News Article | February 15, 2017
NetDimensions (AIM: NETD; OTCQX: NETDY), a global provider of performance, knowledge, and learning management systems, consolidates its position as a Core Leader in the unique European learning and talent market insight report, the Fosway 9-Grid™ for Learning Systems, which was released in January 2017. This year’s model shows NetDimensions improving both its performance capabilities and its potential in delivering Learning Systems. “NetDimensions has been recognized as a Core Leader in Learning Systems thanks to its strong track record of delivering complex solutions for enterprise organizations,” said David Wilson, CEO of Fosway Group. “Together with positive client feedback and a growing customer base, NetDimensions continue to demonstrate its progress year on year.” NetDimensions CEO Jay Shaw commented: “We are pleased that Fosway Group continues to see us as a leader in our chosen high-consequence industries, where we provide the ‘license-to-operate’ learning and talent management solutions. We continue investing in providing solutions that meet the complex needs of organizations in highly regulated environments.” The Fosway 9-Grid™ is a five dimensional market analysis model that is used to understand the relative position of solutions and providers in the learning and talent systems market. The Fosway 9-Grid™ has been evolving since 2008 and is driven by demand for analysis and insight designed for European-based companies. The Fosway 9-Grid™ Report for Learning Systems is available for download on the Fosway Group website. At Fosway Group we understand that developing and engaging people is how complex global organizations deliver performance and achieve success. Just as every employee’s talent journey is unique, so is every organization’s people strategy. Fosway Group’s analyst and advisory services deliver the insights your organization needs to achieve results and eliminate risk. We know that every aspect of next generation HR and talent are more intertwined than ever. When you work with us, you accelerate your insight and make better decisions. We’re Europe’s #1 independent HR analyst, and just like the Roman road we draw our name from, you’ll find that we’re unusually direct. We don’t have a vested interest in your technology or consulting choices. You can depend on us to tell you what you need to know to succeed. Example clients include: Alstom, Aviva, Boots UK, BP, BT, Centrica, Deutsche Bank, Faurecia, HSBC, International SOS, Lloyds Banking Group, Novartis, PwC, Rolls-Royce, Royal Bank of Scotland, Sanofi, Shell, Swiss Re, Telefonica, Thomson Reuters, Toyota Europe, and Vodafone. Established in 1999, NetDimensions (AIM: NETD; OTCQX: NETDY) is a global provider of learning, knowledge and performance management solutions to highly regulated industries. NetDimensions provides companies, government agencies and other organizations with talent management solutions to personalize learning, share knowledge, enhance performance, and manage compliance programs for employees, customers, partners, and suppliers. NetDimensions' solutions also include custom content and learning portal development services, as well as off-the-shelf course libraries and regulatory compliance courseware developed by NetDimensions' subject matter experts and content partners. NetDimensions' award-winning solutions have been chosen by leading organizations worldwide including ING, Cathay Pacific, Chicago Police Department, Geely Automotive, Norton Healthcare, and Fresenius Medical Care. NetDimensions is ISO 9001 certified and NetDimensions' Secure SaaS practices are ISO 27001 certified. For more information, visit http://www.NetDimensions.com or follow @netdimensions on Twitter.
