Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Disclaimer: The Parliamentary Library does not warrant the accuracy of closed captions. These are derived automatically from the broadcaster's signal.
Business Today -

View in ParlView

(generated from captions) CC

This programme is captioned

live.

Good morning, welcome to the

program, in business today,

losses continue. Gloomy news

from the European banking

sector. Regional super-player

ANZ confirms it has bought the

distressed Asia assets of RBS.

tourism industry suffers from Empty beaches - Australia's

the downturn. Those stories

shortly. First, a quick look at

the markets.

I'm joined by Julia Lee from

Bell Direct. Ual street has

boosted? The fourth

consecutive gain in the US. We

saw consumer date that was

better than expected, it Rose

4.0 per cent in June, but we

saw incomes fall, which will

make it hard for the recovery

in consumer spending to be

sustained. There are signs of a

US recovery in home sales.

Earnings in focus, caterpillar

Rose 6.1 per cent, saying it is

well positioned for a recovery.

Banking stocks mostly finished

in the black. The Dow was up by

0.4 per cent. Nasdaq up and the

S&P gained. Small gains across

the major US indices. Still in

the US, Pepsi struck a deal

with billions of dollars, what

are the details? It has struck

a deal to gain control of two

of its largest bottling

companies. They are Pepsi

bottling group and Pepsi Americas. That will give

control of 80 per cent of its

beverage market in North

America. The deal is worth $7.8

billion and will result in $300

million of cost savings. Its

share price reached the highest

level since April, up by 5.1

per cent. In Europe there are

concerns that UBS will suffer

from more big withdrawals from

wealthy clients after posting

the biggest consecutive

quarterly loss. We have seen

UBS have another quarterly

loss. It is its 7th quarterly

loss in 8 quarters, a loss of

1.4 billion Swiss francs during

the second quarter, compared to

a year ago when it had 390

million Swiss francs in losses.

UBS has lost client advisers

and face as tougher regulatory

environment. The stock losing

4.3 per cent in securic, in the

US it lost 7.6 per cent. More

on that story in a moment.

Let's move on to regional

markets, how will they trade

today? It's been a good couple

of weeks for regional markets.

Some nerves are start to go

creep in because of the strong

rise. Expect a little bit of

caution. We are seeing some of

the futures trading lower, the

nick Kaye is down by 70, hang

Seng is looking flat, with a

loss of 5 points and the

Australian futures up by 11

points. The markets getting

nervous because of the strong

rise. Crude prices are fallen

back. Oil prices have pulled

back a bit. Traders are looking

to the oil imagery report,

which will be released in the

US tonight, expecting to see a

rise in inventories. Metals on

the London metals exchange

closed mixed and gold prices

saw a rise on technical

buying. Is there any economic

data for the region we should

look out for? Not a lot. In

Australia we will get the trade balance. We are expect to go

see a deficit of $800 million

in June, from a deficit of $556

million previously. We will get

the performance of services

index and in Japan the services

PMI. Jewel la Lee there. Now

lets look at currencies and

commodities.

British bank Northern Rock,

which was taken over by the

Government last year after it

ran into difficulty, continues

to languish. Hard on the heels

of yesterday's good news from Barclays and HSBC, Northern

Rock has announced a half

yearly loss of $1.3 billion.

It was once one of our fastest

growing banks, but how times

change. In the first six months

of the year Northern Rock lost

?724 million. It also owes

$10.9 billion to the

government. Today, ministers

were putting on a brave face.

Northern Rock was the first

bank to get into difficulties

and banks across the world have

had problems. I don't think the

figures come as any great

surprise. Northern Rock ran

into trouble almost two years

ago when it sought emergency

funding from the bank of

England. In the months that

followed the government failed

to find a buyer, so in February

last year it took the momentous

decision to nationalise it. The

initial plan was to shrink the

business. Earlier this year,

the government urged it to

increase lending to help the

wider mortgage market.

Northern Rock was an early

casualty of the credit crunch.

It relied upon the international wholesale market

for fundful they dried up in

the wake of the sub prime

crisis in the US. It is paying

the price for a risky lending

strategy which allowed

customers to borrow up to 125

per cent of the value of their

property. The number of

customers more than 3 months

behind in mortgage payment

assist almost 4 per cent. That

is considerably higher than the

national average of just under

2.4 per cent. Those that have

stuck with the bank through the

last two turbulent years hope

the worst may be behind it.

