Royal Bank of Scotland

Bridgeport, CT, United States

Royal Bank of Scotland

Bridgeport, CT, United States
SEARCH FILTERS
Time filter
Source Type

News Article | May 14, 2017
Site: www.theguardian.com

The government is expected to sell off its remaining shares in Lloyds Banking Group in the coming week, marking a watershed moment for the sector after the financial crisis. Eight years after pumping in £20bn to prevent the bank from collapsing, taxpayers will no longer own any shares in an institution that was created in the depths of the financial crisis when Lloyds TSB rescued HBOS. The share sale, in the midst of the general election campaign, will highlight the contrast between the progress of Lloyds and that of Royal Bank of Scotland, which is still 73% owned by the government and has yet to make an annual profit since its bailout. At its peak, the taxpayer holding in Lloyds stood at 43% and first started to be scaled back in September 2013. Last week, the bank’s chairman, Lord Blackwell, told shareholders at its annual general meeting that the stake had fallen to 0.25%, with those final shares expected to be disposed of in the coming days. They will not be sold with the fanfare envisioned by George Osborne when he was chancellor. He had ambitions for a discounted share sale to the public, which had to be abandoned a year later by his successor, Philip Hammond, because of the fall in the bank’s shares after the Brexit vote. Instead the shares are being sold off on the stock market through the investment bank Morgan Stanley at prices below the 73.6p average that taxpayers paid during the three-stage bailout that began in January 2009. Hammond has said that despite some of the shares being sold at a loss, the government has still recouped all the £20.3bn used to buy shares. However, that does not take into account the £3.6bn cost incurred by the government although the bank’s chief executive, António Horta-Osório, told last week’s AGM that the government would make at least £500m from the bailout. The return to the private sector has led to 57,000 job cuts – in part because of cost-cutting implemented in the merger but also subsequent efficiency drives to boost profitability. The bailout also required a restructuring of the bank. While a competition inquiry was averted after the HBOS deal was clinched at the height of the crisis, the EU required 600 branches to be sold off. Those TSB branches are now owned by Sabadell of Spain. Lloyds still has a 25% share of current accounts, 22% of retail deposits and 21% of the mortgage market, largely through Halifax. The recovery of Lloyds has also been held back by a bill of more than £17bn to compensate customers missold payment protection insurance (PPI) – about half the industry’s total. Horta-Osório, who has been paid more than £30m since becoming chief executive in 2011, will now face questions about his own plans. He has focused the bank on the UK, which now accounts for 97% of its business, after retreating from 30 countries to six. The Portuguese banker is also expanding into credit cards, buying MBNA for £1.9bn to increase Lloyds’ market share from 15% to 26%, at a time when concerns are being raised about the speed of consumer credit growth. Horta-Osório is also facing anger from businesses hit by the loans scam at the HBOS branch in Reading. Six people were jailed in February after a jury heard they splashed out on superyachts and sex parties, while destroying businesses they had been lending to. Lloyds has set aside £100m to compensate 64 victims including the TV presenter Noel Edmonds but is facing questions about whether it will be enough. September 2008 A £12bn takeover of HBOS by Lloyds TSB comes just days after the collapse of Lehman Brothers sent shockwaves through financial markets. The Financial Services Authority, then the City regulator, says the deal will “enhance finance stability”. October 2008 As financial instability mounts the government announces a bailout of the banking system. Lloyds TSB renegotiates the takeover of HBOS to 0.605 Lloyds TSB shares for every one HBOS share, from 0.833 a month earlier. January 2009 Lloyds Banking Group is created from the purchase of HBOS by Lloyds TSB. The government begins first of a three-tranche bailout of the group, pumping in £13bn. May 2009 Sir Victor Blank is forced to step down as chairman of Lloyds. June 2009 The government puts in another £1.5bn. December 2009 The government backs cash call, buying £5.8bn of shares. Total rescue deal amounts to £20.3bn. Taxpayer stake stands at 43%. March 2011 Eric Daniels leaves and António Horta-Osório takes over as chief executive. May 2011 Lloyds takes first provision for payment protection insurance of £3.2bn. The bank’s bill eventually tops £17bn. November 2011 Horta-Osório takes leave, citing fatigue. He returns to work in January. September 2013 The taxpayer stake gradually reduces from 43% to 39% for technical results. It is cut to 33% when a formal sell-off of Lloyds shares begins: £2.3bn of shares sold to big City investors at 75p a share. March 2014 £4.2bn of shares sold at 75.5p, taking the taxpayer holding to 24%. February 2015 Dividends to resume for first time since the bailout. December 2014 George Osborne announces a plan to dribble out shares into the market. October 2015 Osborne unveils plans for a cut-price sale to the public. October 2016 Philip Hammond, the new chancellor, abandons his predecessor’s pledge to sell cut-price shares to the public. May 2017 The taxpayer is expected to exit Lloyds Banking Group.


