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FAIRFIELD, Conn. – GE (NYSE:GE) announced today an agreement to sell GE Capital Bank’s U.S. online deposit platform along with all deposits of GE Capital Bank, including online savings accounts, online CDs and brokered CDs, to Goldman Sachs Bank USA (“GS Bank”). Under this agreement approximately $16 billion of deposits will be transferred to GS Bank. The sale relates only to the deposit platform and deposits of GE Capital Bank.

“As we work to reduce the size and complexity of GE Capital, this transaction is another key step. It advances GE Capital’s new strategic direction by facilitating closure of one of our two U.S. bank charters, which we believe will help us become less systemically important,” said Keith Sherin, GE Capital chairman and CEO. “I am confident that under GS Bank our deposit customers will continue to receive the high level of service and commitment they have come to expect,” he added.

The transaction is subject to regulatory approval and includes management, employees, software, and technology used to operate the platform. Scott Roberts, president of GE Capital Bank, is expected to join GS Bank to oversee the platform.

GE Capital Bank is a Utah-chartered industrial bank. GE expects to wind down the remaining operations of GE Capital Bank following closing of the transaction, subject to regulatory approval.

Synchrony Financial, the U.S. consumer financial services business majority owned by GE Capital, also takes retail deposits at Synchrony Bank. Synchrony Financial is targeted to be split off in a share exchange later this year, subject to regulatory approval.

Sherin said, “Coupled with the split off of Synchrony Financial, this transaction will facilitate our complete exit from U.S. banking operations, eliminate the exposure of the U.S. deposit insurance safety net to GE Capital and thereby significantly reduce our regulatory footprint in the United States as we work to pair a smaller GE Capital with GE’s long-term industrial growth.”

As previously announced, GE is embarking on a strategy to create a simpler, more valuable company by reducing the size of its financial businesses through the sale of most GE Capital assets and by focusing on continued investment and growth in its world-class industrial businesses. GE and its Board of Directors have determined that current market conditions are favorable to pursue these dispositions. GE will retain the financing businesses that relate directly to GE’s industrial businesses.

About GE
GE (NYSE:GE) imagines things others don’t, builds things others can’t and delivers outcomes that make the world work better. GE brings together the physical and digital worlds in ways no other company can. In its labs and factories and on the ground with customers, GE is inventing the next industrial era to move, power, build and cure the world. www.ge.com.

GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.

WASHINGTON, DC – Fannie Mae (FNMA/OTC) announced today that it is continuing efforts to reduce taxpayer risk by increasing the role of private capital in the mortgage market and has completed its latest credit risk sharing transaction. The Credit Insurance Risk Transfer (CIRT™) transaction shifts credit risk on a pool of loans to a panel of reinsurers. For the first time since the CIRT program’s inception in 2014, an international reinsurer participated in this type of Fannie Mae risk sharing transaction.

“Through CIRT, we remain focused on finding new ways to build liquidity and move credit risk away from Fannie Mae. In this transaction we attracted new global capital, providing opportunities for reinsurers to gain exposure to the U.S. housing market,” said Rob Schaefer, vice president for credit enhancement strategy & management. “We’ve focused on educating reinsurers on our company’s strategic approach to managing credit risk and to explore opportunities to work together. We want to continue to lead this space and grow the CIRT program as a repeatable, frequent structure, and increase the number of reinsurers we work with on these deals. We look forward to bringing similar transactions to market in the future.”

In this transaction, CIRT-2015-2 which became effective July 1, 2015, Fannie Mae retains risk for the first 50 basis points of loss on an $8.1 billion pool of loans. If this $40.5 million retention layer were exhausted, reinsurers would cover the next 250 basis points of loss on the pool, up to a maximum coverage of approximately $202.5 million. Coverage is provided based upon actual losses for a term of 10 years. Depending upon the pay down of the insured pool and the amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the 3-year anniversary and each anniversary of the effective date thereafter. The coverage may be canceled by Fannie Mae at any time after the 5-year anniversary of the effective date by paying a cancellation fee.

The reference loan pool for the transaction consists of 30-year fixed rate loans with loan-to-value (LTV) ratios greater than 60 percent and less than or equal to 80 percent. The loans were acquired by Fannie Mae from April through August of 2014.

In addition to the CIRT program, Fannie Mae continues to reduce risk to taxpayers through its flagship Connecticut Avenue Securities (CAS) program and other forms of risk transfer. Through both CIRT and CAS, Fannie Mae has sold a portion of the credit risk on approximately 60 percent of recent acquisitions and on approximately $400 billion of loans in recent years. These transactions are structured so that if the covered loans experienced the same stress as the most recent housing crisis, Fannie Mae’s projected losses would be limited to the small first-loss piece of credit risk retained by the company.

Washington D.C., — The Securities and Exchange Commission today announced that BNY Mellon has agreed to pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by providing valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.
An SEC investigation found that BNY Mellon did not evaluate or hire the family members through its existing, highly competitive internship programs that have stringent hiring standards and require a minimum grade point average and multiple interviews. The family members did not meet the rigorous criteria yet were hired with the knowledge and approval of senior BNY Mellon employees in order to corruptly influence foreign officials and win or retain contracts to manage and service the assets of the sovereign wealth fund.

According to the SEC’s order instituting a settled administrative proceeding, the sovereign wealth fund officials requested that BNY Mellon provide their family members with internships, and they made numerous follow-up requests about the status, timing, and other details of the internships for their relatives. BNY Mellon employees viewed the internships as important to keep the sovereign wealth fund’s business.

“The FCPA prohibits companies from improperly influencing foreign officials with ‘anything of value,’ and therefore cash payments, gifts, internships, or anything else used in corrupt attempts to win business can expose companies to an SEC enforcement action,” said Andrew J. Ceresney, Director of the SEC Enforcement Division. “BNY Mellon deserved significant sanction for providing valuable student internships to family members of foreign officials to influence their actions.”

