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News Article | May 9, 2017
Site: www.theguardian.com

Barclaycard and the British Retail Consortium have warned that a spurt in spending in April was the result of the late timing of Easter and said the growing squeeze on incomes meant the underlying trend in high street activity was weak. The two surveys found that rising inflation had resulted in consumers devoting an increasingly share of their pay packets on household essentials. Barclaycard said consumer spending was 5.5% up on April 2016 but added that the increase was mainly driven by supermarkets and petrol stations. It said spending on these essentials was up more than 11% year on year, the fastest rate of growth since it began releasing consumer spending data in 2012. Paul Lockstone, managing director at Barclaycard, said: “A late Easter and rising prices provided a superficial boost to spending in April, but behind the headline figure it’s clear consumers are recognising and responding to the inflationary pressures being placed on household budgets. Despite growth across a number of categories, the spending picture in real terms is one of growing caution, as seen by declining confidence levels amongst the UK’s consumers.” Consumer spending was boosted by the sharp fall in oil and other commodity prices in 2014 and 2015, which raised the real value of incomes by pushing the annual inflation rate to zero. But this trend has been reversed since the summer of 2016 through a combination of a rebound in oil prices and the rising cost of imports caused by the post-Brexit referendum drop in the value of the pound. Inflation has risen from 0.6% to 2.3% and is now running at the same level as the annual growth in average earnings. Further increases in inflation are expected over the coming months, despite the recovery in sterling against the US dollar from just above $1.20 to just below $1.30. Other recent data have indicated that consumers are no longer spending as freely as in the second half of 2016. Retail sales were 1.8% lower in March than in February, the Society of Motor Manufacturers and Traders said new car sales were almost 20% lower in April than a year earlier, while the Halifax said house prices in April – the start of the spring housebuying season – fell 0.1% and have now fallen £3,000 from the peak reached last December. The latest data for consumer spending and the housing market comes ahead of the Bank of England’s interest-rate setting meeting on Thursday. Threadneedle Street is expected to leave borrowing costs on hold at 0.25%. The BRC’s chief executive, Helen Dickinson, said the 6.3% rise in sales reported by her organisation was distorted by the timing of Easter. “As expected, the Easter holidays provided the welcome boost to retail sales, which goes some way to making up for the disappointing start to the year. That said, the positive distortion from the timing of Easter was largely responsible for the month’s growth and looking to the longer-term signs of a slowdown, the outlook isn’t as rosy. “Taking a closer look at the sales figures, consumer spend on food and non-food items is diverging. Food categories continue to contribute the most weight to overall growth, although food inflation has a part to play in this. Meanwhile, consumers are being more cautious in their spending towards non-food products and focusing more on value-priced lines.” Dickinson said that life was set to become more difficult in the high street, adding that Theresa May should make consumers a priority as she negotiates Britain’s exit from the EU. “Although today’s figures do indicate that consumers are still willing to spend, with a cocktail of rising costs and slowing wage growth as the backdrop, conditions for consumers will get tougher. The next government needs to deliver a plan that puts consumers first in its economic policies and the forthcoming Brexit negotiations.”