News Article | May 25, 2017
Site: www.theguardian.com

A group of “diehard” shareholders determined to see the former Royal Bank of Scotland chief executive Fred Goodwin in court are refusing to accept a settlement in their £700m legal claim against the bank. The state-backed lender has offered about £200m, or 82p per share held by investors, in an attempt to avoid a case that would see Goodwin take the stand on either 8 or 9 June. About 4,500 current and former employees, some of whom are seeking a higher offer, are understood to be among those who have not accepted a deal. Shareholder Neil Mitchell, who has previously sued RBS in a separate claim, said there was a hardcore group that would not settle under any circumstances. “For many people, it’s never been about money, it’s been about principle and justice, and about seeing senior board members of the bank brought to trial,” he said. “There are a lot of pensioners [among the claimants], many of whom are ex-RBS employees. “When they went to presentations by Goodwin, they weren’t just encouraged to put their bonus in, but to put their savings in, even to go and borrow money. “That’s why some people are diehards. But there are also financial institutions that feel the same way, that this should go to trial.” Mitchell said the public deserve to hear more about what led to the bank’s £45bn taxpayer-funded bailout after it nearly collapsed in 2008. The case was brought by 9,000 claimants who allege that they were misled into investing in a £12bn rights issue as the bank was close to collapse. Reports that thousands of claimants are refusing to settle cast doubt on comments by Jonathan Nash QC, acting for the claimants, who told Mr Justice Hildyard that “progress continues to be made” on a settlement. RBS has reached settlements with 87% of the investors after announcing in December that it had an £800m pot to resolve claims. Hildyard has adjourned the case until 7 June. The court is not sitting next week, but has set a deadline of 1 June to know whether a settlement is possible.


News Article | May 29, 2017
Site: www.theguardian.com

Thousands of private investors who claim they were misled by Royal Bank of Scotland and its former chief executive Fred Goodwin into investing in the bank before it was rescued by the taxpayer are being urged to settle their legal case. An action group representing investors involved in the long-running legal battle has told its members it has decided to accept the 82p-a-share offer, which RBS presented to them just hours before the case was due to begin last Monday. The case has been adjourned until 7 June to allow the shareholders to consider the £200m settlement from RBS. If the deal is accepted, Goodwin and other former directors of the bank would no longer be required to give evidence in the high court. A letter sent to members of the RBS Shareholder Action Group on Saturday states: “Having carefully considered the merits of the current offer ... we have decided to accept the offer of 82p per share on behalf of our membership. This is a decision which is fully supported by our legal advisers. “We understand that accepting an offer of slightly below the previously advised range of damages, being 92p per share and 234p per share, may be surprising to some claimants. However, there are a number of practical and legal risks which had to be considered.” The letter goes on to say that while “the merits of the case against the bank remain strong, the merits against the individual director defendants has always been more mixed”. It also adds that, even if shareholders won the case, RBS would likely appeal the claim as it relates to “a previously untested piece of legislation”, while another trial to assess the level of damages would also need to take place. The claimants allege they were misled into buying the bank’s shares in a £12bn cash call in April 2008 – six months before it was bailed out – and are bringing their action against the bank, Goodwin and three other former directors. It is understood the group needs the approval of 70% of the claimants to accept the deal. An action group source said institutional shareholders involved in the claim would accept, while the majority of retail investors being represented by share trading platforms had also indicated they would take 82p a share. Each of the two groups is thought to account for about 40% of the claimants. It is not known which way the remaining 20% of independent shareholders will vote, or if their views will be significant to the result. Some of those investors have previously been described as “diehards” as they do not want a deal, because they want to hold former senior managers to account. The letter to claimants also confirms that Trevor Hemmings, who owns Preston North End football club and has been providing funding for the claim, has decided to accept the deal and was no longer prepared to provide funding – meaning any shareholders wanting to continue would need to find a new financial backer. The action group’s letter adds: “The claim is presently being funded by a substantial claimant in the action. That claimant has decided to accept the offer and they are no longer willing to fund the action. That means that there is currently no available funding to fund the legal and other costs to take the matter to trial.” While the court is not currently sitting, Mr Justice Hildyard wants an update this week and asked to be told on Thursday if a settlement has been reached before they reappear in court on 7 June. At that hearing, any shareholders wanting to continue will have to state to the court that they have the funding to carry on – a position that some involved with the case view as extremely difficult to finalise in the timeframe. The action group’s letter adds: “All of the [institutional investors] have now indicated that they will accept the 82p offer ... As a result, the economic platform of costs sharing will be destabilised, meaning a smaller number of claimants sharing the costs burden, and also increasing the potential liability for adverse costs which would be divided amongst fewer continuing claimants. “In these circumstances, the viability of the case continuing to trial is now significantly in doubt.” RBS has been facing a number of legal claims in relation to the April cash call. In December, the bank started to settle claims which had once amounted to £4bn by announcing it had £800m to share among the various factions bringing claims. RBS has settled with 87% of them without admitting liability but to “minimise material litigation expense and management distraction”. The previous settlements have been about 42p a share.