News Article | January 26, 2017
LONDON, 26 January 2017 – Cornerstone OnDemand (NASDAQ:CSOD), a global leader in cloud-based human capital management software, today announced that it remains positioned as a Strategic Leader in the 2017 Fosway 9-Grid™ for Learning Systems. The Fosway 9-Grid™ is a five-dimensional market analysis model that is used to understand the relative position of solutions and providers in the European talent systems market. It provides readers a comparison of different solutions based on performance, potential, market presence, total cost of ownership and future trajectories across the market. The Fosway 9-Grid™ is the only market analysis of its kind focused on organisations in Europe. “Cornerstone retains its position as a Strategic Leader in the 2017 Fosway 9-Grid™ for Learning Systems because of its consistent performance, growth and investment in innovation” said David Wilson, CEO Fosway Group. “Cornerstone continues to deliver capabilities that meet the demands of complex enterprise-scale customers as well as strong customer advocacy and growing its penetration into the mid-market.” Cornerstone’s learning management software enables organisations to engage the entire workforce, accelerate employee performance, support organisational goals, and ensure compliance. From a simple, modern and engaging centralised solution, Cornerstone delivers instructor-led training (ILT), virtual, mobile, collaborative and online learning, exams, certifications, and compliance content for training and developing employees. “We have a strong learning heritage, and Cornerstone being featured as a Strategic Leader is a real testament to how comprehensive and modern our solution is. We pride ourselves on our ability to deliver innovation, true adoption, advocacy, and customer satisfaction,” said Vincent Belliveau, executive vice president and general manager of Europe, Middle East and Africa (EMEA) for Cornerstone OnDemand. “Learning never ends, and is very much a survival skill as change remains rapid in organisations. Data and analytics are more important than ever because of this too, and our suite of products helps organisations to build their people’s skills, boost engagement through modern and collaborative learning, and predict the future leadership pipeline based on data – and train them accordingly.” Learn more and download the 2017 Fosway 9-Grid™ for Learning Systems at http://www.fosway.com/9-grid/learning-systems About Fosway Group At Fosway Group we understand that developing and engaging people is how complex global organisations deliver performance and achieve success. Just as every employee’s talent journey is unique, so is every organisation’s people strategy. Fosway Group’s analyst and advisory services deliver the insights your organisation needs to achieve results and eliminate risk. We know that every aspect of next generation HR and talent are more intertwined than ever. When you work with us, you accelerate your insight and make better decisions. We’re Europe’s #1 independent HR analyst, and just like the Roman road we draw our name from, you’ll find that we’re unusually direct. We don’t have a vested interest in your technology or consulting choices. You can depend on us to tell you what you need to know to succeed. Example clients include: Alstom, Aviva, Boots UK, BP, BT, Centrica, Deutsche Bank, Faurecia, HSBC, International SOS, Lloyds Banking Group, Novartis, PwC, Rolls-Royce, Royal Bank of Scotland, Sanofi, Shell, Swiss Re, Telefonica, Thomson Reuters, Toyota Europe, and Vodafone. About Cornerstone OnDemand Cornerstone OnDemand (NASDAQ: CSOD) is a global leader in cloud-based human capital management software. The company’s solutions help organisations realise the potential of the modern workforce. From recruitment, onboarding, training and collaboration, to performance management, compensation, succession planning, people administration and analytics, Cornerstone is designed to enable a lifetime of learning and development that is fundamental to the growth of employees and organisations. Based in Santa Monica, California, the company’s solutions are used by more than 2,800 clients worldwide, spanning nearly 28 million users across 191 countries and 42 languages. To learn more about Cornerstone, visit us on Twitter, Facebook and our blog. www.cornerstoneondemand.co.uk Cornerstone® and Cornerstone OnDemand® are registered trademarks of Cornerstone OnDemand, Inc.
News Article | February 19, 2017
A small corner of Merseyside has become the centre of the corporate universe. Vauxhall’s plant in Ellesmere Port is less than seven miles away from Unilever’s base in Port Sunlight on the Wirral peninsula. The thousands of workers in those two places now face an anxious wait for the outcome of takeover talks involving their parent companies. Last week General Motors revealed it was in talks with Groupe PSA, the owner of Peugeot and Citroen, about selling its European businesses, Opel and Vauxhall, while Unilever rejected a $143bn (£115bn) bid from Kraft Heinz. If both deals go ahead, job losses in the UK will be a genuine concern. GM’s European business has not made a profit in the 21st century and the drop in the value of the pound has made carmaking in the UK even less attractive for a US company. And 3G Capital, the private equity fund that teamed up with Warren Buffett to merge Heinz and Kraft, has a reputation for cost-cutting. Brexit is clearly playing a role in the proposed deals. The fall in the value of the pound against the dollar since the vote last June has led to writedowns on the value of GM’s European operators and made it cheaper for Kraft Heinz to launch a bid for Unilever. Whether the deals actually happen is another matter. GM has flirted