(Reuters) – Bank of America and UBS trimmed their terminal rate expectations on Thursday after the U.S. Federal Reserve hinted that it might pause its rate-hike campaign due to the turmoil in the banking sector.

The Fed’s benchmark rate stood in the range of 4.75-5% following a quarter percentage point hike on Wednesday.

While the Fed’s move was largely priced in, a minority of market participants had flagged the possibility of a pause in hikes following the collapse of two mid-sized U.S. lenders as well as a Swiss-backed takeover of troubled global bank Credit Suisse.

BofA analysts said the consequent unexpected tightening in bank lending standards could substitute for further hikes.

Both BofA and UBS no longer expect an interest rate hike in June and see the Fed funds rate peaking in May at 5-5.25% from 5.25-5.5%.

Goldman Sachs, which expected the Fed to pause on Wednesday, maintained its terminal rate forecast in the 5.25-5.5% range, but now sees rates peaking in June instead of July.

The banking crisis may trigger a credit crunch with “significant” implications for the economy, which could slow even more this year than previously thought, Fed officials said.

Money markets, which priced in a terminal rate close to 6% by September just as early as this month, now see the rate peaking at 4.9% by May.

(This story has been corrected to change the terminal rate forecast range in paragraph 5)

(Reporting by Tom Westbrook and Susan Mathew; Editing by Christopher Cushing and Anil D’Silva)

By Marc Jones

LONDON (Reuters) -The main global committee of banking supervisors is to review this month’s banking market turmoil to see what lessons can be learnt and whether regulations may need tightening.

The Switzerland-based Basel Committee said in a statement it had met in Hong Kong “to take stock of recent market developments and risks to the global banking system and related vulnerabilities.”

It said it had also discussed “a range of policy and supervisory initiatives” and urged rule setters to be “vigilant”.

“The Committee will continue to closely monitor bank and market developments and assess the financial stability risks of higher interest rates”.

The comments come after the emergency rescue of Credit Suisse at the weekend and collapses of Silicon Valley Bank and Signature Bank in the U.S. this month triggered some of the worst turbulence in banking markets since the collapse of Lehman Brothers.

As well as the current stresses, the Committee approved a workplan to “assess and mitigate” the risks stemming from cryptoasset markets, which have also seen widespread turmoil over the last year.

The plan includes targeted reviews of “Group 1” stablecoins – cryptocurrencies pegged to a fiat currency like the dollar or other real world asset – and what are known as “permissionless blockchains”.

It will monitor banks’ activities and exposures to cryptoassets as well, including their role as potential issuers of stablecoins or tokenised deposits, and as custodians.

A consultation paper is also due to be published by the end of the year on what banks should disclose when it comes to climate change risks – such as whether rising sea levels or more frequent droughts or storms would lead to more loans defaults.

“The purpose of the framework is to provide additional bank disclosures about the prudential risks,” the Committee said, adding it would complement parallel initiatives by the International Sustainability Standards Board and other authorities.

(Reporting by Marc Jones; Editing by Amanda Cooper, William Maclean)

By Paul Lienert and Nathan Gomes

(Reuters) -Ford Motor Co expects its electric vehicle business unit to lose $3 billion this year, but remains on track to achieve a pretax margin of 8% by late 2026, the company said.

The projected loss was revealed at a briefing for investors and analysts on Thursday to discuss details of the automaker’s new financial reporting format. 

Ford shares were up 1.9% at $11.70 near midday on Thursday.

Starting with first-quarter results, which will be announced on May 2, Ford will begin reporting by business unit for Model e (electric vehicles), Blue (combustion vehicles) and Pro (commercial vehicles and services).

Ford projects Model e’s cumulative three-year loss from 2021-2023 at $6 billion, including a pro-forma loss last year of $2.1 billion. But the company expects its first generation of EVs, including the F150 Lightning and Mustang Mach E, to be profitable on a pretax basis by the end of 2024.

Chief Financial Officer John Lawler said Ford no longer will break out financial results by region, only by business unit, because “that’s how we’re running the company now.”

