The COVID-19 pandemic has created a global scene that is producing some incredible reactions. One of which is the level of state-backed intervention that is occurring in the UK and US, with the respective Conservative and Republican governments announcing record financial packages. However, as part of that intervention, we are starting to see elements of state intervention in private business that is not being received well by the market. In this post, we shall examine the Bank of England’s decision, as part of its role as the British regulatory framework’s top supervisor, to apply pressure to banks to cancel dividends. For HSBC, and its structure, this has proven to be a particular issue. It was reported recently that a number of the UK’s largest banks had received pressure from the Prudential Regulation Authority, the regulatory arm of the Bank of England, to halt their dividends ‘ after they were warned against paying out billions of pounds to shareholders during the coronavi...

It was only earlier in the month that we looked at the comments made by the new Head of the Financial Reporting Council (FRC) regarding the audit oligopoly and the potential of reforms heading its way. In today’s business press, it is being reported that Deloitte – the second-largest British accounting firm – has altered its policies so that now Non-Executive Directors have the final say regarding the level of pay and bonuses that its auditors can obtain. In this short post we will look at these plans and assess the validity of the move with regards to the potential of regulatory reform making its way to the sector. The Financial Times was clear this morning that the move was purely aimed at preventing ‘ the perception of conflicts of interest between its audit and consulting divisions and avoiding a forced split ’. The article says that the Non-Executive Panel – which includes former Barclays Chairman Sir Gerry Grimstone – ‘will review the policies and performance metrics by...

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 ...

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 April 2017 we reviewed the story of Karen Millen , who had built her fashion brand into a 130-store chain before being declared bankrupt because of an unpaid tax bill . The brand, which was bought from Millen in 2004 by an Icelandic company before being transferred to Aurora Fashions in 2011, has been long regarded as a quality outlet on the British high street. However, with the seemingly-relentless demise of the traditional British high street, it appears there are about to be two more casualties. In 2018 Karen Millen, owned by Aurora – who are ultimately owned by the Icelandic Kaupthing Bank – acquired certain parts of Coast , a competing fashion retailer who were launched in 1996 and grew to have almost 20 stand-alone stores in the UK. As Coast were in administration, Karen Millen were able to acquire certain parts of the Coast’s concession and online portfolio, saving 600 jobs in the process. However, it was confirmed this week that Karen Millen and Coast have been put i...

There is a risk in writing and publishing this post before 4pm GMT because as we await news of Britain’s new Prime Minister’s new cabinet, suggestions from the press may have guess wrongly. The strong rumour is that, as Boris Johnson begins to form his new Cabinet, which is likely to include such figures as the disgraced Priti Patel , current Home Secretary is in line to become Britain’s new Chancellor of the Exchequer. The reason for this post is based upon a theme that is currently being played out across the media, in that the past of a number of candidates are being reduced to mere footnotes in favour of a list of compliments regarding their past performances and this is being linked to ideas of what they will do in their new roles. This applies particularly to Sajid Javid who, whilst he is a son of a Pakistani bus driver and represents a ‘ rags-to-riches ’ story, also went to play a vital role in Deutsche Bank’s structured finance gluttonous uptake that both contributed to the...

The issue of the British Railway system has taken up a few posts here in Financial Regulation Matters , with the majority being concerned with developments with the HS2 project . However, in relation to yesterday’s post on the concept of ‘capture’, this post will examine a suite of potential reforms that are heading towards the British Railway. In examining the proposals put forward to Government recently, we will look at this potential issue of developing an ‘arms-length’ body or entity, and also the effect of the proposals, which has been to completely ignore the question of nationalisation. The Government have commissioned a review of the rail system, to be undertaken by former British Airways CEO Keith Williams. This week the first signs of the reform proposals have been released and there are a number of issues the Williams’ Review intends to tackle. The main issue that has been picked up by the media is that a ‘ Fat Controller type figure would be key for regaining public...