News Article | May 29, 2017
Site: www.theguardian.com

A judge will learn this week if a multimillion-pound settlement has been reached that would keep the former Royal Bank of Scotland chief executive Fred Goodwin from having to appear in court. Goodwin has been called to give evidence in the long-running legal battle brought by thousands of investors who argue they were misled into buying the bank’s shares in a £12bn cash call in April 2008. The bank was bailed out six months later, leaving the shareholders nursing losses. Their claim for £520m of compensation had been due to begin in the high court last Monday but was adjourned to allow the bank and shareholders to try to thrash out a settlement thought to be worth around £200m. While the court will not sit this week, Mr Justice Hildyard wants an update on Tuesday and asked to be told on Thursday if a settlement could be reached. The court is adjourned until 7 June. The judge has been told that “progress is being made on a settlement” though some investors are being described as “diehards” who do not want to do a deal with the bank because they want to hold former senior managers to account. The investors are bringing their claim against RBS, Goodwin and three former directors. The last time Goodwin – who left RBS in the wake of the 2008 bailout – accounted for his actions in public was in February 2009 when he had appeared before MPs and issued a “profound and unqualified apology for all of the distress that has been caused”. It has been reported that the businessman Trevor Hemmings, who owns Preston North End football club and is helping cover the shareholders’ legal costs, is willing to accept the RBS settlement. Last December, RBS announced that it had £800m to share among the various factions bringing claims relating to the April 2008 cash call. The bank has settled with 87% of them without admitting liability but to “minimise material litigation expense and management distraction”.


News Article | May 26, 2017
Site: www.theguardian.com

The Serious Fraud Office has further delayed its decision on whether to bring any criminal charges against Barclays and former executives at the bank over a 2008 fundraising. A decision is now expected in mid-June, despite the SFO setting an end-of-May deadline earlier in the year – itself a delay from an end of March deadline. The latest setback means that Barclays and a group of former senior bankers will not know the outcome of the five-year investigation until after the general election on 8 June. The probe into the circumstances around an emergency fundraising from a unit of Qatar’s sovereign wealth fund was announced in August 2012. The decision into one of the most high-profile investigations conducted by the SFO comes at a sensitive time. The Conservative party manifesto outlined plans to roll the SFO into the National Crime Agency, in an attempt to “improving intelligence sharing and bolstering the investigation of serious fraud, money laundering and financial crime”. The investigation, according to disclosures by Barclays, focuses on commercial arrangements between the bank and Qatar Holding – an investment vehicle for the Gulf state – which bought shares in Barclays during two fundraisings at the height of the financial crisis. In June 2008 Barclays raised a total of £4.5bn then a further £7.3bn in October from a number of investors including Qatar Holding. In documents accompanying the June fund aisings Barclays disclosed an “advisory services” arrangement with Qatar but did not put a value on the deal. It did not disclose the arrangement in the October documentation or value them. The bank has since said the fees amounted to £332m payable over five years. Barclays first revealed investigations into Qatari arrangements in July 2012 and admitted in September 2013 that the City regulator, the Financial Conduct Authority, wanted to fine it £50m for “reckless behaviour” during the cash calls. That finding was stayed while the SFO investigated, although the City regulator has since reopened its inquiry following the disclosure of new documents by the bank. The bank had also admitted to the US justice department and the Securities and Exchange Commission have been investigating. Barclays did not comment on Friday on the further delay but in its annual report published in February it said it continued to contest the City regulator’s findings and that it “continues to respond to requests for further information in that investigation, which is at an advanced stage”. The investigation has reportedly involved 44 individuals being questioned by the SFO, including the bank’s former finance director Chris Lucas and chief executive John Varley. At one point there had been expectations that Barclays would be offered a deferred prosecution agreement – a form of settlement – although this no longer appears to be on the cards. Earlier this year, Rolls-Royce paid £671m to settle its case with the SFO while Tesco paid a fine of £129m as part of a DPA over an accounting scandal. The fundraisings also prompted other legal cases. The bank has described a £721m claim from financier Amanda Staveley as “fundamentally misconceived”. Her claim against the bank is for her firm PCP Capital Partners, for fees she argues should have been received for being involved in the financings. Also, a former Barclays banker, Richard Boath, is claiming he was unfairly dismissed after the SFO shared a 900-page transcript of interviews relating to the criminal investigation with the bank. The events of 2008 have prompted a number of other court cases. Royal Bank of Scotland is attempting to settle claims from shareholders that they were misled during the time of a £12bn cash call in April 2008. A high court judge has adjourned the case – which was due to start last Monday and would require former RBS chief executive Fred Goodwin to give evidence - until 7 June to allow settlement attempts. Later in the year, Lloyds Banking Group faces accusations from shareholders that they were not told that HBOS was dependent on emergency funding from the Federal Reserve and the Bank of England at the time of its takeover by Lloyds in 2008.