He said Ford will provide quarterly and annual sales and market share for the company’s top six global markets, including the United States, China and Germany, but no longer will report by region.

Last year, Ford had a pretax loss of $600 million in China, broke even in Europe and posted a modest $400 million profit in South America, with most of its earnings before interest and taxes – $9.2 billion – coming from North America.

The company expects its Ford Pro commercial vehicle business to nearly double pretax profit this year to $6 billion, while the traditional Ford Blue business should see a modest increase to $7 billion.

Lawler reaffirmed the company’s target of a 10% adjusted EBIT margin by late 2026.

He said the automaker will have the global capacity to build 600,000 electric vehicles by the end of 2023 and 2 million by late 2026 – “and we intend to fully use that capacity.” More than half of those EV sales initially will be from new customers, he added.

Lawler said continued improvements in the cost of Ford’s future EVs could be offset by pricing pressure from competitors.

Among the anticipated improvements, Ford aims to lower EV battery costs by producing more of the components itself and by introducing new chemistries in addition to iron phosphate (LFP) and nickel cobalt (NCM).

(Reporting by Paul Lienert in Detroit and Nathan Gomes in BangaloreEditing by Matthew Lewis)

(Reuters) – Shares of First Republic Bank rose 5% on Thursday as they drew the attention of bargain-hunting retail investors, but still hovered near record-low levels on lingering fears about the future of the U.S. regional lender.

The stock was the second most traded by retail punters in Wednesday’s session and the fifth most popular trade by 10:00 a.m. ET on Thursday, according to J.P.Morgan data.

San Francisco-based First Republic is in talks with its peers and investment firms about capital infusions following the shutdown of Silicon Valley Bank and Signature Bank due to bank runs.

First Republic’s shares have lost nearly 90% of their value this month, the worst performing stock among the members of S&P 1500 regional banks index, which has fallen 30.2% during the same period.

Treasury Secretary Janet Yellen on Wednesday dashed all hopes that U.S. regulators would insure all consumer deposits through the end of the banking crisis, sending First Republic’s stock down 15% on the day.

After the rapid rise in interest rates led to a crisis in the U.S. and European financial sector, the Federal Reserve on Wednesday indicated it was on the verge of pausing further increases in borrowing costs.

“While the situation remains highly uncertain, our assessment is that these stresses should subside through the spring,” said Citi Research economist Nathan Sheets in a note on Wednesday.

“Over the next few months, pressures on U.S. midsize banks may occasionally flare up, and some additional institutions may require interventions from the Fed and other regulators.”

(Reporting by Medha Singh in Bengaluru; Editing by Shinjini Ganguli)

By Steve Scherer

OTTAWA (Reuters) – Canada will introduce in its budget next week a 30% investment tax credit to boost clean-tech manufacturing, especially in the electric vehicle (EV) supply chain, two government sources familiar with the document said on Thursday.

The tax credit for capital investments in manufacturing equipment will be a “significant piece” of a bundle of measures aimed at putting Canada’s green-transition effort on the same level as the United States, said one source.

The credit will be available for future investments in equipment used to extract and process critical minerals used in EVs, a second source said, and to purchase equipment used in manufacturing along the entire EV supply chain, including for batteries.

In addition, the tax credit will be able to be used to buy equipment to produce nuclear energy fuels and heavy water, for making electrical energy storage, and for producing solar panels or wind turbines, the second source said.

Finance Minister Chrystia Freeland will present the 2023-2024 fiscal year budget to parliament on Tuesday. Neither source was authorized to speak on the record. A finance ministry spokesperson declined to comment.

Freeland has promised to bolster Canada’s green energy stimulus after the U.S. last year passed the Inflation Reduction Act (IRA), which provides massive incentives for those who invest in clean technology there.

“In an ideal scenario, this will incentivize expanded critical minerals extraction and processing in Canada, and ideally a lot of that will then be purchased and fed into a growing net-zero manufacturing base in the U.S.,” the first source said. U.S. President Joe Biden is due to arrive in Ottawa on Thursday for an official visit that officials say will include an agreement between the two countries to enhance cooperation clean energy and technologies.

