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News Article | September 13, 2012
Site: www.theguardian.com

Within minutes of the London markets opening, it was clear the pound was going to come under renewed pressure. There were only three days until the weekend referendum in France on the Maastricht treaty. Unlike the UK, French voters were preparing to decide on plans drawn up by the then president of the European commission, Jacques Delors, for majority voting and closer economic ties. Polls suggested 58% were against. Sterling had joined the EU's longstanding Exchange Rate Mechanism (ERM) in 1990 but had struggled to remain inside its designated floating band. Now circling City speculators saw a chance to attack Britain's currency and wreck a fledgling monetary union that many of them thought would never work. The Italian lira and Spanish peseta were also under pressure, but it was the pound that was grabbing the headlines. George Soros's Quantum Fund led a field of speculators who borrowed UK gilts only to sell them and buy them back later at cheaper prices. They repeated the trick every few minutes, making a profit each time. Soros said later he had made £1bn from selling sterling he didn't own. By mid-morning the selling was so intense that Bank of England officials were buying £2bn of sterling an hour. The prime minister, John Major, was staying in Admiralty house in Whitehall. He was told about the frenzy of selling and convened a meeting of key ministers. He talked about the possibility of interest rate rises beyond the already sky-high 10% and the need for further interventions by the Bank of England. Senior Conservatives Michael Heseltine, Douglas Hurd and Kenneth Clarke joined Major and the chancellor, Norman Lamont, who was on the end of a phone. At 11am they agreed to push up interest rates to 12%. Jim Trott, former chief dealer for the Bank of England, described the day as "stunningly expensive". He said that behind the scenes he bought more sterling in four hours that day than anybody had before or since. All of his purchases lost value during the day – and went down even more when the government pulled out. The ERM demanded that currencies stayed within a band set in relation to other currencies in the club. To maintain the currency values relative to each other, countries with the most valuable currencies had to sell their own and buy the weakest. In September the deutschmark was the most powerful currency and sterling the weakest within its band. As Trott tells it, the Bank of England was furiously buying sterling but little was done by the Bundesbank to sell deutschmarks. "The cavalry were the Bundesbank. We kept on looking over the hill, but there was no dust and there were no hats and no sabres. And then later at the conference call they suddenly didn't speak English, which was extraordinary. So we were kind of stretched on that day," he said. Thirteen years later, Treasury papers would be released showing the cost to be an estimated £3.3bn. By lunchtime it was obvious the efforts of the central bank and attraction of high UK interest rates were outweighed by a complete lack of confidence in the UK's ability to stabilise its currency. News had filtered through to traders that the head of the German Bundesbank was in favour of Britain devaluing its currency. If this was his view, it explained why he was unwilling to spend money propping up the UK at a higher exchange rate. He obviously believed it was a doomed project and not worth any more German taxpayers' money. Knowing Britain had a paucity of foreign currency reserves to sell, speculators such as Soros confidently moved in for the kill. The radio news bulletins that afternoon quoted traders using words such as "slaughter" and "disaster" to describe the situation. Lamont called Major to say the game was up, but Major disagreed and insisted interest rates should rise further to 15%. When the market closed later that afternoon, sterling was still outside its currency band. At 7.40pm, after Major conceded defeat, Lamont, flanked by Treasury mandarin Gus O'Donnell and his adviser David Cameron, who were later to be Cabinet secretary and coalition prime minister respectively, declared that Britain had suspended its membership of the ERM. The TV news bulletins went into overdrive. The BBC's Peter Jay said leaving the ERM would wreck the government's plans to bring down inflation by the end of the decade, though a cheaper currency would spur growth. In parliament the next day John Smith, the Labour leader, derided the Major government's economic policy. He said: "The real lesson of the ERM crisis was that 'before you can have a strong currency you need a strong economy'."


