The bank said it was acting jointly with the state, which owns a separate stake through public ⁠shareholding agency APE. As per Bpifrance, the financial entity and the French government will hold a combined 20.4% stake in the telecoms operator after the deal, remaining the largest shareholder.

Despite the stake sale, Bpifrance has maintained its confidence in ⁠Orange’s leadership and the strategy announced back in February 2026.

“France can reduce its Orange stake because French law grants double voting rights to ⁠shareholders who have held registered shares for at least two years,” one of the sources told Reuters.

BPifrance and APE will keep about 27% of voting rights in Orange, with board representation unchanged.

Orange has reported solid financial performance for the H1 2026, with revenue rising 3.5% year-on-year to 20.9 billion euro. The company’s Africa and Middle East (MEA) business emerged as its strongest-performing region, delivering double-digit revenue and profitability growth.

Revenue from the region increased by 13.9% compared to the same period in 2025, supported by the addition of 10 million new mobile data customers. Orange has maintained a sustained financial momentum in Africa and the Middle East, which has now delivered double-digit EBITDAaL growth for 10 consecutive quarters.

The strong commercial performance also translated into higher profitability, with EBITDAaL for the MEA region growing 16.1%, making it the largest contributor to Orange’s overall EBITDAaL growth of 5.0% during the H1 2026.

Realising the growth potential from this region, Orange has already increased infrastructure investments across its MEA operations. Group eCAPEX reached 3.2 billion euro, representing 15.2% of total revenue, with the company attributing the increase primarily to accelerated network deployment across the region, under Yasser Shaker’s leadership as CEO of Orange MEA. Excluding investments in Africa and the Middle East, the group’s overall capital expenditure declined during the period.

In MEA, Orange also reported continued progress in its digital inclusion and sustainability initiatives, apart from expanding its 4G population coverage by two percentage points to reach 80% of the population. The cumulative number of people benefiting from the telecom venture’s free digital training programmes, delivered in part through its network of Orange Digital Centers across the continent, rose to 3.8 million since 2021.

In H1, Orange further accelerated its transition to greener network infrastructure as part of its ambition to achieve net-zero status by 2040.

“The number of solar-powered network sites across the Africa and Middle East region increased by 24% year-on-year, with solarised sites now accounting for 31% of the region’s total network footprint,” the business noted.

“This semester marks a significant milestone in the execution of our ‘Trust the Future’ strategic plan. Our record first-half results confirm that our ambitions are rooted in solid execution: record growth in Africa & the Middle East, with 10 million new mobile data customers and near 14% revenue growth,” said Christel Heydemann, Orange Group CEO.

Orange has now upgraded its full-year outlook. It expects EBITDAaL growth of more than 4% for 2026, apart from forecasting organic cash flow of approximately 4.3 billion euro.

The post France cuts stake in telecom major Orange, remains largest shareholder appeared first on International Finance.

Japanese Prime Minister Sanae Takaichi and Brazilian President Luiz Inacio Lula da Silva confirmed the launch of the negotiations during a meeting in Evian-les-Bains, France, on the sidelines of the recently concluded Group of Seven (G7) Summit.

Through the pact with the Mercosur bloc, which also includes Argentina, Bolivia, Paraguay and Uruguay, Japan hopes to expand market access for automobiles and other products, apart from diversifying supplies of critical minerals amid China’s recent rare earth export restrictions.

In her opening remarks, Takaichi described Brazil as a strategic global partner that shares values and principles with Japan. Mercosur is an attractive growth market with a population of about 300 million and a combined GDP of roughly USD 3 trillion. It is richly endowed with resources such as critical minerals, energy and agricultural commodities,” said Deputy Chief Cabinet Secretary Kei Sato, while giving out more details about the bilateral meeting.

Brazil, the largest economy in the Mercosur bloc, is also a major oil producer, thereby making the Latin American region increasingly important for Japan’s efforts to diversify supply chains and resource procurement. However, as per Sato, Takaichi is also taking into consideration the concerns raised by lawmakers of the ruling Liberal Democratic Party, who have warned that increased imports of animal protein-related products could end up hurting domestic producers.

“The Japanese government is aware of those concerns and will seek to protect sensitive agricultural sectors during the negotiations,” Sato said.

Apart from Brazil, Japan is looking to deepen its ties with France, with Takaichi and French President Emmanuel Macron meeting on the sidelines of the G7 Summit and discussing cooperation on economic security, critical minerals and advanced technologies.

Meanwhile, Japan’s exports grew for a ninth straight month in May, as a weaker yen, higher commodity prices and solid semiconductor demand offset the drag from major supply disruptions linked to the Iran war.

“Total exports by value rose 17% year-on-year in May, outpacing a median market forecast for a 16.2% increase and following a 14.8% rise in April. By volume, however, they rose just 0.5% last month,” the government data stated.

Exports of electronic components drove overall growth, with the ongoing AI boom pushing up prices for memory chips and non‑ferrous metals. While exports to the United States rose 12.5% in May from a year earlier, the China tally went up by 17.9% as well.

Overall imports grew 12.5% in May 2026, compared with the May 2025 tally. However, the ratio fell short of market forecasts, which predicted a 12.8% increase. The gains were witnessed despite a plunge in crude oil import volumes, as the maritime trade disruptions at the Strait of Hormuz severely raised the prices of crude and other energy products.

With per-unit cost in yen hitting an all-time high, crude oil imports plunged 28.5% in value terms and 57.3% in volume terms. That resulted in the Far East Asian nation ⁠running into a trade deficit of 378.7 billion yen (USD 2.36 billion) in May, compared with the forecast of a 564.6 billion yen deficit.

Japan, heavily dependent on imported energy, has faced higher costs following disruptions to ⁠Middle Eastern supply routes. In May, crude oil imports from the Middle East tumbled 61.9% in volume terms. Despite the Takaich government securing alternative crude supplies from alternative sources like the United States, they were not being able to offset the impact that was created by the downfall in Gulf tally.

The post Japan looks to deepen trade ties with Latin America, France appeared first on International Finance.

Recently, rumours about Biya’s health have spread like wildfire, prompting the government to ban any public discussion on the topic. This isn’t new as whenever Biya vanishes from public view, people start talking. His most recent public appearance, at Yaounde Airport on October 21, ended weeks of speculation about his death.

The country depends on Biya’s presence rather than strong institutions, making succession a daunting task. Questions linger: Who will lead after Biya? How will his departure affect a country that has known no one else? What happens to the millions struggling with poverty, corruption, and poor infrastructure?

Cameroon is rich in natural resources. It lies at a key crossroads between West and Central Africa, along the Atlantic coast. Yet more than half of Cameroonians live in poverty, and nearly 38% are severely impoverished. The country’s wealth has not translated into widespread prosperity.

This disparity is rooted in corruption and mismanagement. When Biya took power in 1982, he promised a “New Deal” to fight corruption. At first, his stance seemed genuine, and Cameroonians were hopeful. But by the early 1990s, Cameroon topped the world’s corruption lists. Biya’s promise of reform had become empty words.

Today, corruption is part of life. Transparency International ranks Cameroon 140th out of 180 countries for corruption. Biya’s anti-corruption drives are often seen as a tool to silence rivals, not a real effort to clean up government. His ethnic group, the Beti people, hold many senior positions despite being a minority. This nepotism has fuelled resentment and division, breeding a kleptocratic state where few benefit at the cost of many.