News Article | May 10, 2017
Site: www.theguardian.com

British workers will see their disposable incomes shrinking this year as a result of rising inflation that will peak at 3.4%, a leading economic thinktank has warned. The National Institute of Economic & Social Research said that wage rises would be capped at only 2.7% on average, leaving workers to face the largest real-terms cut in their takehome pay since early 2014. The warning follows the controversy over rising energy bills and inflation-busting increases in council tax that have already hit household budgets ahead of the general election. Recent surveys have shown consumers devoting a bigger slice of their weekly shopping budget to essential items in response to increasing prices by a wide range of retailers. Theresa May has pledged to cap energy costs to boost disposable incomes, while Jeremy Corbyn wants to intervene in the housing market to reduce the escalating cost of buying a home and monthly rental costs. The prediction for a spike in inflation of 3.4% is well above the level forecast by the Office for Budget Responsibility, the Treasury’s independent forecaster, which said earlier this year inflation would reach 2.4% by the end of 2017. Inflation has already begun to rise steeply. It jumped markedly in February to 2.3% to overtake regular wage rises, which only inched ahead by 1.9% month on month. NIESR said wage growth was likely to pick up over the rest of the year, but remain well below inflation, denying the average worker a real terms rise. Simon Kirby, NIESR’s UK economic forecaster, said that with inflation already hitting 2.3%, the OBR would be forced to revise its forecast upwards. He said: “GDP growth over the next couple of years will be subdued, growing at less than the economy’s long-run potential rate of 2% per annum, but households will feel the pinch from rising consumer price inflation.” He added: “The rate of inflation is expected to rise from 2.3% per annum in March to almost 3.5% by the end of 2017. By 2018 we expect consumer spending growth to have effectively stalled.” Kirby said a previous forecast that predicted inflation would hit 3.7% had been revised lower in response to reports showing that the impact of the falling pound would be spread over a longer period. NIESR said that despite the squeeze on disposable incomes the GDP growth rate would pick up from 1.7% this year to 1.9% in 2018. It said moves towards Brexit since the vote to quit the EU last June had made little impact on its forecasts. It said the triggering of article 50 had only a short term impact on financial markets, leaving the economy to move ahead, albeit at a slower pace than before the vote. Kirby said the labour market remained “robust” with an unemployment rate of 4.7% and an employment rate hitting a record high in the three months to February of 74.6%. But he said surveys continued to show that millions of workers want an increase in the number of hours they work, showing that firms could increase output without taking on new staff or increasing hourly rates. “Despite the strong performance of the labour market, real wages growth remains subdued, perhaps indicating some slack remains,” he said. Bank of England officials are expected to keep interest rates at their record low of 0.25% when they meet on Thursday to offer continued support to the economy and the jobs market. Economists forecast that just one policymaker, Kristin Forbes, will vote for a rate rise to quell inflation, while the other seven members will consider the increase in prices to be temporary. Kirby said he expected the BoE’s monetary policy committee to keep rates on hold until after the UK has quit the EU in 2019 when it will start to rise towards 2% in the latter half of 2022. A report by NIESR on the global economy said increasing activity in the developing countries would push GDP growth higher following a four year low point in 2016. Risks to the forecast came from the UK leaving the EU without a trade deal and US president Donald Trump introducing protectionist policies, but without these threats, the outlook was for an improving global growth rate.