New release of Wrangler Enterprise enhances Trifacta's capabilities in self-service scheduling, collaboration and sampling LONDON, UNITED KINGDOM--(Marketwired - May 24, 2017) - Trifacta, the global leader in data wrangling, today announced the Spring '17 Wrangler Enterprise release, focused on accelerating the expansion of data wrangling projects in enterprise environments through advancements in self-service scheduling, sharing and sampling capabilities. With the Spring '17 release, Trifacta now provides enhanced features that meet the growing expectations for deploying data wrangling solutions at enterprise-wide scale. The updates improve upon Trifacta's award-winning user experience by empowering users to more effectively manage complex workflows, share wrangling recipes and datasets, and have greater flexibility in defining samples. "At OpenGov, we're continuously improving our speed and agility in on-boarding complex client data to our Smart Government Cloud. Trifacta's latest release allows us to schedule the recipes and data flows that we've developed for our client data so they run automatically, which has allowed for more repeatable and scalable processes. We're also excited that Trifacta gives us a visual summary of these recurring data flows for effortless management," said Alysa Zyda, manager, customer success at OpenGov. "Rank Group depends on data to identify pricing shifts and understand relevant competition across our huge portfolio of customers. With Trifacta's latest release, we're able to collaborate on these efforts even further by sharing the unique transformation recipes and data flows that we've built in Trifacta across our entire team. We're becoming smarter and more efficient as an organization with these new sharing capabilities," said Pat O'Connell, CIO at Rank Group. As more data wrangling workloads move from ad-hoc exploration into production pipelines, the demands and expectations of enterprise customers continue to grow. This latest update to Wrangler Enterprise focuses on enabling users to more efficiently schedule data wrangling workflows that incorporate multiple datasets while also improving the manageability of complex workflows through Flow View. The Spring release also extends the ability of Trifacta users to share and collaborate on entire workflows, and define higher-order wrangling tasks using natural language, in addition to other new functionality -- all of which are critical aspects of moving data wrangling from small-scale exploratory projects to large-scale enterprise deployments. "As the leader in the fast-growing category of data preparation, it's critical that we continue to define the market -- where data preparation tools are going and the extent of what they cover," said Wei Zheng, VP of product at Trifacta. "The Spring '17 release of Wrangler Enterprise focuses on accelerating the expansion of data wrangling projects to encompass more users and use cases, and quickly transition initial exploratory projects into production workflows. We will continue to accelerate our momentum by expanding upon Trifacta's enterprise features, user experience and machine learning capabilities to provide industry-leading organizations with a data wrangling solution that scales to meet growing enterprise requirements." Trifacta is used by tens of thousands of users at more than 7,300 companies in 143 countries around the globe. The world's leading brands, including Google, PepsiCo, eBay, Royal Bank of Scotland, Kaiser Permanente, and LinkedIn are unlocking the potential of their data and accelerating time to insight using Trifacta's market-leading data wrangling solutions. For more information on Trifacta Wrangler Enterprise release, check out the product page here and the blog post on the release here. About Trifacta: Trifacta, the global leader in data wrangling software, significantly enhances the value of an enterprise's big data by enabling users to easily transform and enrich raw, complex data into clean and structured formats for analysis. Leveraging decades of innovative work in human-computer interaction, scalable data management and machine learning, Trifacta's unique technology creates a partnership between user and machine, with each side learning from the other and becoming smarter with experience. Trifacta is backed by Accel Partners, Cathay Innovation, Greylock Partners and Ignition Partners.


