This very short post is based on the news today that Sir Philip Green has, according to the general sentiment being displayed, delivered on his pledge to ‘sort’ the pensions crisis that had developed in the wake of the British Home Stores (BHS) collapse. In putting £363 million into a Special Purpose Vehicle , thereby allowing 19,000 employees of the failed high street giant to be put in a position, in relation to their pension, that they would have been in had BHS not collapsed, which is around 10-15% higher than they would have received if the pension-holders would have been entered into the Pension Protection Fund . Those with pensions of less than £18,000, around 9,000 of the 19,000, will be able to opt to take a lump sum and, if they choose to do so, Sir Philip Green may see up to £15 million returned to his pockets . The general sentiment of the business press today goes along the line of the following: ‘ Philip Green’s settlement… is a triumph for the regulator and for ...

This short post is concerned with the attempt by a non-profit organisation to inject some much needed responsibility and care into the credit rating industry. Based on a published article that is available here in its final form in The Company Lawyer , and here in its pre-published and different form, this post will look at the International Non-Profit Credit Rating Agency (hereafter INCRA) and its aims, as well as some of its shortfalls. Ultimately, it is concluded that whilst the endeavour is incredibly worthy and should be praised, the environment is skewed against newcomers to the rating marketplace, and especially those trying to reduce the impact of the venal 'Big Two' – Moody’s, and Standard & Poor’s. INCRA was initially developed by the Bertelsmann Foundation in 2011, organically as a result of its research into the quality of nation states’ quality of governance via its Transformation Index . As such, the newly-imagined rating agency set its sights on...

Speaking yesterday after releasing a global-macro outlook for 2017-18 , the Vice President of the Credit Rating Agency Moody’s, Madhavi Bokil, announced that the Agency expects global activity to maintain its upward curve. However, there were a number of caveats that were attached to the announcement and one of them in particular will be the focus of this short post. Citing the shifts in economic policy emanating from the Trump administration in the U.S., which it suggests would affect the global economy via shifts in its views to trade and interest rates, and the risks associated with a deceleration in China’s economic expansion, Bokil is confident that ‘ destabilising economic and policy dislocations will be minimal ’ in the next few years. However, there is another caveat of Moody’s’ which is of interest when understood with a recent development within Europe. Bokil continued by discussing that the political and fragmentation risks in the E.U. and the European area also pose ...

Less than 2 weeks ago it was announced that the French group PSA, owners of popular car firms Peugeot and Citroën, were in talks with America’s General Motors over the sale of its loss-making European business Opel (whose U.K. arm is branded as Vauxhall). In this post, the focus will not be on the potential issue regarding the protection of workers after a takeover, something which has been dominant in the British press, but rather on the potential systemic effects that may result from the further acceleration of PSA’s growth. Whilst the issue regarding the safeguarding of employees' positions and, crucially, their pensions is of the utmost importance, the recent news is that the jobs and the pension fund (albeit currently operating at a deficit of £840 million ) will be safeguarded until 2021 , which in the current turbulent climate is relatively secure unfortunately. So, for this post, the focus will be on a potential issue that is currently developing, and will arguably be ...

In a number of media outlets across the world, the noises coming out of the ‘Conservative Political Action Conference’ today are receiving more attention than usual, and this is simply because of the rise of Donald Trump and, perhaps even more so, the rise of Steve Bannon. The former Breitbart Editor’s influence upon the new U.S. administration has garnered more column inches than almost anything else, particularly due to his supposed influence on Donald Trump’s so-called ‘ Muslim Ban ’, with Bannon making it onto the front of Time Magazine accompanied with the title ‘ the Great Manipulator ’. However, for this very short post, the focus will be on a statement made by Bannon during today’s proceedings in the CPAC, rather than the wider political issues stemming from the new administration – a meaningful analysis is far beyond the scope of this post. During the proceedings today, Bannon affirmed that the Trump Administration would deliver ‘ an economic nationalist agenda ’. Th...

This short post previews an article that this author has had accepted recently by the European Business Law Review, scheduled for release in 2018. As the issue has just been raised in the financial press , it is worth going over the central thesis of the article and discussing some of its applicability to a forthcoming issue with regards to the regulation of credit rating agencies in the U.K. after it secedes from the E.U. The article develops on the basis that the U.K. will trigger Article 50 and secede from the E.U., and that the terms will be such that the often-stated notion of a ‘hard-Brexit’ comes to fruition – in such a case, the U.K. will need to directly regulate the rating industry for the first time, because up until now the European Securities and Markets Authority (ESMA), i.e. the European financial regulator, has been tasked with overseeing the regulation of the industry , with the U.K. having to designate a ‘ competent authority ’ to act as the regional superviso...

