BRITAIN

More documents

Recommendations

Info

02 NEWS TUESDAY 28 JUNE 2016 CITYAM.COM THE CITY VIEW Do not ignore activists during difficult times AS PROFITS warnings fly and share prices tank in the postreferendum world, business leaders will need to work out how to steer their companies through some choppy waters ahead. Boards will have to step up their game in terms of governance and strategy. And help may be at hand from what at first sight seems like an unlikely source: activist investors. To a board, such investors may seem like a thorn in their side. On occasions, one can see why – a common activist ploy is to vote against an M&A deal, equivalent in the corporate world to a gun to the head. In addition, high-profile activist US hedge funds run by the likes of Carl Icahn and Bill Ackman make them come across as noisy troublemakers, and some board members regard them as a distraction from getting on with the jobs they’ve been appointed to do. But as recent events at Rolls- Royce and Alliance Trust show, shareholder activists can be the catalyst for muchneeded change at underperforming companies. At Rolls-Royce, shareholder Often boards are unwilling to take what is essentially free advice ValueAct pushed for a seat on the board in exchange for not calling for a break up of the aerospace giant, which has suffered a string of profit warnings. It adopted a behind-the-scenes approach in its stalking of the boardroom, with success. Following the credit crunch, there was an increase in company engagement with activist investors because there was less money around. This is now likely to happen again as the UK heads for a period of economic uncertainty during what will presumably be the run up to Brexit. Often boards are reluctant to take what is effectively free advice from activists, but what is at stake is a company’s value. Many boards have been too sleepy and insular for too long, lunching amongst themselves. The wake up call for nonexecutives is when remuneration is set to be hit – i.e. when it is too late. So if an activist rings, board members should consider picking up the phone. It may help build trust, and even boost performance during an especially tough period. How securing passporting can help stem a flight from the Square Mile One of the biggest sources of panic post-Brexit is passporting, something previously little-heard of by those outside the financial services industry. New London mayor Sadiq Khan told City A.M. over the weekend that a loss of the provisions would be “a disaster”, while Londonheadquartered HSBC warned all the way back in February that it would consider moving as many as 1,000 staff to Paris if favourable passporting rights could not be secured in the event the UK left the EU. WHAT IS PASSPORTING? In a nutshell, passporting currently allows financial services firms which are authorised in the UK to operate throughout the European Economic Area. A LOT OF BANKING REGULATION IN THE UK STEMS FROM THE EUROPEAN UNION – IS THIS THE END OF FINANCIAL SERVICES RED TAPE AS WE KNOW IT? It’s unlikely that the rules the finance sector abides by will be torn down any time soon, if at all. Firms are only granted passporting rights because they comply by single market rules, so a total scrapping is unlikely to get the best results for the sector in the UK’s negotiations to leave the EU. A statement from the Financial Conduct Authority released on Friday pointed out that all the regulation would remain in place for the time being, regardless of where it originated from. The British Bankers’ Association in its statement pointed out that the rules relating to passporting in particular “could take some time to resolve and any changes to banking would take place over a long period of time”. Barney Reynolds, partner and head of financial institutions advisory and financial regulation at Shearman & Sterling, feels it’s unlikely that financial services laws will be “washed away”, although there may be some “minor adjustments where the UK hasn’t agreed with things that have been done at a European level”, such as the bankers’ bonus cap. HOW IMPORTANT IS PASSPORTING? The rights are important enough to have many big firms already considering their options should the UK fail to secure them. Vishal Vedi, banking partner at Deloitte, told City A.M. that the rights were “of fundamental importance” adding that the passporting possibility the UK currently offers acts as a key factor for many overseas banks to establish branches in the country. However, others, while not denying that the rights are important, do not see the potential loss of passporting rights as the death knell for the City. Reynolds remarked that the rights were “not as important as most of the media coverage so far has suggested”, pointing out that a lot of activity in