Archive for February, 2012

Friday Fiver

posted by Edward Jones

1. Peston & Hester on the One show: On the eve of RBS’ eagerly anticipated results this week, Stephen Hester, the undersiege Chief Executive, took to the airwaves to defend RBS. The interview on the One Show was as expected, up until the point Robert Peston, commenting that bankers usually hate the limelight, asked ‘Are you enjoying yourself?

Hester’s response was telling:

‘The limelight I hate. I don’t know if I’d have done it if I had my time again, but I’m here and what I care a lot about is can RBS succeed? I think it can, I want to be part of the team that made it succeed, and I’m gritting my teeth about the rest and pushing on with that.’

I was impressed with two things: first, his honesty, and secondly his determination. Both came through during the interview and set the tone for how the results were received the following day.  

2. Another week, another Greek bailout: A second bailout in as many years, amid constant rangling begs the simple question will it last? I’m not convinced.   

3. A less marked U-turn, but a U-turn nonetheless: Cameron ‘attacked’ anti-business rhetoric this week decrying those who criticise big business as ‘dangerous’. Quite. I’m pleased to say it wasn’t just us that noticed the irony of this statement. 

4. Only girls allowed: An advert with face recognition technology is highlighting discrimination against women for children’s charity, Plan UK. The ad on Oxford Street ignores men and will only play to women aiming to send a message about equality. Perhaps the Government could place one in the boardrooms of Britian’s biggest companies in its drive to improve equality.

5. The Sun on Sunday: Finally, we’re eagerly anticipating our little trip to the newsagents this Sunday morning to get our hands on the first edition of the Sun on Sunday, to complement our last edition of the News of the World. Don’t forget yours.

Forget about Greece, it’s all about the oil

posted by rossgillam

Following the second €130bn bailout for Greece, you could be forgiven for thinking that the Eurozone crisis might finally be abating. However, the increasing tensions between Iran, Israel and the West pose a significant threat to economic recovery.

As Gideon Rachman wrote this week, the threat of conflict with Iran is increasingly real. Israel’s Defence Minister, Ehud Barak, has stepped up the rhetoric against Iran, recently calling for tighter nuclear sanctions, to the extent a pre-emptive missile attack by Israel no longer looks out of the question. Similarly, whilst the Foreign Secretary, William Hague, explicitly said the Government are not advocating military action against Iran, Mr Hague would not support a backbench motion calling for the unilateral ruling out of it.

Added to this is the escalation of conflict in Syria. Despite the veto by Russia of a recent UN resolution that sought to put an end to Bashar al-Assad’s authoritarian regime, increased media attention of al-Assad’s crackdown, heightened by Marie Colvin’s untimely death this week, means some form of military intervention from external sources also looks more likely than previously believed. Such intervention is likely to provoke a response from Iran, a fierce ally of al-Assad, which could draw in other regional players, such as Saudi Arabia and Israel. Whilst such a scenario currently seems a long way off, as events across the Middle East have shown us in the last 14 months, anything is possible.

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Friday Fiver

posted by Edward Jones

As you may have noticed this week’s fiver is a little, well, smaller. Importantly however, it’s still perfectly formed! It’s a new format designed to fit in around what we know are normally busy Friday afternoons. We hope you approve and do let us know what you think. 

1. Merlin fails to wave magic wand – Project Merlin’s official data this week confirmed what most people already knew, principally that the banks have missed their SME lending target of £76bn.

2. A case of impeccable timing – Good news then that later this week companies with a turnover of up to £41m will now be able to apply for the Enterprise Finance Guarantee Scheme and four new lenders have been accredited for the EFG scheme including Metro bank.

3. Inflation signals reprieve for consumers – Though expected, the news of a decrease in the rate of inflation is welcome news to household budgets and savers, as Lucy Tobin pointed out this week.

4. Taking AIM – Newspapers continue to fret about the fluctuating FTSE and its effect on our pension funds, the inactivity on the sister AIM stock market used by smaller companies is even more worrying. Allenby Capital reckon fundraising on AIM was very quiet in January with even less money raised than at the back end of 2011.

5. Not all bad though – 10 of the 17 companies that left AIM during January left because they were bought by other companies, which just goes to show that a well performing share price remains a magnet for buyers. Meanwhile the City continues to eye up the Glencore Xstrata merger, not least the eye watering fees, with glee.