with the idea of extending its existing partnership with Peugeot for many years and the deal is mired in political difficulty. The UK and German governments are uncomfortable with the idea of Opel and Vauxhall being sold, while the French government owns a stake in PSA. Meanwhile, Kraft Heinz has a lot of work to do if it wants to buy Unilever. The US company’s proposal was rejected because Unilever saw “no merit, either financial or strategic, for shareholders”. But Kraft Heinz indicated it was not giving up. Strategically, there doesn’t look to be much that Kraft Heinz can offer Unilever. Only 40% of the Anglo-Dutch company’s sales are actually in food and it has moved away from the mass-produced products that Kraft Heinz specialises in. Unilever’s spreads business, which includes Flora, is the only significant remnant of this and its performance fluctuates depending on the direction of the entire market. Elsewhere in food, Unilever is focused on positioning brands such as Magnum ice creams as upmarket in the western world and increasing sales in emerging markets. In contrast, Kraft Heinz said in its results last Thursday that sales had fallen by 3.7% in the final three months of 2016, sending its shares down 4%. As for Unilever’s collection of personal care and home care brands, Kraft Heinz does not have much of a track record in this area. However, every company has a price, so if Kraft Heinz tables an irresistible offer then Unilever’s directors and shareholders will put these concerns to one side. The US firm’s initial offer was at just an 18% premium to Unilever’s share price before the deal talks were revealed, which is small by the standards of corporate M&A. Although the sheer size of Unilever will limit the premium, the Anglo-Dutch company clearly feels this price does not reflect the risks involved in the deal. Kraft Heinz is reportedly keen to use Unilever’s strong credit rating to raise debt for the transaction – its own credit rating is close to junk – and part of the deal would involve Unilever investors getting shares in the enlarged company, so its future success would matter. Both these factors should push the premium higher. There are some factors in Kraft Heinz’s favour. Unilever’s recent row with Tesco about increasing the price of Marmite shows it is working hard to protect profit margins at a time when costs are rising and supermarkets are trying to push food prices down. If Unilever combined with Kraft Heinz then it would have even more muscle in negotiations with supermarkets, and the US company’s cost-cutting abilities would be valuable. A slightly higher offer could make seeing off 3G and Warren Buffett a formidable task for Unilever. When Royal Bank of Scotland reports its results for 2016 this week, there will be another painful reminder of the 2008 crisis. The numbers are eye-watering: the ninth consecutive year of annual losses will mean the bailed-out bank has sunk into the red by more than £55bn since taxpayers pumped in £45bn to keep it alive. And a proposed deal announced by the chancellor on Friday – designed to free the bank from the necessity of having to divest 300 branches – has added to the strain on its fragile finances. To satisfy the penalty for state aid meted out by Brussels as a result of the bailout, RBS said it would need to take another £750m hit – indicating that the loss it reports on Friday will be close to a colossal £7bn. It is a sorry story and one made all the more woeful by the fact that bailed-out rival Lloyds is on the brink of being freed from taxpayer ownership. Philip Hammond’s proposal, though, to take a £750m hit and free RBS from having to spin off the branches will be a relief. The bank’s attempt to divest the branches – which were being packaged up under the revived brand of Williams & Glyn – has been fraught with difficulties and has already cost £1.8bn. Buyers have walked away: and after the Bank of England cut interest rates to rock bottom levels in the wake of the vote for Brexit, RBS boss Ross McEwan concluded the operation was not viable as a standalone entity. The chancellor had made it clear that the uncertainties surrounding W&G, as well as a hard-to-quantify bill the bank faces over a US bond mis-selling scandal a decade ago, were the main obstacles to selling off the 73% stake that taxpayers still own in the bank. So in setting out alternative proposals to Brussels to spend £750m injecting competition into the banking market, Hammond is removing one of the key hurdles in the way of extricating the taxpayer from the bank. Whether it will be good news for customers is another story. W&G was supposed to be a new presence on the high street; its absence will be felt. Theresa May’s post-Brexit vote pledge to clamp down on corporate excess and put workers on boards was to be welcomed. But with the government’s consultation on pay closing on Friday, there is a real risk that the prime minster’s words will turn out to be empty. Major companies will no doubt be allowed to get on with “business as usual”, despite the odd tinkering with the current rules that will be dressed up as radical reform. Boardroom bosses will keep getting pay rises bigger than their staff and continue to regard the odd run-in with shareholders at annual general meetings as a price worth paying. The fear is that the warning from Stefan Stern, head of the High Pay Centre, will prove to be right. He is a supporter of publishing pay ratios – an embarrassment to boardrooms as the bosses of FTSE 100 companies are currently paid around 147 times the average wage of employees. Last week, he predicted that if bosses’ pay kept rising at the same rate as in the past, that ratio would reach more than 300 to one in the next two decades. Scandalous.