News Article | May 8, 2017
Site: www.theguardian.com

Cars have helped drive the UK’s recovery since the 2008 financial crash. British factories are today making more cars than at any time this century, and consumers are buying more of them than at any time in history. The question, though, is whether cars, and the way we buy them, will be the cause of Britain’s next financial crisis. UK households borrowed a record £31.6bn last year to buy cars, up 12% on the year before, and 90% of private buyers used personal contract plans – PCPs – to make their purchases. This year the total borrowed is expected to exceed £40bn. Cash purchases for the legion of souped-up shiny 4x4s, SUVs and estate cars that populate Britain’s streets are almost unknown. The boom in debt-financed car sales stems from the convergence of ultra-low interest rates and falling oil prices, which almost halved in 2014. Leasing companies, seeing how these developments made cars more affordable, embarked on a frenzy of marketing. Almost overnight this pushed the UK to the top of Europe’s car ownership rankings; it was the making of Land Rover, which found its rebirth as a glamorous brand helped as much by domestic sales as by its success in China and the rest of Asia. But this sharp rise in debt-fuelled car purchasing should be cause for worry. A steep rise in car loan arrears and repossessions is already fuelling concern about another crash in the US. Doomsayers predict a tipping point will be reached when car companies and lenders are laden with unsold cars and consumer debts that cannot be repaid. A team inside the Financial Conduct Authority, the main City watchdog, has begun drawing up the terms of an inquiry into how much banks have lent to car buyers, and the likelihood of these institutions (many of them still struggling with the overhang of debts from the 2008 crash), getting their money back. High on the FCA’s checklist should be questions about the credit histories of customers who borrow to buy a car, and whether those with the lowest incomes can maintain payments running into thousands of pounds a year tied to three- or four-year contracts. The inquiry should attempt to establish whether banks and the leasing firms they underwrite, having exhausted the list of private buyers with solid credit scores, turned to those with chequered credit histories to drum up new business via PCPs. Like the sub-prime mortgage deals of the noughties that brought the world of finance to its knees, PCPs are an American import. For decades the “repo man” has been a figure of fear for blue collar workers across the US who fall behind with their payments and risk having their car repossessed. In 1984, when Alex Cox’s punk comedy Repo Man aired in art house cinemas, it was shocking to see how vulnerable the lives of ordinary Americans were once the car payments began to mount up. If they lost their job, it wouldn’t be long before the car was towed away. Without a car they couldn’t find another job. Lives fell apart, and divorce invariably followed close behind. At the time, a Brit watching Repo Man most likely had a degree of job protection, a welfare state to help with the mortgage if they found themselves out of work, and a car parked outside their house that might be ageing and slightly rusty, but was all paid for. Those who took out loans did so as a means to buy the car outright. Of course the FCA inquiry is not concerned with a shift in the patterns of employment and finance that makes for a more precarious workforce. It will be concerned with the suspected mis-selling of leasing products it believes consumers either misunderstand or are available more cheaply on the high street. The review, due to be published next year, will more than likely come to nothing. Car leasing has a large fanbase of customers who consider themselves much better off than they really are. They can secure a brand new car stuffed with the latest comforts and gadgets for a payment every month that is the same as someone paid for a whole loan 20 years ago. Free breakdown cover and warranty are thrown in, which means