News Article | May 18, 2017
Site: www.theguardian.com

Britain went on a spending spree in April. The shops were full of punters. Online retailers coined it in. Spring brought with it an end to the winter consumer spending blues. That at least is what the official figures suggest. The Office for National Statistics reported that the volume of retail sales rose by 2.3% last month, smashing City expectations. It was enough, in combination with Donald Trump’s political woes in Washington, to send the pound back through the $1.30 level to its highest since last September. But hang on a minute. This is the same Office for National Statistics that said earlier this week that living standards were being squeezed because wages were failing to keep pace with prices. Something doesn’t quite add up. One explanation is that the ONS has got its seasonal adjustment wrong. The late timing of Easter this year would be expected to lead to a rise in spending between March and April and the ONS tries to make an allowance for this. But it is not an exact science, which is why the monthly movements in retail sales often look quite dramatic. April’s big rise followed a 1.4% fall between February and March. The weather also has an impact, particularly for certain sectors of retailing. April was a relatively warm month, which tends to increase footfall in the high street. Garden centres seem to have done especially well. A less benign explanation is that consumers are either ignoring the squeeze on their real incomes or are oblivious to it. If so, expect to see an increase in consumer debt over the coming months. This, though, does not square with what happened in the first few months of 2017, when consumers did seem to be tightening their belts after spending freely in the second half of 2016. Despite record levels of employment and ultra-low interest rates, there was a marked slowdown in retail activity. All of which suggests that the April increase in retail sales should be treated with some caution. The ONS always suggests that looking at retail sales over the latest three months is a better guide to what’s happening than a single month’s data, and that advice is particularly apposite here. Between the three months ending in January and the three months ending in April, retail sales volumes rose by 0.3%. That looks about right and fits with the general picture of an economy that is not about to plunge into recession but is not exactly firing on all cylinders either. The Conservative manifesto has much to say about consumer protection. Action is pledged to help motorists, rail passengers, leaseholders and phone users. Despite the derision heaped on Ed Miliband when he proposed the self-same policy two years ago, there will be a price cap on energy bills, which ministers estimate would be worth £1.7bn a year to households. There is, though, one big omission from the list: help for people buying their own homes on standard variable rate (SVR) mortgages, who could save themselves money by moving to a cheaper home loan deal. This is curious for three reasons. Firstly, the savings are considerably higher than for the energy cap. Banking analysts at Bernstein note that it is possible to get a two-year fixed rate mortgage at 1.4% while the 35% of mortgage payers on SVRs are paying 4.2% (on average). If they remortgaged at the market interest rate of between 2.2% and 2.6% they would save themselves between £5bn and £7bn a year. Lloyds, by virtue of owning the Halifax, would stand to be the biggest losers. Secondly, savings of this size would ease the pressure on living standards and help the economy through its current sticky patch. The evidence suggests that those on SVRs tend to be lower-income households in the poorer regions of Britain. They would spend any windfall they received from a lower mortgage rate. Finally, there is a simple mechanism by which the government could effect change. Competition in the mortgage industry means that people are coming off SVRs albeit at a slow rate. But lenders that are charging what are effectively rip-off mortgage rates have received more than £100bn in cut-price funding from the Bank of England in recent years. That provides the government with considerable leverage. It should not hesitate to use it. Returning to Lloyds, the government’s disposal of its stake in the bank - which once stood at 43% – has prompted speculation that its boss António Horta-Osório will now consider it job done and head for the exit. The Portuguese banker seems to be trying to quash such talk: he spent £36,000 on shares on Wednesday, not usually the actions of an executive about to walk.


News Article | May 18, 2017
Site: www.accesswire.com

LONDON, UK / ACCESSWIRE / May 18, 2017 / Active Wall St. blog coverage looks at the headline from Lloyds Banking Group PLC (NYSE: LYG) ("the Group") as the Company announced on May 17, 2017, that the UK government has sold its last remaining shares in the Group. This step enables the financial institution to become a fully privately owned organization. Register with us now for your free membership and blog access at: One of Lloyds Banking's competitors within the Foreign Money Center Banks space, Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX), reported on April 21, 2017, its results for Q1 2017 ended March 31, 2017. AWS will be initiating a research report on Banco Latinoamericano de Comercio Exterior in the coming days. Today, AWS is promoting its blog coverage on LYG; touching on BLX. Get all of our free blog coverage and more by clicking on the link below: Sharing his views on the matter, António Horta-Osório, Chief Executive of Lloyds Banking Group said: "Today the Government has sold its last shares in Lloyds Banking Group, receiving more money than was originally invested. Six years ago, we inherited a business that was in a very fragile financial condition. Thanks to the hard work of everyone at Lloyds, we've turned the Group around. But the job is not done. We're going to continue to use our strong position to Help Britain Prosper." The credit for the turnaround goes to Antonio Horta-Osorio, the CEO of the Group. His strategies and persistent efforts have enabled the Group to gain its financial strength and profitability. The Group has over the last few years focused on cutting costs, strengthening its balance sheet, reducing its international exposure and risk, selling off unviable business units, etc. It started paying dividends to its stakeholders from FY14. Following the Bank of England's 2016 stress testing of the UK banking system, Lloyds Banking emerged as one of the best performing banks in UK. For FY16, the CET1 ratio of the Group was 13.8% (post dividend). CET1 is a measure of bank solvency that gauges a bank's capital strength. The Group has reduced its reliance on wholesale funding and in FY16 its wholesale funding stood at £111 billion. It has also simplified its business strategy by focusing on local business and presently 97% of its business is now in the UK. The Group emerged as the most profitable bank in UK for the period from 2012 and 2016. The Group has paid a dividend of over £5 billion to its shareholders. UK Financial Investments Limited (UKFI) manages the UK Government's shareholding in the Royal Bank of Scotland and the Group. UKFI was formed in 2008 to manage Government's shareholding in banks, which it had acquired as a part of the bailout package given to the banks due to the financial crisis following the collapse of Lehman Brothers. As a part of the bailout, UK Government had invested over £20.3 billion and acquired 43% stake in the Group. The Group had reported a loss of over £25 billion in 2008 as Lloyds TSB took over Britain's biggest lender, HBOS for £12 billion. Since 2013, the government has been slowly reducing its stake by selling off the shares in the Group. UKFI had announced in October 2016 that UK Government's Treasury would sell the shares of Group over a period of 12 months as per a pre-arranged trading plan. As per the plan, the stake sale was expected to be completed before October 06, 2017. UKFI had roped in the services of Morgan Stanley & Co. International PLC for this purpose. At the time of announcement, UK Treasury owned approximately 6.5 billion ordinary shares, or approximately 9.1% stake in the Group. By the start of FY17, the UK Government owned only 5% stake in the Group. The last remaining 0.25% stake, or 638,437,059 shares, was sold off by the UK Government early investment of £20.3 billion from stake sale in the Group. After the UK Government's exit from the Group, the Royal Bank of Scotland remains the only bank with 73% stake still owned by the government and has still to emerge from the setback and make a recovery. At the closing bell, on Wednesday, May 17, 2017, the stock closed the trading session at $3.76, slightly climbing 0.53% from its previous closing price of $3.74. A total volume of 8.79 million shares have exchanged hands, which was higher than the 3-month average volume of 7.72 million shares. Lloyds Banking's stock price gained 15.69% in the last month, 9.30% in the past three months, and 23.28% in the previous six months. Moreover, the stock surged 21.29% since the start of the year. The Company's shares are trading at a PE ratio of 21.36 and have a dividend yield of 2.39%. At Wednesday's closing price, the stock's net capitalization stands at $66.88 billion. Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below. AWS has not been compensated; directly or indirectly; for producing or publishing this document. The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email [email protected]. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. 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News Article | May 15, 2017
Site: www.theguardian.com