News Article | February 26, 2017
Trading got underway at Wall Street with investors awaiting any specifics on fiscal stimulus and tax cuts in President Donald Trump address to a joint session of Congress (AFP Photo/SPENCER PLATT) Paris (AFP) - World equity markets came under pressure Friday as analysts ran out of ways to justify Donald Trump-inspired stock valuations, but some said the party may not be completely over. The dollar stuttered, while Wall Street, Asian and European markets fell after Treasury Secretary Steven Mnuchin lowered US growth expectations, providing the trigger for a correction many said had been overdue. "The signs were there for a stock market plunge, which is exactly what has happened today," said Fawad Razaqzada, an analyst at Forex.com. "Is this the start of the crash that many people had been waiting for? Well, that remains to be seen," he said. Friday's downturn came after 10 gravity-defying straight record-breaking sessions on the New York exchange which had global investors looking on in "awe and disbelief", said Mati Greenspan, Senior Market Analyst at eToro. This took Wall Street's gains since Trump's election to around nine percent. "Many analysts feel that this has been overdone but most agree that it could very well continue for a while," said Greenspan. In the meantime, Wall Street's recent surge "was probably a cue in itself for global markets to give a little back," said Jasper Lawler, an analyst at London Capital Group. After all, he said, such a winning streak had not been seen since 1987, "the year that saw Black Monday, the biggest one-day market crash in history". But while all the world's major stock markets suffered in Friday's correction, they were in no mood for a crash. Europe even came off early lows late in the session, relieved that Wall Street's morning fall turned out to be so modest. Mnuchin forecast three percent growth by the end of next year, warning that the effect of certain measures would take time. That compared with the four percent Trump promised on the campaign trail. In an interview with CNBC, Mnuchin also appeared to wind back on his boss's earlier threats to call China a currency manipulator, easing concerns about a possible trade stand-off between the world's top two economic powers. Stephen Innes, senior trader at OANDA, said the comments "have left investors dangling about the US administration's currency policy as there appears to be a subtle shift in the Trump administration's rhetoric". The comments overshadowed his promise to push through tax cuts by August, and pursue deregulation on companies and banks. Gold, an attractive investment in risky times, rose 0.5 percent on Friday as investors fled the stock markets for safety. The dollar lost some of its recent shine against the euro and the yen, another sign that cracks may be appearing in investors' belief that US economic strength will make them richer day after day. In corporate Europe, some heavyweights saw heavy losses in response to annual results. Vivendi in Paris dropped nearly four percent after posting a 35-percent decline in net profit. Royal Bank of Scotland shares dropped 4.5 percent in London after the bank's net loss widened to £7 billion in 2016. Frankfurt heavyweight BASF shed close to three percent after the chemicals giant reported a "challenging" 2016, leaving it just "cautiously optimistic" for the current year. New York - Dow: DOWN 0.3 percent at 20,749.51 Euro/dollar: UP at $1.0581 from $1.0579 Pound/dollar: DOWN at $1.2493 from $1.2556 Dollar/yen: DOWN at 112.27 yen from 112.67 yen Oil - West Texas Intermediate: DOWN 42 cents at $54.03 per barrel
News Article | February 18, 2017
Barely seven weeks have passed since Liam Coleman took charge of the Co-operative Bank – but last week he hoisted a for-sale sign. The career banker will be hoping prospective buyers focus on what he insists is a strong, growing high street operation – rather than one that is on track to report its fifth consecutive annual loss. The Co-op Bank has racked up losses of £2.1bn since 2011 and has been told to raise more capital by the Bank of England. Its response has been to look for a buyer but that is where the problems start. A new owner may not have the same ethical approach to business – indeed, it could even be forced to stop using the Co-op brand – but the bank has 4 million customers and 85% of them, according to the Co-op’s own research, joined the bank precisely because of its ethical stance. The Co-op Bank’s ethical credentials, which include not doing business with companies that breach human rights or are involved in animal testing, are “a bedrock and central strand to many of the relationships we have with our retail customers,” said Coleman. Coleman is looking for a buyer, and considering other options, to shore up the ruinous financial position created by the disastrous deal between the Co-op and Britannia building society eight years ago. At that time, the talk was of the creation of a mutual behemoth, born out of the ashes of the financial crisis. But within four years it had all come tumbling down – after an audacious and aborted to attempt to grow even bigger by buying what is now known as TSB. In 2013, a £1.5bn hole in the bank’s finances was uncovered. Until then, wholly owned by the Co-operative Group, the UK’s biggest mutual which runs grocery chains and funeral parlours, it was forced to ced control to hedge funds, and hand over 80% of the bank, to survive. A vivid 152-page account into what went wrong at the Co-op by former top civil servant Sir Christopher Kelly concluded it was brought down by poor management, bad lending, a flawed culture and an overambitious drive for growth. Its former chief executive, Barry Tootell, has been banned from ever holding a senior position in banking again and former chairman Paul Flowers was fined for possessing cocaine, crystal meth and ketamine and subsequently dismissed as a minister by the Methodist church. Coleman, who joined after spells at RBS and Nationwide and was part of the 2013 turnaround team, says the bank is now a very different organisation to the one rescued by hedge funds. Its board has been revamped, it has pared back riskier lending and its assets have been scaled down from £43bn to £28bn. A turnaround programme has led to the workforce being more than halved to 4,000 and nearly 200 branches have been shut down, leaving only 105. Some 700,000 customers have also departed – although these include many customers who regularly move their cash between the best deals and were lured in by high-paying savings products that no longer exist. Current account holders have only slipped from 1.5 million to 1.4 million, but the number of mortgage customers has increased to 225,000 from 175,000. In a week when Royal Bank of Scotland will reveal it has now racked up £55bn of losses since its 2008 bailout, the losses at the Co-op may appear comparatively small. But in the context of the once mutually owned bank, they are enormous: more than double the profits made since the start of the millennium. Other progress has been made: an overhaul of the Co-op’s famously rickety IT systems was completed last Monday and discussions over the pension fund are still under way. But the turnaround plan has been knocked off course by the damage done to profitability by low interest rates, which no one expected to have remained so low for so long when the plan was put in place three years ago. Hence the need to find more cash and the quest for a buyer. The only other alternative may be to ask existing shareholders (the hedge funds and the Co-op group) to put up more cash. The Co-op Group – which has already written down the value of its 20% stake from £333m stake to £140m – was quick to deliver its verdict on that idea, saying it was “supportive of the plan to find the bank a new home”. Equally, the hedge funds are unlikely to want to have to dig any deeper. “The bank’s probably been looking for a buyer ever since the Co-op Group reduced its ownership. Hedge funds aren’t in there for the long-term,” said Pete Hahn, dean at the London Institute of Banking & Finance. The arrival of those hedge funds – and the reputation of hedge-fund investors – meant that the Co-op Bank’s ethical credentials, which had pulled in so many customers since they were introduced in 1992, were written into its articles of association. “Putting them in the documents, they are clearer than they’ve ever been,” said Coleman. The business secretary Greg Clark and the Financial Conduct Authority can ban any buyer from using the Co-op name if it is regarded as misleading to the public. That is not to say the bank’s approach to ethics has not been questioned. Coleman’s predecessor, Niall Booker, was criticised for his multimillion-pound pay deals; Coleman’s is yet to be disclosed. The bank has also been hit by a £660m bill to compensate customers for mis-selling payment protection insurance. “It’s taken some big charges on PPI,” said Hahn. “It may not lend money to defence companies, but how ethical was it really? It is still a bank.” Coleman won’t say how much cash the bank needs to find. But analysts at JP Morgan reckon it is about £550m. They are sceptical that a takeover is possible and think bondholders – as was the case in 2013 – may eventually have to pay up to cover the shortfall. “There are very few options left,” they said. “We think bondholders may have to participate in the recapitalisation of the troubled lender.” Tomas Kinmonth, fixed-income analyst at ABN Amro, thinks the bank is unlikely to be taken over in its entirety. “It is expensive to take over such a small bank,” he said. “There is very little value in taking over the infrastructure and staff.” It is more likely, he says, that the current accounts and mortgage book will be sold off separately. The Co-op brand might go with the current accounts, but could equally be sold to another buyer who pledges to retain the ethical stance. Whatever the outcome, though, it is very different to 2012 when, together with the TSB branches, the Co-op was expected to create a 1,000-strong high street force to take on the big four of Lloyds Banking Group, HSBC, Barclays and RBS.