Crisis and instability ruling the roost

Cameroon became a federation in 1960, bringing together French-speaking and English-speaking regions. This union was supposed to reflect a unity of diversity. For a time, it worked. But disenchantment, especially among the Anglophone southwest, led to unrest in 2016. What began as peaceful protests turned into a violent conflict now known as the “Anglophone Crisis.”

Thousands have died, and tens of thousands more have been displaced. The government responded to early protests with force, escalating the crisis. The Anglophone regions, feeling neglected and marginalised, have called for autonomy, language rights, and even independence.

In an attempt to ease tensions, the government created the Commission of Bilingualism and Multiculturalism and offered “special status” to the troubled regions. However, these gestures failed to solve the underlying issues. The Anglophone population remains marginalised, and the violence continues. As Biya’s era ends, this unresolved crisis poses a real threat to national unity.

Biya focused on consolidating power, not building institutions. His rule has left Cameroon without structures strong enough to handle change. The country has no clear mechanism for succession. It is uncertain who could take Biya’s place or if any successor has been groomed. Nepotism and favouritism have ensured loyalty to Biya the man, not democratic principles or the law. When Biya is gone, this loyalty may fracture, risking chaos.

The military could also play a major role. It has been a key support for Biya. In times of uncertainty, the military might step in “to safeguard the republic.” If this happens, Cameroon could face a military dictatorship, which would be disastrous for any hope of democratic reform.

Biya has used every tool at his disposal to secure his position, making his presidency effective for life. This has prevented the coups or revolutions seen in Chad, Niger, and the Central African Republic. In 1992, Biya agreed to a multiparty system under pressure. But this was democracy in name only. Biya manipulated the system to weaken the opposition. The use of legal and extralegal means ensured that no real challenge to his power emerged. As a result, Cameroon’s political landscape is fragmented. There is no unified opposition ready to take charge if Biya leaves power.

Foreign role in the region

Regionally, Cameroon is important. It has been a key ally of France and the United States in the fight against Boko Haram. The fight against terrorism has made Cameroon central to regional stability, with military support from its international allies. This cooperation has helped solidify Cameroon as a partner in regional security.

Biya also managed to settle the Bakassi Peninsula dispute with Nigeria peacefully, avoiding regional instability. His diplomatic efforts, while overshadowed by his domestic failures, helped maintain stability in the region.

But as Biya’s reign ends, it’s unclear if these alliances will hold. France’s political and economic ties may continue, but a power struggle or internal chaos in Cameroon could change priorities. International stakeholders want a stable Cameroon, especially given their investments in the region.

Though Cameroon gained independence from France in 1960, Paris has maintained strong ties, which has shaped the trajectory of the country for decades. This ongoing influence is deeply intertwined with Cameroon’s current state of governance and economic disparity.

One of the most significant symbols of France’s neo-colonial control is Cameroon’s use of the CFA Franc. The currency, created during colonial times and still controlled by France, ties Cameroon’s economic fortunes closely to those of France. Cameroon, like many other countries in Central and West Africa, must deposit 50% of its foreign exchange reserves with the French Treasury, effectively limiting its monetary sovereignty.

The CFA Franc has a fixed exchange rate with the Euro, which benefits French businesses and investors while stifling economic autonomy in Cameroon. This system created a scenario where France remains the major beneficiary of Cameroon’s natural resources and trade.

France is Cameroon’s leading trade partner, with trade between the two countries amounting to over 1.3 billion euros annually, according to France’s Ministry of Foreign Affairs.

French companies have a dominant presence in Cameroon’s key sectors. This overwhelming economic presence of French corporations means that much of the profit generated from Cameroon’s resources ends up overseas rather than benefiting the local economy.

France has supported Paul Biya’s government for decades, providing diplomatic backing even as corruption, human rights abuses, and nepotism have become defining features of his rule. The French want to maintain its influence in Cameroon. It is this backing that has allowed Biya to remain in power for over four decades, manipulating political structures to his advantage.

Moreover, France has also provided military aid to Cameroon, often under the guise of fighting terrorism, such as the threat posed by Boko Haram. According to data from the Stockholm International Peace Research Institute (SIPRI), France has provided arms and military equipment to Cameroon over the past decades, bolstering the government’s ability to control dissent domestically. This military support helps sustain the current power structures, which benefit France economically and politically.

France also exerts influence through development loans and financial aid. While these funds are often portrayed as a form of benevolence or development assistance, they come with strings attached that primarily benefit French interests. In Cameroon, 90% of the development loans from France are directed towards projects in Francophone regions, further entrenching the inequality between French-speaking and Anglophone regions. This practice has deepened the divisions within the country, contributing to the ongoing Anglophone crisis.

For instance, between 2010 and 2020, France provided over 2.5 billion euros in development loans to Cameroon. These loans often require French contractors, reinforcing France’s economic control over key projects, particularly in infrastructure and energy sectors. This pattern of lending has led to a cycle of debt and dependency, preventing Cameroon from exercising full control over its development agenda.

The direct impact of France’s neo-colonial policies is evident in the socioeconomic conditions experienced by most Cameroonians. Despite its resource wealth, Cameroon ranks 153rd out of 189 countries on the Human Development Index, with a significant portion of its population living below the poverty line. The influence of French companies, the economic straitjacket of the CFA Franc, and conditional development loans have all contributed to a situation where the economic benefits of Cameroon’s resources do not reach its people. Instead, they benefit French corporations and the political elite in Cameroon who maintain close ties to France.

The Anglophone regions, in particular, have suffered from this inequitable distribution of resources. The French-driven policies that favour Francophone areas have exacerbated regional tensions, contributing to the long-standing Anglophone crisis. The fact that most development funds are concentrated in Francophone regions fuels resentment and conflict, further destabilising the country.

France’s neo-colonial influence over Cameroon is pervasive, affecting everything from its economy to its political stability. The use of the CFA Franc, economic dominance by French corporations, political backing of Biya’s regime, and conditional development loans have all contributed to keeping Cameroon tethered to France. This relationship has not fostered development or democracy in Cameroon but rather entrenched inequality, corruption, and economic dependency.

As Cameroon faces the uncertainty of a post-Biya era, the legacy of France’s influence will continue to be a significant factor. For true progress to occur, Cameroon must find a way to break free from the neo-colonial dynamics that have held it back for decades. Without loosening these ties, any attempts at reform will be limited, and the vision of a prosperous, independent Cameroon will remain out of reach.

The Future: Uncertain, but with hope

Cameroon stands on the edge of a new era. Biya’s departure could bring opportunities for change. Some hope that his exit will lead to reforms, greater transparency, and a crackdown on corruption. But without structural changes, these hopes may prove hollow. Biya’s legacy includes weakened institutions and a lack of democratic preparation for what comes next.

Poverty is widespread, infrastructure is crumbling, and economic prospects are bleak. Any future government must address the needs of the people. The Douala port and railway links may be modernised, but the rest of the country remains underdeveloped. Corruption must be fought head-on, and the wealth of the nation must benefit all its people, not just a select few.

In the Anglophone regions, there must be real dialogue. Reconciliation is key to bridging the divide between Anglophones and Francophones. Autonomy or even a federal system may need to be considered to resolve these long-standing grievances. Without addressing these issues, peace will remain out of reach.