News Article | May 25, 2017
Site: globenewswire.com

The Selection Panel of the 12th Annual Bay Area CFO of the Year Awards is proud to announce the 2017 Bay Area CFO of the Year Winners: The Bay Area CFO of the Year Awards is presented by Larkin Street Youth Services in partnership with the San Francisco Business Times, and title sponsors Deloitte and Marsh & McLennan Agency. Proceeds benefit Larkin Street’s work to prevent and end youth homelessness. At this year’s Bay Area CFO of the Year Awards ceremony on Wed., May 24, at the Hyatt Regency San Francisco, nearly 500 guests celebrated the Finalists and Winners, raising over $500,000 to support Larkin Street. Philip Jones, a Larkin Street client, shared how Larkin Street’s housing, education and employment programs helped him go from homelessness to college. Lifetime Achievement Award Winner Robin L. Washington, Executive Vice President and Chief Financial Officer of Gilead Sciences, Inc., spoke as well, after being introduced by Kevin Young CBE, Chief Operating Office at Gilead. “I am truly honored to receive this recognition and share it with my sponsors, colleagues and family, who have all supported me throughout my career,” said Ms. Washington. “The phenomenal leaders I’ve worked alongside and the innovative environments I’ve been a part of, across different industries, have inspired me in so many ways. Knowing this event greatly benefits the work of Larkin Street Youth Services and the critical resources they provide to at-risk and homeless youth makes this honor even more special.” Ms. Washington joined Gilead, a global biopharmaceutical company, in 2008 and is currently Executive Vice President and Chief Financial Officer, where she oversees the Finance and Information Technology organizations. Previously, she was Chief Financial Officer of Hyperion Solutions, which was acquired by Oracle Corporation in March 2007. Ms. Washington is a member of the Board of Directors of Honeywell International, Salesforce.com, UCSF Benioff Children’s Hospital Oakland, and the Board of Visitors Graziadio School of Business and Management, Pepperdine University. A certified public accountant, Ms. Washington holds a bachelor’s degree in business administration from the University of Michigan and a MBA from Pepperdine University. The Bay Area CFO of the Year Awards Selection Panel is comprised of business and academic leaders including Alison Davis (Managing Partner, Fifth Era, Board Member: Royal Bank of Scotland, Diamond Foods, Fiserv, Unisys, and Ooma), Mary Huss (Publisher, San Francisco Business Times), Sharon McCollam (Winner, 2012 Hall of Fame Lifetime Achievement Award, Former Chief Administrative Officer and Chief Financial Officer, Best Buy), Byron Pollitt (Winner, 2013 Hall of Fame Lifetime Achievement Award, Retired Executive Vice President and Chief Financial Officer, Visa), and Richard Rosenberg (Retired Chief Executive Officer, Bank of America). Please see attached for courtesy photography. About The Bay Area CFO of the Year Awards Now in its 12th year, The Bay Area CFO of the Year Awards event is a partnership between the San Francisco Business Times and Larkin Street Youth Services recognizing outstanding CFOs in the Bay Area. The event has raised over $5 million to benefit Larkin Street Youth Services and the homeless youth they serve. Learn more at cfoawards.org Larkin Street Youth Services is an internationally recognized leader in providing effective housing, education, employment and health services to at-risk, homeless and runaway youth. Larkin Street reaches ages 12 to 24 across San Francisco and has served over 75,000 homeless and at-risk youth since 1984. Three out of four youth who complete the full range of Larkin Street programs successfully exit homelessness permanently. Larkin Street is at the forefront, working at the local, state and federal levels to create the circumstances necessary to make instances of youth homelessness rare, brief and non-recurring. For every dollar invested in homeless youth, society sees $8 in social benefits or saved costs. A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/6829edcb-3033-43c3-a7be-86a5a1e89544 A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/df7c1f82-5ccf-48df-a356-471841286216


News Article | May 23, 2017
Site: www.theguardian.com

Last-ditch talks are under way to avert a legal battle that would force Royal Bank of Scotland’s disgraced former chief executive Fred Goodwin to give evidence at the high court. A judge hearing the case brought by thousands of shareholders claiming they were misled into buying RBS shares in April 2008 was told that the majority of them had indicated their willingness to agree a settlement with the bailedout bank. Jonathan Nash, QC for the shareholders, told the judge that there was a “good prospect” that by the end of Tuesday the remaining shareholders would agree to an deal with RBS. The remarks were made as case was adjournedfor a second day by Mr Justice Hildyard who granted a second 24-hour adjournment. The much-anticipated case had been due to begin on Monday and last for 14 weeks but Hildyard had agreed to an adjournment when lawyers for the shareholders asked for time to discuss a settlement with RBS. According to reports, when Hildyard was asked for a second adjournment, he said: “There is obvious interest in the court in seeking to facilitate a full and final settlement agreeable to the parties.” The judge also told the shareholders that they had to decide whether to continue their legal case against RBS. The details of the settlement being offered by RBS to avert a lengthy court room battle that would require Goodwin and other former directors of the bank to give evidence have not been confirmed. But it is thought the bailed-out bank is offering about £200m to the 9,000 private shareholders and a handful of major City institutions over their claim that they were misled during the £12bn cash call. The rights issue, at the time a record-breaking fundraising, took place six months before the £45bn taxpayer bailout of the Edinburgh-based bank that left shareholders nursing heavy losses. The investors are making their claim against RBS, Goodwin and three former directors, including Sir Tom McKillop, who was chairman at the time of the bailout. Goodwin has been scheduled to give evidence for two days from 8 June. If the settlement talks fail and the case goes ahead, the former RBS chief executive would be forced to account for his actions in public for the first time since February 2009, when he appeared before MPs on the Treasury select committee and offered a “profound and unqualified apology for all of the distress that has been caused”. It has been reported that the businessman Trevor Hemmings, who owns Preston North End football club and is helping cover the shareholders’ legal costs, is willing to accept the RBS settlement. The offer, in which the RBS chief executive, Ross McEwan, was involved, is thought to be based on 82p a share, although Reuters was reporting that investors were holding out for 100p a share. This figure amounts to about £200m, double the size of settlements reached with other groups of shareholders involved in long-running legal battles with RBS. Five shareholder groups originally brought claims, but last December, RBS announced that it had £800m to share among the various factions. It has settled with 87% of the investors. With the last group being offered about £200m, the bill for RBS would rise by about £100m. RBS has not accepted liability. Sir Howard Davies, the bank’s chair, told its annual meeting this month: “The settlement does not constitute any admission of liability by the bank, but allows us to minimise material litigation expense and management distraction.”