News Article | February 21, 2017
The City of London has warned that the loss of banking jobs to EU countries due to Brexit could threaten British and European financial stability. Interviews with more than half a dozen senior bankers and business leaders reveal growing certainty that the threat of losing single market access will force a wave of relocations this year and may cause an “unwinding” of a cluster of related businesses. While the immediate loss of a few thousand jobs is viewed with relative equanimity, concern is mounting over the knock-on effect on financial stability if the City’s valuable related professions begin to fragment. Douglas Flint, the chairman of HSBC, Britain’s biggest bank, said common regulation needed to be agreed with the remaining 27 EU members once Brexit talks got under way or there was a risk of sparking turbulence in the financial system. “One of the critical pieces is the ecosystem that exists, which effectively connects the fund managers to the risk managers to the liquidity providers to the insurance providers and the credit providers … it all benefits from all the other pieces being there,” Flint said. “That gets built up over decades as bits get added to the existing cluster. It’s difficult to know which is the piece that causes people to say, ‘Well, if that’s not there I have to do something else,’ and you get an unwinding of a cluster because things that are connected today are more important than people imagine.” He echoed that warning in remarks accompanying HSBC’s worse-than-expected results yesterday, pointing to “uncertainties facing the UK and the EU as they enter Brexit negotiations”. HSBC will implement its contingency plan – to move 1,000 roles from London to Paris – “progressively over the next two years” but American, Swiss and Japanese investment banks may not have as much time because of the way they are structured. Many rely on their operations in London to service their EU clients and are preparing to open replacement offices and apply to local regulators for new banking licences to ensure they can keep providing finance to major clients after the UK leaves the single market. All firms need to make some adaptations to the way they operate, regardless of the length of any transition period, but City sources said the extent to which business leaves the UK will depend on what deal Theresa May’s government strikes. Flint said there was recognition of a need for a transition period. “If one of the ways of avoiding damage is ensuring a proper implementation phase that must be in everyone’s interest” . “The point of no return is probably nine to 12 months away,” said one senior investment banker in London. “The only thing we might know by then is whether an implementation phase is possible, but I am very sceptical they can deliver on it [in time], so we will go past the point of no return.” A report by accountants PricewaterhouseCoopers for a pan-European lobby group has warned that some banks cannot wait for long. It says: “Clarity will only emerge on the negotiation outcomes during the negotiation period following article 50 notification, with certainty only at its conclusion, so these banks need to begin implementation before having certainty over the eventual Brexit outcome.” Such warnings are being passed to the government by a number of top financiers, many of whom believe the City’s early focus on job losses has obscured the more important challenge of persuading Europe that it faces potentially catastrophic risks of its own if London’s position as a financial centre is damaged. “The big question of what being outside the single market [for financial regulation] actually means is still unresolved,” said Sir Howard Davies, the chairman of Royal Bank of Scotland and a former deputy governor of the Bank of England. “How far, even if you’re outside the single market, can you retain equivalence … or are you regarded as a third country; all of that … tedious sort of detail … is still to play for. “The extent to which we get equivalence will depend on the extent to which we can bring home the argument that not agreeing a reasonable degree of equivalence between London and the rest of the EU is actually going to be disruptive to Europe’s capital markets and damage the ability of European companies to raise funds. That’s where the current battleground is.” Bankers predict that the talks will start badly. They worry that off-colour remarks by ministers such as Boris Johnson are causing particular offence in the EU and provoke belligerent rhetoric over the size of any “divorce settlement” – a particular cause for concern in the run-up to triggering article 50. Davies, who spends part of his time as a professor at the Sciences Po university in Paris, said: “There clearly is a risk of a disorderly Brexit if it becomes politically very unpleasant. I’m slightly anxious about the fact that what I hear when I go over to the other side of the Channel is all they are focusing on is the size of the [settlement] bill and that seems to me not particularly well understood in the debate here. “If it becomes very acrimonious you never know how the consequences flow. People may start to make decisions which are economically irrational, and what you want is for both sides to say, ‘Look, we can have our rhetoric but what really makes sense for both sides?’ My fear is irrationality, and irrationality generated by a mismatch of expectations, when the process starts.” Though most business leaders have welcomed May’s recent speech promising to try to secure a generous free trade agreement with the EU, many remain sceptical that it can be achieved in the face of such rancour and competing interests. Instead, they fear a “crash landing” that leaves only World Trade Organisation rules in place. In an interview shortly before May’s speech, Carolyn Fairbairn, the director general of the CBI, urged: “We have been absolutely clear and I remain absolutely clear that an exit into WTO [rules] at the stroke of midnight without the proper planning and preparation in place would be very serious for the UK economy. We think an abrupt overnight move into WTO [rules] should be ruled out. It is not an ideological argument, it is a practical one.” “When the prime minister starts to say ‘no deal is better than a bad deal’ that is deeply worrying,” said one investment banker.
Doust P.,Royal Bank of Scotland
Journal of Computational Finance | Year: 2012
The Hagan et al SABR implied volatility approximation formula can result in a negative probability density function when applied to long-dated options. This paper presents a methodology for avoiding that problem for0 < β < 1by writing the density function as the sum of two components that are always positive. One component corresponds to the absorbing boundary at F = 0, which can be a significant part of the density function for long-dated options. An upper bound on the time to expiry for the Hagan et al formula is also derived, which shows that their formula cannot be expected to work as this upper bound is approached. © 2012, Incisive Media Ltd. All Rights Reserved.