The post Cameroon’s post-Biya future: Hope or chaos? appeared first on International Finance.

The head of Norway’s sovereign wealth fund, the biggest in the world, Nicolai Tangen, told The Financial Times, “We are not very ambitious.” The European Chamber of Commerce has declared that “European businesses need to regain self-confidence.”

There is an endless list of factors contributing to the so-called “competitiveness crisis” in the European Union (EU), including an excessive number of regulations and insufficient authority held by Brussels’ leadership. Companies are too small to compete on a global scale; public and private investments are too low; and financial markets are too fragmented.

“Our organisation, decision-making and financing are designed for ‘the world of yesterday,’ pre-COVID, pre-Ukraine, pre-conflagration in the Middle East, pre-return of great power rivalry,” Mario Draghi, a former president of the European Central Bank who is heading a study of Europe’s competitiveness said.

It is now impossible to take for granted cheap energy from Russia in the post-Ukraine scenario, inexpensive exports from China, and a firm reliance on United States military defence. Concurrently, hundreds of billions of dollars are being directed by Beijing and Washington toward the development of their own semiconductor, alternative energy, and electric vehicle industries as well as the disruption of global free trade agreements.

According to a McKinsey Global Institute report, Europe-based big businesses invested 60% less in 2022 than their American counterparts and expanded at a rate of two-thirds slower. In terms of per capita income, it is typically 27% less than that of the US. Furthermore, compared to other large economies, productivity growth is slower and energy prices are significantly higher.

Draghi’s report, in all likelihood, will be made public after the parliamentary election of the European Union is over. However, he has already declared that “radical change” is necessary. From his perspective, this entails a massive rise in collaborative spending; a reorganisation of Europe’s convoluted financing and regulatory framework, and a consolidation of smaller businesses.

The inherent difficulties in coordinating the actions of over 22 nations have gotten more acute due to the speed at which technology is developing, the escalating number of international conflicts, and the growing reliance on national policies to direct business. Imagine if the federal government’s ability to raise money to finance the military was restricted and each state in the United States retained its national sovereignty.

Europe has started moving in the right direction already. The European Union first proposed an industrial defence policy, and it passed the Green Deal Industrial Plan in 2023 to expedite the energy transition. However, compared to the resources that China and the United States are using, these efforts are insignificant.

According to an analysis released by the research firm Rystad Energy, the bloc “is set to fall far behind its ambitious energy transition targets for renewable energy, clean technology capacity and domestic supply chain investments.”

Draghi believes that for the European Union to stay up, public and private investment in the digital and green transitions alone needs to increase by half a trillion euros annually ($542 billion).

The European Commission, the EU’s executive body, ordered both his report and Letta’s to aid in directing decision-makers when they convene in the fall to draft the bloc’s next five-year strategic plan. A considerable portion of people still favour free markets and are wary of government interference in Europe and other regions.

However, there is a growing consensus among Europe’s most powerful politicians, business executives, and officials regarding the necessity of more assertive group action.

They contend that Europe cannot effectively compete if public funds are not consolidated and a single capital market is not established. This will prevent the continent from investing in crucial areas like energy, defence, and supercomputing.

Furthermore, it cannot compete with the economies of scale enjoyed by enormous foreign corporations that are better positioned to gobble up market share and profits if smaller businesses are not consolidated.

According to Draghi, Europe possesses at least 34 major mobile networks, while China and the United States have four and three, respectively.

Letta claimed that during his six-month research trip to 65 European cities for his report, he witnessed first-hand the peculiar competitive shortcomings of Europe.

“By high-speed train between European capitals” was not an option, he declared.

This stark contradiction serves as a metaphor for the issues facing the single market. However, there may be political pushback to the suggested fixes. Concerns about jobs, living standards, and purchasing power are major issues for many politicians and voters throughout the continent. Giving Brussels more power and resources, though, is something they are cautious about.

Furthermore, they frequently find it difficult to witness the demise of well-known administrative guidelines and business practices or the merger of national brands with competitors.

Another concern is that there might be an increase in red tape. In 2024, in protest of the numerous environmental regulations imposed by the European Union that govern their use of pesticides and fertilisers, planting schedules, zoning, and much more, irate farmers in France and Belgium blocked roads and dumped truckloads of manure.

For far-right political parties seeking to capitalise on economic concerns, blaming Brussels is also a handy strategy. The European Union has been dubbed the “enemy of the people” by the anti-immigrant National Rally party in France.

According to the current political undercurrent, right-wing parties are gaining big time in the European Parliament, further fracturing the legislative body. Government officials at the federal level tend to defend their rights. The European Union has been working to establish a single capital market for the last ten years to facilitate international investment.

However, a lot of smaller countries, like Sweden, Ireland, and Romania, have resisted changing their laws or giving up control to Brussels because they fear it will hurt their own financial sectors.

The consolidation of power worries civil society organisations as well. Thirteen European organisations released an open letter in May 2024 alerting readers to the dangers of increased market consolidation, which they said would hurt workers, small businesses, and consumers while giving corporate giants undue power and driving up prices.

Europe has been lagging behind the rest of the world for over ten years in many competitiveness metrics, such as capital investments, research and development, and productivity growth. However, McKinsey claims that it is a global leader in lowering emissions, reducing income inequality, and promoting social mobility.

Also, choice plays a role in some of the economic differences with the United States. Because Europeans choose to work fewer hours on average over their lifetime, the difference in per-capita GDP between Europe and the US is half. Others caution that if Europeans wish to keep their standards of living, they may no longer have the luxury of making such decisions.

According to Simone Tagliapietra, a senior fellow at the Brussels-based research group Bruegel, policies controlling energy, markets, and banking are too dissimilar.

“If we continue to have 27 markets that are not well integrated. We cannot be competing with the Chinese or the Americans,” he remarked.

Europe’s recovery remains firmly on course, driven by internal demand. All of the major economies performed marginally better than predicted till April 2024, which shows growth that is slightly above expectations, according to the most recent GDP data for the euro area. The healing process is propelled by a rise in both consumer and business optimism. Household finances are fortified by persistent job markets, resulting in a rebound of incomes.

In various countries, disinflation is ongoing and is preparing the ground for interest rate cuts. As of April 2024, the inflation rate in the euro area has stayed the same at 2.4%. Additionally, the core inflation rate has noticeably decreased.

The post Is Europe becoming uncompetitive? appeared first on International Finance.

The transaction closed following fulfilling the conditions precedent, including all required regulatory approvals. The consortium will combine Datagroup-Volia with Lifecell to create a unified telecom platform for growth, expansion, and investment. The consortium includes US private equity firm Horizon Capital.

Lifecell was fully owned by Turkcell. In April 2024, a Kyiv court cleared the path for the acquisition by lifting the seizure of Lifecell’s shares belonging to sanctioned Russian billionaire Mikhail Fridman, who held approximately a 20% stake through LetterOne.

The next significant milestone for the combined platform is signing loan documents and then disbursing the USD 435 million joint financing package provided by the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).

Following the announcement of this agreement at the Ukraine Recovery Conference in Berlin in June, both institutions have obtained the necessary board approvals. Datagroup and Volia own a network covering over 4 million Ukrainian households in over 100 cities, with over 35,000 kilometres of fibre infrastructure.