The SEC’s order finds that BNY Mellon lacked sufficient internal controls to prevent and detect the improper hiring practices. The company did have an FCPA compliance policy, but maintained few specific controls around the hiring of customers and relatives of customers, including foreign government officials. Sales staff and client relationship managers were permitted wide discretion in their initial hiring decisions, and human resources personnel were not trained to flag potentially problematic hires. Senior managers were able to approve hires requested by foreign officials with no mechanism for review by legal or compliance staff. BNY Mellon’s system of internal accounting controls was insufficiently tailored to the corruption risks inherent in the hiring of client referrals, and therefore was inadequate to fully effectuate BNY Mellon’s stated policy against bribery of foreign officials.

“Financial services providers face unique corruption risks when seeking to win business in international markets, and we will continue to scrutinize industries that have not been vigilant about complying with the FCPA,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.

The SEC’s order finds that in 2010 and 2011, BNY Mellon violated the anti-bribery and internal controls provisions of the Securities Exchange Act of 1934. Without admitting or denying the findings, the company agreed to pay $8.3 million in disgorgement, $1.5 million in prejudgment interest, and a $5 million penalty. The SEC considered the company’s remedial acts and its cooperation with the investigation when determining a settlement.

The SEC’s investigation was conducted by Eric Heining, Rory Alex, Richard Harper, and Rachel Hershfang of the Boston Regional Office. The case was supervised by Paul G. Block of the FCPA Unit.

Banks in Central, Eastern and Southeastern Europe (CESEE) reduced the pace of deleveraging in the first quarter of 2015 compared with the previous quarter, and the related capital outflows moderated. Credit growth continued to diverge across the CESEE region, according to the latest report from the Vienna Initiative Steering Committee.

Banks reporting to the Bank for International Settlements (BIS) reduced their exposure to the region by 0.3 percent of GDP in the first quarter of 2015, following a 0.7 percent reduction in the fourth quarter of 2014. Excluding Russia and Turkey, the fall in exposure in the first quarter of 2015 was also 0.3 percent of GDP.

BIS reporting banks lowered their exposure in about half of the countries in the region, mostly toward Southeastern Europe and the Commonwealth of Independent States. They increased or maintained their exposure elsewhere.

In line with developments in the BIS banks’ external positions, overall net capital outflows from the region moderated in the first quarter of 2015 relative to the previous quarter.

Credit growth remained uneven across CESEE countries, reflecting differences in growth prospects and different degrees of corporate balance sheet repair. While economic recovery continues in many countries in the region, in about half of the countries output recovery is accompanied by continued contraction or stagnation of credit to the private sector.

The CESEE Deleveraging and Credit Monitor is prepared by the staff of international financial institutions taking part in the Vienna Initiative’s Steering Committee. It is based on the BIS’s International Banking Statistics published on July 24, 2015.

The Vienna Initiative was established at the height of the global financial crisis of 2008/09 as a private-public sector platform to secure adequate capital and liquidity support by Western banking groups for their affiliates in Central, Eastern, and South Eastern Europe (CESEE). It was relaunched as “Vienna 2” in January 2012 in response to renewed risks for the region from the Euro zone crisis.

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF), made the following statement today:
“The policy package specified in the Memorandum of Understanding (MoU) recently agreed between the Greek authorities and European institutions, with input from Fund staff, is a very important step forward. It not only reverses much of the policy backtracking that caused the previous program to run seriously off track, but puts in place wide-ranging policies to restore fiscal sustainability, financial sector stability, and a return to sustainable growth. I particularly welcome the authorities’ efforts to overcome the serious loss of confidence in recent months through strong upfront actions. Most of these actions have been fully specified in the MoU, and key measures including in the fiscal structural areas will be implemented as prior actions for the disbursement of the first European Stability Mechanism (ESM) tranche.

“In two areas that are of critical importance for Greece’s ability to return to a sustainable fiscal and growth path—the specification of remaining parametric fiscal measures, not least a sizeable package of pension reforms, needed to underpin the program’s still-ambitious medium-term primary surplus target and additional measures to decisively improve confidence in the banking sector—the government needs some more time to develop its program in more detail. This is understandable, and I am encouraged in this regard by the government’s commitment to work with its European partners and the Fund on completing these essential reforms in the coming months. With the detailed specification of these outstanding reforms, the recently agreed MoU will entail a very decisive and credible effort on the part of the Greek authorities to restore robust and sustainable economic growth.

“However, I remain firmly of the view that Greece’s debt has become unsustainable and that Greece cannot restore debt sustainability solely through actions on its own. Thus, it is equally critical for medium and long-term debt sustainability that Greece’s European partners make concrete commitments in the context of the first review of the ESM program to provide significant debt relief, well beyond what has been considered so far.

“In conclusion, I believe that the actions to be taken by the authorities by the time of the first review, in conjunction with the policies specified in the MoU, once they have been supplemented by the above-mentioned fiscal structural and financial sector reforms, as well as by significant debt relief, will provide the basis for a credible and comprehensive program to restore medium-term sustainability. We look forward to working closely with Greece and its European partners in the coming months to put in place all the elements needed for me to recommend to the Fund’s Executive Board to consider further financial support for Greece.”

FAIRFIELD, Conn. – GE [NYSE:GE] announced today that it has reached an agreement to sell $8.5 billion of healthcare-related loans and its Healthcare Financial Services (HFS) U.S. lending business to Capital One for approximately $9 billion. Separately, GE has signed an agreement with another buyer to sell approximately $600 million of HFS real estate equity investments.