Nearly 300,000 debt judgments were filed against individuals in English and Welsh county courts in the first three months of 2017, the highest quarterly figure for more than 10 years. Figures from the Registry Trust show a 35% rise compared with the first quarter of last year in county court judgments (CCJs) against borrowers who found themselves unable to pay their debts. The trust, which compiles the figures on behalf of the Department of Justice, said there were 298,901 debt judgments registered against consumers in England and Wales in the first three months of 2017, the highest figure for a single quarter in over a decade. The figures highlight growing alarm over rapid increases in household spending over the last two years fuelled by extra borrowing. Anti-poverty charities have warned that the growing number of people taken to court for failing to pay their debts could worsen this year as rising inflation and slowing wage growth eat into household finances. In recent months the Bank of England, MPs and charities have warned that consumer debt levels were dangerously high, citing increases in lending from banks, car leasing companies, credit card firms and shops offering interest free-credit. Concerns that the purchase of cars with complicated loans, known as PCPs, has increased the debt levels of many low income families has triggered an investigation into potential mis-selling by the main consumer finance watchdog, the Financial Conduct Authority. Last year banks had £19bn of impairments on credit cards, compared with £12bn on mortgage loans. Joanna Elson, the chief executive of the Money Advice Trust – the charity that runs the National Debtline – said: “It is worrying that the number of CCJs issued has been increasing so dramatically. “The sharp spike in the first quarter follows a general increase we’ve seen in recent years and is likely due to a number of factors including an overhang from the financial crash with debts coming to the end of the period in which creditors can take action, more people now struggling to balance household budgets, and a change in approach by some collection agencies. “There’s a strong chance that this trend will continue as people feel rising inflation levels eating into their wages.” The chief executive of Citizens Advice, Gillian Guy, said CCJs “can cause lasting damage to people’s credit rating” and it was crucial that creditors offer customers flexible ways to repay what they owe before taking court action. “As borrowing on credit cards, personal loans, and car finance continues to rise, lenders must ensure that people can afford to pay back what they borrow. It’s good that the Bank of England and Financial Conduct Authority are looking into how robustly lenders are carrying out affordability checks,” she said. The trust said the average value of debts pursued through the courts had fallen for the eighth consecutive year, decreasing 17% on the first quarter of 2016 to a historic low of £1,495. It said that the average value of a judgment in the first quarter of 2008 stood at £3,662. Peter Tutton, the head of policy at debt charity StepChange, said he was concerned that banks were moving more quickly to prosecute people in financial difficulty. He asked whether the figures “represent an assessment by those collecting debts that more aggressive enforcement through the courts is an increasingly attractive option”. “Getting a judgment can have serious knock-on effects, possibly making it more difficult for homeowners to re-mortgage, for renters to secure a tenancy, as well as adding costs and potentially significant levels of stress and anxiety for the borrower. Lenders must do more to support people in financial difficulty,” he said. The trust chairman, Malcolm Hurlston, said the banks were selling portfolios of personal debts to third parties that were “more efficient at pursuing debts” and could therefore make a profit chasing smaller sums. He said banks were more likely to write off debts. “People who don’t pay their debts are increasingly likely to be taken to courts. CCJs can seriously damage credit ratings and good lenders rightly avoid people who have shown they can’t manage debt,” Hurlston said. However, he argued that it can be beneficial to indebted consumers to have their debts cancelled at an early stage. “This may seem like bad news on the surface but judgments for smaller sums are protective for the people concerned,” he said, adding that it prevented them from taking on further debts that they cannot afford to repay.