the headache of arranging and paying for repairs evaporates. For many people with poor credit records, a PCP is likely to be the only way they can borrow a sizable sum of money. That is partly because the loan is arranged against a tangible asset, and partly a reflection of a regulatory environment that critics say allows people with fragile incomes to bypass scrutiny. It is this last point that the Bank of England is concerned about. Its last major report on the economy warned that a sharp rise in all forms of consumer credit was a worry and would be monitored closely. The market for car loans is only a fraction of the mortgage market – in the US, $1.1tn v $14tn – and car companies are not banks: they are not systemic risks. Yet without car sales, growth in GDP and wages and all the other standard measures of economic progress stand still. This highlights the Bank of England’s difficult balancing act in regulating an economy dependent on consumer spending where debt is a large element for an important minority of households, especially millennials and young families with constrained budgets. Keep interest rates low and regulations loose, and watch the economy grow. Or tighten regulations, and watch the economy slow. Worse for regulators, there would also be a backlash from a nation of drivers who have come to love the upgrades – every three years – to the massive piece of tin outside the house as much as they have the annual upgrades to their smartphones.


News Article | May 10, 2017
Site: www.theguardian.com

Bondholders in the Co-operative Bank are braced to take losses as the troubled lender scrambles to find £750m to boost its financial strength. The bank is expected to update investors as soon as this week about its attempts to find a buyer, amid speculation that it is struggling to attract an offer and that bondholders will be forced to step in. Even if a bidder is found, bondholders still face losses as part of the Co-op bank’s requirement to meet the Bank of England’s requests for more capital. The Co-op Bank has warned bondholders that potential bidders have sought “some form of liability management exercise” – which could see investors take losses in return for equity stakes. The LME could boost the bank’s capital by £450m, which would leave another £300m to be raised in fresh funds. This would require Co-op Bank to convince existing investors to stump up more cash or seek more backers. Among those flagged as potential new investors are Virgin Money, TSB and buyout houses JC Flowers and Cerberus. The Bank of England is reported to have Co-op under “intensive supervision”. The Manchester-based bank has endured five consecutive years of losses since its problems started to emerge in 2013, which have sapped its ability to rebuild its capital. But the Co-op Bank’s management hopes to attract a buyer because of its 4 million customers who are attracted by its ethical approach to doing business. Co-op Bank, which refused to comment on Tuesday, insisted last month that it had “received a number of non-binding proposals from strategic and financial parties” and “selected several parties to enter a further phase” of talks. The bank put itself up for sale in February, four years after its near-collapse which sparked its rescue by hedge funds. The hedge funds have been left owning 80% of the bank, which until then had been 100% owned by the Co-operative Group of supermarkets and funeral homes. But the mutual is unlikely to be ready to put more cash into the bank after writing down the value of its 20% stake to nil last month. At the time, the Co-op Group finance director, Ian Ellis expressed hope that the bank’s sale would be successful and that the group expected “to get some value from the sale”. However, the Co-op Group may also demand a solution to pension scheme it shares with the bank, which is due for revaluation in July, and could be a potential barrier to any buyer. An institution that once had bold ambitions to merge with TSB, the Co-op Bank has been dramatically scaled back over the past years, from nearly 300 branches to just 95.


