social Security retirement benefits from 65 to 67 over a 22-year period, beginning in 2000. Of course, older Americans care deeply about Social Security — and often cast their votes accordingly. Still, it’s hard to imagine such a change going over quite so easily in France.

    For the most part, the demonstrations in France haven’t awakened Americans’ sense of empathy or solidarity. Instead, it has elicited expressions of sheer befuddlement. What on earth, my friends and acquaintances here ask, do the French have to complain about?

    Life in France is not perfect. But French citizens have a generous health care system, which means workers pay next-to-nothing out of pocket for medical care. University education is nearly free. Unemployment benefits allow laid-off workers to sustain a reasonable quality of life while they look for their next jobs.

    Yes, French workers have all of that. It is, in short, part of their birthright as citizens of France.

    After World War II, both the retirement system and the National Health care system were introduced in France, and though there have been limitations over the last twenty years, social benefits still make it among the most envied countries in Europe in terms of its social programs.

    If Americans are baffled by the French willingness to fight to hold onto these hard-won benefits, it is in part because the two countries have very different ideas about what it means to be a worker. In the United States, work is an identity. You are what you do.

    For those of us raised in French culture, work refers to a finite period of life lasting roughly 40 years. And when that work is done, you are still young enough and fit enough to enjoy the best of what life has to offer. It’s the norm that retirement years — or decades actually — are spent traveling, caring for grandchildren or picking up new hobbies.

    It’s part of our social compact: The French work hard during their most productive years during which time they pay what most Americans would consider usuriously high taxes. But then comes the much anticipated “Troisieme Age” — the “third age.” It’s a concept French people grow up with and cling to fervently for their entire lives.

    The “first age” is childhood. During life’s “second age,” many of us are saddled with responsibilities of work and raising children. The third age however promises a good, healthy retirement free from want and worry — the kind of retirement many in the United States cannot even dream of. It is no wonder that people are willing to take to the streets to protect it.

    The ongoing protests are also seen as a pushback against Macron’s imperious governing style. Years ago, he earned the nickname “Jupiter” — after the king of the Roman gods — as he was derided by some for his highhanded approach to governing — imposing his will, in the eyes of his critics, as if he were a sovereign rather than elected.

    Macron says retirement reform is necessary because the system is near collapse. There’s some disagreement about that, however. The budget appears to be balanced for the next dozen years, although it’s true that falling birth rates and increasing longevity pose a problem that will have to be addressed.

    Still, there are less draconian ways to fix problems posed by a future retirement fund shortfall. For starters, Macron might reverse his move to abolish the wealth tax. He might also reconsider corporate tax breaks that have benefited big business handsomely.

    His administration’s use last week of a constitutional maneuver to bypass a vote in the National Assembly and raise the retirement age is an example of his imperial style. It’s an approach to governing that Macron has used multiple times, including when he passed a budget late last year. And as the protests wear on, there’s been another sign of government heavy-handedness: Macron now has resorted to the “requisition” of some striking workers — in short requiring them to return to their places of employment or risk losing their jobs.

    Such moves are, in my view, an admission of political impotence rather than strength. The president has failed to see politics as the art of persuasion and is instead ruling by fiat. The brutal police crackdown on demonstrators protesting pension reforms led to hundreds of arrests in recent days, another sign that he lacks political deftness. The unions meanwhile show no sign of backing down, and are continuing to organize massive protests urging workers to stand firm and remain off the job.

    So what’s next? Surely the French will continue to take to the streets, something they always do with great gusto. Beyond this, it’s hard to say how this upheaval ends.

    There’s no question that the French are slow to embrace change. I am and will always remain staunchly French, although after many years in the US, I can see that my compatriots need to show greater flexibility. They hold on too long to obsolete aspects of their cherished way of life. It’s time for the French to abandon their “c’est tout ou rien” (“all or nothing”) approach as we negotiate what French society will look like in the future.

    But then I read about the latest moves to raise the US retirement age to 70, and think that my protesting countrymen have a thing or two that they can teach workers in America when it comes to protecting the sanctity of their golden years.

