NYT - VW Admits Cheating in the U.S., but Not in Europe

VW Admits Cheating in the U.S., but Not in Europe

{http://www.nytimes.com/2016/01/22/business/international/vw-admits-cheating-in-the-us-but-not-in-europe.html}

LONDON — Volkswagen is staking out an aggressive response to its emissions-testing crisis in Europe, where the vast majority of affected vehicles were sold, by essentially saying: We didn’t cheat here.

The company’s system to trick, or “defeat,” pollution tests, which VW has admitted installing in millions of vehicles globally, “is not a forbidden defeat device” under European rules, a company spokesman said in a statement to The New York Times.

The company’s determination, which was made by its board, runs counter to regulatory findings in Europe and the United States. German regulators said last month that VW did use an illegal defeat device.

VW executives have already admitted to using the illegal software to cheat on emissions testing in the United States, where regulations are tougher. About 500,000 affected diesel cars were sold in America. But Europe is home to more than 8.5 million affected vehicles, making the risk of litigation and regulatory sanctions potentially costly.

Volkswagen’s position sheds light on its view of the scandal as a whole. While it promises to fix affected vehicles wherever they were sold, it is prepared to admit wrongdoing only in the United States.

Its position is unlikely to mollify customers like Stephen Larkin, who has purchased Volkswagens since he bought a used VW Derby in 1988. Several weeks ago, not long after the scandal broke, he sold his 2014 diesel Passat and contacted a law firm about joining a potential suit against the company.

“They play a lot on their environmental credentials, but I don’t think they care about the environment,” said Mr. Larkin, a 47-year-old civil engineer from northern England. “I‘m very disillusioned.”

Volkswagen’s claim that it did not cheat in Europe is likely to renew questions about Europe’s porous regulatory system, which allows manufacturers to control and manipulate emissions tests for their own benefit. European states and the European Union’s central government in Brussels are in a contentious battle to overhaul the regulatory system.

The scandal began in September, when Volkswagen admitted installing software in 11 million diesel vehicles worldwide that could detect when the cars were being tested in a laboratory and reduce the emissions of nitrogen oxides, a deadly pollutant tied to a range of health problems. American regulators learned that actual emissions on the road were as much as 40 times higher than tests were showing. Volkswagen includes the brands Audi and Porsche, and SEAT and Skoda in Europe.

Volkswagen has admitted that it cheated in the United States, though last week the company’s new chief executive, Matthias Müller, clouded matters by denying in a radio interview that the company had lied to American regulators, only to backpedal to some degree in a subsequent interview.

Still, in a letter released by the British Parliament last week, Paul Willis, the company’s chief in Britain, said Volkswagen “accepts that a defeat device was used in the U.S.A. in certain models.” But Mr. Willis also said, “We do not think that it is possible to make the same definitive legal determination in relation to the software that was fitted” to “differently configured vehicles in the U.K. and the E.U.” He then acknowledged “the potential for this to be an issue that is examined in litigation.”

The company was more definitive in a subsequent statement provided to The Times, in response to a question about the determination by German regulators that the software did constitute an illegal defeat device. “The Board of Management remains of the opinion,” the company said, that the system “is not a forbidden defeat device.”

The decision not to challenge the determination made by German regulators was “purely procedural” and had “nothing to do with giving up the legal assessment” of the issue. “Rather, in the interest of customers it is solely in order to cooperate and work constructively and hand-in-hand with the regulatory authorities to implement the action plan,” the statement said. “We did not want a dispute putting a strain on this.”

This is not to say that the software was used only in the United States. Mr. Willis said that the vehicles sold with the software in Europe “would not function” without it. And he said that the software “clearly contributed to meeting” European emissions standards.

But regulations that apply in Europe give automakers discretion to determine the engine settings used during emissions testing. And in the past some regulators have fretted that those settings may not be the ones used on the road.

