Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Spanish construction rebuilds after market collapse

Property developer Olivier Crambade founded Therus Invest in Madrid in 2004 to build offices and retail space. For five years business went quite well, and Therus developed and sold more than €300m of properties. Then Spain’s economy imploded, taking property with it, and Mr Crambade spent six years tending to Dhamma Energy, a solar energy […]

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Categorized | Banks, Financial, Insurance

No soft Brexit for City, despite data

Posted on September 20, 2016

Skyscrapers including Tower 42, the Heron Tower, the Leadenhall building, also known as the "Cheesegrater," 30 St Mary Axe, also known as "the Gherkin," and 20 Fenchurch Street, also known as the "Walkie-Talkie," stand on the skyline in London, U.K., on Tuesday, June 28, 2016. Banks demand for cash surged at the Bank of Englands first liquidity operation since the U.K. voted to leave the European Union, with financial institutions requesting more than double the amount allocated. Photographer: Simon Dawson/Bloomberg©Bloomberg

In messy break-ups, among which Brexit is set to figure, the departing partner is tempted to taunt: “See how you get along without me!” The danger is that they will later chance on their ex insouciantly shelling beer nuts in his vest and getting along just fine. So City folk should not seize too readily on Financial Conduct Authority data that show more continental financial groups rely on locally-granted “passports” to operate in the UK than vice versa.

This might look like a stick with which Theresa May can wallop fun-loving European Commission president Jean-Claude Juncker during leaving negotiations. More than 8,000 businesses from 30 nations are using local passports into the UK compared with 5,500 heading the other way.

    It is a useful reminder that free trade is mutually beneficial. The data will hardly persuade European politicians to cut the UK any slack, though. According to another breakdown from the FCA, the bulk of inbound passports were granted under the insurance mediation directive. This covers some access to the important Lloyd’s wholesale insurance market. Most of the passport holders are retail insurers.

    Registrations under Mifid, the directive pertinent to investment banking, matters more to the future of the City of London. Here, outbound passports predominate by 2:1.

    There is a further snag. Continental banks and brokers value the access to international capital the City gives them. French and German politicians value the votes of Parisians and Frankfurters too, and are in a better position to influence negotiations for local economic gains.

    Grandees envisage a so-called “Switzerland-plus” deal in which capital continues to flow freely. Their arguments for the EU to offer this contain more holes than cheese from the same Alpine nation. Barring a revolt against migration across member states, the City is set to lose a chunk of banking and trading while reinventing itself as an offshore centre.

    Incidentally, remember how hedgies such as Crispin Odey rallied to the cause of Brexit before the vote? It transpires four times as many hedge funds rely on a UK passport to trade on the continent as vice versa,. “Be careful what you wish for” is the phrase that springs to mind.

    Walmsley’s chill to costs

    Because she’s worth it? Emma Walmsley, a former L’Oréal executive, has won the contest to become chief executive of GlaxoSmithKline. A businesswoman with a background in cosmetics will lead the UK’s premier science company, a role which last year paid Sir Andrew Witty £6.7m.

    It is an eye-catching appointment. Ms Walmsley, who has a arts degree, heads GSK’s £6bn-a-year consumer healthcare division. Less than a year ago investors were agitating for the group to sell the business.

    That spin-off will be even more unlikely when Ms Walmsley takes over from Sir Andrew. She has brought the culture of companies that sell toothpaste and detergents to GSK.

    Stuffier investors will bridle at the appointment. The function of make-up is to prettify customers, not save lives, they will harrumph.

    GSK taps consumer goods veteran Emma Walmsley as new chief

    composite image of Andrew Witty and Emma Walmsley of GSK

    Andrew Witty to step down in March 2017

    The counterpoised risk with appointing a scientist to run GSK is that he or she will fall in love with the science, which can be costly. The company is wrestling with the expiry of patents on Advair, the respiratory drug with peak sales of around $8bn.

    Ms Walmsley’ is likely to pursue “externalisation” in drugs discovery, favouring numerous partnerships with biotechs over a few big bets on treatments created in house. You can see how that policy might suit Neil Woodford, an influential shareholder. He wanted an external candidate to lead GSK, but is also a fan of biotech.

    There is one snag. GSK has national champion status in drug development. Less of that in-house could mean fewer jobs for UK scientists. Politicians wouldn’t like that. Ms Walmsley is a toughie, apparently. She’ll need to be.

    Talking turkey

    Norfolk farmer Bernard Matthews thought his turkeys were “bootiful”. Pensioners are unlikely to say the same of the pre-pack administration through which 2 Sisters is buying the business. The defined benefit pension scheme may wind up in the Pension Protection Fund, triggering haircuts for members.

    Pensions consultant John Ralfe points out that if vendor Rutland Partners has lent money to Bernard Matthews, it could be in line to get a payout from administrators. Companies House data shows the largest element of the poultry farmer’s financing does indeed appear to be a £24.6m loan note owed to funds managed by Rutland.

    Bernard Matthews paid interest of £3.4m on this in the last recorded financial year, helping turn a £1.8m operating profit into a £5.6m post-tax loss. That compares with contributions of just £800,000 paid to the company’s pension scheme, whose deficit had risen to £16.7m. Plenty for the Pensions Regulator to ponder.