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  • TikTok CEO testifies before Congress for the first time | CNN Business

    TikTok CEO testifies before Congress for the first time | CNN Business

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    CNN
     — 

    TikTok CEO Shou Chew made his first appearance before Congress on Thursday and was immediately hit by intense criticism from lawmakers, including calls for the app to be banned.

    Rep. Cathy McMorris Rodgers, the chair of the House Energy and Commerce Committee, opened Thursday’s hearing by tearing into TikTok, and telling Shou: “Your platform should be banned.”

    “I expect today you’ll say anything to avoid this outcome,” she continued. “We aren’t buying it. In fact, when you celebrate the 150 million American users on TikTok, it emphasizes the urgency for Congress to act. That is 150 million Americans that the [Chinese Communist Party] can collect sensitive information on.”

    In his opening remarks, Chew attempted to stress TikTok’s independence from China and played up its US ties. “TikTok itself is not available in mainland China, we’re headquarterd in Los Angeles and Singapore, and we have 7,000 employees in the U.S. today,” he said.

    “Still, we have heard important concerns about the potential for unwanted foreign access to US data and potential manipulation of the TikTok US ecosystem,” Chew said. “Our approach has never been to dismiss or trivialize any of these concerns. We have addressed them with real action.

    Chew’s moment in the hot seat comes as some lawmakers are renewing calls for the app to be banned in the United States due to perceived national security concerns because of its ties to China through its parent company, ByteDance. TikTok acknowledged to CNN last week that federal officials are demanding the app’s Chinese owners sell their stake in the social media platform, or risk facing a US ban of the app. A number of countries, including the US, have already instituted a ban of the app on government devices due to the security concerns.

    TikTok doesn’t operate in China. But since the Chinese government enjoys significant leverage over businesses under its jurisdiction, the theory goes that ByteDance, and thus indirectly, TikTok, could be forced to cooperate with a broad range of security activities, including possibly the transfer of TikTok data.

    With his appearance, Chew may hope to reassure Americans and temper the heated rhetoric in Washington about the app – but the first two hours of the hearing showed just how challenging a task that might be.

    Much of Chew’s attempts to stress that his company is not an arm of the Chinese government appeared to fall on deaf ears. Numerous members of Congress interrupted the chief executive’s testimony to say they simply don’t believe him.

    “To the American people watching today, hear this: TikTok is a weapon by the Chinese Communist Party to spy on you, manipulate what you see and exploit for future generations,” said Rep. McMorris Rodgers.

    In an exchange with Rep. Anna Eshoo, Chew talked up TikTok’s ongoing efforts to protect US user data and said he has “seen no evidence that the Chinese government has access to that data; they have never asked us, we have not provided it.”

    “I find that actually preposterous,” Eshoo fired back.

    “I have looked in — and I have seen no evidence of this happening,” Chew responded. “Our commitment is to move their data into the United States, to be stored on American soil by an American company, overseen by American personnel. So the risk would be similar to any government going to an American company, asking for data.”

    “I don’t believe that TikTok — that you have said or done anything to convince us,” Eshoo said.

    Perhaps no exchange sums up Thursday’s hearing like a moment following Rep. Kat Cammack’s lengthy critique of TikTok’s content moderation and links to China.

    “Can I respond, Chair?” Chew asked McMorris Rodgers after Cammack’s time was up.

    McMorris Rodgers considered Chew for a brief moment.

    “No. We’re going to move on,” she said.

    As lawmakers doubled down on their questions about TikTok’s data collection practices, Chew also emphasized that the data TikTok collects is data “that’s frequently collected by many other companies in our industry.”

    “We are committed to be very transparent with our users about what we collect,” Chew said. “I don’t believe what we collect is more than most players in the industry.”

    Independent researchers have backed Chew’s assertions. In 2020, The Washington Post worked with a privacy researcher to look under the hood at TikTok, concluding that the app does not appear to collect any more data than your typical mainstream social network. The following year, Pellaeon Lin, a Taiwan-based researcher at the University of Toronto’s Citizen Lab, performed another technical analysis that reached similar conclusions.