Last year, Canada budgeted C$3.8 billion ($2.8 billion) to scale up exploration and infrastructure for critical minerals. Pierre Gratton, president and CEO of the Mining Association of Canada, said more investment is badly needed. Countries across the globe are scrambling to take advantage of a rapid shift to low-carbon energy. Canada has an abundance of the critical minerals used to produce EVs.

“The U.S. does need us… and right now, we’re not on track to deliver,” Gratton said. “So these measures, if they turn out to be in the budget, will help us make sure we can deliver.” Canada sends three-quarters of its exports south of the border, and the automobile industries of the two countries are highly integrated.

Neither source put a price tag on the measure, but they did say it would not apply to projects where investments have already been agreed, such as the two Canadian battery plants planned by carmakers Volkswagen and Stellantis NV.

Canada has limited financial firepower compared with what the U.S. put forward in the IRA, which many experts say will lead to more than $1 trillion in investment.

Earlier this month, a source told Reuters that green transition budget measures would focus on increasing the capacity of the electricity grid, on battery manufacturing and on mass timber construction, without providing details.

Last autumn, Canada announced investment tax credits for companies that purchase finished clean energy systems, like solar panels. Instead, the new tax credit will apply to manufacturers buying equipment to build things like solar panels.

“It’s about building out the industrial base in Canada,” the second source said.

($1 = 1.3659 Canadian dollars)

(Reporting by Steve Scherer; Editing by Denny Thomas, Bill Berkrot and Marguerita Choy)

By Sam Tobin and Clara Denina

LONDON (Reuters) -Aluminium giant Rusal plans to bring a further lawsuit in London against Vladimir Potanin, CEO of Nornickel, court documents show, marking the latest flare-up in relations between two of Russia’s biggest metal companies.

Rusal wishes to “bring certain further claims” against Potanin and his affiliate Whiteleave Holdings Ltd that are not covered by a lawsuit filed in London’s High Court on Oct. 21, according to a court order dated March 21 and seen by Reuters.

Rusal declined to comment, but previously said its legal action was to protect the interests of Nornickel’s shareholders. Potanin holds a 37% stake, while Rusal holds 26%.

“Lawyers on the case are waiting for their licence as they are preparing to litigate,” Potanin’s Interros holding company said in an emailed statement.

Rusal’s lawsuit has been paused until mid-July pending an application by Potanin and Whiteleave’s lawyers Seladore Legal to Britain’s Office of Financial Sanctions Implementation for a licence to represent them, the court order states.

Nornickel has not been directly targeted by Western sanctions, but Britain and the U.S. have placed sanctions on Potanin.

The dispute that led to the October lawsuit, and Rusal’s planned further claims, centres on an agreement brokered by Moscow in 2012 between Nornickel’s two largest shareholders, Potanin and Rusal, which protected Nornickel’s dividend payouts.

Oleg Deripaska, founder of Rusal, is not a party to the litigation.

Disagreements over dividends have been the main reason for on-and-off rows between shareholders at Nornickel and Rusal. One of the parties to the 2012 deal is billionaire Roman Abramovich, who helped to cool the dispute a decade ago.

The deal, which was due to expire at the end of 2022, resolved a disagreement over how much profit should be returned to investors and how much should be invested in Nornickel.

Rusal alleges Potanin and Whiteleave procured the transfer of “crucial subsidiaries” out of Nornickel’s corporate group “with the sole or main purpose of diverting value away from the (Nornickel) Group, as part of a wider strategy of entrenching (Whiteleave and Potanin’s) control”, according to a summary of the lawsuit dated Oct. 21.

(Reporting by Sam Tobin and Clara Denina, additional reporting by Anastasia Lyrchikova; editing by Barbara Lewis)

By Simon Jessop and Ross Kerber

LONDON/BOSTON (Reuters) – BlackRock Inc, the world’s largest asset manager, said on Thursday it would continue to push companies for details on how they treat “material” climate-related risks, despite criticism from some U.S. politicians for its stance on the energy transition.