Plaintiffs’ lawyers brush aside the distinction being drawn by Volkswagen. “The issue of whether or not it is a defeat device amounts to very little in a legal sense,” said Bozena Michalowska Howells, a partner at the London law firm Leigh Day.

“They’re going to remove it and fix it, and for regulatory purposes, it’s being deemed a defeat device,” she said.

Jacqueline Young, a partner in the London office of Slater and Gordon, an Australian law firm, said, “That will be a major issue if national authorities are going to start talking about fining or giving penalties, but whether it’s a defeat device has bearing, but not huge significance, on consumer claims.”

VW owners don’t care about what you call it, she said. “They care about the value of their asset.”

While class-actions suits in the United States began to appear almost as soon as the scandal broke, group litigation in Europe is far less aggressive. The applicable laws tend to be less hospitable to such claims, though they vary country to country. A recent law in Britain made such suits easier by allowing members of a potential class to opt out instead of opt in to group litigation.

Potential legal claims are in various stages in countries like the Netherlands and Ireland. In Britain, lawyers said they were waiting to see what remedy Volkswagen would offer before deciding whether to proceed with a suit. “We need to see exactly what the fix entails.We need to see what the impact is in relation to resale values,” Ms. Howells said.

A major shareholder suit is also expected to be filed within days in Germany. Nadine Herrmann, a partner at Quinn Emanuel Urquhart & Sullivan, said the suit would be based only on the use of defeat devices in the United States. The suit is being supported by Bentham Europe, a London company that funds such litigation.

The crux of the claim is that the use of defeat devices “had to be disclosed under German securities laws,” Ms. Herrmann said in an email response to questions.

The European Commission has asked VW to reconsider its refusal to make good-will payments to owners in Europe, as the company is doing in America. Volkswagen has argued that because regulations are different in the United States, the fix will be more complicated and time consuming there.

“They’ve put their hands up in the U.S. and said mea culpa,” said Alan Campbell, a 57-year-old electrical engineer from Bristol, who owns a diesel power Skoda Octavia that is among the vehicles that will be recalled. “From what I’ve seen in the press, it’s going to be one rule for U.S. people and one rule for U.K. people, which I think is wrong,” he said.

NY Post : American Express prepares for plastic’s inevitable demise

--> -ve for Gemalto....



“Don’t leave home without it” is a slogan that you can actually leave home right now.

American Express, which coined the phrase decades ago, is preparing for the inevitable demise of plastic, said chairman and chief executive Kenneth Chenault at the National Retail Federation conference on Tuesday.

“I don’t care if plastic goes away as long as we are where our customers want to be,” Chenault said.

Increasingly, that place tends to be a mobile app and doesn’t involve a physical card at all.

In a room packed with retail executives, Chenault said American Express could easily operate without plastic and its technology is embedded in some of the most ubiquitous apps like Uber.

“We can assign an [account] number, and you can go off without a card right now,” Chenault said, adding, “We can get you up and spending very quickly.”

>>> Few Research Notes Today...UBS Media, HSBC Airlines, CS Top Picks, Exane



From: LCHEKROUN@makor-cm.com At: Jan 21 2016 08:56:38
To: LAURENT CHEKROUN (MAKOR SECURITIES LO)
Subject: Fwd:>>> Few Research Notes Today...UBS Media, HSBC Airlines, CS Top Picks, Exane M&A List

UBS : Europe Media :Buy South Sell North – note attached



HSBC : European Airlines

4 Fuel costs are falling fast, but building capacity, geopolitics and economics will weigh on unit revenues. On balance earnings rise, hedge structures defining the scale by carrier

4 We remain cautious towards the fragmenting European low cost sector. We review the impact of lower fuel on fleet plans and present a review of the aircraft leasing sector

4 Key Buys include Lufthansa, Air France-KLM and Wizz. We are cautious on the highest margin European airlines, maintaining Reduce on EasyJet, Hold on IAG and Ryanair