News Article | May 12, 2017
Site: www.prlog.org

-- The Bank of England (BoE) had its meeting on a Super Thursday and released its inflation report (http://www.bankofengland.co.uk/publications/minutes/Documents/mpc/mps/2017/mpsmay.pdf). Sterling fell against the US dollar to $1.28 after the BoE's release. It has hit a one week low against the dollar. The possibility of a rate hike is now a distant dream and the pound's prospect of reaching $1.30 is forever lost. As Dean Turner, economist at UBS Wealth Management said, "'Super Thursday' has become 'Average Thursday'."The Bank cut its growth forecast from 2% to 1.9% and predicted that inflation will go as high as 2.8% this autumn. The Monetary Policy Committee (http://www.bankofengland.co.uk/monetarypolicy/Pages/overview.aspx)(MPC) of the BoE also voted to leave the interest rates at 0.25% (https://twitter.com/bankofengland/status/862623360924213248/photo/1?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.theguardian.com%2Fbusiness%2Flive%2F2017%2Fmay%2F11%2Fbank-of-england-super-thursday-interest-rates-inflation-growth-brexit-business-live%3Fpage%3Dwith%253Ablock-59144422e4b0f5ae171e135f)and maintain its government bond purchases at £435bn and its corporate bond purchases at up to £10bn.The BoE has warned that households' living standards will decline as Brexit will impact on the economy, pushing prices higher and stalling wage growth. While the interest rates remained at a record low of 0.25%, the Bank hinted that they might rise if inflation continues to increase.The Bank's quarterly forecasts for economic growth this year were a bit higher (1.9%) than the year before (1.8%). But growth will slow next year to 1.7%.Inflation was at the highest level in more than three years at 2.3%, due to higher oil prices and the pound's fall after the UK referendum vote, which increased the price of imported goods.The Bank's MPC sets monetary policy to meet the 2% inflation target, so that economic growth and employment are maintained.The BoE governor Mark Carney held a press conference on Thursday afternoon at the BoE with deputy governor Ben Broadbent to present the Bank's quarterly report.Carney said that the UK economy's future depends on households, businesses and financial markets' response to the Brexit negotiations. Already Brexit is affecting the economy, with wage growth slowing down, inflation increasing and consumer spending being squeezed. "Wages won't keep up with prices," Carney said, but he is hopeful that real wage growth will return later.Wage growth has been weak for some time now, due to poor productivity and firms avoiding taking higher wage costs as Brexit uncertainty looms in the horizon. He said: "Uncertainty for companies about the outlook may also have made them unwilling to raise wages at a faster pace until they have more clarity about future costs and market access."Since the UK economy relies on consumer spending, the pressure on household budgets will affect economic growth. But the Bank said that this would be counterbalanced by business investment and rising trade since cheap exports would be on demand.This might appear too hopeful to economists who are expecting inflation to weaken economic activity and wage growth to diminish. Increasing input costs faced by businesses will also deter possibilities of investment, despite the BoE's more optimistic outlook.Economists agreed that the BoE forecasts depend on how the general elections and Brexit negotiations will unfold. For some, the Bank's growth predictions were too optimistic in terms of wage growth, stressing the volatile and uncertain political horizon.Joshua Mahony, market analyst at IG, said:"The chance of a rate rise during the long Brexit negotiations was always going to be slim, but Carney said that the speed of rate rises will be determined by how successful those negotiations are. The bank's upward revisions for inflation and downgrades to growth should be taken with a pinch of salt given the uncertainty provided by the impending election, oil prices and Brexit negotiations."Howard Archer at IHS Markit:"we maintain the view that the Bank of England is being too upbeat on the growth outlook with some pretty optimistic assumptions, particularly relating to the likely pick-up in wage growth. We also think Brexit uncertainties will hamper growth.We maintain the view that the Bank of England is highly likely to keep interest rates at 0.25% through 2017 and 2018 - and very possibly beyond. In fact, we do not see the Bank of England edging interest rates up until 2020 given likely prolonged economic and political uncertainties centred on Brexit.Similarly, David Page, Senior Economist at AXA Investment Managers said that the BoE might keep interests unchanged until 2019 and beyond: "While we recognise the risk that the MPC may tighten policy later in 2018 if Brexit negotiations are smooth over the next few years, we argue that in practice the materialisation of some downside risk is likely to leave the MPC keeping its policy rate on hold through the Brexit period and into 2019."As Carney repeated in the past, the BoE can't take the whole weight of the economy on its shoulders and that government officials should also coordinate their attempts to smooth the impact of Brexit. Carney emphasised that the Bank had adjusted its strategy in anticipation of Brexit, but added that monetary policy can't provide a panacea for the UK as it withdraws from the EU.He said: "Monetary policy cannot prevent either the necessary real adjustments as the U.K. moves towards its new international trading arrangements or the weaker real income growth that's likely to accompany that adjustment over the next few years."The Bank's forecasts depended also on the possibility of a "smooth" Brexit and he stressed that the Bank's policy can't be driven just by Brexit: "While Brexit will play an important role, other factors will also influence the outlook for the economy and inflation."Moving forward, Carney said that monetary policy would be changed if economic development is "broadly consistent with its projection."Brexit hangs heavy over the economic and political landscape, but at the moment, after Thursday's uncontroversial monetary policy meeting, the next stop would be the general elections, and who knows what might happen?