    Still, even if TikTok collects about the same amount of information as Facebook or Twitter, that’s still quite a lot of data, including information about the videos you watch, comments you write, private messages you send, and — if you agree to grant this level of access — your exact geolocation and contact lists.

    While national security was expected to be the primary focus of the hearing, multiple lawmakers also highlighted concerns about TikTok’s impact on children.

    Democratic ranking member of the committee Rep. Frank Pallone, for example, said Thursday: “Research has found that TikTok’s algorithms recommend videos to teens that create and exacerbate feelings of emotional distress, including videos promoting suicide, self-harm and eating disorders.”

    Rep. Bob Latta, a Republican from Ohio, accused TikTok of promoting a video on the so-called “blackout challenge” or choking challenge to the feed of a 10-year-old girl from Pennsylvania, who later died after trying to mimic the challenge in the video.

    Republican Rep. Gus Bilirakis of Florida also said there is a lack of adequate content moderation, which leaves room for kids to be exposed to content that promotes self harm.

    “Your technology is literally leading to death,” Bilirakis said to TikTok CEO Shou Chew.

    Citing examples of harmful content served to children, he said, “it is unacceptable, sir, that even after knowing all these dangers, you still claim that TikTok is something grand to behold.”

    TikTok, for its parts, has launched a number of features in recent months to provide additional safeguards for younger users, including setting a new 60-minute default for daily time limit for those under the age of 18. Even that feature, however, was criticized by lawmakers as being too easy for teens to bypass.

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  • French airports, schools and oil refineries hit by national strike over pension age increase | CNN Business

    French airports, schools and oil refineries hit by national strike over pension age increase | CNN Business

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    Paris
    CNN
     — 

    French transport networks, oil refineries and schools were hit by widespread disruption Thursday as workers staged a national strike to protest an increase in the retirement age that was pushed through parliament without a vote.

    Though sporadic demonstrations had popped up in Paris and other cities after the French government forced the bill through last week, Thursday marked the first day of coordinated action since then. It is the ninth day of strikes since the bill was introduced in January.

    Only two out of 14 metro lines in Paris were operating a normal service. RER train services, which run in the city and its suburbs, were severely reduced and only half of high-speed TGV trains were working. The nationwide strike has also affected air traffic, with 30% of flights impacted at Paris Orly airport.

    Unionized workers blockaded a major oil refinery in Normandy and another one in Fos-sur-Mer in the south of France, according to a government spokesperson.

    “We are intervening in a targeted manner to unblock oil storage tanks that are blocked by demonstrators,” the minister of energy transition, Agnès Pannier-Runacherin, said in a statement.

    “If the strike is a fundamental constitutional right, blockading is not one… The police is mobilized in difficult conditions and has my full support.”

    The government renewed its requisition order requiring workers to go back to work at the two blockaded refineries, the government spokesperson said.

    The government’s plan to raise the retirement age for most workers by two years was opposed by huge numbers of people. But despite protests that drew more than a million people onto streets across the country, President Emmanuel Macron’s government did not back down. It rammed the legislation through the French National Assembly last week using a constitutional clause that allows the government to bypass a vote.

    The country’s generous pension system and early retirement have long been a point of pride since they were enacted after World War II. Under the new law, the retirement age for most workers will be 64, still one of the lowest in the industrialized world.

    As a result of the refinery strikes, kerosene stocks at Charles De Gaulle airport, which serves Paris, were “under pressure,” and those at Orly airport were being monitored, according to the civil aviation authority.

    Earlier in the day, around 70 protesters blocked terminal one at Charles de Gaulle airport, an airport spokesperson told CNN.

    About 20% of teachers in public education also took part in the strikes, according to France’s education ministry.

    A protester stands near burning garbage bins during a demonstration as part of protests against the pension reform, in Nantes, France, March 23, 2023.

    Macron and his government have defended the retirement reform as necessary to keep the pension system funded. Taxes on current workers pay for the benefits of retirees, and as people live longer — and more baby boomers retire — the system would otherwise eventually go bankrupt, though the threat is not immediate.

