In the second post today, the focus will be on the news recently that two major shareholders in Tesco, the massive retail company that engages in multiple avenues of business, have sought to publicly express their opposition to the company’s plans to purchase Booker , a wholesale grocery firm, for a reported £3.7 billion. Whilst there are more elements to this story which need to be discussed, the sentiment that is emanating from this news, that shareholders are taking the long-term into account and not succumbing to the destructive narrative of growth at any cost is the most important way forward, is a very welcome sentiment indeed. Therefore, this post will assess these details, and also the importance of this sentiment being repeated in other arenas. The attempted merger with Booker, which was originally made public in January, was billed as a move which would bring benefits to customers, retailers, and ultimately deliver ‘ significant shareholder value ’. However, the deal

Today’s short post is concerned with the news yesterday that the Bank of England is preparing to put the seven largest banks in the U.K. through an additional stress test , in addition to the resilience test that is conducted annually. The new test, which will examine the bank’s susceptibility to a number of additional aspects, including persistently low rates and higher costs, will run every two years and represents the central bank’s understanding that the volatile environment that we currently inhabit needs to be reflected in the stress tests. So, this post will focus on this new ‘exploratory’ test and assess whether it goes far enough, and whether there are any shortcomings which need to be addressed. The Bank of England has created this additional test so that it may better understand the larger financial environment if the banks in its jurisdiction, as a whole, succumb to the same pressures. The tests, which are based upon 7-year projections , are intended to incorporate g

This post is concerned with the recent publication from the ‘Financial Exclusion Committee’, a committee that was set up by the House of Lords to ‘ consider financial exclusion and access to mainstream services ’. The report has created headlines that allude to the poorest in Britain being excluding from banking services, and ultimately being turned towards ‘ high-cost credit ’ and ‘ rent-to-own ’ products, However, there are a number of aspects, some of which are particularly vital for society, which emanate from this report and are worth considering. Ultimately, the report suggests a number of reforms and, although advisory in nature, strikes the right tone in terms of what is required to protect the vulnerable in society as we rocket towards a new phase. The report tackles a number of issues in terms of what is being labelled ‘financial exclusion’. The first aspects that we will look at revolve around the role of the banks within society. The first recommendation that may hav

Today’s post looks at the jostling for position currently taking place within Europe in anticipation of the U.K.’s and the E.U.’s negotiations over the U.K.’s secession deteriorating into what has been termed as a ‘hard-Brexit’ i.e. an almost total separation from the Union and the benefits that come with it. We have already discussed this jostling in Financial Regulation Matters through the lens of a battle between Paris and Frankfurt , but Dublin is emerging as a very credible alternative to those aspiring financial centres. However, there are consequences that come with being the host of such vast but socially-dangerous institutions, and Ireland’s recent history means that it is important to ask whether Ireland should be making itself as open as possible to these organisations. The debate about the jostling for position between Paris and Frankfurt is well covered in the financial press. Also, another issue that has been raised in the press is that the propagation of jobs fr

This short post looks to understand the current financial regulatory environment within China, because there is a growing debate as to whether the decentralised and fragmented framework that currently exists is capable of protecting the world’s second-largest, yet arguably fragile economy. The overriding call is to create a ‘super-regulator’ who would oversee all the major elements of the Chinese economy; this is something worth considering, but the recent calls for the People’s Bank of China (PBOC) to take the lead may not be as optimal as it seems. This post, therefore, analyses the problems facing the Chinese economy, and why it has them, and ultimately suggests that a centralised financial regulator would be the best option, but that there must be conditions attached to make it effective. Currently, within China, the PBOC has a broad remit over the macro elements of the Chinese economy, but the detailed elements of overseeing aspects such as banking, securities, and insura

This very short post aims to take a brief look at the recent news that Credit Suisse, the large banking entity that has a substantial presence in a number of key markets, have recently increased the amount that it will pay in bonuses, increasing its bonus pool by 6% which is represented by a total figure of £2.5 billion . However, for a firm carrying the negative reputation that Credit Suisse is currently carrying, this seems to be an exorbitant increase at a time when its competitors, who are similarly experiencing incredible amounts of negative publicity, have cut their bonus pools significantly – Deutsche Bank cut its 2016 bonus pool by almost 80% . This move by Credit Suisse represents either one of two things; either it shows the need to retain talent by way of increasing the remunerative package being offered, or it shows the disregard to those affected by Credit Suisse’s poor practices. Once again, the notion of ‘perception’ proves to be central here. Credit Suisse, like

