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The Financial Conduct Authority (FCA) has fined Metro Bank £10m for publishing false information to investors in its Q3 2018 results. Former chief executive Craig Donaldson and ex-chief financial officer David Arden have also been told to pay £223,100 and £134,600, respectively, for being aware of the transgression. The FCA said the financial information published by the lender in the quarterly results “was wrong and would require substantial correction,” noting that the bank released figures that it “was aware at the time" were wrong. Metro had applied the wrong risk weighting to professional buy-to-let loans and commercial mortgages, which ultimately meant the group was not holding enough capital. Metro Bank said it “has cooperated fully with the FCA investigation and accepts the outcome.” The Prudential Regulation Authority last year fined the bank £5.4m for “failing to act with due skill, care and diligence” in regard to the reporting of its capital position, governance and controls.

 

Sky News

Financial Times

The Daily Telegraph

The Times

The European Central Bank (ECB) plans to increase its scrutiny over how banks manage credit risk and diversify funding. The ECB, which supervises more than 100 big banks in Europe, intends to look at lenders exposed to the most vulnerable sectors, adding that it will also keep a close eye on residential mortgages and commercial real estate. In a statement, the ECB said: “Higher interest rates and a sluggish or possibly recessionary growth outlook may challenge the debt-servicing capacity of borrowers going forward.”

 

Reuters

The latest Future Readiness Indicator 2022 by IMD ranks 89 of the world’s largest pharma, tech, and retail companies against their competitors. Roche, Google, and Nike topped the global rankings in their respective industries. Professor Howard Yu, author of the Future Readiness Indicator report, said: “The big learning for companies this year? Diversity is king. Be it gender, race, or business diversity, single-mindedness may have brought them this far, but won’t be as forgiving through 2023.”

 

Macau Business

Office for National Statistics (ONS) data show that the UK economy shrank by 0.3% in the three months to October. The decline came despite a 0.5% increase in October. Analysis shows that the economy shrank by 0.2% in the three months to September, with economists warning that the UK is already in recession. Samuel Tombs, chief economist at Pantheon Macroeconomics, expects a “peak-to-trough fall in the quarterly measure of GDP of about 2%,” adding that the economy is unlikely to grow again until early 2024. Reflecting on the ONS data, Chancellor Jeremy Hunt said the figures “confirm that this is a very challenging economic situation,” adding that “it will get worse before it gets better."

 

BBC News

The Daily Telegraph

The Times

The European Union has reached a deal in principle to approve a minimum tax on major corporations. Hungary had previously used its veto to block the move. Budapest has agreed to drop its veto over the global minimum corporate tax of 15% set out by the Organisation for Economic Co-operation and Development, which is to be applied to large international corporations where they make money, rather than where they set up offices for tax purposes. The agreement means the profit of companies with annual turnover of more than €750m will be taxed at 15% or more. The minimum tax will become EU law if Poland withdraws an objection to the policy.

 

Financial Times

Reuters

Netflix paid just £5m in UK corporation tax last year, despite earning a record £1.38bn from British subscribers. The streaming service used a legal accounting loophole to avoid an estimated £49m in UK taxes by diverting cash to the Netherlands. The firm’s 2021 accounts reveal that it transferred £1.24bn – of which an estimated £260m was pure profit – to Dutch-registered Netflix International BV “per a distribution agreement.” This effectively reduced the company’s UK corporation tax rate on its profits from the standard 19% to under 2% – reducing its bill from around £54m to just £5.2m. Nigel Mills MP, a member of the Fair Tax All-Party Parliamentary Group, said it looked as if Netflix was “not paying a fair amount of tax in the UK,” but the company insisted it has invested more in production in the UK than anywhere outside of North America.

 

Daily Mail

The UK Statistics Authority (UKSA) has reprimanded the Government for claiming the UK had secured £800bn in “new free trade deals” since leaving the EU, saying the figure includes deals rolled over from before Brexit. The statistics watchdog has written to the Conservatives over an infographic and also warned the party that it should provide sources for such figures in the future. Asked about the UKSA’s letter, a Conservative spokesperson said: “Since Brexit the UK has signed deals with 71 countries plus the EU, accounting for over £800bn worth of trade last year.”

 

The Guardian

BNP Paribas is standardising job titles for hundreds of its investment bank employees in the UK as the French lender moves to ensure a transparent job evaluation scheme. A discrimination suit earlier this year indicated a lack of clarity on duties and pay at the investment bank. A broker at BNP Paribas in London was awarded £2m ($2.45m) in January, one of the biggest payouts in a UK equal pay suit. The employment judge ruled that BNP's pay structures were "opaque" and observed the bank had acknowledged that a lack of clarity increased the risk of discrimination. Reuters notes that investment banks typically use standardised job titles to mark career milestones, starting at analyst and culminating at managing director, but BNP has alternative designations for some employees, with the bank's most senior UK-based traders and bankers named 'heads of desk' or 'heads of team.' A BNP spokesperson told Reuters: "BNP Paribas is communicating corporate titles to employees in the London Branch that reflect their existing roles to standardise terminology across all business lines."