Additionally, Turkcell affirmed that the sale of its Ukrainian-based subsidiaries has ended. The statement states that Turkcell has received USD 524,3 million following the completion of the transfer of shares, along with all rights and liabilities in Lifecell, Global Bilgi, and Ukrtower, Turkcell’s subsidiaries, to DVL Telecom, one of the NJJ Holding group companies. The sale of Lifecell was first approved by the company in January.

The deal is worth at least USD 524.3 million, Turkcell mentioned. The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation will provide USD 435 million in loans, the firms added. The new platform is expected to rack up around 10 million mobile users, and more than 4 million people connected via fixed-access network.

“NJJ Holding, the leading investor alongside Horizon Capital, is one of Niel’s investment vehicles. It is the sole owner of Atlas Investissement, which is also the top shareholder of telecoms group Millicom. Iliad, at the core of Niel’s overarching telco business, will not be the parent company of this new Ukrainian provider,” Reuters reported further.

Who Is Xavier Niel?

The tech magnate owns the telecom behemoth Iliad, which is the parent company of one of France’s biggest ISPs (Internet Service Providers), Free. Monaco Telecom and Orange Switzerland, which he purchased in 2014 for USD 2.09 billion and rebranded Salt, are also part of his holdings.

Niel also holds stock in the British telecom provider Vodafone, the French daily LeMonde, and the Unibail-Rodamco-Westfield commercial real estate company, which is headquartered in Paris.

Niel first made his mark by investing in the maiden Internet Service Provider in France, World-NET, created by Sebastien Socchard, Philippe Langlois and Pierre Seguret. This company was sold for 30 million euros the year before the internet bubble burst.

Niel is a business leader marked by versatility as apart from co-owning the newspaper Le Monde, he also has controlling stakes in Monaco Telecom, Salt Mobile and Eir. Apart from being the chairman and chief strategy officer for Iliad, Niel is a board member of American global investment giant KKR and French real estate venture Unibail-Rodamco-Westfield.

After taking over a company subsequently renamed Iliad, Xavier Niel launched in 1996 the first reversed directory service on the Minitel. This service was responsible for one million euros of revenue per year for Iliad until the end of the Minitel in France in 2012. Niel remains Iliad’s majority shareholder, holding 71% of the share capital.

Just before the year 2000, Niel created Free, a French Internet service provider. In 2002, Free launched a broadband package at a low price (29.99 euro per month), which became the benchmark in the market then. Free also developed and launched the Freebox: the first triple-play multi-service box in France. The free modem service worked wonders for the company, as many of the existing internet customers switched to broadband for the sake of comfort.

In 2012, Niel created Free Mobile, which offered unlimited voice calls, text and data at the lowest price in the market in France (19.99 euro per month). In 2017, the entrepreneur launched the Iliad Italia brand in Italy, which in April 2021 conquered 9% of the market or 7 million subscribers with mobile offers for less than 10 euros. A launch on fixed connectivity is also planned for 2021.

After restructuring its assets leading to the creation of the holding HoldCo, Xavier Niel made major manoeuvres to reconquer the markets and strengthen its position in the capital of Iliad. In November 2019 he bought back 120 euro more than 11.7 million Iliad shares via a public share buyback operation, automatically raising the price to this level. He increased his control in the company from around 52% to 72%.

In September 2020, Niel again hit the headlines, as he through Iliad, launched a public offer for the Polish operator Play, leader of the Polish mobile market with 15 million subscribers after having bought a 96% stake on the market for 2.2 billion euros.

Man Of Versatility

In 2014, Cable & Wireless Communications (CWC) sold its 55% economic interest in Monaco Telecom to NJJ Capital, an investment vehicle controlled by Xavier Niel for USD 445 million. By the year-end, via its holding company NJJ Capital, the French tycoon acquired for USD 2.7 billion (2.8 billion Swiss francs) Orange Switzerland (owned by Apax Partners since 2012), which was renamed Salt Mobile in 2015. Five years down the line, Salt Mobile sold 90% of its towers for 800 million dollars to Cellnex.

In 2018, Niel bought 100% of the Cypriot operator MTN Cyprus through Monaco Telecom for 260 million euros, the carrier was rebranded into Epic the next year. Also in 2018, through NJJ, the billionaire invested 330 million euros for 32.9% of the capital of Eir. Iliad, for its part, took a 31.6% stake in Eir’s capital with a call option to buy back 80% of NJJ’s stake in 2024.

In April 2018, via NJJ, Niel acquired a stake in the capital of Tigo Senegal through the “Teyliom” consortium, a company which was rebranded into Free Senegal in 2019. In 2020, the businessman bought 100% of the operator Vodafone Malta through Monaco Telecom for 250 million euros, market leader for telecommunications operators in Malta, in the fields of mobile, internet and fixed communications. The company was rebranded into Epic in November 2020.

In April 2024, it was announced NJJ Holding had been given regulatory approval to acquire Ukrainian fixed telecom and pay-TV provider Datagroup-Volia. Talking about Niel’s involvement with the Unibail-Rodamco-Westfield, through his holding NJJ, in 2020, the businessman bought shares on the stock market of the French real estate venture with Leon Bressler and Susana Gallardo. The consortium announced in the same year that their stake in the company exceeded 5%, following which the entity was able to cancel the company’s plan of capital increase following a shareholders vote. In 2021, Niel took over the control of 15.5% stakes in Unibail-Rodamco-Westfield.

Niel has also been known as an angel investor. He co-founded with Jeremie Berrebi Kima Ventures, a fund dedicated to investing in start-ups around the world. From 2010-2014, Kima Ventures invested in 330 companies in 32 countries. Business Insider described Xavier Niel and Jeremie Berrebi as “almost certainly the most active angel investors in the world.”

Niel also created a school named 42, which is a free technical school with no teachers, no books, and no tuition for 1000 people every year. As of 2021, 33 campuses have been opened in the world. In 2021, the tycoon became the first shareholder of the company Unieuro, which is the largest Italian retailer of consumer electronics and household appliances by number of outlets, with a network of 460 stores throughout Italy.

In 2023, Niel was part of an investor group that had bought a 7.5% stake in Swiss asset manager GAM.

TikTok And AI Commitments

Xavier Niel will be joining ByteDance, the parent company of TikTok, as a director, the company announced to the South China Morning Post.

Experts stated that Niel isn’t a name that typically appears for prominent board posts, so this is an interesting move.

As per the report, he is taking over as ByteDance’s board member from Philippe Laffont, who founded the investment firm Coatue Management in New York. There were reports about Coatue mulling to sell some of its ownership in ByteDance.

In addition, he has actively participated in start-up investing through various investment vehicles and his seed company, Kima Ventures. Also, he established the Computer Science School 42 and Station F, a start-up campus located in Paris.

Among other news, a French artificial intelligence (AI) research lab backed by Niel recently showed off a new voice assistant with a variety of human-like emotions that is similar to a product that OpenAI promised but delayed over safety concerns.

Kyutai, an AI non-profit group formed in 2023, revealed its Moshi service at an event in Paris in July 2024. Scientists for the lab said their system can speak with 70 different emotions and styles. In the words of Bloomberg, these individuals “demoed the assistant offering advice on climbing Mt. Everest and reciting a poem it had composed with a thick French accent.”

The post Business Leader of the Week: Meet Xavier Niel, new owner of Ukrainian mobile operator Lifecell appeared first on International Finance.

