An Apple/IBM alliance, Buffett's unprecedented donation and the BRIC nations to get a bank of their own. Read about these and more of the day's top business news stories.
BRIC Nations Creating Their Own Development Bank
The leaders of five emerging market powers, known as the BRIC nations, said at a summit Tuesday that they gave final agreement to creating their own development bank worth $100 billion that will have its headquarters in China, The Associated Press reports. The first president of the New Development Bank will be from India. The position will rotate every five years among Brazil, Russia, India, China and South Africa. The new bank is seen as a response by the BRICS against the World Bank and the International Monetary Fund, which the developing world has long complained it far too U.S.- and European-centric, the Tribune states. The New Development Bank will have an African regional branch in South Africa and eventually other nations would be able to participate.
Yellen: Economy Still Needs Fed Help
Federal Reserve Chair Janet Yellen said Tuesday that the Fed will continue to prop up the economy until hiring and wage data show the effects of the financial crisis are "completely gone,” Reuters reports. In testimony before the Senate Banking Committee, Yellen emphasized that she won't conclude the economy has recovered until wages start rising and discouraged workers return to the labor force. In its latest semiannual report to Congress, the Fed singled out biotechnology and social media stocks for their "stretched" valuations. Biotech stocks suffered some of their biggest losses in months, while social media companies like Yelp slid as much as 4 percent.
But Yellen said that the one thing that might prompt the central bank to raise rates earlier or faster is if hiring and wages take off in an unexpected way.
Apple and IBM to Team Up on Business Software
Once adversaries, tech giants IBM and Apple announced Tuesday the formation of a business enterprise partnership to develop about 100 business apps that will combine IBM’s data capabilities to Apple's user-friendly iPads and iPhones, USA TODAY reports. The alliance, which is Apple’s first major joint venture partnership in years, aims to "redefine the way work will get done, address key industry mobility challenges and spark true mobile-led business change,'' the companies said in a joint statement. The apps would address specific industry needs, such as helping airline pilots save fuel, and could be used in a wide range of business applications turning iPads and smartphones into money-saving tools.
Buffett Beats Personal Charitable Best with $2.1 Billion Gift
Warren Buffett, chairman and CEO of Berkshire Hathaway, and the second-richest person in the United States, made his largest single charitable contribution ever with a $2.1 billion donation to the Bill and Melinda Gates Foundation, The Chicago Tribune reports. Buffett gave 16.6 million Class B shares Monday in an annual gift to the foundation. Last year, Buffett donated $2 billion. Buffett, 83, has a net worth of $60 billion. He has encouraged other ultra high net worth people to follow his example and donate their money. Most of Buffett's donated money goes to the Gates Foundation, which focuses on hunger, poverty and education, and where Buffett is a trustee.
Northern Trust Names First Female COO
Jane Schreuder, 55, will become the first female chief operating officer of Northern Trust Corp., Chicago’s biggest locally headquartered bank.
Schreuder is currently president of wealth management. As COO, she will oversee operations and technology teams. Northern Trust has had female divisional COOs before, but not companywide, The Chicago Tribune reports. William Morrison, 63, who has served as president and chief operating officer of the 125-year-old company since 2011, will retain the role of president. Northern Trust reports its second-quarter financial results on Wednesday.
Comcast Disconnect Phone Call Goes Viral
Comcast, currently in the midst of pushing for federal government approval of its merger with Time Warner Cable, is apologizing for a “Kafkaesque” and “hellish” service call that went viral. Tech journalist Ryan Block taped his call to Comcast during which the service representative refused to disconnect Block’s service and instead harangued him with questions about why he would leave the company. Comcast released a statement saying it was “very embarrassed” by the call and said it would reach out to Block personally to apologize.