The comments continue BlackRock’s attempt to walk a middle line between Republicans who say it has overemphasized environmental, social and governance (ESG) factors in investing, and shareholder activists and other investors who say the $8.6 trillion asset manager should push companies harder to address climate issues.

In a statement on the priority areas it will focus on in talks with companies at the start of the season for annual company meetings, BlackRock said while it had refined some language it uses, nothing substantive had changed.

Specifically, it would focus its engagements with portfolio companies on topics like on board quality and effectiveness; a company’s strategy, purpose and financial resilience; executive incentives; climate-related risks and natural capital; and a company’s impact on people, particularly its workers. Those talks can inform BlackRock’s proxy voting decisions.

“There are no material changes in our approach to these themes, and our engagement with companies will continue the dialogue on material risks and opportunities relevant to their business models and sectors that we had in 2022,” it said.

It said that environmental issues it would consider include “water use, land use, waste management and climate risk.”

The statements were in line with recent comments by BlackRock Chief Executive Laurence Fink in his recent annual letter. Fink said BlackRock has been vocal in seeking company disclosures about their plans to navigate the energy transition, but that “it’s not our place to be telling companies what to do.”

(Reporting by Simon Jessop in London and by Ross Kerber in Boston)

By Lananh Nguyen and Saeed Azhar

(Reuters) -Citigroup Inc CEO Jane Fraser on Wednesday expressed confidence in U.S. banks after a series of closures rattled investors and fueled turmoil in global financial markets.

“The banking system is pretty sound,” and large and regional banks are well-capitalized, Fraser told the Economic Club of Washington D.C. on Wednesday.

“This is not a credit crisis. This is a situation where it’s a few banks that have some problems, and it’s better to make sure that we nip that in the bud,” she said.

In the past two weeks, two U.S. banks collapsed, Credit Suisse Group AG was taken over by Swiss rival UBS Group AG and America’s biggest lenders agreed to deposit $30 billion in beleaguered First Republic Bank. Fraser’s public comments were among the first by a large bank CEO since the tumult began.

Citi, the fourth-largest U.S. lender, was one of 11 major banks that threw a lifeline to First Republic last week in an effort to help it buy time for restructuring.

While Citi is not interested in buying First Republic, Fraser said, it contributed $5 billion to the lender as a mark of confidence – and expects to be paid back.

The move to shore up First Republic was an unprecedented show of unity among banking behemoths that are normally fierce competitors, she said.

“We usually try and kill each other in different deals that we’re trying to do,” Fraser said. “But in this instance, this is one where we’re in a strong position, we want to stop what could have been a problem.”

The rescue efforts failed to stop a 15% plunge in First Republic’s shares on Wednesday.

Elsewhere, the takeover of another ailing lender, Credit Suisse, by rival UBS on Sunday was not surprising, Fraser said.

“I don’t think anyone was falling off their chair that Credit Suisse ultimately ended up where it did, it was really a question of time,” Fraser said. “It’s been a troubled institution for a long time,” she said, citing management instability and various crises.

Scottish-born Fraser also spoke about her life and career in a wide-ranging interview with Carlyle Group Inc Co-Founder David Rubenstein. A travel buff with two college-age children, she is the first woman to lead a major Wall Street bank.

As an only child born to an accountant father, Fraser worked as a golf caddy in her youth before attending Cambridge University and Harvard Business School. Fraser started her career at Goldman Sachs Group Inc, then became a partner at McKinsey & Co and held several executive roles at Citi before taking the helm two years ago.

Fraser praised the quick action taken by U.S. regulators to stop the bank runs that toppled Silicon Valley Bank and Signature Bank earlier this month from spreading more broadly.

The Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation invoked “systemic risk exceptions” that allowed them to guarantee billions of dollars of uninsured customer money.

“It’s very important to protect depositors,” Fraser said. “The banking system everywhere around the world depends on confidence, and that confidence has to be in the safety and security of deposits,” she said.