London’s banking arena was not cross-border at all. In addition, Arun Srivastava, Baker & McKenzie’s London head of financial services, has previously told City A.M. that “[maintaining a passporting regime] is extremely important but it’s not exactly the end of the world”. IS BANKING THE ONLY INDUSTRY AFFECTED? No, other industries are affected by passporting rules too. Clifford Chance has pointed out that those working in insurance and asset management will also face growing concerns about what access to the single market they will be able to obtain in the negotiations. WHAT HAPPENS IF GREAT <strong>BRITAIN</strong> CAN’T GET A GREAT DEAL ON PASSPORTING REGULATIONS? Although many agree that it’s far too early to even guess what the final deal will look like, if the worst did happen and the UK financial services industry lost access to the single market, banks would have to head to the drawing board. Vedi explained: “The banks that are based here will then need to think very carefully around how they structure themselves to continue to do business with the EU and in many cases that will then mean having to establish, or think about establishing separate subsidiaries or branches in the EU.” Simon Gleeson, regulatory partner at Clifford Chance, warned: “There is no prospect of UK banks maintaining a passport unless the UK agrees to, among other things, freedom of movement and full adoption of all present and forthcoming EU laws – this is exactly the discussion which has been being playing out in Switzerland. Thus things will have to change but it is too early to say how, or how significant the impact will be.” However, Thomas Donegan, partner at Shearman & Sterling, told City A.M.: “What we’re seeing at the moment is a lot of contingency planning. It makes sense as a bank to look at where you’d stand in the worst case scenario and then work out what you’d do to plan around that, but it’s not the time to start shifting half of your business to France.” HAYLEY KIRTON Follow us on Twitter @cityam FINANCIAL TIMES THE TIMES THE DAILY TELEGRAPH THE WALL STREET JOURNAL GOOGLE TO BE HIT BY NEW COMPLAINT FROM BRUSSELS Brussels is to step up the antitrust pressure against Google next month with a fresh official complaint and a sharpening of its first case against the company from last year. Margrethe Vestager, the EU’s competition commissioner, is planning to issue two separate “statements of objections” against the company for allegedly abusing its market power in online advertising and shopping, said people familiar with the case. WHAT THE OTHER PAPERS SAY THIS MORNING OAKTREE EXEC ARRESTED ON UAE THEFT CHARGES A London-based executive of Oaktree Capital, one of the biggest distresseddebt firms in the world, has been arrested in the UK at the request of authorities in the UAE after being accused of stealing $264m and now risks extradition. MORRISONS TREATS SUPPLIERS THE WORST Supermarket giant Morrisons has the worst record among major grocers for mistreating suppliers, according to a report by Christine Tacon who heads the industry watchdog Groceries Code Adjudicator (GCA). A fifth of respondents to a survey of more than 1,000 suppliers and trade associations said that Morrisons “rarely” or “never” complied with industry rules governing supply chain relations. Morrisons, Iceland and Asda were thought to be most likely to be in breach of the legally binding code of practice, while Aldi, Sainsbury’s and Lidl were most likely to comply “consistently well” with the rules. Tacon has launched a formal consultation. MICROSOFT CUSTOMER GETS $10,000 PAY-OUT Microsoft has paid a customer thousands of dollars in compensation after its new software Windows 10 automatically tried and failed to download on to a computer. The company paid Teri Goldstein $10,000 (£7,600) after the failed update left her computer unusable for days on end. GEORGE SOROS: I DID NOT BET AGAINST THE POUND George Soros, the billionaire who bet against the pound on Black Wednesday in 1992, did not repeat the trick during the Brexit turmoil that has so far wiped 11 per cent off the value of sterling against the dollar. PRIVATE EQUITY FIRM TAKES STAKE IN SKULLCANDY Skullcandy said yesterday a privateequity firm had taken a nearly 10 per cent stake in the company and made an unsolicited buy-out offer, potentially disrupting the headphones maker’s deal to be acquired by consumertechnology provider Incipio. GE STRIKES DEALS TO SELL RESTAURANT ASSETS General Electric has struck three different deals to sell the bulk of its US restaurant finance assets, the latest deal in its broader strategic move to focus on its industrial businesses. The sale would represent an ending net investment of about $1.4bn on 31 March, GE said.