 

Reuters

The Financial Conduct Authority (FCA) has warned firms they risk "cannibalising each other" by focusing solely on the diversity of their most senior staff rather than creating sustainable pipelines of diverse talent. In a review into diversity and inclusion strategies within financial services companies, the regulator said it found several instances where firms focused almost exclusively on gender representation at senior levels because there were external targets and expectations for it. This, the FCA said, suggested some financial services companies were taking a "compliance approach" to diversity and inclusion rather than being genuinely committed to it. The FCA said: "Such focus, in isolation, risks creating a culture where firms attempt to 'poach' diverse senior talent rather than develop their own pipelines. This is not a sustainable approach and is unlikely to bring meaningful, long-lasting change." This, the regulator warned, meant firms risked "cannibalising each other" as they hunted diverse senior talent.

 

FT Adviser

MJ Hudson Group has suspended chief financial officer Peter Connell and warned it would not be able to complete its full-year audit by the end of December due to discrepancies in the audit of its accounts. MJ Hudson, which provides advisory and data services to the asset management industry, has appointed an external firm of accountants to review historical issues that mean the full-year audit will not be finished on time. In October, MJ Hudson said that EY had highlighted the need for audit adjustments related to a significant contract. It has now revealed that while EY had continued its work on the audit, “the board has become aware of additional issues, including in relation to the reporting of historical trading of the business in relation to financial year 2022, the full impact of which is unclear.”

 

Daily Mail

Reuters

The Times

The Daily Telegraph

Microsoft is set to acquire a 4% stake in the London Stock Exchange Group (LSEG) in a deal that will move the exchange’s financial data on to the tech giant's cloud computing platform. Reuters notes that it is the latest sign of deepening ties between financial services providers and a handful of big global cloud companies such as Microsoft, Google, Amazon and IBM, which have prompted regulators to scrutinise the ties more closely. Regulators are concerned about the financial industry's over-reliance on a small number of cloud service providers because of the potential industry-wide disruption that would result from a provider going offline. LSEG said the link with Microsoft was a partnership to reap the benefits of "consumption-based pricing," and not a traditional cloud deal.

 

Reuters

Citigroup is cutting as many as 50 jobs in the Europe, Middle East and Africa region, according to sources. Citi employs around 6,000 people across banking, capital markets and advisory activities globally. One of the sources said most of the cuts would affect people in director roles, with some managing directors also set to exit.

 

Reuters

Sam Bankman-Fried, the founder of the collapsed cryptocurrency exchange FTX, has been arrested in The Bahamas, the country's attorney general has said. He is scheduled to appear on Tuesday in a magistrates' court in the Caribbean country's capital, Nassau. Police said Mr Bankman-Fried was arrested for "financial offences" against laws in the US and The Bahamas. Last month FTX filed for bankruptcy in the US, leaving many users unable to withdraw their funds. The Wall Street Journal recently reported on how the collapse of FTX has affected the Bahamas, which has in recent years encouraged crypto companies to set up shop. FTX planned on building its new headquarters in Nassau, but the company’s failure means some Bahamians are now questioning the role of the crypto sector in their country’s economy, and how it has shaped their country’s reputation. The Bahamas prime minister, Philip Davis, has previously made a commitment to crypto.

 

BBC News

Wall Street Journal

The lawyer representing former Wirecard CEO Markus Braun has dismissed allegations of wrongdoing at the payments company as "absurd" and prejudiced. Mr Braun and two other managers are on trial in Germany on charges including market manipulation and fraud and could be sentenced to up to 15 years in prison if convicted. Mr Braun's lawyer, Alfred Dierlamm, has told the court that the former CEO never sold his Wirecard shares and had actually taken the initiative to call in outside auditors from KPMG to investigate the firm's finances.

 

Reuters

A British businessman wanted by US authorities for helping a Russian oligarch evade sanctions will face an extradition hearing next May. Graham Bonham-Carter is accused of wire fraud relating to over $1m for American properties purchased by Oleg Deripaska. He is also accused of attempting to move Deripaska's artwork from an auction house in New York to London while concealing the identity of the true owner. Bonham-Carter appeared at Westminster magistrates' court yesterday following an American extradition request. He was released on bail, with an extradition hearing to begin on May 22.

 

The Times

Ryanair is set to compensate travellers for strikes that took place over four years ago after it dropped a UK Supreme Court appeal. “Ryanair's decision to discontinue the Supreme Court appeal of the Court of Appeal judgement means that affected passengers will now be able to make a claim for compensation,” said Paul Smith, consumer director at the Civil Aviation Authority (CAA). Passengers across Europe and the UK were hit by delays and disruption during the summer of 2018 after pilots and cabin crew members walked out in a dispute over pay and conditions. The low-cost carrier refused to refund customers, saying the disruption had been caused by “extraordinary circumstances.” This led to a legal battle with the UK aviation regulator, as the CAA undertook enforcement action against Ryanair.

 

City A.M.

Daily Mirror

EasyJet chief executive Johan Lundgren was handed a pay package worth almost £3m, despite the airline posting an annual loss of £208m and its share price slipping by almost 40%. The airline has been forced to cancel thousands of flights because of staffing and other problems. Mr Lundgren has been given an annual bonus of £1.2m on top of his fixed pay of £833,000, as well as shares worth £925,000. Kenton Jarvis, the company's chief financial officer, received a total of £2.1m. His salary and other benefits are worth £860,000 and he received £1.26m in variable compensation. Moni Mannings, chairwoman of easyJet’s remuneration committee, said: “Operations have significantly improved as a result of management actions to mitigate the disruption that the whole airline ecosystem experienced through the third quarter.”

 

The Times

Daily Mail

The Guardian