Durov has multiple citizenships spanning France, Russia, the Caribbean island nation of St. Kitts and Nevis, and the United Arab Emirates (UAE). He was born in Russia but lived much of his youth in Italy. After arriving from Azerbaijan, he was detained at Paris-Le Bourget Airport in France and freed following four days of interrogation. According to the Paris prosecutor’s office, he was told to go to a police station twice a week and was compelled to pay 5 million euros in bail.

Telegram maintained that it complies with European Union (EU) regulations and that its content filtering is “within industry standards and constantly improving” in a statement that was uploaded to its platform. The business continued by saying Durov “has nothing to hide and travels across Europe frequently.”

Here are some specifics about the Telegram app, which is the reason behind Durov’s detention.

What is Telegram?

With the help of the Telegram software, users can have one-on-one chats, group chats, and broadcast messages to a large number of subscribers through “channels.” In contrast to competitors like Meta’s WhatsApp, Telegram supports up to 200,000 users in group chats, while WhatsApp only supports 1,024 users. Experts are worried that in group discussions, big, false information might spread quickly.

In contrast to widespread belief, Telegram does not automatically enable end-to-end encryption for user communications. Users must activate the option. Group conversations are not compatible with it either. This is in contrast to Facebook Messenger and rival Signal, where conversations are always end-to-end encrypted.

“Group conversations and channels—two popular Telegram features—are not end-to-end encrypted,” said John Scott-Railton, a senior researcher at Citizen Lab at the University of Toronto, explaining that their contents can be accessed through Telegram.

Similarly, user-to-user conversations are not end-to-end encrypted by default, which leaves Telegram with access to them as well. The only end-to-end encrypted function on Telegram is the opt-in “secret chat” option, which keeps Telegram from viewing the chat data.

According to Telegram, there are over 950 million active users. It is a popular messaging app in France, and some officials from the presidential palace and the ministry overseeing Durov’s probe use it as well. However, French police have also discovered that drug dealers and Islamic extremists have utilised the programme.

In 2013, Durov and his brother Nikolai founded Telegram. Pavel Durov backs the app “financially and philosophically, whereas Nikolai’s input is technological,” according to Telegram.

Durov established the biggest social network in Russia, VKontakte, before Telegram. The business faced pressure as a result of the Russian government’s crackdown following the large-scale pro-democracy demonstrations that shook Moscow at the end of 2011 and 2012.

According to Durov, representatives of the administration ordered VKontakte to remove the internet networks run by Russian opposition activists. Later, it demanded that the site provide the personal information of users who participated in the 2013 Ukrainian rebellion that resulted in the removal of a pro-Kremlin president.

However, in 2014, under pressure from Russian authorities, Durov sold his interest in VKontakte. He departed the nation as well. Currently headquartered in Dubai, Durov described the city as “the finest position for a neutral platform like ours to be in if we want to make sure we can preserve our users’ privacy and freedom of speech” during an April 2024 interview with Tucker Carlson, host of a conservative talk programme.

Why Did Durov Get Arrested?

French officials detained Durov and charged him with a misdemeanour for permitting suspected illegal activities on Telegram. They also prohibited him from leaving the country while they conducted additional inquiries. Durov is accused of allowing drug trafficking and child abuse materials to be distributed on his platform, and of Telegram refusing to provide information or documents to law enforcement when asked to do so.

According to the prosecutor’s office, the first preliminary complaint against him was for “complicity in maintaining an online platform to allow unlawful transactions by an organized gang,” a crime that carries a maximum sentence of 10 years in prison and a fine of 500,000 euros.

French law defines preliminary charges as a magistrate’s strong suspicion of a crime, with the option to continue the inquiry at a later date.

South Korea Gets Tough

South Korean police have now launched an investigation into Telegram over deepfake online sex crimes, reported the Yonhap news agency.

South Korean authorities have called on Telegram and other social media platforms for cooperation in fighting sexually explicit deepfake content. A broadcaster reported in August 2024 about university students running an illegal Telegram chatroom, sharing deepfake pornographic material of female classmates, one of a slew of high-profile cases that have stoked public anger.

“In light of these (deepfake) crimes, the Seoul National Police Agency launched their probe last week… for abetting the crimes,” said Woo Jong-soo, head of the investigation bureau at the National Police Agency, according to a transcript of a press briefing.

Police received 88 reports of deepfake porn last week alone, Woo said, adding they have identified 24 suspects. As per the AFP, the authorities have pledged to “find ways to cooperate with various investigative bodies, including the French, to enhance” their investigation into the platform.

As per the activists, South Korea is reportedly suffering from “an epidemic of digital sex crimes,” including those involving spycams and revenge porn, with inadequate legislation to punish offenders.

Perpetrators of deepfake crimes have reportedly used social media platforms such as Instagram to save/screen-capture photos of victims, which were then used to create fake pornographic material.

Dark Web Allegations Against Telegram

Telegram’s lack of content filtering has drawn criticism from Western governments on several occasions. Experts claim this exposes the messaging app to possible uses in drug trafficking, money laundering, and the transmission of content related to the exploitation of kids.

In contrast to other messaging apps, David Thiel, a researcher at Stanford University’s Internet Observatory who has studied the use of online platforms for child exploitation, claimed that Telegram is “less secure (and) more lax in terms of policy and detection of unlawful information.”

Additionally, Thiel stated that WhatsApp, a messaging software, “submitted over 1.3 million CyberTipline reports in 2023 (while) Telegram submits none,” and that Telegram “appears basically unresponsive to law enforcement.”

Due to the Telegram operators’ noncompliance with German legislation, Germany fined them 5.125 million euros (USD 5 million at the time). According to the Federal Office of Justice, Telegram has not designated a German company to receive official correspondence or established a legal mechanism for reporting illegal content.

Under German rules governing big internet platforms, both are necessary.

Due to Telegram’s refusal to provide information on neo-Nazi behaviour linked to a police investigation into school shootings in November 2023, Brazil temporarily blocked the messaging app.

As per Joe Tidy, Cyber correspondent, BBC World Service, criminals generally like the dark web because of the anonymity it provides: internet traffic is bounced around the world, obscuring people’s locations. Citing Researchers at cyber-security company Intel471, he said, “pre-Telegram this activity (cybercrime) was predominantly done in online markets hosted using hidden dark web services but for lower-level, lesser-skilled cyber-criminals, Telegram has become one of the most popular online destinations”.

The hacker group Qilin, which held United Kingdom’s NHS hospitals to ransom recently, notably chose to publish stolen blood test data on its Telegram channel before its dark web website. The deepfake service used to create fake vulgar images of teenagers in Spain and South Korea also runs its full service, including payment, on Telegram.

In January 2024, state police in Latvia set up a separate unit specialising in monitoring chat apps for drug trafficking and communication, and officials have named Telegram as a particular concern.

On “Chila Abuse Materials,” Telegram says that its content moderation is “within industry standards”, but BBC has found evidence to the contrary related to “an area of criminality far less visible.”

The BBC learnt that while Telegram does respond to some takedown requests from police and charities, it does not participate in programmes aimed at proactively preventing the spread of images and videos of child abuse. Not doing enough to police CSAM has been one of the allegations French prosecutors have brought against the platform.

“At the heart of this case is the lack of moderation and co-operation of the platform, in particular in the fight against crimes against children,” said Jean-Michel Bernigaud, the secretary general of French child protection agency Ofmin, on LinkedIn.