CITYAM.COM FOR MORE ON THE BREXIT FALL-OUT GO TO CITYAM.COM Corbyn fights on as party revolt hits second day MARK SANDS @mksands LABOUR leader Jeremy Corbyn vowed to fight to retain control of his party last night after almost all his front bench withdrew their support for him. Of the party’s 31 shadow cabinet members, 20 have now departed since early Sunday morning, when shadow foreign secretary Hilary Benn was sacked. Labour deputy leader Tom Watson reportedly told Corbyn that he held “no authority” among MPs. Angela Eagle, who resigned as shadow business secretary, was almost in tears when on BBC Radio 4’s World at One yesterday. She earlier wrote: “Too many of our supporters were taken in by right-wing arguments and I believe this happened, in part, because under your leadership the case to remain in the EU was made with half-hearted ambivalence rather than full-throated clarity.” Despite a stormy meeting with MPs, Corbyn vowed to fight on. Speaking to left-wing supporters outside parliament, he said:“Don’t let the media divide us, don’t let those people who wish us ill divide us. Stay together, strong and united, for the kind of world we want to live in.” Shadow chancellor John McDonnell accused a “handful of MPs” of trying to “subvert” the party. Jeremy Corbyn meets supporters of the Momentum left-wing lobby group TUESDAY 28 JUNE 2016 BREXIT NEWS 03 Osborne puts emergency budget on hold EMMA HASLETT @emmahaslett GEORGE Osborne sought to calm markets yesterday, saying there will be no emergency Budget at least until a new Prime Minister is in place. In his first public appearance since the EU referendum result, Osborne said Britain will “confront what the future holds for us from a position of strength”. “Growth has been robust, employment is at a record high… and the Budget deficit has been brought down. “That is not the outcome I wanted… [but] now the people have spoken, we in this democracy must accept the result… I will do everything I can to make it work for Britain.” He added: “It is inevitable that Britain’s economy will have to adjust.” WELCOME TO OUR WORLD Government launches civil service Brexit unit to develop leaving plans MARK SANDS @mksands THE GOVERNMENT has set up a “Brexit unit” to develop plans for the UK’s departure from the EU ahead of the selection of a new Prime Minister. The team will be made up of civil servants from across Whitehall and will present options to the Cabinet about how the government can respond to last week’s historic vote. Chancellor of the Duchy of Lancaster Oliver Letwin will play a “facilitative role” for the project, which will see civil servants liaise with devolved authorities, including the London Assembly. Downing Street is yet to set out the numbers of staff involved, but David Cameron said the team would include the civil service’s “best and brightest”. It will consist of officials from the Treasury, Foreign Office and other departments. The unit will take no decisions on the UK’s negotiating stance, instead reporting to the core cabinet, which includes Brexit campaigner and justice secretary Michael Gove. However, this also means that Boris Johnson, the favourite to succeed Cameron, is currently excluded from exit plan research. Sajid Javid to meet business groups to discuss EU concerns MARK SANDS @mksands SAJID Javid will today meet business leaders to discuss the challenges of the UK’s Brexit vote. The business secretary – thought to be courting support for a joint Tory leadership bid with work and pensions secretary Stephen Crabb – will meet groups, including the Confederation of British Industry and the Institute of Directors. He will argue Brexit will generate risks, but add there will also be opportunities, and he will ask them to share their concerns. Ahead of the event, Javid said: “My objective now is to ensure that the negotiation of our future relationship with the EU is carried out in the interest of UK companies, investors, potential investors and workers.” An IoD spokesperson said: “George Osborne has been trying to calm the markets, but it’s thin on the detail. “We want to know about business support like lending. We know they have been planning, so we want to see how far they have got.”
Page 1: IT’S HAPPENED AGAIN ENGLAND’S F
Page 5 and 6: CITYAM.COM FOR MORE ON THE BREXIT F
Page 7 and 8: CITYAM.COM FOR MORE ON THE BREXIT F
Page 9 and 10: CITYAM.COM TUESDAY 28 JUNE 2016 NEW
Page 11 and 12: Volatility ahead? Take advantage wi
Page 19 and 20: DON’T MISS OUR LUXURY PROPERTY AN
Page 21 and 22: CITYAM.COM TUESDAY 28 JUNE 2016 FEA
Page 23 and 24: CITYAM.COM TUESDAY 28 JUNE 2016 OPI
Page 25 and 26: CITYAM.COM TUESDAY 28 JUNE 2016 FEA
Page 27 and 28: CITYAM.COM TUESDAY 28 JUNE 2016 LIF
Page 29 and 30: CITYAM.COM TUESDAY 28 JUNE 2016 SPO
Page 31 and 32: CITYAM.COM TUESDAY 28 JUNE 2016 SPO

BRITAIN

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?