“This transaction is another example of the value generated by GE Capital’s strong businesses and exceptional teams as we continue to demonstrate speed and execute on our strategy to sell most of the assets of GE Capital,” said Keith Sherin, GE Capital chairman and CEO. “We are on track to reduce our ending net investment (ENI) by $100 billion by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016,” he added.

GE Capital, Healthcare Financial Services provides financing to U.S. healthcare companies, sponsors, investors and developers across various healthcare sectors including senior housing, hospitals, medical offices, outpatient services, pharmaceuticals and medical devices. Darren Alcus, president and CEO of HFS, will join Capital One. Capital One also will retain the HFS management team and employees.

“We’re pleased to sell HFS to a company that is committed to expanding the business,” said Sherin. “Our customers, sponsors and HFS employees will benefit from the synergies of combining Capital One’s existing healthcare lending businesses with the expertise, relationships and experience of our highly-regarded HFS team.”

As previously announced, GE is embarking on a strategy to focus on its high-value industrial businesses and is selling most GE Capital assets. GE and its Board of Directors have determined that market conditions are favorable to pursue disposition of these assets.

GE Capital will retain the financing “verticals” that relate to GE’s industrial businesses, including a unit that provides healthcare equipment financing to GE Healthcare customers and others.

When completed, the transaction, which represents about $8.4 billion of ENI ($8.5 billion of assets), will contribute approximately $1.5 billion of capital to the overall target of approximately $35 billion of dividends expected to GE under this plan (subject to regulatory approval). GE is on track to reduce total ENI at GE Capital by about $100 billion by year end. With this transaction, the total for announced sales is approximately $78 billion.

Sherin concluded, “This announcement is the next step in GE’s transformation to a more focused industrial company.”

The transaction is subject to customary regulatory and other approvals and is expected to close in the fourth quarter of 2015. Citigroup Global Markets Inc. and J.P. Morgan Securities LLC provided financial advice to GE and Hogan Lovells US LLP provided legal advice.

About GE
GE (NYSE:GE) imagines things others don’t, builds things others can’t and delivers outcomes that make the world work better. GE brings together the physical and digital worlds in ways no other company can. In its labs and factories and on the ground with customers, GE is inventing the next industrial era to move, power, build and cure the world. www.ge.com.

GE’s Investor Relations website at www.ge.com/investor and our corporate blog at www.gereports.com, as well as GE’s Facebook page and Twitter accounts, including @GE_Reports, contain a significant amount of information about GE, including financial and other information for investors. GE encourages investors to visit these websites from time to time, as information is updated and new information is posted.

OMAHA, Neb. & PORTLAND, Ore. – Aug. 10, 2015 – The boards of directors of Berkshire Hathaway Inc. (NYSE: BRK.A; BRK.B) and Precision Castparts Corp. (“PCC”) (NYSE: PCP) have unanimously approved a definitive agreement for Berkshire Hathaway to acquire, for $235 per share in cash, all outstanding PCC shares. The transaction is valued at approximately $37.2 billion, including outstanding PCC net debt.

“I’ve admired PCC’s operation for a long time. For good reasons, it is the supplier of choice for the world’s aerospace industry, one of the largest sources of American exports. Berkshire’s Board of Directors is proud that PCC will be joining Berkshire,” said Warren E. Buffett, Berkshire Hathaway chairman and chief executive officer.
“We are very pleased to be joining forces with Berkshire Hathaway,” said Mark Donegan, PCC’s chairman and chief executive officer. “We see a unique alignment between Warren’s management and investment philosophy and how we manage PCC for the long-term. We believe that as part of Berkshire Hathaway, PCC will be exceptionally well-positioned to support our customers’ needs into the future. This transaction offers compelling and immediate value for our shareholders, and allows PCC’s employees to continue to operate in the same manner that has generated many years of exceptional service and performance to our customers.”

The transaction requires approval by a majority of PCC’s outstanding shares. Closing is expected to occur during the first quarter of calendar 2016, subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Act and competition clearance in certain foreign jurisdictions.

PCC will continue to do business around the world under the Precision Castparts name and maintain its headquarters in Portland, Oregon.

In light of this announcement, the three nominees who would have joined PCC’s Board of Directors if elected at PCC’s upcoming Annual Meeting of Shareholders, Peter B. Delaney, James F. Palmer and Janet C. Wolfenbarger, have withdrawn their candidacy. None of Mr. Delaney, Mr. Palmer or Ms. Wolfenbarger currently serves on PCC’s Board of Directors and PCC does not intend to nominate replacement directors for election at the Annual Meeting in their place. Other than Mr. Delaney, Mr. Palmer and Ms. Wolfenbarger, the nominees named in the Proxy Statement sent or made available to PCC shareholders, all of whom currently serve on PCC’s Board of Directors, intend to stand for election at the Annual Meeting. PCC intends to convene its Annual Meeting on August 11, 2015 as currently scheduled and, without conducting any business, adjourn the Annual Meeting to August 17, 2015 at 10:00 a.m., Pacific Time, in the Bella Vista Room of the Aquariva Restaurant, 0470 SW Hamilton Court, Portland, Oregon.

Credit Suisse acted as financial advisor to PCC and PCC’s legal counsel is Cravath, Swaine & Moore LLP and Stoel Rives LLP. Berkshire Hathaway’s legal counsel is Munger, Tolles & Olson LLP.

About Berkshire Hathaway (www.berkshirehathaway.com):
Berkshire Hathaway and its subsidiaries engage in diverse business activities including insurance and reinsurance, utilities and energy, freight rail transportation, finance, manufacturing, retailing and services. Berkshire Hathaway’s common stock is listed on the New York Stock Exchange, trading symbols BRK.A and BRK.B.

