These are stories Report on Business is following Wednesday, March 27, 2013.
Diana Carney under fire
Diana Carney is in the eye of a British storm over a comment she reportedly made about how much trouble the family’s having trying to find a house in London.
It’s the latest controversy surrounding Bank of Canada Governor Mark Carney, who will soon be at the helm of the Bank of England, over his hefty compensation, which will include an annual housing allowance of £250,000, or some $385,000.
Ms. Carney, an economist at Canada 2020, is reported to have seemingly joked via Twitter that “maybe I’ll be able to find a place to live in London after all,” referring to news about how the French government is pulling back on its tax-the-rich program, which has seen high-income earners quit Paris for London, limiting availability of housing.
"Her husband is getting a housing allowance that is more than many of my constituents earn in 10 years,” Labour MP John Mann told The Daily Mail.
“I would be happy to help her find suitable accommodation. I’m prepared to move out of my London flat for her which will be available at just 4 per cent of her housing allowance.”
Mr. Carney has defended the compensation on the basis of the high cost of living in London.
Times are tough in Britain, of course, where 2.5 million people are out of work, one of the reasons the government chased Mr. Carney to take the job.
Ms. Carney, who was born in Britain, reportedly tweeted her comment with a link to a news story, though that can’t be verified because her tweets are locked from full public view.
The British press is having a field day.
“That’s rich: new Bank chief’s wife condemned for London rents moan,” is how The Guardian put it yesterday.
“City Diary: Does Diana Carney dare to joke about £250,000 housing budget?” said The Telegraph.
The Daily Mail was particularly harsh online: “How DOES one live in London on £1-million? New Bank of England chief’s wife blames influx of wealthy French to London for her struggle to find a home (despite £5,000 a week allowance).”
British banks told to boost buffers
A key committee of the Bank of England believes the country's banks should boost their capital levels by £25-billion, or $38-billion (U.S.) this year as a buffer against future crises.
That was the recommendation today from the Financial Policy Committee to the Prudential Regulation Authority after a study of the country's banks and building societies.
"The PRA should take steps to ensure that, by the end of 2013, major U.K. banks and building societies hold capital resources equivalent to at least 7 per cent of their risk-weighted assets, as assessed on the basis described in Recommendation 1," the committee said.
"Relative to that benchmark, major U.K. banks and building societies in aggregate currently have a shortfall in capital of around £25-billion."
- British regulator tells banks to raise another $38-billion to boost stability
- Canada's big banks told to hold more capital on books by 2016
Suncor cancels upgrader
Suncor Energy Inc. is killing its Voyageur upgrader project, and taking a hit of $140-million to first-quarter profit because of it.
Suncor, which already took a hefty writedown on the project, said late today it wouldn’t go ahead with it after a strategic review.
It also said it’s paying $515-million for the interest of its partner in the project, Total E&P Canada.
“Since 2010, market conditions have changed significantly, challenging the economics of the Voyageur upgrader project,” said chief executive officer Steve Williams.
“That’s why we undertook a thorough review of the project to determine whether it met our criteria for long-term, profitable growth,” he added in a statement.
“This decision is in line with our commitment to capital discipline and our stated plan to allocate capital with priority given to developing higher-return growth projects and accelerating the return of cash to shareholders through dividends and share buybacks.”
We can all relax– teenagers most of all, presumably – now that the Supreme Court of Canada has decided that text messages are just as private as phone calls.
As The Globe and Mail’s Kirk Makin reports today, the top court ruled against an Ontario police force’s search of previously sent texts that had been preserved by Telus Corp., one of the country’s biggest carriers, which stores sent messages.
“Text messaging bears several hallmarks of traditional voice communication: It is intended to be conversational, transmission is generally instantaneous, and there is an expectation of privacy in the communication,” the court said in a 5-2 ruling released this morning.
That, Mr. Makin writes, invalidated a search warrant by the Owen Sound police in 2010.
It’s an important decision, one that recognizes the rapid march of technology and follows a decision last month to kill what had been a controversial Internet surveillance scheme.
That, too, sparked complains over incursions on privacy.
“Technical differences inherent in new technology should not determine the scope of protection afforded to private communications,” wrote Madam Justice Rosalie Abella.
Telus moved to quash the warrant that had been issued on the grounds that texts were private, and needed a judge’s wiretap approval.
- Police must treat text messages as private, top court rules
- Globe Editorial: Court wrong to allow police to look into cellphone without warrant
- Harper government kills controversial Internet surveillance bill
Cyprus readies controls
Cyprus plans to slap strict controls on how much cash can leave the ailing country in advance of the reopening of its banks tomorrow.
At this point, the restrictions will run for seven days.
Markets have been waiting to see how forceful the government would be on capital controls in the midst of the banking crisis.
“As capital control measures are still in place for Icelandic depositors following their banking collapse five years ago, it does call into question the Cypriot government’s insistence that these will only be 'temporary,’” said market analyst Alastair McCaig at IG in London.
This came as the country’s central bank ousted the chief executive officer of the biggest commercial bank, Bank of Cyprus.
- Cyprus to limit cash, credit-card use abroad
- ROB Insight (for subscribers): ECB whatever-it-takes pledge not enough for Euro banks
Canada’s annual inflation more than doubled in February, but to a still-tame 1.2 per cent, pushed higher by gas prices.
Indeed, Statistics Canada said today, gas prices surged 8.4 per cent in February alone, marking the biggest monthly increase since May 2008.
On an annual basis, inflation jumped from 0.5 per cent in January. Over the course of the year, gas was up almost 4 per cent.
Prices for the vehicles it fuels also climbed, by 2.5 per cent year over year. Just sayin’.
Over the course of the 12 months, prices rose in seven of the eight areas measured by Statistics Canada. Only the cost of clothing and shoes fell, though they rose sharply on the month.
Food prices also rose, by 1.9 per cent from a year earlier, largely because of higher costs for meat and fresh fruit.
Here’s a tip: prices for non-alcoholic drinks dropped by more than 4 per cent.
Where the Bank of Canada is concerned, so-called core prices, which strip out volatile items and help guide the central bank, climbed 1.4 per cent over the year. That was up from the annual pace of 1 per cent in January.
"Following an extreme period of discounting around the turn of the year, Canadian inflation trends have popped back to normal with lightning speed," said chief economist Douglas Porter of BMO Nesbitt Burns.
"Still, even with the hefty rise in February, Canadian headline and core inflation is still much closer to the lower end of the BoC’s target range at little more than 1 per cent," he added.
"This doesn’t look to represent the start of a new trend of rising inflation, but does show that the very mild readings at the start of the year were an aberration. With core inflation now not far from where the BoC expected, we believe this doesn’t materially change the timetable for eventual rate hikes (i.e. second half of next year). "
Streetwise (for subscribers)
- Fongo's Wind bid looks like a publicity stunt
- Former subprime mortgage lender Xceed finally sold
- Miners must find new partners to survive
ROB Insight (for subscribers)
- What to watch as EU crisis rears its ugly head
- Mr. Munk's wild ride comes to an end
- EU concedes it may have to settle for a paler shade of green
- Economist: ECB whatever-it-takes pledge not enough for Euro banks
- Tensions remain over BRICS development bank
- Debit hits Canada's mobile payment market as players rush into the fray
- Spanish deficit, retail figures deepen economic gloom
- Life on overload: 'Sandwich generation' struggles with burnout
- RIM targeted by short sellers as market awaits results
- Lloyd's of London back in profit on fewer catastrophes