News Article | May 25, 2017
Site: www.theguardian.com

The first time I met Ian Dick, the head of private housing at Newham council in east London, he took me on a walk to look for “beds in sheds”. It was 2011, and alongside criminal levels of overcrowding in private rental properties, there was a growing problem of people living in illegal structures in back gardens. It was not uncommon to find 10 or 20 people living in a room above a fried chicken shop, in a basement, or in ramshackle outbuildings. When we met again, five years later, he was happy to talk to me, not because these problems had disappeared, but because he was proud of the council’s private rented sector licensing regime. Introduced in 2013, it was the first such scheme in the country and had led to 800 prosecutions and 28 landlords being banned from renting property to tenants. This time we met in Forest Gate, traditionally one of the most deprived parts of Newham. “This is an area undergoing the most dramatic change – the council doesn’t use the term ‘gentrification’, they use the term ‘regeneration’,” he said as we strolled down a pleasant high street in the sunshine, looking up at Victorian facades renovated by the council. Along the road, hipster cafes and pubs were interspersed with clothing retailers, halal butchers and phone shops. To show me the reality in some of the flats above, he took me around the back, where an entire street was accessed by a badly maintained private alleyway, with a huge pile of mattresses dumped at one end. The mattresses were outside a property where, until the previous week, 20 people had been living in a makeshift structure in the yard outside. “The landlord is under caution, he’s not arrested, he’s been housing people desperate for accommodation – people were paying £400 a month to stay in this,” Dick said. Further down the back alley, the entrances to a large number of flats were up dangerous-looking fire escape stairs, particularly hazardous for small children. In one of the properties a scooter stood at the foot of a rickety open stairway. At the back of a large Victorian house, we were met with a smell of leaking sewage, and the once-white walls were now filthy and soot-stained. “This must be illegal. That’s the thing about English housing – there’s little that’s illegal but there’ll be breaches here,” Dick explained, telling me that English property law does not target property standards, but that interventions can be made around public health. In this case, the breaches would be drainage and conditions detrimental to health. “This is the sort of private rented sector that still exists in 2016, even after all we’ve done,” he said, noting details down in his notebook so that his officers could visit. The interior of one of the flats was visible through a grim-looking security gate at the back door. Through the bars I could see a toddler and his mother. This was no place for a child – or anyone – to live, but it was also obvious that once they were evicted, their fortunes would not necessarily improve. There would be nowhere to go, and even if they qualified for social housing, they would most likely enter the world of substandard temporary accommodation. Walking back down the high street we paused to look at some of the “to let” signs in the newsagents’ windows. One in particular stood out, offering a room share for four people for £160 a month per person: effectively a bed space in what may or may not be legal accommodation. Renting bed spaces, I had already heard from a number of sources, is becoming more common, with bunk beds visible in the front rooms of nearby terraces. While we sat having a coffee, Dick explained this was partly down to the increasingly common – and highly profitable – practice of what is known as “rent to rent”. “An estate agent will rent a house to an individual who will then let it out to others, who might also sublet. There’s a whole submarket in rent to rent. It’s all done with no documentation, they don’t ask for references, and when we go round we might find 15 people there. “There’s different levels of this going on – everybody has to share because nobody can afford to rent,” he said, adding that sometimes criminal gangs might rent 20 properties, then re-rent them at a 20% higher price. The council had prosecuted 25 agents, he said, and pointed to how to find them through ads in the local papers: “Where you see agents offer ‘guaranteed rent’, there are no controls on lettings agents.” Adverts on hoardings all over London show a city populated by smart-looking people in luxury balcony apartments. The city is the destination of choice for foreign investors and the oligarchs, billionaires and super-rich who make up the so-called “alpha elites”, all of whom are attracted by the UK’s favourable tax environment. Entire neighbourhoods – St John’s Wood, Highgate, Hampstead, Notting Hill Gate, Kensington – have changed out of all recognition in the past decade. Estate agents refer to these centrally located, “super prime” areas as “golden postcodes”. They have long been wealthy places, but in the past, like most of London, they were also mixed. Now ultra-high-net-worth individuals have displaced even the wealthy from Kensington; they in turn displace others to suburban areas, creating a domino effect that ripples out through the city, with the consequence that average-income earners and the poor move to the periphery or out of the capital altogether, which places pressure on housing and pushes up prices around the country. London’s skyline is being transformed by one of the greatest waves