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Daily News Roundup: Tuesday, 23rd May 2023

Posted: 23rd May 2023


Central bank involvement in rate rigging revealed

An investigation by the BBC’s economics correspondent Andy Verity has revealed that central banks including the UK’s Bank of England, the Banque du France, the European Central Bank, Banca d'Italia, Banco de Espana and the Federal Reserve Bank of New York pressured banks in the wake of the 2008 financial crisis to artificially adjust benchmark interest rates called Libor and Euribor, which track how much it costs banks to borrow money from each other. Nearly 40 traders and brokers were prosecuted by the US Department of Justice and the UK's Serious Fraud Office for rate rigging between 2015 and 2019, but despite the FBI and the UK financial regulator being aware of the state-led drive to "rig" rates they were never shown this evidence. Banks have been fined $8.8bn for rigging Libor and Euribor. Further suppressed evidence indicates that the UK Government, including 10 Downing Street, was also involved in pressuring banks to "manipulate" Libor, Verity says. Andrew Tyrie, who chaired the UK Treasury Committee of MPs when it enquired into Libor in 2012, told the BBC that he believed “Parliament appears to have been misled and, if that's the case, should not let it rest." Senior Conservative MP David Davis said that in the light of the evidence he'd seen there was "a case to believe that state agencies coerced individuals into perjury that led to false convictions". The Bank of England called the claims “unsubstantiated” while the Financial Conduct Authority said it had met its disclosure obligations.

Government ownership of NatWest falls below 40%

NatWest has bought 469m shares back from the Government for £1.26bn, bringing the UK’s stake in the bank down from about 41.4% to 38.6%. Dame Alison Rose, NatWest’s chief executive, said: “This transaction reduces government ownership below 40% and demonstrates positive progress on the bank’s strategic priorities and the path to privatisation. NatWest Group’s robust balance sheet and capital generation allow us to continue lending responsibly and supporting the customers and communities we serve whilst delivering sustainable returns to our shareholders, including the Government.”

First Citizens sues HSBC over poaching claims

HSBC is being sued by First Citizens, which acquired Silicon Valley Bank after its collapse. First Citizens has accused the UK lender of illegally poaching dozens of former SVB employees. The British bank bought SVB UK for £1 in March, days after the implosion of its American owner. Weeks later, First Citizens acquired most of the remaining business. It now says HSBC and former SVB bankers engineered an attempt to "plunder what they believed to be the 'core of [SVB's] profitability engine'.”


JPMorgan plans ‘unmatched’ $15.7bn spending spree on new initiatives

JPMorgan Chase is planning to spend more than $15bn this year on hiring, marketing and investment in technology - $2bn more than it spent last year. The bank also expects its acquisition of First Republic to boost its net income by $3bn – from $81bn to $84bn. However, it expects this figure to fall to the mid $70bns in the medium term, reflecting rate headwinds and “meaningful catch up in deposit repricing”.

Rothschild targets private assets market

Rothschild & Co has created a new private markets group within its wealth and asset management division as part of a trend by finance firms to offer more private assets to wealthy individuals. The Paris-listed investment bank, which is being taken private by its owners, said the new team would be led by Jessica Sellam.

Mizuho agrees $550mn deal for boutique investment bank Greenhill

Japan's Mizuho Financial Group is to acquire independent investment bank Greenhill & Co in a $550m deal, as the company tries to accelerate its expansion in the US.


US and EU subsidies leave UK struggling, Ryanair boss warns

As the EU responds to massive US subsidies for green energy projects with investment incentives of its own, the UK has been left behind, warns Ryanair chief Michael O’Leary. He claims BP and Shell are “very excited” about investing in the EU after Brussels unveiled a series of subsidies to attract investment into green industries and technologies. Mr O’Leary said: “They think it could be the game-changer for the production of SAF [sustainable aviation fuel] in Europe over the next five years.”