News Article | February 24, 2017
Sir Howard Davies, chair of Royal Bank of Scotland, described the £7bn loss the bank rang up last year as “stark”. But it is just a fraction of the bank’s towering total losses of £58bn over the nine years since it was bailed out by the taxpayer. And the bank will rack up even more losses this year. The reported losses hide the true extent of the problems inside the Edinburgh-based bank, because they have been offset by the cash RBS has continued to generate since its £45bn rescue. The total cost of disastrous lending, over-paying for takeovers, fines and legal bills actually tops £90bn. Some of the key causes of RBS’s long period in the red are:
News Article | February 14, 2017
Rolls-Royce has suffered the biggest loss in its history due to the cost of settling corruption charges and the impact of Brexit on the value of sterling. The engine-maker reported a £4.6bn statutory pre-tax loss for 2016, one of the biggest corporate losses in British history. It included a £4.4bn writedown on the value of financial hedges Rolls uses to protect itself against currency fluctuations and a £671m charge for the penalties the company has agreed to pay to settle bribery and corruption charges with the Serious Fraud Office (SFO), the US Department of Justice, and Brazilian authorities. The biggest loss in British history is the £24bn recorded by Royal Bank of Scotland for 2008. Warren East, chief executive of Rolls-Royce, insisted the loss did not reflect the underlying health of the business. “This has no impact on what is really going on in the business and cash, it is just an accounting measure,” he said of the biggest loss for the company since Henry Royce established an electrical and mechanical business in 1884. Accounting rules mean Rolls was forced to write down the value of its currency hedges – which are worth more than £30bn – to reflect sterling’s slump. The pound has lost almost a fifth of its value against the dollar since Britain voted to leave the EU last June. Rolls hedges billions of pounds of cash to protect itself against currency fluctuations because deals in the aerospace industry are conducted in dollars. East said he hoped the Brexit negotiations would result in “as close as possible to the status quo”. East and the Rolls management team backed the UK remaining in the EU in last June’s referendum. “Our main reason for being on the remain side was uncertainty. The very fact you are asking the question shows there is uncertainty,” he added. The charge for settling the corruption allegations comes after Rolls agreed to pay £671m of penalties plus interest to the UK, US and Brazil. Sir Brian Leveson, who approved the so-called deferred prosecution in court, said the SFO’s investigation into Rolls had revealed “the most serious breaches of the criminal law in the areas of bribery and corruption” and that some of the charges “implicated senior management and, on the face of it, controlling minds of the company”. However, the judge praised the cooperation of the firm’s existing management, which allowed Rolls to settle with the SFO rather than face a damaging trial. The penalties related to charges that Rolls bribed middlemen around the world between 1989 and 2013 to win contracts. Although Rolls will make the payments over five years – with £293m expected to be paid in the first year – it has recognised the full cost in the latest accounts. The SFO is continuing its investigation into individuals involved in the scandal and has said it will announce in the next few months whether or not it will bring charges. However, East, who has apologised for the “unacceptable” behaviour, said the settlement and the financial results allowed the company to draw a line under the scandal. “We are continuing to cooperate with the SFO with any inquiries they want to do, but as far as the SFO is concerned that is it – as far as the Department of Justice is concerned that is it,” he said. The Rolls boss indicated he was hopeful that the damage to the company’s reputation would not lead to it losing lucrative contracts. “If you think about it in abstract, that is a risk,” he said. “But we have interacted with our customer base and generally there is an understanding that we are a very different business today.” Excluding the bribery penalties and the impact of currency fluctuations, Rolls reported that underlying revenues fell 2% in 2016 to £13.8bn and that underlying pre-tax profits fell 49% to £813m. This performance was ahead of forecasts in the City. Nonetheless, Rolls said it would hold the final payment to shareholders at the same level as last year – 7.1p per share – given the company’s financial commitments and the investments it is making. Rolls cut its dividend last year for the first time in 24 years. On the back of holding the dividend and a strong run for the share price in recent weeks, shares fell by 2.7% to 720.50p. East said it has been an “important year” for Rolls and the management team has “accelerated the transformation of the business”. The Rolls boss has been trying to overhaul and modernise the company since taking control in 2015, inheriting a business that is struggling for the first time in a decade. Rolls, which makes engines for Boeing’s 787 Dreamliners and Airbus’s A380 superjumbos among others, has been affected by lower-than expected demand for the wide-bodied airliners to which it supplies engines. It has also been hurt by cuts to defence spending and the decline in the oil price, which has lowered demand from the offshore oil and gas industry for its marine products. In response, East has focused on making Rolls more efficient and accelerating the pace at which it builds engines. He has cut hundreds of middle and senior managers and by the end of 2017 wants to have cut £200m of annual costs. At the same time, however, he has backed the quality of the technology that the company is developing and resisted pressure to sell off underperforming businesses. “I don’t have a concern about orders coming in through the door,” he said. “I have confidence in our technology.” However, East is reviewing Rolls operations and said that underperforming divisions could be sold off. “80% of our activities are in areas where we are competitive,” he said. “We are concerned with some of the areas where we are less competitive – can we change that and are we the best owner of those businesses. These tend to be in areas associated with older and more backward-looking technology. But you shouldn’t read into this that 20% of our business is up for sale.” Sandy Morris, analyst at Jefferies, said: “The question is whether a corner has been turned. The turn may be slow in financial terms, but operationally and fundamentally it is faster, in our view.”
