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The CEO of the Financial Conduct Authority (FCA) has been summoned to appear in front of a House of Lords committee as a row over the regulator’s plans to “name and shame” financial services firms under investigation spirals. Nikhil Rathi has defended the plans, arguing that being more transparent about probes will serve as a deterrent. The City roundly condemned the move and the Chancellor also stepped in and urged the FCA to rethink its plans. Now, the Lords' Financial Services Regulation Committee has launched its own inquiry after Rathi failed to respond to a request to pause the implementation of the plans until after peers had properly scrutinised the proposal. Lord Forsyth of Drumlean, chair of the committee, said: “This isn't acceptable.” Meanwhile, a senior lawyer has made a rare call for the government to intervene and overrule the regulator. “This is but the tip of the iceberg,” said Harvey Knight, UK head of the financial services regulatory group at Withers. The FCA is “exceeding its statutory objectives in pursuit of what it considers to be its best interests without any balancing considerations,” he added. Finally, the Labour party said the FCA should listen to the City and ensure “an appropriate balance between enhancing the integrity of the sector while protecting the international competitiveness of the UK.”

 

Bloomberg

City AM

Daily Mail

The OECD has forecast that the UK economy will experience slow growth in the next two years. The current projection for 2024 is a 0.4% expansion, which is the second worst among G7 countries. The forecast aligns with projections from the International Monetary Fund and the Bank of England. The OECD said the UK's constrained public finances will be a significant obstacle to the economy after 2024. The government's commitment to reducing the debt burden will result in fiscal consolidation, leading to a 1.3% hit to the economy between 2023 and 2025. The OECD called for measures to boost investment levels and increase the size of the workforce.

 

The Times

Emmanuel Macron has warned European nationalists against following Britain out of the European Union, saying that Brexit has impoverished the UK and failed to solve the country's immigration problems. Nationalist parties are surging across Europe ahead of polls next month. Elsewhere, Polish prime minister Donald Tusk, the president of the European Council during the Brexit negotiations, has said that Poles will be richer than Britons in five years’ time because of Brexit. “A fierce debate is taking place in Great Britain, caused by the World Bank’s forecast that GDP per capita will be higher in Poland than in the UK in 2025,” said Mr Tusk on the 20th anniversary of Poland’s membership of the EU. “And I promise this: on the 25th anniversary, Poles will be richer than the British. It’s better to be in the EU.”

 

The Daily Telegraph

The Daily Telegraph

Daily Mail

Foreign direct investment (FDI) into Europe fell 4% in 2023, with Germany experiencing a sharp 12% drop in projects. Companies cited concerns over Germany's economic slowdown and energy security as reasons for the decline. This marks the first annual fall in European FDI projects since the COVID-19 pandemic, and overall foreign investment in the region is now 14% lower than its peak in 2017. The survey by EY also revealed that volatile energy prices, domestic politics, and new European regulations were among the concerns of companies surveyed. Julie Teigland, EY EMEIA Area Managing Partner, highlighted the challenges faced by smaller companies due to the rapid pace of regulation. France topped the foreign investment list, while Britain overtook Germany for second place. The war between Russia and Ukraine had a significant impact on FDI in bordering countries. Romania, Finland, Latvia, and Lithuania all saw substantial declines in FDI.

 

Reuters

Private bank Coutts plans to withdraw an estimated £2bn of funds from the London stock market and invest it in international stocks. According to Coutts' chief investment officer Fahad Kamal, the current allocation of UK stocks in a standard balanced portfolio is an anachronism and should be recalibrated to be more commensurate with the proportion of UK stocks in global stock markets. The bank will be adjusting its compass accordingly and shifting the cash from six Coutts UK equity and bond funds to more world-focused schemes. Coutts is owned by state-backed NatWest and the move could be seen as an embarrassment to the Treasury, which has been attempting to revive London’s capital markets.

 

Financial Times

The Times

Daily Mail

London's stock market is set for a rare boost as Special Opportunities REIT prepares to launch a £500m listing in June. The anticipated float comes as the Square Mile battles a string of high-profile departures. The property trust aims to raise funds to acquire real estate assets that have fallen in price, such as logistics facilities and data centres. The trust is reviewing property deals worth almost £2bn, including advanced talks to buy a £275m portfolio of student accommodation and budget hotels.

 

The Daily Telegraph

The Financial Conduct Authority’s chief executive, Nikhil Rathi, has said there is not enough evidence to show private equity groups pose a systemic risk, contradicting warnings from the Bank of England. Threadneedle Street has in recent months warned of the potential for over-leverage in the private equity industry and said that banks have become over-exposed to the sector. “There are risks in private markets, there is work to be done, but I don't think we should go into overkill regulatory mode where we put leverage limits on all of this activity, if actually, we haven't got the evidence for it,” Rathi said.

 

Financial Times

City AM

Three major building societies, Leeds, Newcastle, and Nottingham, have agreed to reimburse over 2,000 customers who lost their savings after being introduced to now-failed trusts while on their branch premises. The customers were encouraged to put their money in trusts to save on inheritance tax and care home fees. However, the trusts failed, and the customers' money was invested in businesses that later defaulted. Leeds Building Society will cover a quarter of the £44m loss.