Everyone seems to be okay. They

have made a loss but that's not

unexpected. I'm not worried, now that the government own it,

but I would have a concern if

it wasn't government backed.

If they sell it quickly they

will not get value for money

and will not be able to recoup

for the taxpayer the vast

losses made vubility of the

irrespective lending in the

past. The government says it's

in no rush to sell the bank and

it could be some time before

it's back in private hands.

UBS has reported a loss for the

April to June quarter. The loss

is a slight improvement on the

bank's first quarter result.

UBS has been hit particularly

hard by the credit crisis,

suffering from big losses in

the US subprime mortgage

market. Its reputation has been

tarnished by a legal battle

with US authorities over

suspected tax evasion by its US

customers. ANZ has confirmgd

it's got close to $500 million

of Asian based assets from

Royal Bank of Scotland. It is

part of the bank's strategy to

become a super regional player

and it is likely to be the

first of a number of

acquisitionsin Asia. It's a

new and unproven market for

ANZ. Many of the bank's newly

purchased assets are in

Taiwan. Australia's fourth

biggest bank has paid $687

million for the Royal Bank of

Scotland's business in six

Asian countries. Woonchts he

global financial crisis took were bullish on Asia before the

hold. We remain bullish. The

acquisition is not as big as

some had expected but it gives

ANZ an extra 54 branches, $4

billion in loans, $9 billion in

deposits and approximately 2

million clients. CEO Mike Smith

says the deal will add to

earnings within two years. He

says it's an important step

towards doubling the proportion

of earnings from Asia to 20 per

cent. Asia, Australia, New

Zealand, have effectively

become joined at the hip.

Trade flows builds on both soft

and hard commodities,

education, professional

services and manufacturing are

making that connection even

more important. Initial

market reaction to the deal has

been positive, with ANZ shares

rising 3 per cent by the close

. Not everyone is optimistic.

Australian finance services business have a long track

record of going overseas and

making acquisitions. We have

seen AMP and NAB do it, we have

seen IAG. They have come back home with their tail between

their legs and I don't expect

ANZ to be any different. ANZ

is eyeing fourth acquisitions.

There is speculation it is

looking at ING group's assets

which are reportedly set to

come on to the market. The

expansion comes during volatile

times on the domestic front,

with the profit falling 30 per

cent, and some say ANZ should

be more focused on fixing its

problems at home. Almost every corporate disaster in

Australia, Timber Corp, Babcock

and Brown, ANZ has been a

significant lender. They have

been involved in the owe pus

primes of the world, so they

have a lot of issues

domestically. Mike Smith says

ANZ's local business is in good

shape and he remains committed to making the bank a

significant player in the

region. Standard and charter

bank, which focuses on Asia,

Africa and the Middle East, is

raising $1.7 billion to take

advantage of new business

opportunities, by issuing new

shares to investors. The move

comes as the bank reported a

5.5 per cent rise in pre-tax

profit to $2.8 billion. The

bank says it has an advantage

it was as the gross glows

accelerates the transfer of

economic power from the best to

the east. Stan darned and

chartered says it is well

placed to benefit from an

economic recovery in Asia.

Those responsible for setting

Australia's interest rates are

optimistic about the economic

outlook. The Reserve Bank has

kept the official cash rate at

3 per cent and dumped its

easing bias, as more good data

signals an improvement. The

Reserve Bank was also keen to

hose down expectations that its

optimism implied higher

interest rates were just around

the corner. Reserve Bank

governor Glen Stevens and his

Central Bank has an enviable

reputation for doing nothing.

For the fourth month in a row,

the official cash rate remained

at a half century low. But the

board's words, not its deeds,

were of paramount importance

They have shifted to a neutral

bias, they don't think there is

scope to cut rates further.