Credit Suisse : Top Picks




Exane : M&A List : In Colgate Palmolive Out Shire

>>> Street Pre-Market Indications

ML
* CHEMRING - Rights issue terms finalised, 4 for 9 at 94p per new share......
SAB MILLER - Beer Shipments Beat Estimates on Latin America, Africa......RSTR
LOGITECH - Q3 rev in line, raises FY16 EBIT tgt to $170m from $150m.....+4-5%
LAIRD - FY results to be in line, +ve read given warnings in space......+3-5%
REMY - Q3 org sales 3.2% v cons at 2.8% driven by Cognac in US and China+3-4%
TRYG - Headlines in line, premiums and combined ratio bit light...........+3%
ROYAL MAIL - UK broadly in line, European ops beat ests, reits outlook..+2-3%
ACACIA - FY15 production slight beat, but 2016 guidance -4% below cons..+2-3%
LAND SEC - similar vein to BLND, robust demand, record footfall...........+2%
SAFESTORE - LFL revenue +11.5%, stronger in UK than Paris.................+2%
ST JAMES - FuM £58.6bn vs. £57.9bn cons, net inflows £1.63bn v 1.4bn est..+2%
AHOLD - US LFL +1.6%, in line but solid, FCF a highlight, reassuring....+1-2%
KINGFISHER - We UPGRADE to BUY, PO unchanged at 380p....................+1-2%
K. WILSON - sale of Avon loan portfolio for £99.1m........................+1%
HALFORDS - Flat LFL sales growth v +70bps cons, FY exp unchanged..........+1%
DSM - Feedinfo says Vit A prices rise in Europe & China,1st +ve datapoint.+1%
JC DECAUX - Signs multi year deal with Verizon to roll out small cells....+1%
BANKINTER - Net proft EUR 76.4m v 72m cons, NII & capital both better.....+1%
N BROWN - FLF sales +4.1% v 3% cons, do not expect cons upgrades..........+1%
PEARSON - FY15 in line, 13% cut to FY16 operating profit tgt, huge laggard+1%
HAVAS - Win Huawei as a creative client, a small positive.................+1%
GALENICA - Confirms FY15 forecasts and plan to split into 2 entities......u/c
FERROVIAL - Broadspectrum rejected AUD 715m hostile bid from the co.......u/c
SIEMENS - Cautious CEO commentary in interview < 3d before results........u/c
EUROTUNNEL - FY rev ex-MyFerry EUR 1.22bn v 1.26bn est,FY traffic stable..-1%
ACCOR - Big improvement in weekly French RevPAR data, but d/g away........-1%
D.BANK - Q4 net loss EUR 2.7bn v 0.7bn est, one-offs & litigation in line.-1%
MARINE HARVEST - Q4 EBIT NOK 850m, 16% below cons on start up costs.....-1-2%

CS:
Acacia -3-5% Q4 is a beat but guidance is poor
Ahold +1-2% Q4 Sales EU 9.79 bln est EU 9.4bln, outlook better
Arbonia M/P FY sales inline, outlook unchanged with previous guidance
Countrywide +3-5% Underlying EBITDA for 2015 will show a modest improvement
Deut Bank -2% Warning, pre-tax loss of c.€2.7bn, no capital raise
Galenica -1% FY sales 2% light, confirms 2015 forecast
Halfords +1-2% Q3 lfl's +0.3%, expectations for FY profits unchanged
Laird +1-2% Earnings for 2015 to be in line with expectations
Land secs +1% Performance solid with footfall +1.7% vs -2.3%
Logitech +10% Sales 2.5% beat, EPS 48% beat, solid retail sales growth
Marine Har -1-2% Light across the board, one off start up costs in Scotland
Miners +1-2% Copper +0.25%, Brent +0.60%, Iron Ore -0.15%, China -2.50%
N Brown +2-3% Q3 lfl +4.1% vs cons +4%, on track to meet FY
Oils M/P U.S. API crude oil inventories rose by 4.61m barrels
Pearson -3-5% Divi inline, op profit 720m vs 745m, outlook slightly light
Pernod +1% Read across from Remy numbers
Remy +3% Q3 sales +1.5%, sales growth better, confirms outlook
Royal Mail +2% Trading inline, parcel/letter unchanged, guidance unchanged
St. James's +2% Net inflows of £1.63bn, AuM of £58.6bn (cons 57.9)
Tryg +2-3% Q4 net is a 12% beat, divi inline, share buyback ahead