 

The Daily Telegraph

Two of the biggest players in the Lloyd's of London insurance market, Hiscox and Lancashire, have announced that they will face losses following the Francis Scott Key Bridge disaster in Baltimore. Hiscox expects a "moderate" net loss, while Lancashire has "some exposure" to the incident. The insurance industry is still assessing the cost of the bridge collapse, which has disrupted supply chains and caused chaos at one of the largest ports in the US. Analysts estimate that the final losses could reach $3bn, surpassing the losses from the Costa Concordia shipwreck.

 

The Times

Stellantis is recruiting a majority of its engineering workforce in lower-cost countries such as Morocco, India, and Brazil to contend with cheaper Chinese electric vehicles and slower demand. The carmaker is cutting costs to make more affordable vehicles and is seeking savings by hiring engineers in countries where the cost per employee is significantly lower than in hubs like Paris and Detroit, and it aims to have roughly two-thirds of its engineers in lower-cost countries in the long term. Western carmakers, including premium automakers like BMW, are also adding white-collar jobs in countries like India to tap local talent. The strategy is expected to add expertise in areas such as software, artificial intelligence, and battery-cell chemistries. However, the push to hire engineers in lower-cost countries has caused some development problems, requiring engineers from France and Italy to fix local issues.

 

Bloomberg

The Co-operative Bank has announced that its multi-year transformation plan is "materially complete" as it progresses with a £780m takeover by Coventry Building Society. The bank has spent the last three years simplifying and transforming its business, including investing £100m in a new IT system. CEO Nick Slape said that the bank has made significant progress in its IT programme, with only 7% of its total customers left to migrate. The bank also recently embarked on a consultation and restructuring process, which is expected to result in a net reduction of around 400 roles.

 

City AM

Daily Express

London Evening Standard

HSBC is facing pressure from shareholders over green finance ahead of its AGM. ShareAction plans to read out a statement at the meeting on behalf of a coalition of shareholders, asking HSBC to clarify how they intend to use the $1tn they have pledged to spend on green finance by 2030. Shareholders are concerned about the lack of transparency and the bank's commitment to addressing climate finance gaps. The investor group will also urge the board to set a funding target for renewable energy. The meeting comes after CEO Noel Quinn's surprise retirement announcement.

 

The Independent UK

Small businesses are still hesitant to borrow money from banks for expansion due to the lasting impact of the 2008 financial crisis. Tessa Clarke, a member of Rishi Sunak's SME Council and co-founder of Olio, a food-sharing app, highlighted the "scar tissue" left by banks calling in loans during the crisis. Clarke stressed that not seeking bank lending is a missed opportunity for some businesses, as venture capital may not be suitable for all. The Federation of Small Businesses has reported a decline in banks accepting loan applications from small businesses, and concerns over the use of personal guarantees. Net bank lending has also decreased, according to the British Business Bank.

 

The Times

UBS is considering cost-cutting plans for its asset management division as the bank looks to reduce expenses and improve profitability. The bank aims to cut at least $300m in costs, including reducing back-office staff. UBS is also exploring the possibility of integrating parts of the unit into its larger wealth management activities.

 

Reuters

The European Union (EU) and the International Sustainability Standards Board (ISSB) have agreed on joint guidance to minimise overlaps in company climate disclosures. The aim is to reduce the reporting burden for EU companies and ensure interoperability with other reporting frameworks. The ISSB has finalised standards for climate-related corporate disclosures, while the EU has its own European Sustainability Reporting Standards (ESRS) that cover social and governance issues as well. The two sets of standards are aligned, and companies can comply with both by following the interoperability guidance.

 

London South East

Paul Munday, Director and Global Climate Adaptation and Resilience Specialist at S&P Global Ratings, says physical climate risks are worsening globally - and companies' progress on adaptation varies. Munday argues that if mitigation efforts are not increased, the number of climate-related disasters could be 40% higher by 2030. The impact on economic growth could be significant, with up to 4.4% of the world's GDP at risk annually. However, only one in five companies has an adaptation plan in place. Sectors like healthcare, communication services, information technology, and consumer discretionary are falling behind in terms of preparedness. On the other hand, utilities and energy sectors are leading in adaptation planning. Regional disparities are also evident, with European companies showing more awareness of financial impacts from climate risks. In contrast, emerging markets have a lack of knowledge about the potential impact of climate risks on their operations.

 

ESG Today

Trade unions have warned Labour not to dilute its package of workers' rights. Unite general secretary Sharon Graham said that crossing a red line would occur if the party does not fully commit to delivering its 'New Deal for Working People.' The plan, proposed by Angela Rayner in 2021, includes radical changes such as banning zero-hour contracts, ensuring regular hours for 12 weeks or more, and making flexible working a right from day one. Shadow ministers are discussing how to address concerns and are expected to seek union approval for the revised plan.

 

Daily Mail

Joshua Dean, a 45-year-old former quality auditor for supplier Spirit AeroSystems, has died suddenly after suffering from a fast spreading infection. Spirit AeroSystems builds the bulk of the 737 Max for Boeing. Dean claimed to have found a serious manufacturing issue with the Max in October 2022, but said nothing was done by management after he flagged the issues. He is the second Boeing whistleblower to be found dead this year. John Barnett was found in a car park after an alleged suicide in March. He had been giving evidence in a lawsuit against the US planemaker at the time of his death. Attorneys for Mr Dean said aviation companies should encourage and incentivise workers who raise concerns over quality and safety issues.

 

CBS News

The Times

City AM

The Independent