News Article | February 26, 2016
Royal Bank of Scotland has defended a £3.8m pay deal for its chief executive after reporting a £2bn annual loss and falling into the red for the eighth consecutive year. Shares in the bank slumped as RBS dampened expectations that it will start returning cash to shareholders as soon as the beginning of next year. The shares closed down 7% at 226.6p, below the 502p at which taxpayers break even on their 73% stake. The pay packet for RBS boss Ross McEwan was the highest for a chief executive of the bank since its 2008 bailout, with 121 employees also receiving more than €1m (£790,000) during the year. The chairman, Sir Howard Davies, said the doubling in pay for McEwan – a New Zealander who took the helm two years ago – was “appropriate and justified”, and pointed out that his peers were earning more. However, the results for 2015 pushed the bank’s losses since the bailout to £50bn, more than the £45bn pumped in by taxpayers during its bailout. McEwan also warned of a “noisy” year to come in which the bank faces a multimillion pound penalty for the sale of mortgage bonds in the US in the run-up to the financial crisis, and another £1bn of costs to restructure the bank. Its annual report also warned of the increased “economic and operational uncertainty” from the forthcoming referendum on Britain’s membership of the European Union. “The result may also give rise to further political uncertainty regarding Scottish independence. RBS actively monitors, and considers responses to, varying EU referendum outcomes to ensure that it is well prepared for all eventualities,” said the Edinburgh-based bank. Davies said the bank would be able to survive any economic downturn that followed Brexit and said the board had not been under any influence from the government in forming its view. The senior executives at the bank, including McEwan, do not receive annual bonuses, in an attempt to defuse the rows over pay that have characterised RBS since its bailout. Other employees do, however, and that bonus pool was down 11% to £373m. McEwan’s pay included £1m of the allowances that have been put in place in the wake of an EU bonus cap, although he will give half of that to charity after acknowledging the bank still had more work to do. The bank also disclosed a £2.1m payment to Stephen Hester, his predecessor who was forced out in 2013, from long-term pay schemes. The annual losses were caused by £2.9bn of restructuring charges and £3.5bn of litigation and conduct costs. This included £334m relating to investigations into foreign exchange rigging, £157m for packaged bank accounts and £2.1bn related to mortgage bonds in the US. Laith Khalaf, senior analyst at Hargreaves Lansdown, said RBS was the Jekyll and Hyde of the UK banking sector. “On the one hand the bank is downsizing, de-risking and cost-cutting, while at the same time conduct charges are playing havoc with overall profitability,” he said. McEwan also set a new target to save £800m in 2016 that could result in some job cuts. In legal warnings it outlined a string of potential worries, including an ongoing court case from investors who backed a cash call before its 2008 taxpayer bailout, court cases in the US involving Libor-rigging, cases accusing the bank of funding terrorists and the risk of court cases from business customers sold interest rate swaps. It also disclosed it would be writing to customers later this year to establish if they had been mis-sold pension and insurance products. The fall in the shares took place after the bank admitted that its attempts to start making dividend payments to shareholders had been pushed back from the first quarter of 2017. This is because it needs to spin off 300 branches under the Williams & Glyn brand – a sale mandated by the EU following its bailout – and settle the US cases over the sales of mortgage bonds. Even so, the bank is paying back the so-called dividend access share it sold to the government during the crisis, which prevented any shareholders receiving dividends before the government. This will cost more than £1bn to repay this year. While the figures appeared to make it more difficult for the chancellor, George Osborne, to sell off the remaining stake in the bank, Davies said: “I do believe there is, at the core of this, a good profitable bank.” He said that while it was impossible to know if the government would get all its money back, it “will get quite a lot back”. Lloyds Banking Group shares continued to rise – after its promise on Thursday of bigger returns for shareholders – to close the week at 72.1p, just below the 73.6p breakeven point for taxpayers.