News Article | January 13, 2017
Site: www.theguardian.com

The EU’s chief negotiator in the Brexit talks has shown the first signs of backing away from his hardline, no-compromise approach after admitting he wants a deal with Britain that will guarantee the other 27 member states continued easy access to the City. Michel Barnier wants a “special” relationship with the City of London after Britain has left the bloc, according to unpublished minutes seen by the Guardian that hint at unease about the costs of Brexit on continental Europe. Barnier told a private meeting of MEPs this week that special work was needed to avoid financial instability, according to a European parliament summary of the session. “Some very specific work has to be done in this area,” he said, according to the minutes. “There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.” Barnier later moved to clarify his comments, claiming on Twitter that he referred to a “special vigilance” required to ensure the EU remained financially stable after Brexit. The remarks hint at concern among senior Brussels policymakers about the damaging consequences of Brexit for the continent if Europe’s biggest financial centre is cut adrift. A spokesman for the European commission insisted that the minutes, which were drawn up by European parliament officials, did not “correctly reflect what Mr Barnier said”. A source present at the meeting, however, described the minutes as “more or less accurate”. Barnier discussed the problems of financial services, the source said, although the negotiator’s preferred options were not clear. The suggestion recorded in the minutes does mirror the view of the governor of the Bank of England, Mark Carney. He told MPs on Tuesday “there are greater financial stability risks on the continent in the short term, for the transition, than there are for the UK”. Carney said other EU nations relied heavily on the City for their financial needs and could face serious problems if international banks based in London were no longer able to gain easy access to European countries and corporations. “If you rely on a jurisdiction [the UK] for three-quarters of your hedging activities, three-quarters of your foreign exchange activity, half your lending and half your securities transactions, you should think very carefully about the transition from where you are today to where the new equilibrium will be,” he said. The fear is that European governments and companies would find it harder and more expensive to raise capital if they were denied access to the City, which acts as Europe’s investment bank. Countries such as Italy, with very large national debt, are concerned that their economies would become even more fragile if financing costs rose. The minutes indicate that Barnier repeated during Thursday’s meeting the well-worn mantra that the UK should not be allowed to cherry-pick the bits of the EU it likes. But his apparent concern about financial instability contrasts with bullish statements by EU leaders about swooping on London’s financial sector business. In the days after the EU referendum, French president François Hollande said London should no longer be allowed to handle any transactions denominated in euros. These “euro clearing operations” are worth about $150tn a year. Some cities, including Paris and Frankfurt, have launched glossy marketing campaigns aimed at persuading bankers to leave the City of London. Behind the scenes, EU officials are maintaining that the UK will be hardest hit by Brexit, but they are concerned about the costs facing continental Europe. One senior source recently told the Guardian that closing London as a euro clearing centre was likely to increase costs for EU banks and companies. Another source has voiced concern that there would be limited gains for rival financial centres as a result of a smaller European single market. On Friday, one the City’s most senior bankers welcomed growing recognition of the risk to the global financial system. “The industry and the regulatory community, and the political community, are fully aware of the importance of maintaining financial stability,” said Douglas Flint, chairman of HSBC, Europe’s largest bank. “There are clearly negotiating positions that will evolve over the next several months and years but the importance of preserving the functionality of the markets that exist today … is seen by everybody,” he said, following similar warnings to the Treasury select committee. Flint suggested a new special relationship with the City could be achieved with a treaty guaranteeing “mutual recognition” of regulations. City firms are able to do business across the EU by using a “passport”, which will disappear when the UK quits the EU. Barnier, a former EU commissioner in charge of financial services who led the post-crisis crackdown on bankers’ bonuses, is well placed to understand the financial risks of Brexit. According to TheCityUK, the lobby group representing the the City, London is Europe’s biggest financial centre: 75 EU banks have major branches in the capital, holding £1.2tn of assets, almost one fifth of all UK bank assets. Twice as many euros are traded in London than in the 19 countries of the single currency combined. Carney is increasingly becoming embroiled in a war of words with his continental colleagues over who faces the biggest Brexit risks. Earlier this week, Malta’s finance minister, Edward Scicluna, said that the UK would suffer greater damage, although the rest of the EU would also suffer. Barnier, according to the minutes of the meeting with MEPs, described Brexit as a “unique and extraordinary negotiation” that had to result in a outcome that showed the best option was being an EU member. He stressed there would be “no aggressiveness, no revenge, no punishment” but also no naivety. Both lines are consistent with his only public statement on Brexit, when he stressed the interests of the rest of the EU were his top priority. The European parliament must give its consent to the final Brexit deal and Barnier, who briefly served as an MEP, promised to involve them throughout the process. In a sign of ambivalence about a transition deal, he told MEPs it was not part of the remit of the EU exit talks and they were waiting to see what the UK would ask for. This is consistent with earlier remarks, when he said it was “difficult to imagine” a transition deal because the UK did not know where it was heading after Brexit. He made clear that the UK would have to follow EU law if it wished to remain a member of the single market during the transition period. This reinforces comments by Malta’s prime minister, Joseph Muscat, who said this week that the European court of justice would be “dishing out judgements” to the UK during any transition period. Some MEPs’ mistrust of the UK comes through in the minutes of Barnier’s meeting with the MEPs who chair the European parliament’s main committees, including foreign affairs, trade, single market and budget. Elmar Brok, the German centre-right chair of the foreign affairs committee, reportedly voiced concern the UK would become “a Trojan horse of the US” – echoing fears that date back to the time of Charles de Gaulle. Werner Langen, a German centre-right MEP who is leading the investigation into the Panama Papers, wants to ensure the UK accepts international rules to clamp down on tax avoidance. Some EU politicians are worried the UK will embark on “a race to the bottom”, by slashing corporate taxes, to compensate for Brexit. Barnier, however, said he expected the UK to stick to existing commitments to enact more than three dozen laws to combat money laundering and tax avoidance.