of new construction seen in the city, with plans for no fewer than 300 luxury residential towers. From Nine Elms up to Vauxhall and along to Southwark and Blackfriars bridges, mile upon mile of apartments in gated complexes have already been built. At Elephant and Castle the Australian property developer Lendlease is working with Southwark council to render the area unrecognisable, replacing the affordable housing that once characterised it with a forest of gleaming towers. Outside some of these buildings, metal spikes which are already there prevent homeless people from sitting or sleeping on the pavement. There is a direct link between the wealth of those at the top and the capital’s housing crisis – which affects not just those at the bottom but the majority of Londoners who struggle to buy properties, or pay extortionate rents. The 2008 financial crash created a new politics of space, in which people on low incomes are forced out of their homes by rising rent and the wealthy are encouraged to use property for profit. These trends are not limited to London. The same currents of global capital are also transforming San Francisco, New York and Vancouver, European cities from Berlin to Barcelona and towns and cities in the UK from Bristol and Manchester to Margate and Hastings. This isn’t gentrification, it’s another phenomenon entirely. Global capital is being allowed to reconfigure the country. Public housing accounted for a huge proportion of British accommodation throughout the 20th century. Since the 1980s, public housing stocks have been steadily eroded, through the combination of right to buy, which saw the sell-off of 2m council homes, and buy to let, which has resulted in 40% of those former council homes now being owned by private landlords, who rent them out for three and four times the amount that council tenants pay for the remaining local-authority-owned properties. During the 1980s a decision was taken to cease building housing for those on lower incomes and to create instead a system whereby housing benefit would “take the strain”, rising to cover increases in rents. At the time it was predicted that the change in policy might lead to higher rents but nobody believed they would rise to the level they are today. The combination of right to buy and the decision to stop building council housing shifted social tenants into private rented housing. Research from the National Housing Federation shows that the amount of housing benefit paid to private landlords doubled from £4.6bn in 2006 to £9.3bn in 2016. The shortage of affordable housing has given rise to a range of problems in private rented accommodation, from slum landlords and “beds in sheds” to middle-class Londoners under the age of 45 who can no longer afford to live in the city. A generation is being affected and our essential services, such as hospitals and schools, and the majority of our small and medium-sized businesses, are being undermined. “We think broadly a third of landlords are well-meaning and do a good job,” said Southwark councillor Mark Williams, “a third are well-meaning and do a bad job, and a third are rogue landlords. At the fringes of that, you have slum landlords and criminal human trafficking.” Southwark, in south-east London, despite increasing areas of high-cost development, still includes large pockets of poverty. Williams told me that the council found a two-bedroom flat on the Aylesbury estate with 20 occupants, who were being bussed down to Bromley, 40 minutes away, every day to work in a sweatshop. Since Newham introduced its licensing scheme, the council has put a maximum limit on the number of people allowed to share one room and has stipulated that agents must display what that limit is, although some don’t. “Lots of them were non-compliant at the beginning but when we looked at them they started to comply, and then we relaxed and they went back to what they were doing before,” Dick said. It doesn’t surprise him. “Why wouldn’t they? The housing market is broken and the conditions are ripe for exploitation. We’ve got the worst of both worlds – a market which is controlled but not regulated. Most people we’ve prosecuted through the licensing scheme are criminal landlords, although the government prefer the term ‘rogue’.” Although it is notoriously difficult to get accurate figures, a 2013 report by the Migrants’ Rights Network concluded that Ealing may have as many as 60,000 occupants in illegal structures, and Slough borough council, which deployed planes equipped with thermal imaging equipment in an effort to spot them, may have as many as 6,000 beds in sheds. In 2013 a BBC investigation found estate agents renting out beds in sheds in Willesden Green and Harrow. Newham’s licensing scheme has been widely praised, and many councils have expressed wishes to emulate it. But in 2015, to the delight of landlords, the government made it clear it did not want to extend the scheme’s use, with then housing minister Brandon Lewis describing licensing as a “tenants’ tax”. Even though the Department for Communities and Local Government had given Newham £1m to support the licensing scheme, little-known changes to the law have seen some forms of licensing extended, but also made it much harder for councils to introduce licensing in the first place. The new law ensures that councils must now seek permission from the secretary of state for any licensing scheme that would cover more than 20% of their geographical area, or affect more than 20% of privately rented homes. In Redbridge, north-east London, the council’s application for