Euro 2012: Fifa vs. Moody’s

posted by nwoods

It’s 2012, another year in which I can gorge upon a feast of world class sport. The Olympics, the Paralympics, the European Championships and god forbid another failed attempt by Andy Murray to win Wimbledon. The UK may be nearing a ratings agency downgrade but it’s not all bad and a glorious summer awaits.

I wonder what it’s like working in the City when a major sporting event is on. With targets to hit, demanding clients, every pound and every move under scrutiny, I bet they never get chance to scream “REF!!!!” across the trading floor.

Euro 2012 kicks off in 2012 but with ECB research showing inattentive trading during national football matches what impact for the Eurozone? (Image:Euro2012media.com)

Interesting then, that according to the latest bit of research from the European Central Bank, that’s exactly what happens. Its White Paper “The pitch rather than the pit – Investor inattention during FIFA world cup matches” looks at trading data during 2010 World Cup matches and draws some interesting conclusions. My favourite excerpts from the three key findings include:

First, we find strong evidence of decreased activity in stock markets during soccer matches at the 2010 World Cup. Trading activity dropped markedly, especially if the national team was one of the competitors. Compared to normal market circumstances, the median number of trades dropped by 45% if the national team was playing, while the volume dropped by around 55%.”

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Rating Rhetoric

This post is by Marie Cairney, an Associate Director in our Financial and Professional Services team:

Only a few years ago rating agencies were being lambasted by investors, financial institutions and governments alike for their role in the unholy financial mess of 2007-2009. Prior to the crisis, trust in the Big Three agencies ratings on corporates, financial institutions and mortgage-related securities was high. This created a world where investment decisions were more or less made based on a couple of letters of the alphabet. Credit crunch finger-pointing blamed institutionalised ‘bad calls’ on the part of rating agencies as a major factor precipitating the crash. Blaming someone else for allowing you to do something that you knew was inherently stupid never looks good but a lack of transparency and competition in the ratings industry made the agencies a valuable commodity in the scapegoat market and let’s face it, they did get it wrong even if it was along with everybody else.

Ratings agencies assigned 'AAA' designations to exotic securities pre-2007, which led to a bubble of investor confidence in these products (Image: CNBC)

Fast forward five years and rating agencies are still here and still apparently creating mayhem; this time in the sovereign debt markets. Perhaps determined not to get it wrong again, they are all over Eurozone and US deficits and debt. Instead of building faux-investor confidence though, they are, according to beleaguered country governments, wrecking it. Damned if you do, damned if you don’t one might think.  “It wasn’t me, it was them” seems to have been replaced by “It’s not fair” as the key criticism of rating agencies in the global financial playground, with successive Prime Ministers, Presidents, and Chancellors publicly livid with their new grades.

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FPS’ Friday Fiver

Another week, another Friday and that means another edition of our team’s Friday Fiver. This week, we have money-printing banks, Twitter-banning broadcasters, Newsnight-debriefing and Good week/Bad week. Thanks to our contributors DC, EJ, Hendog, and Josh-ua. Enjoy!

RUNNING OUT OF PAPER… It’s becoming increasingly hard for the Bank of England to convince people of the value of QE. As Fraser Nelson argued in the Telegraph, the Bank has gone a little quiet on their original reasons for launching QE which isn’t helping – nor is the fact that the links between QE and growth aren’t being articulated clearly, if it all. Yet at the same time, IHS’ Howard Archer is already predicting QE4 for May.

There's more of this in the games room

Source: Creative Commons/mtsofan

What the bank faces then is a PR challenge (as well as the frankly odd problem that they may run out of govt bonds to buy). If they believe QE4 is needed, then they’ve got 3 months to convince a sceptical media and public why it’s needed – expect Mervyn King’s quarterly inflation report next week to begin that process.

In the meantime, hats off to Stephanie Flanders last night for managing to explain what QE actually is and does – that may well be a first

SKY’S SOCIAL MEDIA COMMANDMENTS…

Source: theindiepedant

Thou shalt not repost non-company tweets

Thou shalt not re-tweet rival journalist or people on Twitter

Thou shalt not tweet someone else’ beat other than your own

Thou shalt pass breaking news lines to the news desk before posting them on social media networks…

The Guardian reported that the greater powers at the broadcast station stamped down their feet, and banned journalists from reposting tweets not relating to the company. Contentious guidelines even include the warning to Sky News employees not to retweet rival reporters.