News Article | December 30, 2016
Site: www.theguardian.com

KitKat lovers can eat happy in the knowledge that the chocolate bar will not be downsized to cut Brexit-related costs. Dame Fiona Kendrick, Nestlé’s boss in the UK and Ireland, said the four-fingered version of the much-loved biscuit bar would not be reduced to three to lower costs. “Not while I’m sitting here as chairman and CEO [chief executive],” she told BBC Radio 4’s Today programme. In November, the makers of Toblerone outraged fans by revealing plans to widen the gaps between the chocolate bar’s triangular chunks in an effort to avoid raising its prices. Mondelez International said higher costs for ingredients meant it was cutting the weight of two bars in Toblerone’s UK range. It has reduced 400g bars to 360g and 170g bars to 150g to maintain retail prices. Kendrick said Nestlé would do all it could to absorb any price rises internally before passing them on to customers. “We want to make sure that Nestlé does everything it can to try and save costs and to ensure that we absorb as much as possible ourselves,” she said, adding that the company would not take risks with well-loved brands for the sake of short-term cost increases. “We will look at every single opportunity to try and take costs out before we put pricing through and we will do that in a very responsible way. We’ve got fantastic, iconic brands and we’re not going to obviously do anything short-term in order to manage the immediate cost issues there.” The pound has fallen sharply against other major currencies since the Brexit vote in June, making imports more expensive and driving up costs for UK manufacturers which buy raw materials and ingredients from abroad. The pound is down 17% against the dollar at about $1.23. Economists including those at the Bank of England have said higher costs will increasingly feed through into consumer price inflation in 2017. The headline inflation rate is expected to rise to about 3% next year from a current level of 1.2%.


