Here's today's look at some of the top stories on markets and politics in Europe.
Nokia releasing Android phone.
Finnish mobile handset maker Nokia, soon to become part of Microsoft, is already turning the alliance into a joke by preparing for release its first Android phone. Nokia started developing the handset before it negotiated the $7.4 billion deal with Microsoft, but it was expected to scrap it because the U.S. company primarily needed Nokia to boost the spread of its Windows Phone operating system. Nokia's bet on Windows has not worked out so far: Despite massive marketing effort, the system's market share is about 4 percent globally, and Windows Phone is not making noticeable progress in the U.S. or China, the world's two biggest markets. The system's problem it that it puts high demands on hardware and can only be installed on higher-end phones. Android, meanwhile, has captured the entry-level segment, and in some countries, India for one, it's the only one that exists. Nokia, which once ruled in emerging markets with its cheap phones, wants some of that market share back, and that means running Android. It will be a modified version without access to the Google Play app store, which will probably doom the effort after giving the industry a good laugh about Nokia's faith in its new owner and software partner.
Nestle reduces stake in L'Oreal.
The French cosmetics giant, L'Oreal, is buying 8 percent of its own shares from the global food company, Nestle. The purchase is partly for $3.4 billion in cash and partly in exchange for L'Oreal's 50 percent stake in the Swiss skin pharmaceuticals company Galderma. Nestle is going to use the proceeds for a share buyback, too. The sale appears to be the beginning of a divorce process designed so as not to damage either side. The current deal will allow the heirs of L'Oreal founder Eugene Schueller, the Bettencourt Meyes family, to increase its stake in the company from 30.6 percent to 33.31 percent, and Nestle's stake will go down from 29.4 percent to 23.29 percent.Its representation on L'Oreal's board is going to drop from three to two directors. For Nestle, L'Oreal is not a strategic investment: Owning a minority stake in a large company - France's third most valuable - is less interesting to the Swiss conglomerate than putting its money in businesses it would control. Nestle will probably keep cutting its stake.
U.K. and the Netherlands sue Iceland for $8.7 billion.
The U.K.'s Financial Services Compensation Scheme and the Dutch central bank are suing Iceland's deposit guarantee fund, TIF, for $8.7 billion in deposit reimbursement, accrued interest and costs. In 2008, when Iceland's Landsbanki went bankrupt, 300,000 British and Dutch citizens stood to lose their high-yield deposits in Landbanki's Icesave online bank. The authorities of both countries stepped in. They did not, however, forget that Landsbanki's failure after years of aggressive, reckless growth was ultimately Iceland's responsibility. The Icesave failure has now come back to haunt TIF, which says it only has $158 million to settle the claims and that if it is forced to pay out $8.7 billion, two-thirds of Iceland's gross domestic product, it will be unable to ever meet any other obligations. TIF points out that it never asked the U.K. or the Netherlands to reimburse the Icesave clients. If they hadn't, however, the depositors' losses could have caused a bank run that, back them, could have driven the European nations' battered financial systems over the edge. While it is unlikely that the plaintiffs will be awarded the full amount by the Reykjavik court, the case if the best proof that cross-border retail banking is a bad idea.
Portugal introduces tax lottery.
In April, Portugal will start holding lotteries with $130,000 cars as prizes for people who collect receipts from restaurants, hairdressers, car mechanics and other small businesses that prefer dealing in tax-free cash. To take part in the lotteries, the receipts will have to reference the customer's tax number. The government expects the cost of 60 cars per year to be easily covered by the rise in tax revenues caused by customers doing their civic duty and preventing tax-free transactions. Schemes like this are widespread in Latin America, though in Europe, Slovakia is the only country that uses one. In Portugal, many consider the idea insulting to the national pride, but a different problem may defeat the government's intentions in the end. A bill for services is lower if it does not include VAT (13 to 23 percent in Portugal), and people will save enough to buy lots of ordinary lottery tickets if they forget about the receipts.
London court awards $175 million to Russian bank scammed by former employees.
London has seen another high-octane Russian trial. Otkritie Bank, Russia's 33rd biggest by assets, sued a group of former employees for defrauding it of $175 million. The group was led by George Urumov, a London-based Russian hired to run international fixed income trading in 2011. The accusations against him included a multimillion-dollar kickback to Russian bank executives who engineered his hiring. Once at the bank, Otkritie maintained, Urumov and his associates skimmed off $150 million on operations with Argentine warrants. Compared to the crass thievery revealed in court, the Libor and forex rate fixing that is costing European banks billions of dollars in fines looks like mild, almost civilized behavior. The judge ruled in favor of Otkritie, but anyone who followed the trial will treat Russian banks with even more caution than before.
(Leonid Bershidsky writes on Russia, Europe and technology for Bloomberg View. Follow him on Twitter.)
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