Numis:
* 32RED (+3%) Pre Close, '15 EBITDA to be slightly better, we u/g '16 by 10%
* ALLIANCE PHARMA (+1%) In line TS, rev c.2% ahead of our expectations
* AVEVA (–2%) Cut to SELL from NEUTRAL at Goldman
* BETTER CAPITAL - 17p return of capital effective today
* CAPE (mkt) Brian Larcombe announced as new NED.
* CHEMRING (-5%) Rights issue to go ahead at 94p, gives TERP at 38% disc
* COUNTRYWIDE (+1%) TU '15 EBITDA to be slightly better than expectations
* ELECTRA PE - Trade ex a large dividends today, 78p final
* EMIS (-3%) 2015 PBT in line but Revs 3% light due to contract closures
* HALFORDS (+2%) Q3 lfl sales flat, f/c unch, should see a relief rally
* HAYS (-2%) Adecco CEO plans no major acquisitions; Reuters
* HOSTELWORLD (+3%) Pre Close, in line, no knock on effects from Paris
* JD WETHERSPOON (-1%) SELL, as profit margin slides; Telegraph
* LAIRD (+2-3%) 2015 Inline, consistent with Q3 update, outlook fine
* LAND SECURITIES (+1%) All pretty much in-line with expectations
* N BROWN (+1%) Q3 lfl sales +4.1%, on track to meet FY f/c, been weak
* NOSTRUM O&G (-2%) GTU3 payments now phased until mid-17, hedged at $49.16
* PEARSON (-3%) Earnings lower on textbooks/slowing US college enrollments
* PREM FOODS (-1%) Domestic grocery sales reduced amid mild weather
* QUIXANT (mkt) TU profits comfortably in line
* ROYAL MAIL (+1%) Update in-line, GLS subsidiary performed ahead of est
* SAFECHARGE (mkt) Trading statement, FY to be in line
* SAFESTORE (+1%) Dividend slightly better L4L +7% all else in line
* SDL (mkt) BUY, raised hopes of a turnaround; Times
* ST JAME'S PLACE (+2%) FUM in-line, better in flows, well placed for 2016

RBC:
ACACIA +3% Strong numbers with outlook reiterated, 5% growth in '16.
AHOLD +3% Q4 net sales ahead, LFL ahead and NL/US margins beat.
CHEMRING -8% Announce £80m right issue to cut debt.
DEUTSCHE B. -2% Q4 revenues/profit miss, litigation costs remain issue
DLG/ADMIRAL +1% Leaks that AA premium for Q4 +9.5%, would be biggest since '10
EUROTUNNEL 0% Q4 revs light of cons. Europorte ahead, truck vol missed
LOGITECH +4% Q3 revs at top end, EPS ahead and company raises FY forecast
LUXOTTICA +1% Positive read from GRAND VISION Q4, revs +2.2% org. US +'ve
PERNOD +1% Read through from REMY numbers.
REMY COINT. +2% Q3 organic sales growth ahead, US/China ahead, outlook reit.
ROYAL MAIL +2% 9M Trading inline, outlook reiterated - relief.
ROLLS R. -2% House broker downgrade to sell.
SAB MILLER +1% Strong trading update, revs/volumes ahead but FX headwinds.
SOUTH 32 -3% Weak numbers, 11% decline in copper, production lower @ Mang.
ST. JAMES +3% Strong AUM, up 13%, net inflows +20% and partner ahead.