News Article | May 18, 2017
Site: marketersmedia.com

LONDON, UK / ACCESSWIRE / May 18, 2017 / Active Wall St. blog coverage looks at the headline from Lloyds Banking Group PLC (NYSE: LYG) ("the Group") as the Company announced on May 17, 2017, that the UK government has sold its last remaining shares in the Group. This step enables the financial institution to become a fully privately owned organization. Register with us now for your free membership and blog access at: One of Lloyds Banking's competitors within the Foreign Money Center Banks space, Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX), reported on April 21, 2017, its results for Q1 2017 ended March 31, 2017. AWS will be initiating a research report on Banco Latinoamericano de Comercio Exterior in the coming days. Today, AWS is promoting its blog coverage on LYG; touching on BLX. Get all of our free blog coverage and more by clicking on the link below: Sharing his views on the matter, António Horta-Osório, Chief Executive of Lloyds Banking Group said: "Today the Government has sold its last shares in Lloyds Banking Group, receiving more money than was originally invested. Six years ago, we inherited a business that was in a very fragile financial condition. Thanks to the hard work of everyone at Lloyds, we've turned the Group around. But the job is not done. We're going to continue to use our strong position to Help Britain Prosper." The credit for the turnaround goes to Antonio Horta-Osorio, the CEO of the Group. His strategies and persistent efforts have enabled the Group to gain its financial strength and profitability. The Group has over the last few years focused on cutting costs, strengthening its balance sheet, reducing its international exposure and risk, selling off unviable business units, etc. It started paying dividends to its stakeholders from FY14. Following the Bank of England's 2016 stress testing of the UK banking system, Lloyds Banking emerged as one of the best performing banks in UK. For FY16, the CET1 ratio of the Group was 13.8% (post dividend). CET1 is a measure of bank solvency that gauges a bank's capital strength. The Group has reduced its reliance on wholesale funding and in FY16 its wholesale funding stood at £111 billion. It has also simplified its business strategy by focusing on local business and presently 97% of its business is now in the UK. The Group emerged as the most profitable bank in UK for the period from 2012 and 2016. The Group has paid a dividend of over £5 billion to its shareholders. UK Financial Investments Limited (UKFI) manages the UK Government's shareholding in the Royal Bank of Scotland and the Group. UKFI was formed in 2008 to manage Government's shareholding in banks, which it had acquired as a part of the bailout package given to the banks due to the financial crisis following the collapse of Lehman Brothers. As a part of the bailout, UK Government had invested over £20.3 billion and acquired 43% stake in the Group. The Group had reported a loss of over £25 billion in 2008 as Lloyds TSB took over Britain's biggest lender, HBOS for £12 billion. Since 2013, the government has been slowly reducing its stake by selling off the shares in the Group. UKFI had announced in October 2016 that UK Government's Treasury would sell the shares of Group over a period of 12 months as per a pre-arranged trading plan. As per the plan, the stake sale was expected to be completed before October 06, 2017. UKFI had roped in the services of Morgan Stanley & Co. International PLC for this purpose. At the time of announcement, UK Treasury owned approximately 6.5 billion ordinary shares, or approximately 9.1% stake in the Group. By the start of FY17, the UK Government owned only 5% stake in the Group. The last remaining 0.25% stake, or 638,437,059 shares, was sold off by the UK Government early investment of £20.3 billion from stake sale in the Group. After the UK Government's exit from the Group, the Royal Bank of Scotland remains the only bank with 73% stake still owned by the government and has still to emerge from the setback and make a recovery. At the closing bell, on Wednesday, May 17, 2017, the stock closed the trading session at $3.76, slightly climbing 0.53% from its previous closing price of $3.74. A total volume of 8.79 million shares have exchanged hands, which was higher than the 3-month average volume of 7.72 million shares. Lloyds Banking's stock price gained 15.69% in the last month, 9.30% in the past three months, and 23.28% in the previous six months. Moreover, the stock surged 21.29% since the start of the year. The Company's shares are trading at a PE ratio of 21.36 and have a dividend yield of 2.39%. At Wednesday's closing price, the stock's net capitalization stands at $66.88 billion. Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below. AWS has not been compensated; directly or indirectly; for producing or publishing this document. The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way. AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice. This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/. For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at: CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute. LONDON, UK / ACCESSWIRE / May 18, 2017 / Active Wall St. blog coverage looks at the headline from Lloyds Banking Group PLC (NYSE: LYG) ("the Group") as the Company announced on May 17, 2017, that the UK government has sold its last remaining shares in the Group. This step enables the financial institution to become a fully privately owned organization. Register with us now for your free membership and blog access at: One of Lloyds Banking's competitors within the Foreign Money Center Banks space, Banco Latinoamericano de Comercio Exterior, S.A. (NYSE: BLX), reported on April 21, 2017, its results for Q1 2017 ended March 31, 2017. AWS will be initiating a research report on Banco Latinoamericano de Comercio Exterior in the coming days. Today, AWS is promoting its blog coverage on LYG; touching on BLX. Get all of our free blog coverage and more by clicking on the link below: Sharing his views on the matter, António Horta-Osório, Chief Executive of Lloyds Banking Group said: "Today the Government has sold its last shares in Lloyds Banking Group, receiving more money than was originally invested. Six years ago, we inherited a business that was in a very fragile financial condition. Thanks to the hard work of everyone at Lloyds, we've turned the Group around. But the job is not done. We're going to continue to use our strong position to Help Britain Prosper." The credit for the turnaround goes to Antonio Horta-Osorio, the CEO of the Group. His strategies and persistent efforts have enabled the Group to gain its financial strength and profitability. The Group has over the last few years focused on cutting costs, strengthening its balance sheet, reducing its international exposure and risk, selling off unviable business units, etc. It started paying dividends to its stakeholders from FY14. Following the Bank of England's 2016 stress testing of the UK banking system, Lloyds Banking emerged as one of the best performing banks in UK. For FY16, the CET1 ratio of the Group was 13.8% (post dividend). CET1 is a measure of bank solvency that gauges a bank's capital strength. The Group has reduced its reliance on wholesale funding and in FY16 its wholesale funding stood at £111 billion. It has also simplified its business strategy by focusing on local business and presently 97% of its business is now in the UK. The Group emerged as the most profitable bank in UK for the period from 2012 and 2016. The Group has paid a dividend of over £5 billion to its shareholders. UK Financial Investments Limited (UKFI) manages the UK Government's shareholding in the Royal Bank of Scotland and the Group. UKFI was formed in 2008 to manage Government's shareholding in banks, which it had acquired as a part of the bailout package given to the banks due to the financial crisis following the collapse of Lehman Brothers. As a part of the bailout, UK Government had invested over £20.3 billion and acquired 43% stake in the Group. The Group had reported a loss of over £25 billion in 2008 as Lloyds TSB took over Britain's biggest lender, HBOS for £12 billion. Since 2013, the government has been slowly reducing its stake by selling off the shares in the Group. UKFI had announced in October 2016 that UK Government's Treasury would sell the shares of Group over a period of 12 months as per a pre-arranged trading plan. As per the plan, the stake sale was expected to be completed before October 06, 2017. UKFI had roped in the services of Morgan Stanley & Co. International PLC for this purpose. At the time of announcement, UK Treasury owned approximately 6.5 billion ordinary shares, or approximately 9.1% stake in the Group. By the start of FY17, the UK Government owned only 5% stake in the Group. The last remaining 0.25% stake, or 638,437,059 shares, was sold off by the UK Government early investment of £20.3 billion from stake sale in the Group. After the UK Government's exit from the Group, the Royal Bank of Scotland remains the only bank with 73% stake still owned by the government and has still to emerge from the setback and make a recovery. At the closing bell, on Wednesday, May 17, 2017, the stock closed the trading session at $3.76, slightly climbing 0.53% from its previous closing price of $3.74. A total volume of 8.79 million shares have exchanged hands, which was higher than the 3-month average volume of 7.72 million shares. Lloyds Banking's stock price gained 15.69% in the last month, 9.30% in the past three months, and 23.28% in the previous six months. Moreover, the stock surged 21.29% since the start of the year. The Company's shares are trading at a PE ratio of 21.36 and have a dividend yield of 2.39%. At Wednesday's closing price, the stock's net capitalization stands at $66.88 billion. Active Wall Street (AWS) produces regular sponsored and non-sponsored reports, articles, stock market blogs, and popular investment newsletters covering equities listed on NYSE and NASDAQ and micro-cap stocks. AWS has two distinct and independent departments. One department produces non-sponsored analyst certified content generally in the form of press releases, articles and reports covering equities listed on NYSE and NASDAQ and the other produces sponsored content (in most cases not reviewed by a registered analyst), which typically consists of compensated investment newsletters, articles and reports covering listed stocks and micro-caps. Such sponsored content is outside the scope of procedures detailed below. AWS has not been compensated; directly or indirectly; for producing or publishing this document. The non-sponsored content contained herein has been prepared by a writer (the "Author") and is fact checked and reviewed by a third party research service company (the "Reviewer") represented by a credentialed financial analyst, for further information on analyst credentials, please email info@activewallst.com. Rohit Tuli, a CFA® charterholder (the "Sponsor"), provides necessary guidance in preparing the document templates. The Reviewer has reviewed and revised the content, as necessary, based on publicly available information which is believed to be reliable. Content is researched, written and reviewed on a reasonable-effort basis. The Reviewer has not performed any independent investigations or forensic audits to validate the information herein. The Reviewer has only independently reviewed the information provided by the Author according to the procedures outlined by AWS. AWS is not entitled to veto or interfere in the application of such procedures by the third-party research service company to the articles, documents or reports, as the case may be. Unless otherwise noted, any content outside of this document has no association with the Author or the Reviewer in any way. AWS, the Author, and the Reviewer are not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document. AWS, the Author, and the Reviewer expressly disclaim any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Additionally, AWS, the Author, and the Reviewer do not (1) guarantee the accuracy, timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice. This document is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Please read all associated disclosures and disclaimers in full before investing. Neither AWS nor any party affiliated with us is a registered investment adviser or broker-dealer with any agency or in any jurisdiction whatsoever. To download our report(s), read our disclosures, or for more information, visit http://www.activewallst.com/disclaimer/. For any questions, inquiries, or comments reach out to us directly. If you're a company we are covering and wish to no longer feature on our coverage list contact us via email and/or phone between 09:30 EDT to 16:00 EDT from Monday to Friday at: CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.