About Precision Castparts Corp. (www.precast.com):
Precision Castparts Corp. is a worldwide, diversified manufacturer of complex metal components and products. It serves the aerospace, power, and general industrial markets. PCC is a market leader in manufacturing complex structural investment castings and forged components for aerospace markets, machined airframe components, and highly engineered, critical fasteners for aerospace applications, and in manufacturing airfoil castings for the aerospace and industrial gas turbine markets. PCC also is a leading producer of titanium and nickel superalloy melted and mill products for the aerospace, chemical processing, oil and gas, and pollution control industries, and manufactures extruded seamless pipe, fittings, and forgings for power generation and oil and gas applications.

HSBC is selling its entire business in Brazil to Bradesco for a consideration of US$5.2bn
The transaction represents a significant step in the execution of the actions announced during the Investor Update on 9 June 2015
Overview of transaction

HSBC Holdings plc (‘HSBC’) has entered into an agreement to sell its entire business in Brazil, comprising HSBC Bank Brasil S.A – Banco Multiplo and HSBC Servicos e Participacoes Ltda (collectively ‘HSBC Brazil’), to Banco Bradesco S.A (‘Bradesco’) for an all cash consideration of US$5.2bn (‘the Transaction’). This represents a price to tangible book value multiple of 1.8x based on 30 June 2015 accounts. As at the completion of the Transaction, the purchase price is subject to adjustment to reflect the movement in the net asset value of the business between 31 December 2014 and completion.

Progress in executing HSBC’s strategy
The sale of HSBC Brazil represents a significant step in HSBC’s stated goal to optimise its global network and reduce complexity, outlined during the HSBC Investor Update on 9 June 2015.

The Transaction will also be a key contributor to the Investor Update action to reduce Group RWAs, accounting for c.US$37bn of the overall c.US$290bn planned reduction, enabling future redeployment of RWAs to support growth opportunities.

Commenting on the Transaction, Stuart Gulliver, Group Chief Executive, said: “We announced at our Investor Update on 9 June that we were targeting a series of actions to generate increased value for shareholders. I am pleased to be able to announce today a transaction which achieves both a solid financial outcome and swift delivery of one of our stated actions.”

HSBC is pleased to be working with Bradesco on this Transaction, given its leading franchise in the Brazilian market and commitment to HSBC staff and customers.

The Transaction is subject to regulatory approval.

HSBC plans to maintain a presence in Brazil to serve large corporate clients with respect to their international needs.

MS. GAVIRIA: Hello, everyone. I’m Angela Gaviria with the IMF’s Communications Department. Welcome to this conference call on Greece. Here with me is an IMF official, who will make some points and then take your questions.

IMF OFFICIAL: Yes. Thank you. And welcome. I want to focus on explaining to you the process that is now ongoing and the role of the IMF in this regard. Those of you who have been following us closely, and particularly the discussions we’ve had in the last couple of months, will not find that I’m saying anything that is new, but let me nevertheless repeat where we are.

Let me start from the point that, again, as we’ve said before, the IMF can only support a program that is comprehensive. What do we mean? We mean a program that ensures medium-term sustainability. There’s nothing new to that; every time the IMF goes to the Board, we need to ensure our Board that there is sustainability in the medium-term context.

And this is nothing special for Greece. It’s a criterion we apply to all members, to all releases of IMF money, and we will, of course, also apply this in this case. What we have also said is that the Greek situation is very difficult. In order to ensure that sustainability, that medium-term sustainability, there’s a need for difficult decisions on both sides and by both sides. I mean, difficult decisions in Greece regarding reforms, and difficult decisions for Greece’s European partners about debt relief.

So, for it to –and we have used the phrase many times– for it to add up, one needs difficult decisions, and you should not be under the illusion that just one side of it can fix the problem. Greece will not be in a medium-term sustainable position just on debt relief, and on the other hand, yet Greece cannot get into a medium-term sustainable position just on reforms of its own. It needs to be a combination of these two sets of issues. What is clear is that it will take some time before the two sides are ready to take these decisions, it was made clear at the meeting of European leaders a few weeks ago that they were not ready to consider the debt operation before the fall.

They said that at the time of the first review of the ESM program they wanted to see implementation of the policies before they are willing to discuss debt relief in the necessary details. And I think it’s also clear from discussions on the part of the Greek authorities that some of the necessary decisions regarding particular fiscal structural reforms will only be taken in the coming months.

So I think everybody understands that the IMF can only be in at that time when these decisions on these two sides are taken. There’s nothing new here, nothing new on deciding to suddenly have a two-stage approach. It’s always been clear that the IMF will only come in once these conditions are in place. So, let me stop here; and I’ll take your questions.

QUESTIONER: Thanks for doing this. One quick, just technical question, and then another, perhaps, more substantive one. When you are talking about — in terms of sustainability, I just want to confirm, you are talking about debt sustainability. Correct? And then secondly, can you be more precise in terms of what you mean the IMF cannot support a program until medium-term sustainability is in place? By that do you mean you will not take a program to the Board for approval? Or, are you saying that you don’t think the Board will approve it without that in place? Can you elaborate on that? Thanks.

IMF OFFICIAL: Yes to the first question. I’m talking about medium-term debt sustainability, but you cannot have medium-term debt sustainability while other parts of the program are not sustainable. So, it’s the overall program that needs to be sustainable, but this indeed comes down to a test of whether the debt is sustainable.
On the second question, yes, management will clearly not want to submit to the Board, and I’m sure the Board will not want to approve, a program that does not meet the normal criteria for access to the Fund’s resources, and the normal criteria is that there is medium-term sustainability. So, this is the answer.

QUESTIONER: A quick follow. Is another one of your conditions that it be fully financed for 12 months? Is that also a condition?

