Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.
European Edition
17th March 2023
Together with

Payment firms lack controls and pose unacceptable risk, FCA says
The Financial Conduct Authority (FCA) has warned payments companies that they will be shut down unless they address issues that pose an “unacceptable” risk to consumers. In a Dear CEO letter to 291 chief executives, Matthew Long, the FCA’s director of payments and digital assets, criticised payments companies over inadequate safeguards for client funds, failing to conduct anti-money laundering checks, and for governance failures. He said that while the City watchdog welcomes the competition and innovation it has seen in the payments sector – “and the improved choice, convenience and value this can provide for customers” - it remains concerned that some firms “present an unacceptable risk of harm to their customers and to financial system integrity.”
Expo & Conference, 4-5 April 2023 – Business Design Centre, London

UK Cyber Week – Expo & Conference brings together the cyber and IT communities, as well as business leaders, looking to incorporate and improve cyber strategies across their organisations.

Your FREE ticket opens many doors...
  • alongside talks from 100+ world-class speakers, hackers and disruptors,
  • experience vendors showcasing the latest tech
  • enjoy a multitude of networking opportunities throughout the day and early evening in a number of meet-ups
  • the excitement of immersive features
  • and the biggest Cyber House Party yet
Time is running out... Get your free ticket today!

And why go alone...? Feel free to also invite your colleagues. This is a great opportunity to engage your wider senior management, IT and cyber teams to support each other in protecting your business.