News Article | May 17, 2017
Site: www.theguardian.com

Labour and the unions accused the government of ignoring the plight of ordinary workers after UK pay growth fell below inflation in early 2017 for the first time in two-and-a-half years. Official figures showed that workers’ average earnings rose by 2.1% year on year in the three months to March, the weakest increase since July of last year. With inflation running at 2.3% in the same period, that meant real-terms pay lagged by 0.2% in the first three months of the year, the first fall since the third quarter of 2014. The Labour party has made weak wage growth one of its main themes in the run-up to the general election on 8 June, which opinion polls suggest Theresa May is on course to win. Analysis by the Resolution Foundation showed that wages were still £16 a week below their 2008 peak, leaving many families forced to borrow to make ends meet. John McDonnell, the shadow chancellor, said the figures revealed “the Tories’ total failure to improve the living standards of working families”. He said: “Real wages are lower than they were in 2010 and, after seven years of the Tories, they are now falling again.” McDonnell has promised a Labour government would introduce a higher minimum wage and end to a cap on public sector pay rises. Analysts said Britain was breaking all the rules of the postwar era as record levels of employment and unemployment at a 42-year low failed to spur consistently strong wage increases. The unemployment rate in the period between January and March fell unexpectedly to 4.6%. Economists polled by Reuters had expected the rate to remain at 4.7%. The number of people in work rose by 122,000, taking the employment rate to a record 74.8%, the Office for National Statistics said. John Philpott, the director of the JobsEconomist, said: “This is a jobs market that looks better on paper than it feels in the pocket, reflecting a structural shift in the types of work people do and the relative bargaining power between workers and bosses. “No wonder workers’ rights, productivity and pay rather than the availability of jobs per se, is a key battleground in the UK general election campaign.” The TUC general secretary, Frances O’Grady, said: “Today’s fall in real wages risks tipping working people into another living standards crisis. And that poses a major challenge for whoever forms the next government. “The big question for every party is – what’s your plan to get Britain’s wages rising again?” Liberal Democrat spokesman Vince Cable said:“This squeeze on living standards is almost certainly caused by the falling pound since the Brexit vote. “If Theresa May is allowed to pursue her extreme Brexit agenda, we can expect further weakening of the economy and erosion of people’s living standards.” May, who has denied that the Brexit vote lies behind the broader economic slowdown, has said she is aware of the squeeze on household spending and that she will cap energy prices, a move that appears to break with the Conservative party’s usual pro-market stance. But inflation has already moved up to 2.7% and is heading above 3%, according to many forecasters, adding to the pressure on politicians to act. The Bank of England is watching for signs of a pickup in wages that could add to inflation. So far it has judged that most of the pressure on shop prices has come from higher import costs that follow a sharp fall in the value of the pound. Sterling fell by almost a quarter against the dollar after the UK voted to leave the EU before a recovery in recent weeks that has limited to the drop to nearer 13%. So far the Bank of England believes there is little pressure on most employers to raise pay sharply, which could feed a more permanent inflation problem. This week, a survey by the Chartered Institute of Personnel and Development found that most large employers were preparing to raise wages by 1% this year. Other surveys have shown wage rises softening amid growing numbers of job cuts as Brexit uncertainty affects the labour market. The Bank of England has softened its previous forecasts for a rise in unemployment, which it expects to stand at 4.7% this year, still above the level it considers inflationary. The ONS said workers’ total earnings including bonuses rose by an annual 2.4% in the first quarter of 2017, edging up from growth of 2.3% in the three months to February. The Bank expects wages to rise by 2% this year before picking up in 2018 and 2019, though it has forecast a stronger outlook in all of the last seven years only to be proved overly optimistic. The ONS said the number of unemployment benefit claimants rose by 19,400 to just under 793,000 in April, slower than an increase of 33,500 in March.