(Reporting by Lananh Nguyen and Saeed Azhar; Editing by Sonali Paul and Stephen Coates)

By Ankur Banerjee

SINGAPORE (Reuters) – Investors hoping to cash in on a boom in Chinese travel after nearly three years of pandemic lockdowns are shifting into airports, hotels and duty-free operators and away from airlines subject to fluctuating fuel prices and more intense competition.

The first wave of bullishness as China began abandoning its zero-COVID policy in December lifted airline stocks and online travel agencies like Trip.com Group Ltd.

But with global airlines being slow to add capacity to connect China with the U.S. and Europe and Chinese travellers preferring trips closer to home, a new set of stocks is benefiting.

Thailand has re-emerged as a favourite destination for Chinese travellers, and also for investors.

“We were active earlier in terms of domestic travel, lodging space and airports, where we’ve done quite well,” said Elaine Tse, portfolio manager at Allspring Global Investments. Tse said the firm has locked in some profits from those bets.

“We are optimistic on a rebound in regional and international travel and continue to get exposure through airports and airplane leasing.”

Shares of airports, such as Airport of Bangkok and Shanghai International Airport have underperformed the big three Chinese airlines Air China, China Eastern and China Southern since the start of November, leaving room for further gains in the former.

Investors say airline stocks are not only expensive, but their earnings tend to be volatile and susceptible to swings in oil prices.

Shares of Air China, China Eastern and China Southern have gained between 7% to 17% in the past four months, with Air China and China Southern trading above their 5-year average forward earnings, according to Refinitiv data.

In contrast, China Tourism Group Duty Free Corp trades at 28 times its forward earnings, well below a 5-year average.

Graphic: Airports v Airlines performance since https://fingfx.thomsonreuters.com/gfx/mkt/gdvzqkndapw/Airports%20Asia.png

In the battle for Chinese travelers, local airlines are expected to fare better than regional airlines such as Qantas, Singapore Airlines and Cathay Pacific, mainly because Chinese airlines kept more widebody planes and staff ready.

China expects inbound and outbound tourist numbers in 2023 to reach more than 90 million, recovering to 31.5% of pre-pandemic levels. All three Chinese airlines are expected to swing to profit in 2023 after reporting big losses last year, according to Refinitiv data.

Analysts expect Chinese airlines will see profits peak next year as international traffic makes a fuller rebound.

“I think we need to be patient and wait for the earnings to kick in to drive the valuations down,” said Vey-Sern Ling, senior equity advisor at Union Bancaire Privee.

Graphic: Travel stocks performance following China reopening https://www.reuters.com/graphics/ASIA-STOCKS/AIRPORTS/zdvxdqankvx/chart.png

Hilde Jenssen, head of fundamental equities at Nordea Asset Management, has bought some consumer discretionary companies exposed to tourism such as duty-free operators in hopes of capturing secondary effects of the reopening.

While investors were betting at the start of the year that sky-high Chinese household savings, which jumped to 17.8 trillion yuan ($2.61 trillion) last year, will lead to a post-pandemic splurge, Chinese consumers have so far been cautious.

Jenssen said earnings from some consumer discretionary companies showed they were restocking inventories in anticipation of strong demand.

“It might not be sort of the big bang that everybody was hoping for at the beginning of the year … (but) there is definitely some pent up demand.”

($1 = 6.8222 Chinese yuan renminbi)

(Reporting by Ankur Banerjee in Singapore; Editing by Vidya Ranganathan and Jamie Freed)

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing new claims for unemployment benefits edged down last week, showing no signs yet that the recent financial market turbulence following the failure of two regional banks was having an impact on the economy.

The unexpected dip in claims reported by the Labor Department on Thursday suggested March could be another month of solid job growth. The weekly unemployment claims report is the most timely data on the economy’s health.

Persistently tight labor market conditions have left some economists expecting the Federal Reserve would raise interest rates two more times this year, despite the U.S. central bank signaling on Wednesday that it was on the verge of pausing its monetary policy tightening campaign.