The latest development raises once again, the debate on ownership of Twitter accounts, corporate or otherwise and how a brand can be represented and equally, mis-represented on social media through its employees.

The interesting question here is whether the guidelines will be applied to other parts of News Corp’s network, and more importantly Murdoch’s own account.

NEWSNIGHT DE-BRIEF…On Wednesday, members of the FPS team attended a Gorkana event with Newsnight’s deputy editor Shaminder Nahal and planning producer Samantha McAlister to hear how the show is put together and what the team are looking for when it comes to content and guests.

For those of you with a Gorkana PR log-in, there’s a detailed summary of the event here.

Looking through our notes from the event, a number of points jump out:

  • The show has an average audience of 800,000 but this can jump significantly in a big news week. For example, at the height of the phone hacking scandal, 1.7 million people were tuning in
  • Those involved in the production of the show, are incredibly passionate about their work
  • Jeremy Paxman is apparently a joy to work with, although perhaps unsurprisingly, he is very challenging and demands a lot from those he works with

Source: Creative Commons/Ric_James

It’s a trend we have noted before, but was one that was reiterated at the event – business and economics news has become “sexy”. Newsnight’s producers are always on the lookout for people from the City who can explain the world of finance and its wider importance to the viewer.

The show’s producers left us with the thought that Newsnight is an opportunity to set the record straight or to put across a new or important view to the nation’s opinion formers. It’s not for everyone, but for those willing to take on a challenge, there are a few more prominent slots.

On the subject of setting the record straight and BBC flagships… The embattled chief executive of RBS, Stephen Hester, addressed his critics this week and the interview is a must listen.

GOOD WEEK/BAD WEEK…Credit where credit’s due, Ed Miliband has had a very good week. To be precise, Ed Miliband had an excellent PMQs. Yes, David Cameron had a very bad PMQs. His aggressive, impatient responses to Miliband’s patient line of questioning confirmed the accuracy of his likeness to Flashman ‘literature’s most famous bully’. Public bullies don’t tend to make popular Prime Minister’s. Just look at what happened to Gordon Brown:

Brown the Bully

Miliband on the other had a bit of an open goal when it came to the NHS. Even the influential ConHome has urged Cameron to #dropthebill, so to speak. The softly, softly approach worked well for Miliband though and importantly, his line of inquiry on the NHS was consistent. Cameron’s increasing frustration at having to give the same weak lines and limp backing to his struggling Health Secretary, amplified Miliband’s taunt of ‘calm down dear.’ It was typical of the bad luck Mili E has suffered with broadcasters that the news of Harry Redknapp’s court case emerged at the same time as PMQs, therefore minimising the impact of this little victory. Cameron’s an incredibly savvy dispatch box performer and will be increasingly wise to it, but if Miliband can continue to draw out Flashman Cameron he may enjoy more success in the opinion polls.

MORE BAD NEWS…Headlines have been dominated by the arrest and trial of ‘rogue’ trader Kweku Adoboli who is accused of unauthorised trading which cost his employer – Swiss bank UBS – about £1.5bn. However, a potentially more interesting story that has come to light in recent days is the sheer scale international investigation into manipulation of Libor – the interest rate used for inter-bank lending. Regulators in Japan, the UK, the US and Europe have been investigating the scheme since at least March 2011, and have now implicated employees at a number of major financial institutions. Analysts had long been suspicious that financial institutions were covering up the size of their borrowing costs during the depths of the financial crisis in 2008.

The American Securities and Exchange Commission has fined British medical equipment Smith & Nephew $22m for bribing Greek doctors to use its products over the course of a decade. The case follows a similar investigation into Johnson & Johnson last year which led to the company agreeing to pay $77m for bribes it had paid in Greece, Poland, and Romania.

The increase in intranational prosecutions and international regulatory collaboration has also highlighted differing standards about what constitutes corporate crime. Many American investors were surprised at the British Financial Service’s Authority decision to fine hedge fund manager David Einhorn for insider trading because his actions would not have been considered unlawful in the US. British authorities generally cast a much wider net when investigating white-collar crime but are perceived to have a miserable record when it comes to prosecutions. By contrast, their American counterparts have a narrower definition but pursue cases with vigour, even if that means crossing international boundaries to do so.

It seems likely that more cases of this nature will emerge in the coming months, especially if Eurozone crisis continues to destabilise international markets.