Moderation is not the only part of the problem for Telegram. The platform’s approach to police requests to remove illegal content and pass on evidence is another criticism.

Brian Fishman, a co-founder of Cinder, a software platform for trust and safety, posted, “Telegram is another level: it has been the key hub for Isis for a decade. It tolerates CSAM. It’s ignored reasonable law enforcement engagement for years. It’s not ‘light’ content moderation; it’s a different approach entirely.”

“Some might argue that Telegram’s privacy features mean that the company does not have much data about this activity to report to police. This is the case with ultra-private apps like Signal and WhatsApp. Telegram offers users similar levels of privacy if they opt to create a ‘Secret Chat’ which uses the same end-to-end encryption that those apps do. It means the activity inside a conversation is completely private and not even Telegram itself can view the contents. However, this function is not set as default on Telegram, and it seems that most of the activity on the app – including on those illicit channels I was added to – are not set as secret,” Joe Tidy noted.

Telegram could read all content and pass it on to the police if it wanted to, but it states in its terms and conditions that it does not. In June 2024, Pavel Durov told journalist Tucker Carlson that he only employs “about 30 engineers” to run his platform. Telegram’s cold approach to law enforcement is something that Tidy cited by frustrated police officers on the fringes of press events.

French authorities also noted in their statements about Mr Durov’s charges that police there and in Belgium had historically an “almost total lack of response from Telegram to legal requests”.

The post IF Insights: Is Telegram in trouble post Pavel Durov’s arrest? appeared first on International Finance.

Pandaloc’s function is simple: allowing landlords to post and manage one residential unit for free. After that, it charges a fixed price for each additional unit. Whereas, tenants get charged a fixed percentage of their rent payment.

The venture, established in 2020, has established an innovative concept of rental relationships between individuals, as through the proptech platform, house owners contact tenants directly. Our copy today will talk about this in detail.

How Pandaloc Works?

“We believe in a world where younger generations will have good housing services. Housing is the most intimate space and rent is the No. 1 expense. However, real estate rental is broken today. Pandaloc gives the key to a good rental thanks to an innovative concept: on Pandaloc, it is the owners who contact the tenants,” the venture said.

Pandaloc’s unique rental relationship works in this way: The tenant defines his/her ideal accommodation: city, surface area, and budget, apart from describing the tenant profile details such as monthly/yearly incomes. After that, Pandaloc sends the profile to the owners of the accommodations that match the tenant’s preferences. House owners then select the tenant’s profile and contact the person directly.

Owners receive the tenant’s profile with the latter’s crucial information like financial health and guarantor details etc. Each application gets scored according to the adequacy of the Tenant’s budget to allow landlords to quickly target the profiles.

“Owners are rigorously moderated by automatic and human checks. No more wasting your time contacting dozens of owners with no response. You describe your profile once and for all. Pandaloc sends your profile to the owners and they contact you,” Pandaloc stated further.

Pandaloc is a paid service (24.99 euros) for tenants. If the tenants feel that they have not received good contacts, Pandaloc follows a simple policy: Unhappy customers will get refunded. The start-up also offers premium fees to tenants who need the service.

Pandaloc leadership sees the real estate rental experience, especially in France, as a “broken” one, apart from being anachronistic, slow and stressful, where tenants rarely get answers to their requests, send their documents and money to complete strangers, sometimes scammers, and spend a third of their budget on poor service.

Pandaloc’s mission is to change the way people rent out their housing spaces, apart from making the whole rental experience smoother, faster and more secure.

“By making this vision a reality, we give everyone the opportunity to live better, from one new beginning to the next. Faithful to our vision that the rise of rental among new generations will revolutionise rental management, and eager to professionalise landlords so that they become the superheroes of history, we created Pandaloc in 2020. Today, thousands of owners and renters trust Pandaloc for a transparent, fast and secure rental experience,” the start-up continued further.

Pandaloc works on four operational pillars: Simplicity, Prompt Client Service (be it responding to every email promptly or reimbursing unsatisfied customers), Security (Ensuring apartment owners validate their telephone numbers, human moderation of ads, using technology to instantly detect signals of suspicious activity and hosting user data on France-based servers) and Transparency.

Pandaloc is a member of the Wilco Accelerator Programme, the largest start-up accelerator in France and a major player in the Paris region’s innovation ecosystem. Wilco is supported by major institutional partners such as the Ile-de-France Region, the Public Investment Bank, the European Union, and large partner companies such as Bouygues Télécom, BNP Paribas, EDF, etc.

How Pandaloc Helps Tenants?

The answer is simple: By scoring each application, saves everyone time. The “Pandaloc Score” is a score that evaluates each tenant’s application from 1 to 100. The mechanism allows owners to more quickly contact tenants whose financial profile is compatible with the rent of their accommodation.

For calculating the score, Pandaloc takes into consideration factors like the adequacy between the tenants’ budget and the rent of the accommodation, along with the stability of the tenants’ situation and details about the guarantors.

The score is a variable one, as explained by the start-up, “A tenant can have a good score for one accommodation (good budget/tenant ratio) and a bad score for another accommodation (bad budget/rent ratio).”

All a tenant needs to do is to create a “Free Account,” where he/she can create the rental file and browse the site to test the file. Pandaloc’s “Premium Account” comes at 24.99 euros per month, availing which the tenant’s profile gets automatically sent to the owners of accommodations matching the search.

Similarly, the landlords/landladies can create their Pandaloc accounts, add listings, and respond to tenants for free. Owners can also indicate the desired rent for their accommodation via the ad page.

Free Rental Management Software

Pandaloc claims to create the best free rental management software, ensuring a smooth rental experience for landlords/landladies and their tenants while securing a stable rental income.

The process is simple here: the landlords/landladies describe their accommodation details like location, surface area, key amenities provided etc., following which Pandaloc presents to them the list of tenants who are looking for accommodations. Finally, the landlord/landlady studies the tenant profiles and makes contact directly by phone/email.

And the best part of the whole process is that Pandaloc updates the tenant lists in real time, apart from notifying the landlord/landlady by email about the new tenants to be discovered. Each tenant comes with a complete profile with their basic information and Pandaloc’s credit score. Basically, the credit score here is the “Pandaloc Score,” which evaluates each tenant’s application from 1 to 100. The score only allows property owners to more quickly contact tenants whose financial profile is compatible with the rent of their accommodation.

As stated before, the entire online rental management software doesn’t hurt the landlords/landladies financially.

The post Start-up of the Week: Armed with technology, Pandaloc is shaking up France’s rental game appeared first on International Finance.

With production facilities and distribution networks spanning continents, Lactalis is active in more than 100 countries. A vast range of dairy products, including milk, cheese, butter, yoghurt, and other dairy-based drinks and desserts, are offered by the company.

Lactalis has grown significantly by making both calculated acquisitions and organic growth. The company has solidified its position in several international markets by acquiring well-known dairy brands over the years.

Among its noteworthy acquisitions are the 2011 purchase of the massive Italian dairy company Parmalat, which helped it establish a stronger presence in Europe, and the 2017 acquisition of the American cheese manufacturer Stonyfield Farm, which helped it expand its reach in the US market.