“A week after the banking panic began, the labor market is steady as a rock with no new layoffs nationwide,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Credit conditions may tighten as banks grow more cautious, but it could be weeks or months before that translates into a material slowdown in real economic activity.”

Initial claims for state unemployment benefits fell 1,000 to a seasonally adjusted 191,000 for the week ended March 18.

Economists polled by Reuters had forecast 197,000 claims for the latest week. Claims have bounced around in a tight range this year, remaining very low by historical standards, despite a rush of layoffs by major technology companies.

Economists will be watching to see if this trend persists when the government updates the seasonal adjustment factors, the model it uses to strip out seasonal fluctuations from the data, at the beginning of April.

Unadjusted claims dropped 4,659 to 213,425 last week. A jump in filings in Indiana and an increase in Massachusetts were offset by decreases in California, Illinois and New York.

With 1.9 job openings for every unemployed person in January, employers are generally reluctant to let go of workers.

Stocks on Wall Street were trading higher. The dollar fell versus a basket of currencies. U.S. Treasury yields were mixed.

Graphic-Jobless claims https://www.reuters.com/graphics/USA-STOCKS/klpygqmwxpg/joblessclaims.png

TIGHTENING CREDIT CONDITIONS

Labor market conditions could loosen, especially in the wake of the collapse of Silicon Valley Bank in California and Signature Bank in New York. Financial conditions have tightened, which could cause banks to become more strict in extending credit, potentially impacting households and small businesses, who have been the main drivers of job growth.

That was acknowledged by the Federal Reserve, which on Wednesday raised its benchmark overnight lending rate by a quarter of a percentage point. The U.S. central bank has hiked its policy rate by 475 basis points since last March from near-zero to the current 4.75%-5.00% range.

Fed Chair Jerome Powell told reporters that “the events of the last two weeks are likely to result in some tightening of credit conditions for households and businesses, and thereby weigh on demand on the labor market and inflation.”

The claims data covered the period during which the government surveyed business establishments for the nonfarm payrolls portion of March’s employment report.

Claims were little changed between the February and March survey weeks, potentially hinting at another month of strong payrolls gains. The economy created 311,000 jobs in February after adding 504,000 in January.

Data next week on the number of people receiving benefits after an initial week of aid, a proxy for hiring, will shed more light on the health of the labor market in March.

The so-called continuing claims increased 14,000 to 1.694 million during the week ending March 11, the claims report showed. Continuing claims have averaged 1.674 million this year, below their pre-pandemic average, indicating some laid off workers could be readily finding new work.

“Tight labor market conditions are a key reason we expect the Fed to raise rates by 25 basis points at both the May and June meetings,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “But the Fed will proceed more cautiously given the recent stress in the banking system and its uncertain impact on the economy.”

The housing market, which has borne the brunt of the Fed’s aggressive rate hikes, is showing signs of stabilizing at very low levels. New single-family home sales rose 1.1% to a seasonally adjusted annual rate of 640,000 units in February, the highest level since August, the Commerce Department said in a separate report.

Graphic-New home sales https://www.reuters.com/graphics/USA-STOCKS/lgvdkjxyypo/nhs.png

New home sales are, however, very volatile on a month-on-month basis. They have now increased for three straight months.

Economists had forecast new home sales, which account for a small share of U.S. home sales, falling to a rate of 650,000 units. The surprise gain was despite mortgage rates rising from early February through early March after mostly falling since November, according to data from mortgage finance agency Freddie Mac. Monthly sales rose in the South and West. They fell in the Midwest and plunged 40.0% in the Northeast.

Sales were down 19.0% on a year-on-year basis in February. The median new house price in February was $438,200, a 2.5% rise from a year ago.

Data this week showed sales of previously owned homes rebounding for the first time in a year in February. Homebuilder sentiment improved for a third straight month in March, while single-family housing starts and building permits rose in February. Nevertheless, the housing market is not out of the woods yet. Tighter lending standards could make it harder for prospective homebuyers to borrow.