Continuing the coverage of the U.K.’s largest banking institutions revealing their financial positions, which has included RBS , HSBC , and Lloyds so far, this short post will use the financial report from Barclays, which was released today , to make a point about a theme that is developing amongst the most important banks around the world. During a report on the release of the figures, Barclays’ Chairman, John McFarlane, stated that although the results were very good for the bank, it still faced challenges because ‘ a number of potentially material legacy conduct matters need to be resolved at acceptable cost ’, by which he is referring to a number of investigations by regulatory bodies in to the bank’s conduct surrounding the Crisis. For this post, the focus will be on this continued use of the word ‘legacy’, which denotes a different era to the current era of banking – the issue for this post is that the era in question was only 10 years ago, and multiple infractions continue ...

Yesterday, speaking in front of the Treasury Committee, the leading figures of the Bank of England (BoE) sat and faced many questions. Whilst there were many issues discussed, particularly with regards to the Bank’s navigation of economic waters since the referendum decision to leave the E.U., it is a comment by Monetary Policy Committee member Gertjan Vlieghe that serves as the central issue for this post. Speaking rather candidly about the strengths and weaknesses of the Bank, he alluded to a much wider issue, which has ramifications for all of society; when discussing the ability to foresee economic disasters, Vlieghe said ‘ we are probably not going to forecast the next financial crisis, or forecast the next recession. Our models are just not that good ’. The results of the Committee’s hearings relay similar messages, like that delivered by Andy Haldane, the BoE’s Chief Economist , who stated that ‘we know that people find risk hard to understand; I find risk hard to understand...

This morning, Lloyds Bank announced that its profits had more than doubled to £4.2 billion , primarily boosted by its reduction of capital reserves to protect against Payment Protection Insurance (PPI) pay-outs. This very short and reactive post looks at the response to the release of the figures, just over an hour ago, and contextualises the seemingly-positive news with that of the wider picture in the banking industry at the moment. The headline-grabbing figure will be the 158% surge in profits, which has not been seen by the bank since pre-Financial Crisis times. Yet, there was actually a drop in underlying profits and still the bank is setting aside resources to protect against the continued claims of negligence regarding the massive PPI scandal , although that provision has decreased from £4 billion last year to £1 billion this year. Recently, however, there have been a couple of news stories which sour this apparent success, both of which relate to issues recently comment...

In covering the continuing release of the annual results of the leading U.K.-based banks, the business press turned their attention towards HSBC as it began the week of financial reports , with Lloyds due on Wednesday, Barclays Thursday, and RBS and Standard Chartered both on Friday. Although there is plenty of analysis to be had regarding the 62% reduction in profits , this short post will focus on a particular line contained within an interview with the Chief Executive of the Bank, Stuart Gulliver. Speaking of the risks posed to the bank moving forward , he stated that ‘if Globalisation continues to retreat, as seems likely, we are in a strong position to capitalise on the regional opportunities that this will present, particularly in Asia and Europe’. The question for this post is this: ‘what standards, and what culture, will HSBC be bringing to these regions when it seeks to capitalise upon the retreat of Globalisation?’ When looking at the Bank’s recent record, particularly whe...

It was reported yesterday that the major banks in Britain will be ‘ in the spotlight ’ next week when they reveal their yearly figures. The article in the Guardian talks of the focus on HSBC, and the issue regarding an overhaul of their boardroom, and of Lloyds Banking Group, who are expected to show relatively positive results as it nears the end of its ties to the U.K. Government and the British Taxpayers. However, the focus for this post is in the Royal Bank of Scotland (hereafter RBS), and the rumour that it will post a loss of more than £6 billion, which would see it post a loss for the ninth year in a row, which is extraordinary. Whilst Lloyds were also assisted by the taxpayer, why is it that RBS continues to fall further and further into the red? This post will therefore look at this question, and it appears that a culture that is about, potentially, to see them punished for mis-selling in the lead-up to the Financial Crisis remains strong. There are a lot of allegations be...

It was reported this week that on Thursday, in a speech before the Economic Club of New York, 91-year old former Chairman of the Federal Reserve (hereafter the ‘Fed’) Alan Greenspan stated that the Dodd-Frank Act 2010 was the ‘worst legislation since Nixon’s wage and price controls of the 1960s’, and that we ‘ could do away with all financial regulation – almost all of it – if we did one thing, and that is raise the capital requirements of banks ’. The debates about the merits of such a statement will only be touched upon in this post because, as with everything of this nature, the analysis could stretch to volumes. So, for this post, the focus will be on the effect of Greenspan over the years and, more importantly given the current climate, the effect that Economists can have in shaping the direction of society. Alan Greenspan’s thinking about financial regulation is simple, as demonstrated by the contents of the speech. In it he discussed how raising the capital requirements ...