News Article | May 12, 2017
Site: www.theguardian.com

Credit where it’s due. After the accounting catastrophe in Italy and a big fine from Ofcom for overcharging for broadband access on the home front, BT’s remuneration committee has done the decent thing. It has awarded no bonus to chief executive Gavin Patterson and the outgoing finance director. It has clawed back bonuses from both men for past years because the Italian scandal caused a £268m overstatement of profits. That penalty will cost Patterson £338,000. His incentive package for this year has also been reduced because the share price is 25% lower than a year ago. In a rational world, praise would be unnecessary. After BT’s hellish year, any bonus would have been outrageous, as Patterson happily agreed. Yet too many other companies, confronted by equal share-price disasters for investors, fail to apply common sense. Elizabeth Corley, chair of Pearson’s remuneration committee, should call her BT counterpart, Tony Ball, for a lesson in what using “discretion” means. Corley’s crew dished out a £343,000 bonus to chief executive John Fallon after a year of record losses for the educational publisher, an astonishing decision that triggered a 60% revolt by shareholders. Corley herself suffered an embarrassing 27% vote against her re-election, but Ball can probably expect to be returned at BT with the usual Soviet-style majority. Once upon a time, Ball’s own pay demands were deemed so excessive by ITV that the broadcaster dropped him as a candidate for chief executive. On this occasion, his hard-nosed approach was spot-on. To complete the package, BT will terminate PriceWaterhouseCoopers as auditor. The aim is to get a new firm in place next year, which resolves Patterson’s previous odd vagueness about PwC’s future. The auditor can’t grumble. The alleged fraud in Italy, which was uncovered by investigators summoned from KPMG after a whistleblower’s tip-off, may have been sophisticated but its size was enormous. It shouldn’t happen at a large FTSE 100 company. The smack of firm governance will give BT’s shareholders some comfort as they assess a year in which almost the only bright spot was the clean integration of mobile operator EE. The public sector market was weak, the global services division needs a job-cutting overhaul, and the TV business ended the year with a “soft” quarter. Overall, top-line operating profits were £7.6bn, against an original goal of £7.9bn, and this year’s outcome could be £7.5bn. The differences sound slight but they mean this year’s dividend, while still being “progressive” in the jargon, won’t progress by the previously-promised 10%. The shares fell 4.5% to a whisker below 300p, a price seen as long ago as 2013. Non-shareholders, though, have reasons to be cheerful. Broadband business Openreach, where Ofcom has applied its own governance shake-up by insisting on legal separation and a separate board of directors, will consult with rivals on how to invest more in fast fibre networks that run to customers’ doors. It’s impossible to tell yet how much extra money could flow, but this is exactly the type of development the regulator wanted to see. As with Patterson’s non-bonus and PwC’s exit, it’s what we expect. Some say Mark Carney will never get the chance to raise interest rates during his term as governor of Bank of England, which is due to end in June 2019. The man himself clearly doesn’t like the idea that the deliberations of the monetary policy committee will be a snooze-fest as far as the eye can see. Carney warned that interest rates may need to rise sooner than investors expect if inflation continues to overshoot its target and if the Brexit process is “smooth”. Well, yes, Carney’s scenario is plausible. The Bank underestimated inflation slightly in the last three months and, for all the argy-bargy with Jean-Claude Juncker, the market still expects the UK and EU to agree a deal. A responsible governor must also give fair warning to those credit-happy consumers who have been spending merrily. Just don’t expect the market to take much notice of the Bank’s hawkish squawks. Forecasts for inflation in a year’s time were revised down slightly in Thursday’s report. Meanwhile, the Brexit uncertainty clouds everything. The consensus in the City is that it’ll be at least a year before the debate over raising interest rates becomes truly interesting again. That sounds about right. We can all feel a little sorry for Barclays’ Jes Staley for falling for the prank email purporting to be from his chairman, John McFarlane. Yes, there was a giveaway in the subject field – “The fool doth think he is wise” – but the initial deceit was cutely done. The revelation in the exchange, however, was the degree of fawning gratitude that Staley was prepared to display after an annual shareholder meeting in which McFarlane came to the defence of his chief executive, who is under fire for seeking to unmask a whistleblower. “You came to my defense today with a courage not seen in many people,” wrote Staley. “How do I thank you? You have a sense of what is right, and you have a sense of theatre. You mix humour with grit. Thank you John. Never underestimate my recognition of your support. And my respect for your guile.” Maybe the gushing language is an American thing. Or maybe Staley applied the lard because he thought that is what McFarlane might want to hear. But the tone jars. A chief executive who is quite so thankful for his own survival looks a little too insecure.


News Article | May 12, 2017
Site: www.theguardian.com

Following a fresh warning on living standards from the Bank of England on Thursday, two leading economists have warned this morning that Britons will all be poorer over the next five years as Brexit delivers a blow to the economy. Andrew Lilico, executive director of Europe Economics, said that Britain will probably lose out on a year’s worth of growth over the next few years, before expanding at a faster pace in the 2020s. Few things in life involving major changes come cost free so I think we should expect to lose a couple of percentage points of GDP growth - the equivalent of one year’s growth over the period of 2019/2020. Then in the 2020s I expect it to grow a little bit faster and by 2030 everything will have come out in the wash.” Ngaire Woods, dean of the Blavatnik School of Government at Oxford University, agreed that UK households would be worse off over the next five years but was less optimistic about a swift turnaround in fortunes thereafter. The real effect of Brexit won’t happen until Brexit happens. I’m optimistic that Britain can secure a free trade agreement with Europe, but it will take at least 10 years. “If there are no smooth arrangements we’re going to see a sharp decrease in investment and therefore a sharp decrease in jobs and that will mean a much more serious reduction in household incomes.”


