It has been reported today that ABN Amro, the Dutch bank that is half-owned by the Dutch Government, is being investigated by the country’s public prosecutor. Though it has not revealed what that investigation entails, it has warned that ‘ it could face fine for lapses in its client due diligence that may have allowed breaches of money laundering and terrorism financing laws ’. In today’s post, we will look at the potential for this investigation, and assess this against the backdrop of what seems to be an increased commitment to compliance on behalf of ABN Amro, paradoxically. In light of a recent article I developed looking at Sigma Ratings , it is worthwhile considering their mission again in light of yet another massive breach of AML regulations, potentially. Though the bank has been unable to declare what the investigation concerns, its suggestion that it may be regarding breaches in AML compliance have resulted in a 9.3% drop in the shares already. The article in the FT di...

In 2017 I introduced the Analytical Credit Rating Agency to the literature – the article is available here , and the pre-published version here . I also discussed the Russian rating arena in an article for Financial Regulation International , entitled ‘ Rating Creditworthiness in Russia: A Microcosm of Inherent Issues within the Credit Rating Industry ’. As a result of these investigations, there were a number of concerns raised regarding the perceived integrity of the ACRA and how important it was that its rating were to be deemed impartial. This month, the agency produced its first sovereign rating to Russia and this is then the perfect opportunity to review the agency. The largest concern for the agency was its perceived independence, with my article concluding that ‘the latest endeavour by an “outsider” to influence the credit rating industry will, arguably, result in failure. In the non-profit sector the issue is funding, and now in the for-profit sector the issue is rapi...

Earlier this month, the Financial Times reported that the Big Three credit rating agencies were continuing to make their move into the ESG marketplace via a number of concerted deals . This report falls directly in line with the analysis I developed in my recent book The Role of Credit Rating Agencies in Responsible Finance and in an article last year entitled Sustainable Finance Ratings as the Latest Symptom of “Rating Addiction” . As I will be producing a chapter for a book next year, with that chapter being entitled Sustainable Rating Agencies , it seems prudent to review the market and its developments. The FT begins by noting that Moody’s has been making particular waves in the marketplace, as they purchased a majority stake in Vigeo Eiris earlier this year , and followed this with the purchasing of Four Twenty Seven . In June, S&P published its first ESG evaluation – of the company NextEra Energy. The article goes on to discuss how experts believe the market for sus...

Earlier this morning, the saga surrounding the British travel firm Thomas Cook came to an end with the news that ‘ last-minute negotiations aimed at saving the 178 year old holiday firm had failed ’. With the tabloids and social media being flooded with stories of customers stranded abroad, and also with statements from the thousands of employees who have lost their jobs and, apparently, learned of this via the press, it is clear that the saga is far from over. However, a number of issues have arisen from the responses to the collapse this morning, and in this post we will analyse those responses. Thomas Cook had been struggling for quite some time. In the summer it had reported a £1.5 billion loss . Over the year, it had issued 3 separate profit warnings. As a result, it had sought to bring in new investment and reconfigure its debts. The new deal involved the Chinese Group Fosun – a conglomerate that also owns British Football Club Wolverhampton Wanderers – and would see the ...

In May 2017, we looked at the issue of big business moving into the British student accommodation sector in a concerted way. On the same subject, the Financial Times is reporting this week that the market has increased in scale, so much so that the issue facing the sector now may be saturation . This development comes at a time when the British Higher Education (HE) system, at least, is being potentially impacted by a number of factors. In today’s post we will assess the FT report and aim to contextualise this supposed saturation of the market against the current issues in the HE sector. The FT chooses to focus on Plymouth, in the south of the UK, in order to set its analysis. The article is full of anecdotal accounts of the differing landscape in the city, and also the experiences of those who live there. However, there are a number of important statistics that are contained within the article. For example, investment in the sector has actually been reducing according to Savi...

Earlier this week it was announced that Moody’s had downgraded Ford’s credit rating to Ba1, the highest rating level within Moody’s’ so-called ‘junk’ category, or in other terms its classification of non-investment grade. There are a number of factors to consider, however, in analysing the situation above and beyond the obviously negative headlines that have accompanied this rating action. Moody’s have been the first of the Big Three credit rating agencies to downgrade Ford into this non-investment grade classification, with S&P and Fitch maintaining Ford’s credit rating at two rungs above non-investment grade. In the title to this post, the question is asked of whether there are testing times for the automotive industry currently and, in providing their reasoning for the downgrading of Ford’s credit rating, Moody’s appear to believe that this is not the case: ‘ The erosion in Ford’s performance has occurred during a period in which global automotive conditions have been fai...

There have been a number of posts here in Financial Regulation Matters concerning the British High Street and the demise of some of its institutions. Whilst Marks and Spencer – a company which traces its roots back to 1884 – is certainly not on the brink of disappearing, it has been reported today that Marks and Spencer (M&S), for the first time since the FTSE 100 was launched in 1984, will be demoted on account of its failing fortunes. In today’s post we will get to know the retailer in more detail in the hope of, potentially, coming to an understanding of what has gone wrong for this High Street stalwart. In 1884, the Belarussian Michael Marks opened a penny bazaar in Leeds. After some initial success, he entered into business with Tom Spencer in 1894, who invested £300 in the fledgling business which combined Spencer’s accounting accuracy with Marks’ flair for buying and selling. The concept of selling everything for a penny took off, so much so that by 1900 M&S ...

In a previous post, we examined the recent change in environment for credit rating provision in China . It was concluded that this changing of the environment – essentially opening the doors to Western credit rating agencies, fully, for the first time – was based upon forthcoming requirements connected to the ‘Belt and Road Initiative’ being developed by China. We have looked at the Initiative before in a number of posts , but in today’s post we will be assessing some of the latest developments as the Initiative, seemingly, moves into a new phase. It seems that these developments are borne out of necessity, so assessing what these factors mean to the future of the largest development program the world will have seen will be important. Going back to April this year, the tone used by President Xi Jinping was very different to the tone he had used in 2017 to champion the development and growth opportunities that the Initiative would bring. This time the focus was on ensuring that t...