For more information visit www.UKCyberWeek.co.uk

Wall Street banks shore up First Republic
A group of Wall Street’s biggest banks has propped up troubled lender First Republic. Eleven major US lenders have agreed to deposit a combined $30bn into the bank after the US government convened talks following a collapse in First Republic’s share price. First Republic has been caught up in the fallout from the collapse of Silicon Valley Bank. Concern over deposit outflows has driven a near-70% fall in First Republic's share value. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each making a $5bn deposit into First Republic, while Goldman Sachs and Morgan Stanley are each making deposits of $2.5bn, and BNY Mellon, PNC Bank, State Street, Truist and US Bank are depositing $1bn each. Meanwhile, US Treasury Secretary Janet Yellen has assured Congress that the US banking system is “sound,” saying Americans “can feel confident that their deposits will be there when they need them.”
Swiss banks oppose idea of forced merger
UBS and Credit Suisse are opposed to a forced merger, Bloomberg has reported, citing people with knowledge of the matter. UBS prefers to focus on its own wealth-centric strategy and is reluctant to take on risks related to Credit Suisse, the report said, as the smaller rival seeks additional time to complete its restructuring efforts after receiving financial support from the Swiss central bank. Wall Street bank JPMorgan on Wednesday said that Credit Suisse's takeover by another lender, probably UBS, was the most likely scenario for the beleaguered bank.
Atom Bank chair to step down
Headhunters are seeking a successor to Bridget Rosewell as app-based lender Atom Bank holds talks with investors about raising at least £100m of additional equity funding, Sky News reports.
Damages claim against BHP increases to £36bn, law firm says
A damages claim faced by global mining giant BHP over the collapse of an iron ore tailings dam in the Minas Gerais region of Brazil that resulted in the deaths of 19 people, the flooding of 39 towns, and the polluting of hundreds of kilometres of river, has risen to an estimated £36bn ($44bn), according to the legal firm leading the UK class action. The bill would be the world's largest-ever claim in relation to an environmental disaster. A trial at the High Court in London is set to begin in April 2024. Legal firm Pogust Goodhead said over 700,000 claimants have now joined the claim. "As a result of the unprecedented increase in the number of participants in the class action making it the world's largest . . . Pogust Goodhead has now produced detailed calculations showing the potential compensation bill to be £36 billion when including interest," the legal firm said, adding that the bill "stands in stark contrast to the £2.8 billion BHP has ring-fenced to cover their liability for the disaster."
Courts siding with large companies in privacy appeals
The Wall Street Journal looks at how big companies are winning appeals to overturn regulatory decisions they claim violate European privacy laws. In recent rulings, courts in the UK, Spain, Italy and Germany sided with companies including Experian, Amazon and Italian energy giant Enel SpA, in some cases quashing multimillion-dollar fines and reaffirming companies’ arguments that their data practices comply with the General Data Protection Regulation (GDPR). Edward Machin, a lawyer in the London office of Ropes & Gray, said: "We’re starting to see the through line of companies starting to pick their battles and spend the time and effort on the appeals they think they can win and would have an effect on their business models." Flora Egea Torrón, a partner at Spanish law firm Legal Army S.L., said appeals of major GDPR decisions show a significant amount of “grey area” where privacy lawyers, regulators and courts disagree over what the law allows. “There’s so much room still to interpret GDPR, so that’s why [companies] have to fight against the decisions” from regulators, she said. 
Bankman-Fried secretly transferred $2.2bn from FTX
FTX co-founder Sam Bankman-Fried received more than $2bn from entities linked to the collapsed cryptocurrency exchange into his personal accounts, according to court filings. Mr Bankman-Fried and five members of his inner circle transferred a total of $3.2bn to their personal accounts in the form of “payments and loans.” The money primarily came from Alameda Research, a crypto trading hedge fund affiliated with FTX. Mr Bankman-Fried faces 12 federal charges and is awaiting trial after pleading not guilty to fraud.
ECB hikes interest rates to highest level since 2008
The European Central Bank (ECB) has hiked interest rates to the highest level since during the financial crisis in 2008. The 0.5 percentage point rise pushes the bank’s main rate up to 3.5%, while the rate paid on eurozone bank deposits left at the ECB increases to 3%. Christine Lagarde, the president of the ECB, said “there were three or four dissenters” on the ECB’s governing board who had argued for a pause in rate rises, but otherwise it “moved quickly” to a decision in favour of a 0.5% rise. Meanwhile, ECB officials have insisted that the “euro area banking sector is resilient, with strong capital and liquidity positions.” The comments come amid market concerns about Credit Suisse and other European lenders after share prices slumped.
Hospitality leaders warn of rail dispute impact
UKHospitality says pub and restaurant businesses are expected to lose as much as £600m due to transport stikes. Kate Nicholls, chief executive of the industry body, said: “Our pubs, bars, coffee shops, hotels and restaurants, to name a few, continue to suffer as collateral damage, with total lost sales since the start of the dispute last year now expected to reach more than £3bn.” Kris Hamer, director of insight at the British Retail Consortium, said that strikes will “slow the progress” retailers have made to encourage people back to the high street following on from the pandemic.
Sovereign wealth funds avoid imposition of corporation tax