“At a minimum the decline in housing activity has slowed significantly and the inventory situation looks manageable,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Andrea Ricci)

By Makiko Yamazaki

TOKYO (Reuters) -Toshiba Corp’s board has accepted a $15.2 billion buyout offer from a group led by private equity firm Japan Industrial Partners, the company said on Thursday, potentially drawing a line under years of upheaval at the conglomerate.

A successful deal, which would value Toshiba at 4,620 yen per share or 2 trillion yen in total, would see the scandal-ridden company taken private and firmly in domestic hands after much tension with overseas activist shareholders.    It is however not yet clear whether activist funds, which are estimated to own roughly a quarter of the company, will be satisfied with the terms. The offer price would give just a 9.7% premium over Thursday’s closing price of 4,213 yen.

Toshiba said in a filing that the board would not go as far as recommending shareholders to tender their shares, because the offer price is not high enough to give recommendations. The price was lowered a few times from an initial offer of up to 5,500 yen per share, according to the filing.

It also said the board’s support may change before late July, when the JIP group plans to start the tender offer.

But the JIP bid is “the only complete proposal” that has been submitted during a one-year competitive auction process, and would give shareholders a chance to exit their investments, Toshiba said.

Some 20 Japanese companies, including financial services firm Orix Corp, chipmaker Rohm Co and Chubu Electric Power, plan to take part in the deal, sources have said. It would be the third-largest M&A transaction globally so far this year, according to Refinitiv data.

“This ends months of uncertainty regarding whether a deal was coming and years of uncertainty regarding Board understanding of the right price,” said analyst Travis Lundy of Quiddity Advisors, who publishes on Smartkarma.

“This would provide a lot of activists a way out, even if it is not what they hoped for. The question is whether ‘Toshiba Fatigue’ is strong enough to overcome disappointment on price.”

Since 2015 Toshiba, a sprawling conglomerate which also owns 40.6% of memory chip maker Kioxia Holdings, has been battered by accounting scandals and heavy losses, and came close to being delisted before becoming engulfed in a series of corporate governance scandals. 

At one of its lowest points, a shareholder-commissioned investigation concluded Toshiba had colluded with Japan’s trade ministry – which sees the company’s nuclear and defence technology as a strategic asset – to block overseas investors from gaining influence at its 2020 shareholder meeting.

The fallout from that debacle eventually led to the strategic review and the buyout proposal.

Toshiba started an auction process about a year ago, receiving eight initial buyout proposals as well as two offers for capital alliances.

Four bidders proceeded to a second round, including private equity firms Bain Capital, CVC Capital Partners and Brookfield Asset Management, sources have said.

JIP initially teamed up with state-backed Japan Investment Corp (JIC) but decided to part ways due to disagreements over whether management should be retained and plans for restructuring.

The JIP consortium last month submitted a binding buyout proposal backed by $10.6 billion in loan commitments from major banks.

It has taken weeks for the board to proceed with a vote on JIP’s proposal, as some board members were dissatisfied with its offer price, sources have said.

Toshiba shares have fallen 12% over the last year, underperforming a 2.2% decline in the Nikkei 225 average.

($1 = 130.7500 yen)

(Reporting by Makiko Yamazaki; Additional reporting by Kane Wu; Editing by David Dolan, Edwina Gibbs and Jan Harvey)

FRANKFURT (Reuters) – Lloyd’s of London swung to a pre-tax loss in 2022 and took writedowns on its fixed-income investments, it said on Thursday.

The pre-tax loss was 800 million pounds ($982.56 million), compared with a profit of 2.3 billion pounds a year earlier.

Rising interest rates have hit investments at many financial firms, and it posted a net investment loss of 3.1 billion pounds, compared with a 900 million pound profit in 2021.

However, Lloyd’s underwriting profit jumped 53% to 2.6 billion pounds. Higher premium rates have helped insurers’ underwriting profits in recent years.

John Neal, CEO of Lloyd’s, forecast 2023 premiums of 56 billion pounds, up from 46.7 billion in 2022, according to a statement.

($1 = 0.8142 pounds)

(Reporting by Tom Sims; Editing by Sandra Maler)