Gone is the scope for further

rate cuts if needed. The board

sees a stabilising global

economy and says the risks of a severe contraction in the

economy have abated. It has

gradually removed its easing

bias as it becomes more

confident. The board would

have seen the latest house

prices, with the median price

jumping 4 per cent in the June

quarter, low interest rates and

the government grants kept the

annual fall to 1.4 per cent for

the year. Median prices rose in

every capital city, with

Melbourne and Sydney well

ahead, while Adelaide and

Canberra saw increases above 3

per cent. There was a sign

shoppers were becoming a spent

force, retail sales

unexpectedly felled in June,

but annual growth was still an

impressive 7.5 per cent. Also

impressive was the volume data

for the quarter. That will

feed flew into GDP estimates

and hopefully might ensure we

get another quarter of positive

growth in the June quarter . By

and large, abstracting for

monthly volatility, the retail

sales figures are still fairly

solid. There won't be any more government stimulus cheques and

the Reserve Bank acknowledged

the prospect of weakening

consumer spending and weak

business investment

contributing to sluggish output

until growth firms neck year.

Australians would get wrong

impression if they think the

Reserve Bank has gone from

cutting rates and will immediately start raising

rates. Australia's cash rate

is amongst the highest in the

borld. Expectations that the

next interest rate move could

be up has seen the Australian

dollar reach no 10-month high,

approaching 85 US cents.

Although the dollar and the

market rates took a hit. The

markets were looking for a more

strongly worded statement, Ian

the possibility that a tighten

ing bias would be introduced

today. It is more balanced, you

can see it in the kaush about

sluggish output. Wayne swan

was doing his best to encourage

foreign investors, following

the recent damaging

disagreements with the

Chinese. The government is

doubling the value of foreign

investment but does not need

approval to $219 million. We

recognise that in a capital-constrained world,

which will be a feature of the

post crisis economy, that we

must do more to send a signal

of our attractiveness as a

place to invest. It won't help

the Chinese because it doesn't

apply to state-owned

enterprises. The cash for club

kers seem in the US has had

widespread impact, benefiting

Japanese auto makers. Toyota

sales sales were 11 per cent

last month, recording its third

straight quarterly loss. The

figure beat effectations. The

loss will be smaller than forecast. Toyota significantly

lowered the price for the third

generation Prius to compete

with Honda's hybrid. The

company expects growth in

domestic sales where it has

benefited from incentives and

tax breaks on more voormently

friendly vehicles. BHP

Billiton, the world's largest

miner, has named a new chairman

after an 18-month select

onprocess. Jac Nasser, former

head of forward, will take over

from Don Argus, who will retire

early next year. Mr That isser

joined the BHP Billiton

executive board in 2006 and his

reputation as a cost cutter has

earned him the make name Jack

the knife. As technology

becomes more sophisticated, so

do the criminals in cyberspace

who target major organisations.

To examine the cost benefits of

crime reduction and what the

future of e crime will look

like and what new

technologieses are being used

to fight it, I'm joined by John

from the Commonwealth Bank.

As technology advances, are we

seeing an increase in e crime

and the sophistication of it?

I think there is a broad range

of e crime, from infrastructure

attacks down to on basic fraud.

We need to take security very

seriously. We are seeing a

pleasing decrease in

traditional internet crime n

terms of internet fraud. That

is displaced into an increase

in older frautdz, like card not

present or other e-commerce

related frauds. In relation to sophistication, there are

worrying signs of increased

sophistication of malware and

delivery of malware to

customers' computers. That sort

of malware takes over the

customer's computer. At this

stage it's a concern. Because

there is a range of weakr

targets, the type of compromise

has not yet reached the mass

market. A range of weaker

targets, what would they be?

Every bank and every business

has a range of security

measures in place, whether it's

e-commerce for their systems.

You have to remember that the

criminals will seek out those

less able to defend themselves.

Because there is a moving

nature to fraud and to e-crime,

we need to stay one step ahead

and make sure our systems are

more secure than other people,

and that way, sadly, they

become victimised, not us.

With the more traditional types

of banking crime, do it bring

into account the spate of

scamming or skimming of ATM

cards that we have seen

recently? That's a really good

point, because skimming of ATM

cards is a blend of e-crime and

the good old physical crime n

terms of the skimming. Of of

the ATM cards. We have seen an

increase in recent years. It

was a crime that was around

some years ago and has

increased of late. Our bank

and other banks have put a

range of measures in place

successfully to reduce that

threat. It is a moving feast so

we have to be on our guard to

ensure security is our number

one priority. Would you say

that the campaigns to educate

customers have been successful,

given that you say there has

been a droppoff in some

e-crimes, such as fishing. I

have received emails from my

supposed financial institution

which has asked me to reconfirm

my password, which I know is

not a legitimate email. Do you

think those sorts of campaigns

have been successful?

