Bershidsky on Europe: EU Corruption Costs $162 billion
Here's today's look at some of the top stories on markets and politics in Europe.
EU corruption costs business $162 billion a year.
A European Commission study determined that corruption costs the EU's collective economy $162 billion a year, an amount comparable to the bloc's budget. A third of companies taking part in government tenders have been deterred from doing so by corruption, the study found. Three quarters of the European businesses surveyed believe corruption is widespread in their countries, and 73 percent say corruption and the use of connections are the easiest ways of obtaining certain public services. At the same time, in most of Western Europe business people's personal experience of bribery and other forms of corruptions is limited: from Austria to Portugal, no more than 3 percent ever had to pay a bribe. Despite the enormous cost estimate, calculated to draw attention to the issue and give rise to a regulatory response, most European countries have relatively little corruption. In the developing economies of Eastern Europe and crisis-stricken Greece, graft is more widespread: between 6 percent and 29 percent of respondents said they had been expected or asked to pay a bribe in the last 12 months. One reason for the differing corruption perceptions may also be that the economic crisis created a deep sense of unfairness and frustration in the countries hardest hit.
Spanish royals publish detailed report on their salaries.
The Spanish royal family, at a popularity nadir because of a fraud scandal involving Princess Cristina and her husband, disclosed new details of how much the state pays its members in salary and "representation costs." The royal family's total budget for 2014 is $10.5 million, compared to $59 million for the Windsors in the U.K. King Juan Carlos' salary and representation allowance have not changed since 2011. They add up to $395,160. That is only six times the average Spanish worker's salary. Queen Sofia will receive $179,000, and Princess Cristina will get nothing, just like last year. Spain's royal family is trying to prove it is not a group of expensive parasites, and, given the royals' reasonable salaries, it has a good case. The question is whether Spain needs them even at this low cost.
UBS back in the black.
Switzerland's biggest bank, UBS, posted a profit of $1 billion in the fourth quarter of 2014, compared to an almost $2 billion loss the year before. UBS also got the Swiss regulator to reduce by about $5.5 billion its demand, made in October, that the bank add $31 billion of extra provisions to its balance sheet. The bank is keeping its assets well under a self-imposed limit of $77 billion, and its flagship wealth management business is thriving, having attracted $6.4 billion in client funds, twice as much as the year before and the most since 2007. Congratulating itself on its success, UBS increased its bonus pool by 28 percent. Chief executive Sergio Ermotti, who recently spoke up against bank-bashing as unhelpful for the economy, has presented a strong argument in favor of his stand. In the last quarter, UBS finally avoided surprise charges such as fines and litigation expenses, and showed unusually robust results based on the well-balanced performance of various business segments.
Barclays chief refuses $4.4 million bonus.
Antony Jenkins, chief executive of Barclays, has turned down his cash bonus for the second year in a row. For 2013, Jenkins would have received $4.4 million, but he felt now would not be a good time to accept the money. "I am aware of the very significant costs which have been required to address legacy litigation and conduct issues in 2013, as well as to exit assets and businesses we no longer wish to participate in," the chief executive said. Barclays is due to announce its 2013 financial results a week from now, and the bank is likely to show a healthy profit, but Jenkins clearly believes its transformation is far from finished. Jenkins, a Barclays veteran, took the helm in 2012 and his desire to be seen atoning for the bank's past sins is understandable and laudable.
John Malone bids for Formula 1 stake.
John Malone's Liberty Global, the most acquisitive company on the European cable TV market right now, has teamed up with Discovery Communications, owners of the eponymous channel, to bid for a 49 percent stake in Formula One racing. Liberty approached the private equity firm CVC Capital for the deal, which would value Formula One at $7.2 billion. CVC only owns 35 percent of Formula One, but it can apparently help Liberty and Discovery secure the remainder. If the deal goes through, it will create a major problem for Rupert Murdoch, who tried to take control of the ultimate motor sport in 2011, and having failed still made a big bet on Formula One races as prime content for his satellite TV platforms. If Liberty and Discovery buy into the franchise, they may decide to hand the broadcast rights to another provider or use them for their own cable networks. If Murdoch goes to war against Liberty, it will be a prolonged, cruel dogfight: Murdoch's aggressiveness is as well-known as Malone's, even if his resources aren't what they used to be.
(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter.)
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.
To contact the author on this story:
Leonid Bershidsky at firstname.lastname@example.org
To contact the editor on this story:
Marc Champion at email@example.com