    When the proposal was unveiled in January, the government said the reforms were necessary to prevent a projected 13.5 billion ($14.7 billion) euro hole opening up in the pension system in 2030.

    During an interview with two of France’s main television networks Wednesday, Macron said the bill should be enacted by the end of this year. He also defended the decision to push through the reform as financially necessary, no matter how unpopular it was.

    “It’s in the greater interest of the country. Between opinion polls and the national interest, I chose the national interest,” Macron said.

    — CNN’s Joseph Ataman and Olesya Dmitracova contributed to this report.

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  • Most Asian shares reverse early losses after US Fed raises rates by a quarter point | CNN Business

    Most Asian shares reverse early losses after US Fed raises rates by a quarter point | CNN Business

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    Hong Kong
    CNN
     — 

    Most Asia Pacific shares pared early losses on Thursday, after the US Federal Reserve reaffirmed its dedication to bring down inflation.

    In Hong Kong, the benchmark Hang Seng

    (HSI)     index traded 1.5% higher, leading gainers in the region. One of the top gainers was internet giant Tencent, which was more than 7% higher after posting a strong rise in its online advertising business in the December quarter on Wednesday.

    In Japan, the Nikkei 225

    (N225)     was flat after opening lower. The broader Topix index was 0.3% lower, reversing some of its early morning losses.

    South Korea’s Kospi was 0.2% higher, while Australia’s S&P ASX 200 advanced by half a percentage point.

    Asian shares had opened broadly lower, tracking losses on Wall Street. In the US, the Dow closed 1.6% lower, while the S&P 500

    (DVS)     slipped about 1.7%. The Nasdaq Composite declined 1.6%.

    “Looking ahead, while we see fundamental value in Asia-ex Japan stocks … we remain concerned about a possible pullback in US stocks assuming US data deteriorates in the months ahead,” Nomura analysts wrote in a Thursday research note.

    US markets had been fickle on Wednesday before settling in the red as investors digested the Federal Reserve’s quarter-point rate hike and looked for clues about the state of the banking sector meltdown.

    The Fed raised rates by a quarter point at the conclusion of its two-day meeting, even though its historic rate hiking campaign was a contributing factor in the banking crisis.

    Investors were heartened by the central bank’s strong hints that its aggressive pace of interest rate hikes would come to an end soon. Still, the central bank also warned that rate cuts aren’t coming this year.

    – CNN’s Krystal Hur and Laura He contributed reporting

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  • Jamie Dimon and other big bank CEOs met with top Biden economist Lael Brainard | CNN Business

    Jamie Dimon and other big bank CEOs met with top Biden economist Lael Brainard | CNN Business

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    CNN
     — 

    Lael Brainard, President Joe Biden’s top economic adviser, met with JPMorgan Chase CEO Jamie Dimon and other leading Wall Street CEOs on Wednesday, people familiar with the matter told CNN.

    The meeting comes as the banking industry remains in turmoil following the biggest bank failures since 2008.

    Brainard, the director of the White House National Economic Council, met with Dimon and other big bank CEOs at a Washington event held by the Financial Services Forum, the sources told CNN.

    Beyond Dimon, it’s not clear specifically which CEOs met with Brainard but the Financial Services Forum represents the leaders of eight of America’s biggest banks. Its members include Citigroup CEO Jane Fraser, Bank of America CEO Brian Moynihan and Goldman Sachs CEO David Solomon.

    It’s not known specifically what Brainard and the bank executives discussed, but US officials and regulators have stayed in close contact with bank industry leaders in the wake of deposit runs that collapsed Silicon Valley Bank and Signature Bank earlier this month.

    Brainard, who recently moved to the White House from the Federal Reserve, met with Dimon and the other bank CEOs as part of a series of meetings held over the past month with business, labor, advocacy and academic leaders, one of the sources told CNN.

    Representatives for both JPMorgan and the White House declined to comment.

    News of Dimon’s scheduled meeting with Brainard, the former No. 2 official at the Federal Reserve, was previously reported by Reuters.

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