Here in Financial Regulation Matters we have covered the concept of ‘capture’ from a number of different angles, including the audit , banking , and tobacco industries through to the concept of ‘ public private partnerships ’. Additionally, we have also looked at issues relating to money laundering , and economic crime more generally. It is for those reasons that the recent news that the British Government have put in place a number of plans to tackle the systemic issue of economic crime within the country – with London being consistently rated as one of the world’s leading economic crime ‘ hotspots ’ – is worth examining. Yet, rather than this being the headline, there is a glaring issue that the media have been quick to focus upon. The Independent ’s headline neatly sums up the story: “ Government criticised for giving banks key oversight role over fraud and money laundering ”. So, in this post we shall examine these developments and analyse the theory of ‘capture’ a little mor...

The National Trust, the UK and Europe’s largest conservation-based Charity , has this month declared that it will be divesting from all of its fossil fuel investment positions. Even though the investing in these positions is an important part of the Trust’s investment strategy, it has decided that the Oil, Gas, and Coal industries’ movement into greener technologies has not been quick enough, nor extensive enough. In this post we shall look at the Trust and its investment strategy a little closer, and position this recent movement against the backdrop of an increasing shift away from fossil fuel investment. Founded in 1895 and given statutory powers by the National Trust Act 1907 , the National Trust has a number of clear mandates. According to the 1907 Act, which has been updated several times since, the Trust exists to promote ‘ the permanent preservation for the benefit of nation of lands and tenements, including buildings, of beauty or historic interest, and as regards land...

Today’s post discusses the recent, and very much expected move of the European Banking Authority from London to Paris. Very much in response to Brexit, the EBA now sits at the junction of a new phase in its development in terms of forming a central component of a new direction for European financial service provision. This post will discuss this move and also assess an interesting and thought-provoking article by Frances Coppola ( @Frances_Coppola ) in a recent issue of Forbes. In November of 2017, Paris and Dublin were tied in the race to be the new home of the European Banking Authority. After the decision of the British electorate to leave the European Union was confirmed, it was deemed essential by the EU that the EBA, and the European Medicines Agency, would both be relocated from London. Whilst the EMA were relocated to Amsterdam, it would be Paris that would emerge victorious in the race to secure the presence of the EBA , in a move that would see the EBA sit in the same ...

In this very short post we will react to the news that broke today regarding the future of the Financial Reporting Council. We have covered the FRC on a number of occasions here in Financial Regulation Matters and the posts have been highly critical of what was a feeble regulator. We had only looked previously at the regulator and the fact that it was under review, but today the final decision was made on the future of the FRC. Founded in 1990, the Financial Reporting Council was today confirmed by the Government as being no more. In its official press release, the Government stated that, after considering the Kingsman Review, the FRC would be replaced with a new regulator. That regulator will be called the Audit, Reporting and Governance Authority . The business media are reporting that the new regulator ‘ will have stronger statutory powers, including the ability to make direct changes to accounts and powers to require rapid explanations from companies and publish reports ab...

Unsurprisingly, RBS and its now-infamous ‘Global Restructuring Group’ (GRG) have been covered a number of times here in Financial Regulation Matters (most notably here , here , and here ). We have also analysed the relationship between the regulators, namely the FCA, and the bank itself on account of the massive bail-out the bank received from British taxpayers at the height of the financial crisis. We have called into question the ability, or capacity of regulators to efficiently regulate and punish the bank owing to this ‘special relationship’ and, in today’s post, we will look at the latest twist in the tale that ‘ MPs have referred to as the worst scandal since the financial crash ’. In the previous posts linked above we discussed and analysed how RBS, via its GRG group, failed thousands and thousands of SMEs ( the BBC cite 16,000 ) with a large number of those companies ending up ruined by decisions taken by the GRG unit – the business media state today that ‘ many of the...

Here in Financial Regulation Matters we have discussed the precarious future of the British high street on a number of occasions, ranging from discussing the collapse of BHS , the rise in the number of corporate failures , and the impact that the personal debt crisis is having upon the futures of high street stalwarts. We also looked recently at the case of House of Fraser, both in relation to its near-collapse and then its subsequent rescue . As we speak, another British high-street mainstay – HMV – is in crisis talks over a rescue bid from Sports Direct supremo Mike Ashley and, if Ashley does incorporate HMV into his retail empire, then his imprint on the British high street will be more than considerable. Therefore, in this post, we will ask who is Mike Ashley and question how the British high street will continue to be transformed in the wake of such rapid development. Starting with HMV – and if reports are to be believed – Mike Ashley has ‘ enter[ed] the bidding for HM...