Yesterday, the Guardian Newspaper in the U.K. broke the story that a gigantic money-laundering operation, dubbed the ‘ Global Laundromat ’ had included a number of leading banks, amongst which was HSBC. This short post will look at how the mentioning of money laundering is becoming almost analogous with the mentioning of HSBC and that, ultimately, the bank is in danger of facing the greatest threat that a bank can face - an irreversible loss of its reputation. HSBC has a long association with facilitating the illegal flow of money, either from illegal sources or via tax evasion. In 2010, the bank was ordered by the Federal Reserve to improve its money laundering procedures . Then, as was discussed in a previous post in Financial Regulation Matters , the bank was fined $1.9 billion in 2012 by U.S. authorities for ‘exposing the U.S. financial system to money laundering’. This was predicated upon a damning investigation led by Senator Levin of the U.S. Senate, that systematical

Today’s post provides for updates on posts from last month in Financial Regulation Matters , as recent news has suggested that there are particularly important developments looming. Firstly, the post will look at the developments being undertaken by Lloyds in response to the fraud undertaken by Lynden Scourfield, via Halifax Bank of Scotland (HBOS). Then, the post will provide updates on the new wave of warnings being aimed at executives in receipt of large pay packages. Lastly, the post will provide a passing comment on the recent, undeniably brash warnings given by the Chairman of Barclays to Theresa May. Lloyds’ Griggs Review On the 6 th February, the case of six financiers being jailed for almost fifty years was the target of a post in Financial Regulation Matters . The financiers, led by the head of the Corporate Division in HBOS Lynden Scourfield, conspired against the owners of small and medium sized enterprises (SME) – the scheme was to funnel the business into the

This post focuses upon a piece in the news cycle last week that ran with the headline ‘ Student digs in Britain giving first-class returns’ . The content of the piece concerned an increased influx of big business into the student accommodation market in the U.K., which has ultimately brought serious international players like Goldman Sachs and UBS directly into the realm of Higher Education. The focus of this post will be to detail this influx and to look at some of the possible connotations of this increase in profit-driven characters now associating themselves with an arena that is fundamentally based upon educational growth, rather than the growth of a profit margin. This week saw the massive Mipim Property conference take place in Cannes, France. The conference, which is held every year and draws developers from around the world, is also a forum at which government ministers attend to ‘promote’ their approach to developers in their given countries. This year was no differen

Today’s post offers a short roundup of the day’s business news, and focuses upon the stories of George Osborne taking up the position of Editor of the London Evening Standard Newspaper, and of the news that former Barclays Chief Bob Diamond is returning to the City of London by purchasing the venerable British Broker Panmure Gordon . In a previous post in Financial Regulation Matters , the focus was on George Osborne’s monetising of his previous position as Chancellor of the Exchequer, mostly by way of his new role with the giant investment firm BlackRock which will see Osborne pocket £650,000 a year from that role alone. It was discussed that Osborne is embarking upon a conscious and concerted campaign to turn the influence that he wielded as the architect of austerity into considerable compensation, and the next stage of that campaign was revealed today. It was announced that Russian Billionaire Evgeny Lebedev has installed Osborne as the Editor of the London Evening Standa

Today’s short post looks at the case of Wells Fargo and how it has responded to the scandal that saw it fined $185 million for fraudulently opening up to 2 million accounts , on the basis of extensive pressure from the very top of the company to hit quotas – with its now former CEO John G. Stumpf famously developing the mantra of ‘ eight is great ’ meaning that each customer should be hold at least eight Wells Fargo products. However, recent news suggests that investors in the massive bank are starting to mobilise in order to affect some sort of positive and responsible change, a development witnessed in the U.K. recently as well, as alluded to last month in Financial Regulation Matters , but this post will suggest that the chances of affecting that change are slim and that, ultimately, how Wells Fargo responds in reality will be a clear indicator into the power of the institutional investor. The scandal which hit Wells Fargo recently, despite Warren Buffett’s (a major invest