Red tape holding back a pensions industry keen to invest

The Telegraph details how pension funds became more risk-averse following the Mirror Group pension scandal and the new rules that followed, reducing their exposure to the stock market and early-stage companies. Newspaper tycoon Robert Maxwell was found dead in 1991 and it later transpired that he’d fraudulently appropriated £460m from the Mirror Group to prop up his debt-laden companies. Critics of the red tape and strict accounting rules that came afterwards say reform could unlock a wave of investment by a £4.6trn industry – and help turbocharge the British economy as it struggles out of crisis. Michael Eakins, CIO at FTSE 100 pensions firm Phoenix Group, says regulatory change could create an environment where new companies can be “founded in the UK, developed in the UK and listed in the UK.” L&G CEO Sir Nigel Wilson adds that Labour policies in the late 1990’s had a profound impact on risk appetite, warning: “De-equitisation is a massive concern for the UK economy.” Hendrik du Toit, chief executive of FTSE 250 asset manager Ninety One, agrees, adding that the UK has done itself a disservice by adding more regulation on top of EU rules such as a new duty to protect consumers – as well as shunning investment risk.

Labour administration would 'increase London listings', Reeves claims

The shadow chancellor Rachel Reeves has promised that a Labour government would reform rules to boost London’s flagging market for new company listings. During a visit to the US, Ms Reeves pledged rule changes to how pension funds can invest and to restore Britain’s attractiveness as an investment destination. She told the FT that Labour is prepared to force funds to invest in a new £50bn “future growth fund” – but doesn’t believe coercion will be necessary – and revealed plans to accelerate the merger of smaller UK pension funds so as to consolidate a fragmented market. Reeves said: “A lack of confidence in Britain’s economy has led to too many businesses leaving our shores.”

CFO at Wise steps down after accident

The chief financial officer at fintech company Wise has quit the company to focus on recovery after being run over by a bus while cycling more than a year ago. Matt Briers said it had been “a quite horrible accident where I went under the wheels of a bus”. The money transfer company first disclosed that Mr Briers had been in a cycling accident last February and an interim finance chief was appointed 15 months ago, though Mr Briers formally returned to the role in May last year.


Soaring crime rates drive US tech execs to UK

A report from Coutts bank warns that rising crime rates in Silicon Valley are leading tech entrepreneurs to leave San Francisco in favour of London. Homicides are up 25% so far this year while robberies are up by 15%. San Francisco was recently shocked by the murder of Cash App funder Bob Lee, prompting Twitter boss Elon Musk to describe “violent crime” in San Francisco as “horrific”. The influx of tech workers from San Francisco was one of the primary reasons for an increase in American property buyers in London. In the year to April 2023, US buyers represented 7.6% of all overseas sales, up from 3.9% in the previous 12-month period.


Sports Direct founder launches boardroom raid at Mulberry

Frasers, the retailer controlled by Mike Ashley, is seeking a seat on the board at Mulberry after reportedly growing frustrated about what it views as a lack of transparency around Mulberry’s business in Asia. Frasers owns 37% of Mulberry’s Aim-listed shares.


UK fruit exports to EU more than halved since Brexit

Exports of fruit from the UK to the EU have more than halved since Brexit, according to data released by HMRC. The decline has been attributed to the introduction of trade barriers caused by the UK's departure from the EU, including mandatory health certificates on fresh and chilled food and customs paperwork. HMRC data shows that the barriers, in place since 2021, are already biting on the UK-to-EU side of the Brexit ledger. In the year to 31 March 2021, the UK sold £248.5m worth of fruit to the EU. But sales figures slumped the following year, when they dropped to £119m and have remained at that level since with latest tax data showing sales for the year to March 2023 of £113.8m.


UK forex boss convicted over ‘Ponzi-style’ scheme

The former head of the now defunct foreign exchange trading firm Capital World Markets, Anthony Constantinou, was convicted on Monday of masterminding a £70m Ponzi-style scheme. Constantinou was found guilty of one count of fraud by false representation, two counts of fraudulent trading and four counts of transferring criminal property, City of London Police said in a statement. The 41-year-old absconded halfway through his trial and remains at large.

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