IMF OFFICIAL: Yes. As always, programs have to be fully financed. We need to have adequate financing assurances, and the way you operationalize this is that we need concrete assurances for the first 12 months, that’s the normal practice for the IMF.

QUESTIONER: I was wondering if you could be more precise about what you expect from the Europeans. Do you expect like a formal commitment to reduce the debt and what is the scale that you are looking at? And also can you also give some clarification on, I mean, does it mean that the former debt program of the IMF that was running until 2016, is dead? I mean, can you clarify that? Thank you.

IMF OFFICIAL: There has been no detailed discussion yet about how this debt relief is going to be provided. There’s a menu of options, but there’s essentially an agreement; we accept that that discussion will take place in stage 2, and I think that the Greek authorities have accepted that also because it’s in the communiqué from the recent Leaders’ meeting. So that’s the conversation that we will have in the next couple of months, but there has not been a detailed conversation about debt yet.
Yes, there is a request for a new program, a new multi-year program. And why? We had a program, and we currently have to replace the program that expires by the end of March. The criteria of the IMF when approving a program is always that the program has to meet its objectives by the end of the program period. The current program is off-track and it will only be able to reach the objectives by the end of the program period, so we need to recalibrate the program and get an essentially longer time to reach the objectives, and this is why we have a longer program now under consideration.
QUESTIONER: If I could just follow up quickly. Can you be more precise? Are you expecting a formal commitment from the Europeans to join them on this new bailout? Can you be more precise?

IMF OFFICIAL: I don’t understand what you mean by the question.

QUESTIONER: I mean, do you expect them to come with the terms of the debt release number to join the new bailout?

IMF OFFICIAL: We expect that by the time we go to the Board there is an explicit and concrete agreement between Greece and its European partners on how to provide debt relief. Yes, we expect that by the time we go the Board at stage 2, an explicit and concrete agreement of how to provide debt relief.
QUESTIONER: Thank you very much for doing this. My question is first about the debt relief. You’ve indicated earlier that there will be a point at which maturity extensions no longer are feasible, and there would need to be haircuts basically, which is a no-go for the Europeans. Can you give us some idea when that point would be reached? And given the drastic situation in the Greek finances, is it, maybe, already reached? And then another, the Greek government has said that in order to basically calm the internal opposition, there will be no additional reform negotiated with the renewed Troika. Is that acceptable to the IMF as long as Greece does everything that it has agreed to so far here in the Brussels summit? Thank you.
IMF OFFICIAL: On the first question, I will refer you to our updated DSA that was released a couple of weeks ago. Our views have not changed since then. We have a mission in the field that just started discussions, actually the mission chief is only arriving today. And so we have no reason to change our views since that DSA.
That DSA said that there’s a menu of options. If we’re going to reach the point where that menu of options will narrow, well, let’s see what these discussions that have just got underway will produce. I don’t have any other views than reflected in the DSA. On the second part of the question, I have not heard the authorities put it like the way you put it. I have heard the authorities say — or I’ve seen press reports, I’ve never heard it from them — I’ve seen press reports questioning the need for further measures before the ESM approval of a new program, so in stage one. That I have seen in press reports, but I have not had any – as I said, we have a mission in the field today so I do not know what the authorities’ view and it’s best to ask them directly. But that’s a different issue. What are the conditions for the ESM to disburse at stage one is really between Europe and the Greek authorities. We come in at stage two.

QUESTIONER: In excerpts from the minutes of the Board meeting yesterday that were published in the Financial Times, the German representative seemed to express dismay that the IMF would not be going along, would not be following the process in parallel with them. And so if it’s really the case that — so it made it sound like it was a live issue at that meeting. If that’s not the case and your decision to wait for stage two was made some time ago, could you confirm who made that decision and when it was made?

The second question: Does this make for a substantive change in the IMF’s role in the current negotiations, the current talks in Europe? Because it sounds like on some level this just might be procedural of whether you reach a staff agreement when your negotiators could be involved in helping shape whatever deal is going to be arrived at. So does this make for a substantive change in what your people will be doing in Brussels and Athens in the coming weeks? Thanks.

IMF OFFICIAL: On the first part of it, I am not going to comment on who said what at the Board. Let me make very clear that the Fund, our Managing Director, myself, we’ve been talking about this to our partners and to the public and we have always made very clear what are the conditions for the Fund. It’s a comprehensive program. There’s nothing new — I mean, go and look at the Mr. Blanchard’s two recent blog posts. They’re very explicit about that.
They were posted before the summit and I can assure you that at the recent summit and Eurogroup meeting there was no misunderstanding about what is the role of the Fund and when we can come in. There is nothing new here. That was also accepted yesterday and understood at the Board.
Now in terms of — you say there’s a change in the role of the Fund. It is not correct. We are not just an observer; we’re not sitting in the sidelines. We are participating actively and fully in the policy discussions in the coming weeks. But there is a clear understanding among all of us that these policy discussions will not include at this stage, will not pertain at this stage to a number of issues — policy issues — that are critical for a medium-term program. So there’s no expectation that all the issues that would need to be covered for us to have a credible package on the table, would all be settled in the next couple of weeks. So this is another way of saying that part one will be completed while a number of policy issues are still outstanding, we are fully involved in these discussions and I can’t see how we are an observer on the sidelines on anything like that.

QUESTIONER: When does the IMF expect Greece’s arrears to be cleared, and is that a prerequisite for getting involved in any new program? And the second is that given that Greece (inaudible) conditions in the earlier bailouts, including a very aggressive fiscal tightening and actually moved considerably further away from debt sustainability rather than towards it. Shouldn’t there be questions asked about whether the IMF should ever have gotten involved in these bailouts in the first place?

IMF OFFICIAL: On the first point, arrears were cleared a long time ago, several weeks ago.