NEW HAVEN, Conn.--(BUSINESS WIRE)--Yale School of Management (SOM) announced that $10 million has been raised to expand the Yale Program on Financial Stability (YPFS) and launch the “Crisis-Response Project.” This effort to codify best practices and provide training that can help governments fight financial crises is being supported by a group of esteemed business leaders and prominent philanthropies, including Jeff Bezos, Bloomberg Philanthropies, Bill Gates, and the Peter G. Peterson Foundation. To help guide this initiative, YPFS has expanded its Advisory Board, bringing in some of the most respected experts on the financial system. The Advisory Board is chaired by Timothy F. Geithner, and the full list of members is available at: http://som.yale.edu/ypfs-advisory-board. The new members are: Advisory Board chair, Timothy F. Geithner said, “Our goal is to improve the quality of decision making by governments and central banks in financial crises. With a master class designed and led by practitioners and a full curriculum of cases from crises around the world, we hope this program will become a model for how to train the next generation of policy makers.” With the Crisis-Response Project, the YPFS is creating an online platform to provide real-time decision support in financial crises. The project will synthesize the lessons from hundreds of interventions from past crises. The online platform will include individual case studies on every major intervention of the last century, with analysis of both best practices and common mistakes made by policymakers. “Making sure the decision-makers are armed with the information they need is the first step toward ensuring an effective response to any crisis,” said Michael R. Bloomberg founder of Bloomberg LP, philanthropist and three-term Mayor of New York City. “By comprehensively studying what went right – and what went wrong – in the financial crises of the past, the Crisis-Response Project will give economists, central bankers, and policymakers essential tools to respond to the financial crises of the future.” “Financial crises have enormous effects on the fiscal and economic health of a nation. It is critical to advance this research that integrates academic theory and policy practice in order learn about the prevention and management of financial crisis for the future,” said Pete Peterson, Chairman and Founder of the Peter G. Peterson Foundation. Andrew Metrick, Program Director of the Yale Program on Financial Stability and the Michael H. Jordan Professor of Finance and Management at Yale SOM, said, “The first time you contemplate a potential solution to a crisis shouldn’t be when you’re in the middle of one. Collectively, we must be better prepared for the next crisis. The Crisis-Response Project will do that.” Peter Salovey, Yale University president and Chris Argyris Professor of Psychology, said, “We are grateful to Jeff Bezos, Bloomberg Philanthropies, Bill Gates, and the Peter G. Peterson Foundation for supporting YPFS and the launch of the Crisis-Response Project. Their generosity will strengthen and extend the reach of YPFS programs, which will equip an influential community of scholars and practitioners with the knowledge to effectively manage financial crises.” The Yale Program on Financial Stability was founded in 2013 by Professor Metrick. In its first three years, a generous series of grants from the Alfred P. Sloan Foundation allowed YFPS to build a portfolio of projects and meetings to serve its mission to create, disseminate, and preserve knowledge about financial crises. With this new support, YPFS will increase its focus on crisis management. “In just a few years, YPFS has become the organization where regulators, policymakers, and central bankers go to learn about dealing with financial crises,” said Daniel Goroff, Vice President and Program Director of the Alfred P. Sloan Foundation. “The Sloan Foundation is proud to support this important work.” The YPFS has become a hub of information and communication for economists employed in macroprudential roles in regulatory agencies and central banks. Through the Financial Crisis Forum, an annual meeting held as part of the Systemic Risk Institute, YPFS convenes senior officials from major central banks and regulatory agencies. The Forum presents a series of panels led by the major architects of crisis response in the Global Financial Crisis and in some of the previous major crises. Previous participants have included Federal Reserve Vice Chairman Stanley Fischer; Agustín Carstens, governor of the Bank of Mexico; and Sir Paul Tucker, former Deputy Governor of the Bank of England. Building upon these critical activities, Yale SOM announced in 2016 the launch of a new one-year degree program – the Master of Management Studies in Systemic Risk. This first-of-its-kind, specialized program is designed for early- and mid-career employees of central banks and other major regulatory agencies with a mandate to manage systemic risk. It will leverage the deep expertise of Yale SOM’s finance faculty in capital markets and their influential academic work about the origins of the crisis. Edward Snyder, the Indra K. Nooyi Dean of Yale SOM, said, “With this significant support, we will expand our work on how the global financial system and individual central banks can effectively and efficiently respond to the next financial crisis. We are grateful to the Alfred P. Sloan Foundation that provided initial support for the program. With Yale SOM’s distinguished faculty experts as well as our global and cross-campus reach, Yale SOM excels at this kind of inquiry.” The mission of the Yale School of Management is to educate leaders for business and society. The school’s students, faculty, and alumni are committed to understanding the complex forces transforming global markets and using that understanding to build organizations—in the for-profit, nonprofit, entrepreneurial, and government sectors—that contribute lasting value to society.


