Week in Review, April 25

A round up of some of the week's most significant corporate events and news stories.

Fears over Credit Suisse equity overshadow strong earnings

Higher trading volumes, driven by rising market volatility, helped Credit Suisse boost its earnings by 23 per cent in the first quarter. But in the last set of results to be delivered by Brady Dougan, the outgoing chief executive, attention quickly shifted to the bank's weakening capital position, writes Laura Noonan in London.

Its common equity tier one ratio - a key measure of its financial strength - slipped to 10 per cent at the end of March from 10.1 per cent at the end of December. While this was still well above regulatory minimums, it fell below the level investors had hoped to see.

Credit Suisse said the deterioration was partly linked to regulatory changes, and the bank warned there could be more of these to come - prompting some investors to worry that incoming chief executive Tidjane Thiam might begin his tenure with a capital raising.

When he takes the helm in June, Mr Thiam is expected to pare back the group's capital-intensive investment banking division, but Tuesday's results showed it had put in a strong performance.

This was largely because of market volatility which lifted trading revenues for the Swiss bank, as it has for many of its US counterparts.

Underwriting and advisory fees fell 26 per cent in the quarter, but Mr Dougan said the trend had improved since then.

Pre-tax profits at wealth management - the division Mr Thiam is expected to pin his growth hopes on - rose 10 per cent. However, the wider private banking and wealth management unit suffered a 3 per cent slide in earnings.

? Related analysis: Results leave Thiam with bigger challenge? Related Lex note: Checkout time

Tech pioneer takes Rolls-Royce helm

Rolls-Royce attracted a sprinkling of high tech glamour this week with news that Warren East, former head of Arm Holdings, will in July replaceJohn Rishton, chief executive of Britain's premier engineering group, writes Peggy Hollinger in London.

The aerospace engine maker has become accustomed to springing surprises on investors after last year's profit warnings and a probe into allegations of bribery and corruption.

But this one was better received by shareholders, who hope that one of the UK's most celebrated technology executives will restore Rolls-Royce to profit growth.

Mr Rishton is to step down after four years at the helm and just six months into a restructuring that will see 2,600 Rolls-Royce jobs go and its global manufacturing footprint rationalised.

The former accountant has said he wanted a change of lifestyle and to spend more time with his family. Company insiders insisted this was not the euphemism often used for a dismissal. "He really just wanted a change," said one person close to the board.

Another told the Financial Times that Mr Rishton had decided that, because of family issues, he would be unable to commit for the duration of the Rolls-Royce restructuring. He offered late last year to step down to enable the board to find a new chief executive who could see through the changes.

Mr Rishton has been criticised for mishandling communications with the financial community, and the group last year suffered its first fall in profit.

? Related analysis: Rishton's departure fuels Rolls-Royce takeover speculation? Related Lex note: Rolls-Royce: East-ern promises

Goldman executive settles discrimination case

Dozens of photographers lined up outside London's Central Employment Tribunal on Tuesday to capture the arrival of senior Goldman Sachs banker Sonia Pereiro-Mendez for a discrimination case involving millions of pounds in disputed bonuses, writes Jane Croft in London.

Ms Pereiro-Mendez was suing Goldman for sex and maternity discrimination, claiming she was treated unfairly after telling her managers she was pregnant.

In what looked set to be one of the highest profile City employment cases in years, she had alleged that she was cheated out of millions of pounds in bonuses and subjected to sexist comments.

The press pack were to be disappointed: Ms Pereiro-Mendez did not arrive, and it was later revealed her case had been settled.

Barristers for both parties appeared before Judge Andrew Glennie, who ruled the banker's claim would be dismissed upon withdrawal. He said the employment tribunal had been informed that both parties had "reached terms of settlement and judgment should be made by agreement".

Ms Pereiro-Mendez, a mother of two, is now understood to have left the bank - where she was an executive director - as part of the settlement.

She had alleged that in the past five years her bonuses and salary were cut as bosses felt that "given her pregnancy, she was no longer a significant long-term player".

It emerged in court that Ms Pereiro-Mendez had secretly taped conversations with some of her managers and extracts would be played during the case.

ABF and Tate & Lyle in a sticky patch

Sweet things put Associated British Foods and Tate & Lyle into a pickle this week, writes Scheherazade Daneshkhu in London.

The sharp fall in European Union sugar prices, ahead of industry deregulation, plunged ABF's sugar business into an interim loss of £3m, though the unit is expected to make a small profit - £10m-£12m - in the full-year.

Sugar's demise has been brutal. Only three years ago, the business accounted for 47 per cent of group annual operating profits. It is on course to drop to 1 per cent in this financial year.

Luckily, the Weston family, which controls ABF, has a retailer called Primark up its sleeve. The rise of Primark, which is set to enter the US in the autumn, has come in very handy. The discount high street chain is expected to contribute 65 per cent of the so-called food group's profits this year, up from 33 per cent three years ago.

Tate & Lyle should have been heaving a sigh of relief at having got out of sugar refining five years ago. But its sweeteners have not exactly had a smooth run either, triggering three profits warnings this financial year.

On Tuesday the group said it would get out of the production of high fructose corn syrup in Europe, ahead of the 2017 EU deregulation, by exiting its joint venture with Archer Daniels Midland, the US commodities group.

It also said that after reviewing whether to keep, sell or fix its Splenda sucralose business, it had opted to fix. But it would slash costs by shutting down its Singapore factory and moving all production to its existing Alabama facility.

Despite this week's attempts to grapple with the problems, the sticky patch is far from over for either company.

And finally ... the lighter side of the news

? James Bond has never been shy of a dalliance on foreign soil and now it seems that Aston Martin, the British car marque inextricably linked with 007, is following the superspy's lead. Plans to build an electric 4x4 vehicle see the group shamelessly flirting with several US states about building a factory across the pond. Patriotic fans will be hoping the brand is just playing hard to get and settles on a home in Blighty.

? In an age of algorithms, it is easy to forget there is a human face behind the technology. However, some decisions clearly have a whiff of being motivated by more than simple logic. What, then, should we make of Google's rejig of its search engine to favour "mobile friendly" websites - a move that will push its regulatory nemesis the European Union down the rankings? Deliberate? Or was Google just "Feeling Lucky"?

? With quarterly sales of $22.7bn, Amazon's looming web presence has put many a shop owner in the shade. But, this week, the internet giant revealed that the nebulous world of web services is where it achieves its biggest margins - and is fast becoming the driving force behind its earnings. Some suggested Amazon might eventually dominate a sector where Microsoft once ruled. Proof that every cloud has a silver lining.

? Buyouts valued at $1.5bn often demand a degree of flexibility and compromise from at least one of the parties. Thankfully, the Cirque du Soleil acrobatic troupe is well used to bending over backwards to keep the money rolling in. This week, it agreed a deal with TPG and Fosun to expand its brand into China. As long as no one sends in the clowns, there is little danger of it turning into a three-ring circus. Unless, of course, it's meant to.

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