QUESTIONER: Okay. Sorry. All right. Apologies.

IMF OFFICIAL: So the situation is evolving. And that leads me to the next question also. We are always happy to revisit whether we can do things differently and should have done things differently.
I can assure you that we learn as we go along and evolving circumstances and whatever experience we have will be embodied in any new discussions that we have. And this is of course one of the reasons why we say this requires difficult decisions on both sides.

QUESTIONER: Thank you. I would like confirmation that the new IMF program which has been requested by the Greek government will have the same end period and the same horizon with the ESM program, meaning 2018.

IMF OFFICIAL: There has been no discussion on the exact duration of this program. But my understanding would be that it would sort of broadly coincide with the duration of the ESM program. But I have to admit that those discussions have not taken place yet.

QUESTIONER: Yesterday you briefed the Board. Can you tell us what the Board decided and if they decided to support the mission and the involvement in the third program?

IMF OFFICIAL: Formally what happened was that the Managing Director informed the Board that she has decided to authorize staff to open discussions on a new program that could be supported under the exceptional access policy. So the Board accepted that staff opens discussions on the option and see whether we can get agreement on a credible program that we can support. So that is formally what happened, that the Board accepts that we start these discussions.
MS. GAVIRIA: Well, thank you all. We’ll end this conference call here.

The euro area recovery is strengthening, but the weak medium-term outlook calls for focus on four key areas: increasing demand, cleaning up bank balance sheets, stepping up structural reforms, and strengthening governance, said the IMF’s latest review of the currency union.

Although unemployment is still high, steady job growth and rising real wages have underpinned a rebound in consumption, the report said. Strong policy actions by the European Central Bank (ECB) have also boosted confidence and improved financial conditions.

Among the large economies, Germany continues to grow slightly above 1½ percent, while Spain is rebounding strongly. Italy is emerging from three years of recession, and activity in France picked up at the beginning of this year.

The recovery is supported by cheaper oil, monetary easing, and a weaker euro, with growth in euro area economies expected to rise modestly to 1.5 percent this year and 1.7 percent in 2016.

But medium-term prospects are less bright. “Several factors cloud the outlook for growth over the next five years,” said Mahmood Pradhan, mission chief for the euro area. “These include high unemployment, especially among the youth; large corporate debt; and, rising non-performing loans (NPLs) in the banking system.” Slow progress on structural reforms has also dampened the business climate and reduced growth potential. As a result, the euro area remains vulnerable to shocks. “A moderate shock to confidence—whether from lower expected future growth or heightened geopolitical tensions—could tip the block into prolonged stagnation,” said Pradhan.

To counter the risks of stagnation, the report called for a stronger collective push to strengthen the recovery and make the monetary union more resilient.

Strengthening demand
Staying the course on the expanded asset purchase program, or quantitative easing (QE) is essential, says the report. “While quantitative easing has already improved financial conditions and raised inflation expectations, international experience suggests that its impact on the real economy will take more time,” said Pradhan. But strengthening bank and corporate balance sheets could significantly amplify the impact of quantitative easing via more bank lending to revive credit growth. While there are currently few signs of scarcity in sovereign bond markets, the ECB should develop a common securities lending framework to increase the availability of collateral for market participants. Macro-prudential policies should serve as the first line of defense against potential financial stability risks.

On fiscal policy, the report encourages countries to adhere to their commitments under the Stability and Growth Pact. Countries with limited budget space (such as France and Portugal) should save interest windfalls from quantitative easing to pay down debt. Others (such as Germany and the Netherlands) should use them to support investment and structural reforms. Doing this now in a period of low interest rates, can have a powerful growth impact. There is a further call to expedite the centralized investment initiative (“Juncker Plan”) to support demand, especially in countries with limited fiscal room.

Cleaning up bank balance sheets to support new lending
The ECB’s 2014 Comprehensive Assessment of European banks enhanced transparency and strengthened capital positions. The report, however, notes NPLs have continued to rise and are dangerously high in some economies—eroding bank profitability and locking up capital that could otherwise support new lending. Expeditiously reducing NPLs could generate significant capacity for new lending, particularly in countries with high bad loans.

Three complementary actions to remove bad loans from bank balance sheets quickly include: strengthening prudential supervision; undertaking insolvency reforms to accelerate court procedures and facilitate out-of-court settlements; and developing a market for bad loans to help corporate restructuring. Asset management companies (AMCs), for example, could help banks to work with investors to offload bad loans. In some cases, public sector involvement in AMCs may be beneficial, subject to EU State aid rules.

Advancing reforms within a stronger, simpler governance framework
The report urges authorities to leverage the opportunity provided by the cyclical upturn and monetary accommodation to accelerate structural reforms. At the national level, priorities include reforms to make hiring and firing easier; improve the business climate; and promote competition. At the regional level, the priorities are to implement swiftly the Services Directive to eliminate long-held national barriers; enhance insolvency regimes; and push more strongly for a single market in capital, transport, energy and the digital economy.

The report also calls for a stronger and simpler governance framework to support such efforts. Important components of this framework would include: benchmarking reforms against outcomes (that are clearly observable and measurable), stronger EU oversight with less discretion in applying existing rules, and better financial incentives for reforms. A capital markets union would help diversify funding sources for small- and medium-sized enterprises, reduce reliance on bank lending, and promote more cross-border finance.

The fiscal framework has become more complex following successive reforms over the past years, the report observed. To make it more effective, it should be simplified by focusing on two main pillars: a single fiscal anchor (public debt-to-GDP) and a single operational target (an expenditure growth rule) linked to the anchor.

Abenomics has lifted Japan out of the doldrums, according to the IMF’s latest assessment of the Asian economy. But, policies need to be reinforced to end the lingering deflationary mindset, raise growth, restore fiscal sustainability, and maintain financial stability without undue reliance on yen depreciation.