News Article | May 10, 2017
Site: globenewswire.com

Results of Annual General Meeting (AGM) and Board Changes Results of the proxy voting for the 2017 AGM held on Wednesday, 10 May 2017. All resolutions were passed by the requisite majority on a poll; resolutions 1 to 9 as ordinary resolutions and resolutions 10 to 14 as special resolutions. The following proxy votes were cast in respect of the AGM resolutions: NOTES: 1. 'Total Votes For' include votes recorded as at the discretion of the appointed proxy. 2. The 'vote withheld' option was provided to enable shareholders to refrain from voting on any particular resolution. A vote withheld is not a vote in law and has not been counted in the calculation of the proportion of the vote 'For' and 'Against' a resolution. 3. At the date of the AGM the issued share capital of the Company was 243,087,874 ordinary shares. 4. The full text of the resolutions is detailed in the Notice of Meeting to be found on the Company website www.osb.co.uk Copies of the special business resolutions passed at the AGM have been submitted to the UK Listing Authority, and will shortly be available for inspection at the UK Listing Authority's National Storage Mechanism which is located at http://www.hemscott.com/nsm.do The Board of Directors notes that resolution 2 relating to the approval of the 2016 Directors' Remuneration Report, received a vote of 89.65%  in favour. The Remuneration Committee regularly consults with shareholders and will continue to do so in order to understand the reasons behind today's vote result and on any changes to be made to our remuneration policy for 2018. Mike Fairey will retire at the conclusion of the Annual General Meeting later today, 10 May 2017.  Rodney Duke, who is the senior independent Director, will assume the role of Chairman on an interim basis, until a successor is appointed. For the purposes of section 430 (2B) of the Companies Act 2006, Mike Fairey will receive his pro-rata entitlement to Non-Executive Director fees for the month of May 2017. No payment for loss of office will be made to him. Mike commented that: "I have thoroughly enjoyed being a part of the OSB journey, leading the board through the IPO and helping the Bank grow and establish itself as a FTSE250 company. I believe the Bank is well placed for the future with a high quality board and management team to whom I wish every success and offer my very best wishes." Andy commented that: "I would like to thank Mike for his contribution over the past three years as Chairman of the Board from IPO to a successful FTSE 250 company". OneSavings Bank plc ('OSB') began trading as a bank on 1 February 2011 and was admitted to the main market of the London Stock Exchange in June 2014 (OSB.L). OSB joined the FTSE 250 index in June 2015. OSB is a specialist lending and retail savings group authorised by the Prudential Regulation Authority, part of the Bank of England, and regulated by the Financial Conduct Authority and Prudential Regulation Authority. OSB primarily targets underserved market sub-sectors that offer high growth potential and attractive risk-adjusted returns in which it can take a leading position and where it has established expertise, platforms and capabilities.  These include private rented sector Buy-to-Let, commercial and semi-commercial mortgages, residential development finance, bespoke and specialist residential lending and secured funding lines. OSB originates organically through specialist brokers and independent financial advisers.  It is differentiated through its use of high skilled, bespoke underwriting and efficient operating model. OSB is predominantly funded by retail savings originated through the long established Kent Reliance name, which includes online and postal channels, as well as a network of branches in the South East of England. Diversification of funding is currently provided by access to a securitisation programme; and the Funding for Lending Scheme and Term Funding Scheme, which OSB joined in 2014 and 2016, respectively.


Haldane A.G.,Bank of England | May R.M.,University of Oxford
Nature | Year: 2011

In the run-up to the recent financial crisis, an increasingly elaborate set of financial instruments emerged, intended to optimize returns to individual institutions with seemingly minimal risk. Essentially no attention was given to their possible effects on the stability of the system as a whole. Drawing analogies with the dynamics of ecological food webs and with networks within which infectious diseases spread, we explore the interplay between complexity and stability in deliberately simplified models of financial networks. We suggest some policy lessons that can be drawn from such models, with the explicit aim of minimizing systemic risk. © 2011 Macmillan Publishers Limited. All rights reserved.

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