Global business

Citigroup reached a settlement with American authorities for knowingly selling toxic mortgage-backed securities before the financial crisis. It agreed to pay penalties of $7 billion, $4 billion of which goes to the Justice Department. Citi accounted for the charge in its second-quarter earnings, virtually erasing its profit for the period.

 

Bank of America, which is still negotiating the terms of its mega-settlement for mis-selling mortgage products, blamed other legal costs for a 43 percent fall in quarterly profit compared with the same period last year. It made $2.3 billion. Meanwhile, JPMorgan Chase said it had earned $6 billion, 8 percent less than a year ago. Goldman Sachs bucked the trend by reporting a 6 percent rise in profit to $2 billion, helped in part by its investments.

 

An air of uncertainty hung over Banco Espírito Santo, one of Portugal’s biggest lenders, following a 17 percent fall in its share price on July 10, which spooked stock markets and raised Portugal’s borrowing costs on the bond markets. The bank’s troubles arise from concerns about its exposure to debt in its parent companies.

 

Apple’s announcement that it was teaming up with IBM raised a few eyebrows. The pair will create apps for businesses that draw on Apple’s functionality and IBM’s cloud-computing and security expertise. It is Apple’s first significant thrust into corporate services and amounts to a sea change in its philosophy.

 

Time Warner said it had received a takeover offer from Rupert Murdoch’s 21st Century Fox but had rejected the proposal. The media behemoths are apparently not in formal discussions, but that didn’t stop Time Warner’s share price from soaring.

 

Yahoo’s quarterly earnings fell short of Wall Street expectations. In a prudent move, Yahoo again reduced the number of shares it will sell in Alibaba’s forthcoming IPO so that it can retain a substantial stake in the fast-growing Chinese e-commerce firm.

 

Google selected Alcon, the eye-care unit of Novartis, a Swiss drugs company, to be its partner in developing Google Lens. The “smart” contact lens is being created to help monitor diabetes through a sensor that sends out information on glucose levels in the wearer’s tears. The information is transmitted through a radio antenna embedded in the lens that is thinner than a human hair.

 

Reynolds American, the second-biggest tobacco company in the US, agreed to buy Lorillard, the third-biggest, in a $27 billion acquisition. To stave off antitrust concerns, the pair is selling some of its better-known cigarette brands, including Kool, Winston and Blu, a bestselling e-cigarette, to Britain’s Imperial Tobacco in a $7 billion side deal.

 

Political economy

China’s economy grew by 7.5 percent year-on-year in the second quarter, up from 7.4 percent in the first quarter and in line with the government’s target for annual GDP growth. Industrial production rose in June by 9.2 percent year-on-year, the fastest pace in six months.

 

China began the removal of an oil rig near the Paracel islands in the South China Sea. Its deployment in May had provoked intense anti-Chinese protests in Vietnam, which claims the waters, and criticism from America that China was being “aggressive.” The Chinese state oil firm involved said it would analyze data before deciding its next step.

 

Australia became the first country in the world to repeal a measure to reduce greenhouse-gas emissions when the Senate voted to overturn the carbon tax, which Tony Abbott, the prime minister, promised to ditch when his party won an election last year. Leaders of the BRICS countries, meeting in Brazil for their sixth annual summit, announced the launch of a BRICS development bank, to be headquartered in Shanghai. A $100 billion reserve fund, to be drawn on by members during crises, was also created.

 

The leaders of Russia and China took advantage of the summit to tour Latin America. Vladimir Putin sealed energy deals with Cuba, Argentina and Brazil; he also made the first visit by a Russian president to Nicaragua.