The IMF report found that Abenomics’ three-pronged strategy of aggressive monetary easing, flexible fiscal policy, and structural reforms constituted a clear break from previous incremental efforts. But, despite initial positive results, the pace of real GDP growth has remained at about 1 percent—similar to the post-bubble period—and deflation risks remain.

“This is partly due to external shocks, including slower global growth, and the collapse in commodity prices” said Kalpana Kochhar, Deputy Director in the IMF’s Asia and Pacific Department, and head of the mission that conducted the assessment.

In addition, the negative impact of the consumption tax rate hike in 2014 lasted longer than expected, but structural impediments have also played a role, including sluggish wage growth, production increasingly moving to other countries through foreign direct investment, and headwinds from an aging and declining population.

Recovery underway but momentum still fragile
The economy is projected to grow by 0.8 and 1.2 percent in 2015 and 2016, provided higher real wages support consumption, and business investment rises on the back of lower production costs from declining oil prices, record-high corporate profits, ongoing corporate governance reforms, and the abundant availability of credit.

“However, risks are elevated and clearly to the downside, including from a disappointing outcome of the Shunto wage negotiations, and weaker spending of the oil windfall,” said Kochhar.

Japan also faces short-term risks from lower-than-expected growth in China and the United States, and possible yen appreciation in the event of global financial turbulence given its status as a safe-haven currency.

“Over the medium term, weak domestic demand, and incomplete fiscal and structural reforms could result in stagnation, and doubts about fiscal sustainability” added Luc Everaert, Head of the Japan Division in the IMF’s Asia and Pacific Department.

The report suggests accelerating structural reforms is the only effective policy lever to address these downside risks, and maintain confidence in Abenomics.

Wanted: stronger structural reforms
Structural reforms have progressed in a number of areas. Female labor force participation, which had been rising gradually since the mid-2000s, got a further boost with Abenomics.

“Even so, countering the headwinds on labor supply from adverse demographics requires more forceful labor market reforms” said Kochhar. Female labor force participation can be boosted further by eliminating tax-induced disincentives to work, and raising the availability of child-care facilities through deregulation.
The government can also address labor shortages by drawing more aggressively on foreign labor by relaxing immigration restrictions, as well as providing incentives for older workers to remain in the workforce.

New hiring should take place under contracts that balance job security and flexibility to reduce labor market duality, and raise horizontal mobility, contributing to higher productivity and wage growth.

The financial sector should become a catalyst for growth, the report notes. It should take advantage of the recent significant progress with corporate governance reforms to unwind cross-shareholdings, foster consolidation in the enterprise sector, and promote exit of unviable enterprises.

The report recommends that authorities phase out financial sector support schemes for small and medium-sized enterprises that do not invest or hire workers, and promote the expansion of securitization, and the provision of risk capital. Private sector–led consolidation in the financial system, in particular among regional banks, would also be beneficial.

Balanced fiscal adjustment
Low and stable Japanese government bond yields should not be taken for granted as shifts in investor sentiment could happen abruptly. A concrete and credible medium-term plan would remove uncertainties about fiscal intentions, which could be hampering domestic demand, and create space to respond to downside risks.

And stronger fiscal institutions will be necessary to impart credibility to such a strategy. In this context, the announced medium-term plan provides a useful anchor to guide fiscal policy with the planned adjustment between now and 2020 striking the right balance between supporting growth, and making headway with fiscal consolidation.
“However, the use of overoptimistic growth assumptions risks undermining the credibility of the plan, while it also lacks specifics about how to contain social security spending,” said Kochhar.

Supportive and predictable monetary policy
“Raising inflation has proven to be a marathon rather than a sprint,” said Everaert. Market-based measures of inflation expectations have declined since mid-2014, and recently stabilized at around 1 percent, suggesting the hoped for “regime change” has not yet fully materialized.

The report suggests that several factors will put upward pressure on the price level in the near term, including the recovery of oil and commodity prices from their lows, the lagged effect of the recent episode of yen weakening, and the closing of the output gap–or the difference between the potential output of an economy and its actual output. Continued tightening of the labor market could accelerate nascent wage-price dynamics. Under current policies, IMF staff expect inflation to rise gradually to 1½ percent over the medium term.

As a result, the Bank of Japan needs to stand ready to ease monetary policy further, provide stronger guidance to markets through enhanced communication, and put greater emphasis on achieving the 2 percent inflation target in a stable manner.

Further monetary easing should take the form of increased asset purchases, and lengthening their duration. At the same time, further fiscal and structural reforms remain imperative to unburden monetary policy and, together with macroprudential policies, mitigate financial stability risks. This would also help avoid harming direct competitors through excessive yen depreciation.

“The BoJ should communicate more clearly the drivers that underpin its forecasts,” said Kochhar. Similarly, clarifying the conditions that would trigger additional actions would help guide market expectations when there is a need to adjust the asset-purchase program, and facilitate preparations for an eventual exit.
“In this context, the BoJ recently announced helpful modifications to its communication framework, but more needs to be done to enhance transparency, and predictability of monetary policy decisions,” concluded Everaert.

In the first half of 2015 a total of 454,000 counterfeit euro banknotes were withdrawn from circulation –10.5% down on the figure for the second half of 2014, but still higher than in the first half of 2014. The number of counterfeits continues to remain very low in comparison with the increasing number of genuine banknotes in circulation (over 17 billion during the first half of 2015).

Ever since the first euro series was issued, the Eurosystem – i.e. the European Central Bank (ECB) and the national central banks of the euro area – has urged people to stay vigilant when receiving banknotes. Genuine banknotes can be easily recognised using the simple “feel, look and tilt” method described on the euro pages of the ECB’s website and the websites of the Eurosystem national central banks.