Lactalis has occasionally been the subject of criticism despite its widespread distribution and wide range of products. The business was involved in a significant scandal involving tainted baby formula in 2017, which resulted in recalls and harmed the business’s reputation. But Lactalis moved quickly to resolve the problem, investing in product safety and enforcing stronger quality control procedures to win back customer confidence.

Lactalis is dedicated to sustainability and environmental stewardship in addition to its commercial endeavours. To lessen its influence on the environment, the company has taken steps to optimise the use of energy and water in its production processes and to encourage ethical sourcing across its supply chain. Overall, Lactalis continues to be a major player in the global dairy market, with a constant focus on innovation, growth, and sustainability along with a dedication to providing consumers all over the world with high-quality dairy products.

The brain behind this successful venture is 53-year-old Emmanuel Besnier, a French heir and businessman, and is the chief executive officer (CEO), who has taken this company to such a great milestone.

Who is Emmanuel Besnier?
• Emmanuel Besnier was born on 18 September 1970 in Laval, Mayenne, France
• He pursued his studies in a private school of Laval, the Roman Catholic Immaculate Conception, and then moved to Paris for higher studies at the Higher Institute of Management
• After completing his graduation, Emmanuel Besnier turned towards his family business and started working in Madrid
• He took over the company and became the CEO after his father died in 2000, and turned it into an amalgamation
• In the year 2006, Emmanuel Besnier received the “Mayennais of the Year” award from the local Rotary Club
• Every year his company donates around $230000 to the Laval Stadium through Groupe Lactalis
• Emmanuel Besnier is a passionate football lover and donates EURO 200000 every year to the Francis Le Basser Football Stadium, Laval
  He’s been nicknamed ‘The Invisible Billionaire’
• According to Forbes, as of 2024, Emmanuel Besnier’s net worth is around 2,500 crores USD

Despite Business Success, Lactalis Faces Hard Time

In March 2024, DKSH signed an exclusive distribution agreement with Lactalis. Under the pact, DKSH’s Business Unit Performance Materials will provide business development, marketing, sales, logistics, and distribution services for Lactalis’ pharma grade lactose for customers producing Finished Dosage Forms (FDFs), including tablets, pills, capsules, liquid solutions, among others in key markets like Bangladesh, India, Indonesia, Thailand, Portugal, and Spain.

The development gives some respite to the dairy giant, who, recently, has been reportedly fined for engaging in “unfair” trading behaviour, after Coldiretti, the primary farmers’ organisation in Italy, filed a complaint against the venture.

Part of Italy’s Ministry of Agriculture, the Central Inspectorate of Quality Protection and Fraud Repression (ICQRF) has fined the dairy group 74,145 euros (USD 80,446). After ICQRF issued a summons, it was placed on the local Lactalis subsidiary company Italatte. Regarding the price paid to farmers for their milk supply, Coldiretti had claimed that the company was involved in “unfair practices.”

Lactalis announced that it “will appeal any sanctions that will be imposed.”

“The proposed contractual changes have allowed farmers to earn €40m, more than 10% than what initially stipulated with a price in line with the market,” the dairy company said, as reported by the JustFood website.

However, ICQRF said in its statement, “The Lactalis company had been accused of having unilaterally modified the contract with the farmers supplying milk, decreasing the recognised prices. It was also accused of having introduced a new index linked to the prices of European milk, which was not agreed upon and penalised Italian producers.”

The post Business Leader of the Week: Meet Emmanuel Besnier, CEO of dairy giant Lactalis appeared first on International Finance.

The government’s action followed a rise in official interest rates that led to record earnings for Italian banks. The government now claims that the money will go toward tax reduction and assistance for mortgage holders. The levy on their profits, according to Italian banks, will be “significantly detrimental” to the industry. And after the objections, the finance ministry said the tax would be capped at 0.1% of assets, while reiterating the commitment to support businesses and people suffering due to the higher borrowing costs.

The tax will apply to the net interest income that comes from the gap between the banks’ lending and deposit rates.

According to reports, the levy will generate about €2 billion (£1.7 billion), which will go toward supporting families who are suffering from higher interest rates.

However, some European banks have termed the move bad news for the sector.

Shares in the country’s two largest banks, Intesa Sanpaolo and UniCredit, saw valuation drops, as the government announced the move. Italy’s third-largest bank Banco BPM and the state-owned Monte dei Paschi di Siena also witnessed market bloodbaths. The situation hasn’t been different for the private banks as well. The fallout has impacted the banking sectors of Germany and France too.

What is a Windfall Tax?

A windfall tax is imposed on unexpected/extraordinary profits or gains earned by individuals, businesses, or industries due to specific economic circumstances. It is often considered when a company or sector experiences an unusually large increase in profits that may be perceived as excessive or unjustified.

The rationale behind implementing a windfall tax is to capture a portion of these windfall gains and redistribute them for the ‘public good’. Windfall taxes are typically levied on top of regular corporate or income taxes and are meant to mitigate the potential negative effects of excessive profits on economic equity and fairness.

The implementation of a windfall tax can be a matter of debate and policy decision, as it involves balancing the need for government revenue with considerations of economic incentives, investment, and potential unintended consequences.

Why are countries charging Windfall Taxes?

Crude oil, gas, and coal prices have dramatically increased since 2020. As a result, energy firms made large profits at the expense of customers, who now pay significantly more for their energy use.

In light of this, the UN Secretary-General urged countries to apply windfall taxes on businesses that have greatly benefited from the increase in the price of fossil fuels. As a result, numerous nations, besides India, are thinking about enacting windfall taxes, including the UK, Germany, and others.

International stance on Windfall Tax

Italy is the most recent nation in Europe to surprise banks with a windfall tax on their earnings, which have increased as a result of interest rate hikes, in an effort to assist homeowners.

In order to earn $3.4 billion in 2023 from profits judged excessive to support assistance for families and businesses hurt by skyrocketing electricity and gas prices, the Czech lower house of Parliament authorized a 60% windfall tax on energy firms and banks.

President Emmanuel Macron of France stated in March 2023 that businesses with over 5,000 employees should instead reinvest more of their “exceptionally high” revenues into their workforce. However, he and Finance Minister Bruno Le Maire have disregarded the idea of a windfall tax. While French banks restrict the rate of quarterly increases in loan pricing, the country has a well-known, regulated savings program with an inflation-linked return that adjusts more swiftly than loan rates. This program accounts for slightly under 20% of bank deposits in France.

Compared to the COVID-era lows, net interest revenue for some of Germany’s largest banks has increased by 50% to 70%. However, under pro-business Finance Minister Christian Lindner, a windfall tax has not been a topic of discussion.

The German finance ministry declined to comment on Italy’s decision but pointed out that a coalition government agreement in Germany forbids tax rises.

In a decree issued in June 2023, Hungary modified the windfall taxes levied on significant economic sectors, stating that banks might pay up to 50% less in windfall taxes in 2024 if they increased their purchases of government bonds. Additionally, it placed a brand-new 13% “social tax” on specific investment kinds.

Italy authorized a one-time 40% tax on bank profits from increased interest rates on August 8. It intends to utilize the money raised to assist homeowners. According to insiders, it anticipates receiving less than 3 billion euros ($3.3 billion) in tax revenue.

In May 2023, Lithuania authorized a windfall tax on the banking sector’s net interest revenue.