News Article | May 16, 2017
Site: www.theguardian.com

Global stock markets are hitting new peaks, with the FTSE 100, Germany’s Dax, the S&P 500 in the US and MSCI’s World Index, which tracks equities across the globe, all at record highs. Investors are shrugging off worries about flashpoints such as North Korea, the uncertainty over the global political situation and latterly the WannaCry cyber-attack to snap up shares. So what is driving the rise, and can it continue? Over the weekend, the Chinese president, Xi Jinping, unveiled a plan to spend $124bn (£96bn) on infrastructure as part of a $900bn “Belt and Road” initiative, a global construction plan covering 65 countries, from Asia to the Americas via Africa and Europe. Beijing’s commitment to spend billions of dollars on new roads, ports and other infrastructure is likely to drive up consumption of commodities such as iron ore, copper and nickel. In turn this has given a boost to shares in mining companies that dig the key commodities out of the ground. And the FTSE 100 is particularly dominated by mining businesses, meaning it gains a particular benefit when the sector is in demand. Among political risks worrying investors was the prospect of renewed calls for a break-up of the eurozone, with unpredictable consequences for the rest of the global economy. The prospect of far-right candidate Marine Le Pen, with her anti-EU stance, winning the French presidential election had been hovering over markets for weeks. So when the moderate Emmanuel Macron won, markets rallied in relief. The forthcoming German federal election has also been in focus. Concerns that Angela Merkel, the chancellor seen as a safe pair of hands by markets, could struggle brought new uncertainty. But over the weekend, Merkel’s CDU defeated its rival SPD in regional elections, suggesting Merkel has little to worry about in September’s poll. As for the UK election, Theresa May’s Conservatives appear so far ahead that a shock result looks unlikely and investors are hoping a strong Tory majority will head off the threat of a chaotic Brexit. Rising production and weak demand had seen oil prices slide to new lows last year, but in November an agreement between Opec and non-Opec producers to cut output for six months seemed to halt the decline. But in recent weeks there had been doubts about the effectiveness of the move, given US shale producers were increasing output and taking up the slack and concerns that the end of the agreement was in sight. But ahead of an Opec meeting on 25 May, two of the world’s biggest producers, Saudi Arabia and Russia, said they would support a nine-month extension of the output cap until March 2018. They said they would do “whatever it takes” to tackle the global supply glut, and the news sent oil prices soaring. That, in turn, lifted energy and commodity companies and helped give the markets another lift. Recent strength in the US economy means the Federal Reserve has been happy to start edging up interest rates, and most economists now expect another increase in June. But with some signs of weakness in the first quarter, that may well be the last rise from the US central bank for a while. These small hikes have done little to halt a Wall Street rally and a pause is likely to be welcomed by investors. Meanwhile, the European Central Bank shows little sign of raising interest rates or halting its bond-buying programme anytime soon. Even if it does begin to ease its stimulus measures in the late summer, investors are likely to welcome the fact that the eurozone economy would be strong enough to absorb such a move. In the UK, the Bank of England last week suggested rates may rise sooner than the market expected, but economists believe there will be no move until 2019. And with low interest rates and bond yields, investors searching for growth have little option but to continue buying equities. Even a stronger pound in recent weeks has failed to dent the current rally in the FTSE 100, which has reached 7,500 for the first time. Taken as a whole, FTSE companies make the majority of their earnings overseas, so a weak pound boosts their bottom line and thus their stock prices. Jasper Lawler, senior market analyst at London Capital Group, a spreadbetting firm, said: “Since the snap election was announced, the negative correlation between the British pound and the FTSE 100 has broken down. If the last two weeks are any guide, investors in UK stocks seem to be looking beyond foreign exchange. “After consolidating in a 350-point range for most of the year, the FTSE 100 could be setting the stage for another surge higher.” Following the election of Donald Trump as US president in November, global stock markets surged on his promises of increased infrastructure spending and tax reforms to boost demand for goods from the world’s largest economy. And despite his initial failure to pass the healthcare bill, the lack of detail on his economic stimulus plans and the continuing controversies surrounding the president, investors continue to bet that the US economy will keep growing. The latest set of corporate results on Wall Street were generally positive, with earnings growing at their best quarterly pace in more than five years, according to Thomson Reuters. Technology stocks continue to lead the way, with Apple recently becoming the first US company to be valued at more than $800bn. Meanwhile, the VIX volatility gauge, the so-called fear index, has fallen to a 24-year low. US corporate earnings are on track to grow nearly 15% in the first quarter, the best quarterly pace in more than five years, according to Thomson Reuters.


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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