If you receive a suspect banknote, you can compare it directly with one you know is genuine. If your suspicions are confirmed, you should contact either the police or – depending on national practice – the respective national central bank. The Eurosystem supports the law enforcement agencies in their fight against currency counterfeiting.
The Eurosystem has a duty to safeguard the integrity of the euro banknotes and continue improving banknote technology. The Europa series is designed to make the banknotes even more secure and to help maintain public confidence in the currency.

During that period:
the €20 and €50 continued to be the most counterfeited banknotes. Compared with the figures reported for the second half of 2014, the proportion of counterfeit €20 notes decreased slightly and that of counterfeit €50 notes increased. Together, they accounted for 86% of the counterfeits; most (97.9%) of the counterfeits were found in euro area countries. Only around 1.6% were found in EU Member States outside the euro area and less than 0.5% were found in other parts of the world.

The Eurosystem communicates in various ways to help people distinguish between genuine and counterfeit notes, and to help professional cash handlers ensure that banknote-handling and processing machines can reliably identify and withdraw counterfeits from circulation. Banknote equipment manufacturers and suppliers will continue to receive support from the Eurosystem in adapting their machines and authentication devices to the Europa series banknotes. If their equipment is still unable to accept these banknotes, operators/owners should contact their suppliers or manufacturers without delay.

The new €20 banknote will be issued as from 25 November 2015.

BEIJING, — World Bank Group President Jim Yong Kim today praised China for its growing role in global development in meetings with Premier Li Keqiang and other senior leaders including Finance Minister Lou Jiwei and Governor Zhou Xiaochuan of the People’s Bank of China.

On the first day of his two day visit, President Kim had a far reaching discussion with Premier Li Keqiang on the global economy, development finance and China’s health reforms.

In a separate meeting today, President Kim and Finance Minister Lou Jiwei signed an agreement to establish a $50 million fund to help reduce poverty. The World Bank President also met with leaders of the Multilateral Interim Secretariat for Establishing the Asia Infrastructure Investment Bank (AIIB) to discuss closer collaboration.

These initiatives reinforce the growing partnership with China, which already is the Bank’s third-largest shareholder and an important contributor to IDA, the institution’s fund for the poorest, as well as the Global Infrastructure Facility.

“China is a strong partner in development and a strong partner for the World Bank Group, and we share the commitment to ending poverty and boosting shared prosperity,” said President Kim. “I look forward to a continued strong, cooperative, and productive relationship, which will benefit developing countries around the world.”

The trust fund, which is expected to start later this year, aims to enhance the cooperation between China and the World Bank Group and leverage financial and knowledge-based resources to help developing countries achieve inclusive and sustainable development. It will finance investment projects, operations, knowledge development and human-resource cooperation at both global and regional levels.

“The establishment of this trust fund signals that our partnership with existing multilateral development banks is growing, even as we support new ones. We will continue to partner with the World Bank in fighting poverty and promoting development around the world,’ said Minister Lou.

During his two-day trip to China, President Kim also met with Secretary General Jin Liqun of the AIIB Multilateral Interim Secretariat, who has been nominated by the Chinese government to be the bank’s President-designate. Both agreed to expand their cooperation and explore opportunities for joint financing of projects in the coming months. The prospective founding members of the AIIB signed the Articles of Agreement last month and the bank is expected to be operational by the end of the year.

“I congratulate Secretary General Jin Liqun and all prospective founding members on the great progress made in establishing the AIIB,” said President Kim. “More funding for infrastructure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running.”

Secretary General Jin said: “Since the establishment of the Multilateral Interim Secretariat last November, the World Bank has been very generous in sharing its expertise, lessons of experience and global good practice knowledge with the Secretariat. We plan to identify projects for possible co-financing in the fall. Based on my time at the World Bank as an Alternate Executive Director, I am fully confident that such close cooperation between the Banks will lead to improved lives for citizens of our Member countries.”

The AIIB Multilateral Interim Secretariat and the World Bank are already working together, having exchanged views on matters such as institutional governance, organizational structure, social and environmental safeguards and procurement procedures.

Yesterday, the two month public nomination period to determine who should appear on the next £20 note officially closed.

Since 19 May, members of the public have nominated visual artists who they believe helped to shape British thought, innovation, leadership, values and society.

In total 29,701 nominations were made, covering 592 eligible visual artists. The Bank of England’s Banknote Advisory Committee will now consider all eligible nominations and, together with input from public focus groups, produce a shortlist of 3-5 names. These will then go to the Governor for a final decision. Both the Committee and the Governor will make their decisions with reference to the character selection principles announced in December 2013 and will only consider people nominated by the public.

The decision will be announced in spring next year, alongside a concept image showing the character’s portrait as it will appear on the note. The new £20 note is expected to enter circulation by 2020.

The Bank of England is also announcing today that future banknotes, starting with the £5 polymer note in 2016, will include symbols representing all four of the home nations. The imagery will be taken from the Royal Coat of Arms and the Royal Badge of Wales. This follows discussions with the First Ministers of Wales, Scotland and Northern Ireland. The design will be released at the unveiling of the new £5 note next year.

Chief Cashier, Victoria Cleland said:

“The Bank is delighted with the number and breadth of the nominations we have received, and we are very grateful to all those who have engaged with us on this new initiative. The fact that so many visual artists have been put forward by the public underlines the extent of British achievement in the visual arts and reinforces why this field deserves to be recognised on the next £20 note.”

“During this process, we have repeatedly heard how important banknotes are as a symbol of the United Kingdom. So the Bank is pleased to announce today that after careful consideration future banknote designs, starting with the new polymer £5 note, will explicitly represent all four nations of the UK.”