In order to improve public finances and provide room to absorb the costs that a financial crisis could generate, Sweden implemented a “risk tax” for institutions having liabilities related to Swedish operations of over 150 billion Swedish crowns ($14.1 billion) in 2022 January.

In 2022, the tax amounted to 0.05% of liabilities and rose to 0.06% in 2023. The estimated annual revenue is 6 billion Swedish crowns.

Britain did not enact a bank windfall tax, but since 2011, it has imposed a bank levy that applies to both the global balance sheet assets of UK banks and the assets of foreign banks that have operations in the country.

Are Windfall Taxes fair?

There is a school of thought that believes that corporations don’t operate in a vacuum and that they have a moral obligation to the citizens of the countries they are from. The citizens are the end consumers who help these colossal organizations amass incredible profits.

However, this political intervention in the industry is risky because it occurs while economies are on the verge of recession. Governments must use extreme caution since doing so will undoubtedly frighten bank investors, increasing the capital cost. Additionally, weakening banks is not a wise move because those same banks may be required to provide free-flowing credit during a crisis.

There are many arguments against windfall tax, the most obvious of which is arguably the fact that the majority of banks have no windfall to tax. Analysis reveals a somewhat different scenario from the headlines about European banks reporting “decade-high” profits that have dominated the current reporting season. For many of these banks, the return on the equity deployed remains unimpressive, averaging 10 to 13%. That merely covers the return required by investors, which is also their cost of equity.

Additionally, a recession might be on the horizon, and when one hits, bank earnings plummet as loans default and losses skyrocket. On whether banks would be better prepared to weather a crisis this time, there is debate—there always is. However, the scenario in which impairments increase and profitability declines is by far the most likely. Profitability may decline from its low beginning levels. Because of this, despite appearing to have received “windfalls,” the share values of European banks have decreased by approximately 10% since March 2023.

The fact that politicians and regulators effectively opposed such a move in the recent past, albeit from a different angle, may be the strongest case against a windfall tax. At the beginning of the COVID crisis, politicians persuaded European regulators to compel banks to halt dividend payments. Their justification was straightforward and seemed convincing. Banks would be better prepared to handle the impending recession if they kept more of their profits, allowing them to lend more to the real economy and have more cash to recognize loan losses.

Do Windfall Taxes work?

There are several historical examples of such a windfall tax levied on a specific industry after it registered record gains.

The Oil and Gas Industry in the United Kingdom was taxed for the windfalls it made in the early 2000s. The country introduced windfall taxes on energy companies during a period of high oil prices. The taxes were meant to capture a portion of the unexpected profits generated by these companies due to the surge in oil prices. While these taxes generated revenue for the government, the move also faced criticism from the affected companies and some economists, who argued that such taxes could discourage investment in the energy sector and lead to reduced exploration and production.

The Mining Industry in Australia had a windfall tax during the commodities boom in the mid-2000s. The tax, known as the “Resource Super Profits Tax,” was intended to capture a portion of the extraordinary profits made by mining companies due to the high demand for commodities like iron ore and coal. The tax proposal faced strong opposition from the mining industry, which argued that it would hinder investment and job creation. The tax was eventually repealed.

Germany implemented a windfall tax on telecommunications companies during the late 1990s and early 2000s as part of its efforts to reduce its budget deficit. The tax was imposed on the proceeds from the auction of 3G mobile spectrum licenses. While the windfall tax helped generate additional revenue for the government, it also sparked criticism from the affected companies and analysts who raised concerns about the potential impact on investment in the telecommunications sector.

The Banking Industry in Iceland was taxed in the aftermath of the 2008 financial crisis. The move was projected as a bid to stabilize the European country’s economy and address its fiscal challenges. The tax was applied to the large profits that Icelandic banks had made leading up to the crisis. This measure was part of a broader set of policies aimed at managing the crisis, and its effects were intertwined with other economic factors at play.

Some commodity-exporting countries, such as those heavily reliant on oil revenues, have considered or implemented windfall taxes to capture a larger share of profits when global prices are high. These taxes can provide governments with additional revenue that can be used for public spending or diversifying the economy. However, elements like the degree of government transparency, the administration of tax revenue, and the state of the economy as a whole can affect how effective such taxes are.

It’s important to note that the effects of windfall taxes can vary widely based on specific circumstances. They have the potential to affect investment choices, economic activity, and government revenue, and a variety of factors, such as the state of the economy, the structure of the industry, and public opinion, can affect their success or failure.

The post Weighing Windfall Tax Impact appeared first on International Finance.

The middle-east country has also lifted banking secrecy on the accounts of all five individuals, which include Riad Salameh, his brother Raja, his son Nady, his former assistant Marianne Hoayek and Anna Kosakova, with whom Riad has a daughter, the statement added further.

Riad Salameh served as central bank governor in Lebanon from 1993 until July 31, 2023. The senior official is now facing arrest warrants in France and Germany following investigations into whether he and his brother took USD 330 million in public funds from the Lebanese central bank while he was governor.

The brothers and Riad Salameh’s former assistant Marianne Hoayek have all been charged in Lebanon over embezzlement and other financial crimes.

The Salameh brothers have denied the charges. While Nady Salameh did not respond to Reuters, lawyers for Marianne Hoayek and Kosakova have chosen to remain silent to the media.

Riad Salameh, in messages to Reuters, denied the allegations made by the three sanctioning countries and said he would challenge them. Some of his assets had already been frozen in previous investigations, the former central bank governor added further.

In March 2022, the European Union’s criminal justice cooperation organization announced the freezing of some of Riad Salameh’s 120 million euros (USD 130 million) worth of Lebanese assets in France, Germany, Luxembourg, Monaco and Belgium, in a case in which Munich prosecutors found the banker as a suspect.

In July 2023, the French judiciary transferred seized assets belonging to Riad Salameh and his associates to the Lebanese state.

According to Lebanese law, the Special Investigation Commission is headed by the central bank governor. In the absence of an appointed successor for Riad Salameh, first vice governor Wassim Mansouri is heading the institution as acting governor.

Meanwhile, a long-delayed independent audit of United States-based firm Alvarez & Marsal found that the central bank lost tens of billions of dollars of commercial lenders’ assets on a sovereign debt support scheme. The report also said USD 111 million of Central Bank of Lebanon funds were diverted to Riad Salameh’ personal accounts.

The report, while encountering numerous obstacles and delays and facing resistance from Lebanon’s key policymakers, said that the financial engineering conducted by the central bank was “highly costly, with a total cost of 115 trillion Lebanese pounds (USD 7.7 billion) between 2015 and 2020.”

The report further found that the central bank had a foreign currency surplus of USD 7.2 billion at the end of 2015. However, by the 2020 end, it had become a deficit of USD 50.7 billion.

“The rapid deterioration of the financial situation was not reflected in the balance sheet and financial statements, as Banque du Liban’s use of unconventional accounting standards allowed it to exaggerate the value of its assets and profits. A major chunk of losses was kept off the balance sheet and instead recorded under different categories,” the report continued further.

“The positions and losses of Banque du Liban are presented through the netting of assets and liabilities and through recording them in unexplained and general accounts such as ‘other assets’ and ‘clearance and settlement accounts,” it said.

“No loss is shown at all in the balance sheet,” it added, while noting that no information was provided to the public, such as the ones related to the profit and loss accounts from 2015 to 2020, interest paid to major depositors or granted to major borrowers, or the methodology for reporting those interests.

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