UPI NewsTrack Business

EU regulators eye 3-way airline deal

BRUSSELS, Aug. 30 (UPI) -- A plan by British Airways, Iberia and American Airlines to share revenues on flights has drawn interest from regulators, the European Union says.

The European Commission has launched an inquiry into the deal, which would see the three airlines share revenues on their flights from North America to the 27 E.U. countries, the Financial Times reported Saturday.

Officials said it's not a formal merger investigation with a fixed timeline, but rather an inquiry to determine if the proposal to coordinate the airlines' prices, capacity and schedules on trans-Atlantic routes would violate E.U. antitrust laws.

The announcement by BA, Spain's Iberia and American is the first big airline industry proposal under the new U.S.-E.U. "open skies" agreement that came into effect in March. Late last month BA announced it intended to merge with Iberia, which it said would help its position in the international airline industry and reduce its aircraft, maintenance and staffing costs.

That move was blasted by Richard Branson, president of Virgin Atlantic Airlines, who said the deal would create "a monster monopoly that would push up ticket prices," the Financial Times reported.

Georgia bank becomes 10th to fail

ALPHARETTA, Ga., Aug. 30 (UPI) -- State regulators say they've shut down the Integrity Bank of Alpharetta, Ga., marking the United States' 10th bank failure of 2008.

The Integrity Bank, which listed $1.1 billion in total assets and $974.0 million in total deposits as of June 30, was closed Friday and the Federal Deposit Insurance Corp. was named receiver, CNN reported. Officials told reporters Regions Bank of Birmingham, Ala., would assume Integrity Bank's deposits.

"There is no need for customers to change their banking relationship to retain their deposit insurance," the FDIC said in a statement.

CNN said Regions Bank has agreed to pay a portion of the failed bank's deposits and will buy about $34.4 million of its assets, while the FDIC is set to retain the remaining assets for later disposition.

Big job cuts could follow Dresdner sale

BERLIN, Aug. 30 (UPI) -- The imminent sale of the German investment firm Dresdner Kleinwort could put thousands of jobs at risk, sources say.

Deep cuts could follow an expected sale of the firm by insurance company Allianz, perhaps to Germany's Commerzbank, unnamed sources told the Financial Times Saturday.

"It would be safe to assume it would mean closure of riskier parts of the (Dresdner Kleinwort) business that do not fit with Commerzbank," one source told the newspaper.

Another source added, "I am not sensing that this deal is about embracing investment banking."

Allianz, Europe's largest insurance group, said this week it would not split up the investment firm and perhaps retain a portion of it. Instead, it would seek to sell the company as a whole, meaning any potential buyers would likely come armed with a strategy to reduce employment in an investment banking field that has been rocked by the international credit crisis.

Sources told the Financial Times China Development Bank has shown interest in Dresdner and remains a possible buyer.

The newspaper said a deal could be announced Sunday.

British banks on hook for mortgage fraud

LONDON, Aug. 30 (UPI) -- British banks may be on the hook for at least $12.7 billion in fraudulent mortgage loans given to drug gangsters and other scammers, industry observers say.

The numbers came to light this week as mortgage lender Bradford & Bingley disclosed it had been forced to take a $33 million charge against earnings for the first six months of 2008 thanks to loans to criminal gangs and other perpetrators of fraud, The Times of London reported Saturday.

Experts told the newspaper that may only be the tip of the iceberg. Navigant, a financial consulting firm that conducts forensic investigations, estimates British mortgage lenders could be holding at least $12.7 billion in fraudulent loans. Industry experts say banks are alarmed that the true size of mortgage fraud is only now becoming apparent.

The Times said the British Financial Services Authority has banned at least 20 brokers and fined two of them $182,000.

"The effect of the mortgage crunch has been to make it less easy for people to get away with these things," said Philip Robinson, the FSA's director of financial crime and intelligence. "The forest (of credit) isn't so big, so the trees stand out."