Certainly. There are four

things we have done in the

industry. Firstly, we have

raised the consumer awareness

of security. We have done that

in conjunction with the

Australian bankers association,

the Australian Federal Police

hi-tech crime centre and other

banking agencies. Banking have

improved the and then

indication of their customers

and fraud detection and

improved business processes to

reduce the risk of fraud.

Overall, there has been success

on the internet banking front.

In a financial organisation

such as yours, the Commonwealth

Bank is very large, what types

of security systems are the

most vital? It covers the

whole range. At the high level,

we need to protect our infrastructure, our

ininternational and stern

networks, flowing through to

our products and systems that

we provide customers, through

to fraud detection at the point

of sale. It was a broad suite

of requirements. We try to stay

at world's best practice in accordance with global

standards in intrusion

prevention, detection and

response. Our IT department and chief information security

officer are focused on those

issues. We have run out of

time, thank you. Thank you.

Empty beaches, more room at

the wineries, shorter queues at

the zoo - locals may be lapping

it up but it's very bad news

for the tour imbusinesses. The

number of visitors to South

Australia is declining, thanks

to the global financial crisis

and the swine flu outbreak.

Now, even the most resilient

sector of the industry, the

lucrative backbacker market is

suffering. This business is

normally a magnet for

backpackers looking for jobs.

Last month the operator was

forced to lay off two staff

because of a drop in trade.

Down 20 to 25 per cent.

Overseas tourists are staying

away.

With less work around,

backpackers can't afford to

stay. I might have to go home

early. It has taken six months

for the bad news to spread:

Word of mouth is getting back

to Europe, England and Ireland

in particular, that there are

not as many jobs available as

there were. The tourism and

transport forum says it is part

of a series of blows to the

industry. The national tourism

industry is at the forefront of

the global financial crisis,

bustest beswine flu. We are

seeing 17,000 to 18,000 workers

laid off. As things get tight

the industry is getting more

cutthroat. If the tourism pie

is shrinking, we are prepared

to steal market share from

other destinations. Just under

50 per cent of tourist

businesses told a recent survey

they expect the slump to

continue until the end of next

year. Thailand's capital

Bangkok appears to have escaped

many of the affects of the

global financial crisis. If the

building boom is any guide. The

development of the tallest and

most avant-garde building has

been announced and the

spectacular views won't come

cheap. The sky line of Bangkok

is changing rapidly. Despite

the recession, new sky scrapers

continue to be built. Now

there's a project that has got

tongues Wanging. The building

is avant-garde in design and it

will be massive, with prices to

match. The building will have

sales offices and showrooms

first, hoping buyers will be

queueing up to slap down hefty

deposits. If you want to live

in the very best apartment you

will need to stump up a

whopping $10 million. It's a

lot of money but for what we

offer and compared regionally,

for Hong Kong and Singapore,

US$10 million would not get you

a big flat, it would get you

one bed roo. Here you would get

one of the penthouses. So far

in Bangkok property prices have

not declined like they have in

other cities and building has continued despite the

downturn. You don't have to

look far to see relatics of the

last property crash in 1997,

empty building, many still

mired in litigation. This time,

developers insist they are in

better shape but admit market

conditions aren't ideal. It's

been difficult but not

impossible. Financially, it's

more in Bangkok, it's not a

liquidity problem like in 1997,

it's more a confident problem.

The cash is still there. But

are there the buyers? The high

end is always difficult, no one

is buying high end.

Construction is supposed to

begin later this year and be

completed in 20 12. The big

question for property watchers

in Bangkok: Has the city

Marchic plusly escaped a

property price slide or is

another crash just around the

corper? Now let's look at

what's making headlines around

the region. HSBC has hired

China's capital corp and Citic

as advisers in a bid to be the

first foreign company to sell

shares in Shanghai. General

Electric has agreed to pay $50

million to settle accounting

fraud charges brought by the

Securities and Exchange

Commission. Toyota is

predicting smaller loss than

expected for its first half,

thanks to cost cuts and the

sales of the Prius. That's all

for business today.

We look forward to your

feedback. Thanks for joining

me, enjoy your day. Captions

by CSI.