FPS’ Friday Fiver

Hello All, and welcome to our latest edition of the Financial and Professional Services Friday Fiver. Two things have happened in the UK this week – firstly, it’s been very, very cold. And secondly, corporate Britain has turned into something of a witch hunt. There’s more on that below, as well as our thoughts on Facebook, Mega mergers and a new magazine launch for our sector. Happy weekend everyone, and stay warm.

THE BUSINESS OF FRIENDSHIP…..“It is a good thing to be rich… but it is a better thing to be beloved of many friends.” Euripides

A wise quote, but of course if you’re Mark Zuckerberg you have all of the above. This week Facebook announced its much anticipated Initial Public Offering. It may not be the biggest IPO, of recent years but it’s likely to be a theme of the business pages for many weeks to come. The company is looking to tap up investors for $5bn but the investment community is divided both on the rationale for the listing, as John Gapper explains in today’s FT [recommended read] and also the long-term investment case for the company.

Whatever the merits of the decision, it can be easy to forget the wealth that start-up businesses create, particularly when they experience success on the scale of Facebook. We were warmed to hear the tale of the graffiti artist who took stock instead of cash for painting the company’s office. The value of the stock could now be worth as much as $200 million. All in a day’s work…

SICK (MEDIA) NATIONS…..This weekend sees the beginning of the RBS Six Nations. England approach the tournament as fourth favourites, humbled by their world cup exit and off the field escapades. Ireland are third favourites and will be without their talismanic skipper Brian O’Driscoll. And Wales, so often the nearly men of northern hemisphere rugby (sorry Rach), lie second in the odds, without their impressive and youthful fly half Rhys Priestland. The French once again lead the pack.

La Tribune has ditched its daily print edition

But unlike their rugby team, it seems the French print media landscape is in a more rapid decline than ours. This week saw the last ever daily print edition of La Tribune, one of the leading economic newspapers in France. It will be replaced by a weekly print edition and an active website – of course. Established in January 1985, it was read by CEOs, managers, professionals, political and institutional decisions makers for twenty-seven years.

The success of the website and the weekly edition will no doubt be closely monitored by the British print media. As in the rugby, the question is, when will England take a lead from the French? The closure of the News of the World, the Leveson inquiry and the emergence of ‘i’, ‘Britain’s fastest growing quality newspaper’ no less, suggests the long mooted change in our media landscape is a foot. Quite who will win the sweepstake however is anybody’s guess.

ECONOMY, ECONOMI, ECONOMIA…..Not all print titles seem doomed however – this week, Ed and Dave attended the launch of the ICAEW’s new magazine, ‘Economia’ (thanks for the champagne and chocolates guys, we loved it!). The inaugural edition certainly featured a grand line-up of interviews and contributors, and it will be interesting to see if the magazine can maintain the high standard it’s set itself in future editions. However, there must have been one or two nervous faces on Tuesday evening as the front cover was unveiled – perhaps not the greatest timing….

IT’S COLD OUTSIDE – ENJOY IT…..Our annual cold snap arrived with a bang this week and the forecast for the weekend is decidedly of the ‘icy-white’ variety. Then again, according to The Times’ Eureka magazine this week, we’d better enjoy the pretty white stuff while we can. Snow it seems, is in danger of becoming as rare as a snow leopard within the next 50 years or so as global warming takes a grip. While the debate over warming continues to take precedence over actual action, there are some upsides to a less snowy/icy planet, not least the opening of the Northwest Passage and access to the Arctic’s oil, gas and mineral reserves – something that a newly merged Xstrata/Glencore would undoubtedly look to get to grips with…

GOOD WEEK/BAD WEEK…..As it turns out, it’s been a good week for shareholders, and in particular, anyone with a FTSE tracker fund. As the BBC’s Hugh Pym noted a short time ago, the FTSE100 closed up this week at 5,901 – the highest the index has been since July last year. Will it last? Perhaps not, but for a brief moment at least, pension pots and stocks & shares ISAs are looking a little rosier.

On the bad week front, it’s hard to look past anyone sitting in the chief exec or chairman’s seat on a large company’s board really. The combination of Stephen Hester’s bonus backdown and (Sir) Fred Goodwin’s ‘de-robing’ have caused some commentators to speculate that Britain is now ‘closed for business’. With reporting season still in full flow, the pay gauntlet is looking increasingly long and spiky for company bosses for at least the next four weeks.