The Chancellor has opted against making sovereign wealth funds pay corporation tax on property and commercial enterprises after Business Secretary Kemi Badenoch warned that it could deter inward investment and hit growth.
UK Infrastructure Bank on course to deliver fraction of pre-Brexit support
The Office for Budget Responsibility says Britain’s new Infrastructure Bank will miss an annual target of providing £1.5bn in loans, equity financing and guarantees, falling 37% short of an initial estimate.
US regulators to visit Hong Kong for audit inspections
Officials from the US Public Company Accounting Oversight Board (PCAOB) are set to start a fresh round of inspections of Chinese companies' auditors in Hong Kong. The audit watchdog will reportedly look at branches of EY, Deloitte, PwC and some other audit firms in both Hong Kong and mainland China. Sources say a group of Chinese officials from the China Securities Regulatory Commission and the Ministry of Finance will assist the inspection in Hong Kong. The US last year agreed a deal with China to settle a dispute over auditing compliance of US-listed Chinese firms. Authorities in China had been reluctant to let overseas regulators inspect local accounting firms, citing national security concerns. The first round of inspections saw the PCAOB select a mainland branch of KPMG and a Hong Kong branch of PwC.
More than half of advisers behind on consumer duty
A poll by Copia Capital Management shows that just 27% of firms believe they are on track with the work required to comply with the consumer duty regulations, with 65% lagging behind and 8% yet to start.
Microsoft adds OpenAI technology to Word and Excel
Microsoft says it is bringing generative artificial intelligence technologies such as the ChatGPT chat assistant to its Microsoft 365 suite of business software. The company said the new AI features, dubbed Copilot, will be available in some of its most popular business apps including Word, PowerPoint and Excel. In February, Microsoft debuted a new version of its Bing search engine that included a chatbot powered by OpenAI’s GPT-4 language technology. OpenAI publicly revealed its GPT-4 software earlier this week and pitched it as being more capable than the GPT-3 technology. “Today marks the next major step in the evolution of how we interact with computing, which will fundamentally change the way we work and unlock a new wave of productivity growth,” Microsoft CEO Satya Nadella said, adding “With our new copilot for work, we’re giving people more agency and making technology more accessible through the most universal interface — natural language.”
European MPs want a tax on ultra-rich individuals
More than 130 European lawmakers are calling for a tax on ultra-rich individuals, similar to the landmark deal for a global minimum 15% tax on multinational businesses, to fund the transition to net-zero. “What we have achieved for multinationals, we must now do for the wealthy,” French MEP Aurore Lalucq and economist Gabriel Zucman wrote in an opinion piece in the French daily Le Monde.  “Our proposal is simple: introduce a progressive tax on the wealth of the ultra-rich on an international scale in order to reduce inequalities while helping to finance investments needed for the green and social transition,” they wrote. The signatories to the proposal say that in 2018, Tesla owner Elon Musk, “then the second-richest man in the world, did not pay a single cent in federal taxes” and “in France, known for its high taxes, the 370 richest families are effectively taxed only around two to three per cent.”
Amazon fights EU tax call
Amazon has argued that the EU decision ordering the firm to pay about €250m in back taxes is without merit. In 2017, the European Commission said a Luxembourg tax arrangement allowing Amazon to channel profits to a holding company tax-free meant it paid no taxes on almost three-quarters of its profits from EU operations. It added that this, in essence, amounted to illegal state aid. The online retailer challenged the EU tax order in 2021, convincing a tribunal to scrap the back tax ruling. The commission has since appealed to Europe's highest court, the Court of Justice of the European Union.
Think-tank questions Budget’s back-to-work plans
The Institute for Fiscal Studies (IFS) think-tank says the government’s plans to encourage people back to work will have limited impact and cost £70,000 a job. Chancellor Jeremy Hunt detailed the plans in Wednesday’s Budget, saying the government will offer tax breaks on pensions and expanded free childcare in a bid to boost workforce numbers. Paul Johnson, director of the IFS, said the Office for Budget Responsibility has calculated the plan will cost around £7bn a year and increase employment by around 110,000. Noting that this equates to nearly £70,000 per job, Mr Johnson said that while the Chancellor "might have some success" with the scheme, it was likely to be modest given the large number of people who left the workforce in recent years.
Post-Brexit deal faces Commons vote
Prime Minister Rishi Sunak's post-Brexit trade deal for Northern Ireland faces its first hurdle next week, with MPs set to vote on a key part of the so-called Windsor Framework. The full statutory instrument relating to the ‘Stormont brake’ will be published on Monday, and a vote in the Commons is due to take place on Wednesday. The mechanism will give the UK a veto over any new EU laws applying to trade in Northern Ireland.

Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

Content is selected to an exacting brief from hundreds of influential media sources and summarised by experienced journalists into an easy-to-read digest email.

Risk Channel enhances the performance and decision-making capabilities of individuals and teams by delivering the most useful news and knowledge in a cost-effective way, while promoting a sponsor's brand to the risk and leadership communities.

If you would like to sponsor a Risk Channel special report, reaching thousands of influential professionals, companies, business leaders and decision makers through our US and/or UK & Europe editions, please get in touch with us via email sales team


This e-mail has been sent to [[EMAIL_TO]]

Click here to unsubscribe