borough-wide licensing was refused by the secretary of state. As a result, council leader Jas Athwal said it would be “impossible for us to … deal proactively with poor standards of rented accommodation”. It is clear, then, that an effective means of clamping down on rogue landlords has been found – the government just refuses to support it. Extreme overcrowding is illegal, but poor conditions are also common in the “mainstream” private rented sector. Jan is a university graduate with a good job, who lives in what she describes as “middle-class poverty” despite earning close to £40,000 a year. She and her husband don’t have enough money to make ends meet, even though they both work full time. The family last moved three years ago after their landlord put their rent up by £450 a month. He wanted to sell to a developer who planned to turn the flats into one luxury home, and needed the tenants out. Conditions where they were living were far from ideal: the heating didn’t work properly and Jan and her partner slept in the front room so that their two children, a 10-year-old boy and seven-year-old girl, could have their own rooms. That isn’t possible in the tiny two-bedroom flat they are in now, so she is thinking of putting a mattress in the alcove in the hallway for her daughter. “I’m going to put a curtain up and have her in that, but when I think about that, it’s Dickensian,” she told me. Revealing how low her expectations have sunk, she added: “We’re in a flat which is substandard accommodation, but what we love about it is that the heating works.” The other advantage is that the overcrowded, moth-infested flat is cheaper, but it is in the wrong catchment area for the secondary school her son has applied to, which is causing him great anxiety. An estate agent has found Jan’s family a larger flat in West Norwood, where they used to live, but that would, as before, eat up two-thirds of her salary. “We can stay here and clear our overdraft or go back to West Norwood, have a kitchen diner and live totally beyond our means. It’s these ridiculous choices,” she explained. The other option would be moving to Croydon or Mitcham, but prices aren’t much lower there. “We might be able to get a semi with a garden but the kids would not be in the catchment area for their schools, there’s a massive commute and you lose all your networks.” Jan is paid far above the average salary and her partner works full time as a teaching assistant. But after deducting the cost of childcare, they have nothing left to spare – “it’s second-hand clothes and no holidays. They call it ‘the squeezed middle’ but it’s poverty. It impacts on a whole range of things you can’t begin to anticipate,” she said. To cap it all, on the day we met she’d had a terrible journey into work with cancelled trains and her Oyster card had charged her an extra £20 by mistake. “I just stood on the platform crying. It’s beyond my capacity to cope with any of it,” she told me as we sat in her office. For the past 30 years, Britain’s economy and culture have been built on the Conservative ideal of home ownership. But, despite all the rhetoric surrounding this issue, home ownership in Britain has not exceeded the European average of 70% since the early 2000s. In fact, it has fallen to 64% – the lowest level in 30 years. And in 2017 private renting overtook mortgaged home ownership in London. “This is a middle-class issue now,” Betsy Dillner, director of Generation Rent, the campaign group for better private renting, told me. “People think we represent this middle-class professional group, but if you can find a way of making the private rented sector work for the most vulnerable people in society, then it will work for everyone.” Today, 11 million people in Britain rent privately in an overlapping series of sub-markets, ranging from slums to luxury housing. As an organisation, Generation Rent would like to see rent controls, a national register of landlords and fully licensed lettings agents – all of which Dillner admits are highly unlikely in the current ideological climate. “There are more requirements to run a cattery than to rent out a home. There should, of course, be regulations to look after pets, but I’d like the same rights to be afforded to the place we call home,” she said. Like 2.3 million other Londoners, the Green party London Assembly member Sian Berry is a private renter, and has shelled out more than half her pay in rent and lived in six different houses since she moved to London 20 years ago. In 2016, she published the Big Renters Survey of more than 1,000 renters. According to those surveyed, rising rents were the most common problem experienced, and seven in 10 renters suffered from repairs and maintenance not being done. Damp, mould, broken boilers and dangerous electrics feature prominently in the responses, with many reports of landlords who evict tenants rather than pay for repairs. One said: “After thousands of pounds’ worth of electrical items all broke down at once, an electrician assessed our flat. The wiring was the worst he’d ever seen and was, in his words a ‘death trap’. We were living there with a newborn baby. Our landlord chose to evict us, making us homeless, rather than carry out repairs.” Another responder reported that they had to wear rubber gloves in the shower to avoid electric shocks and a third wrote: “Once a ceiling of an old house fell on me and all my stuff. I let my landlady send workers into the house to fix it for two months, during which time we still had to pay some rent. Immediately afterwards she put the rent up to a level we could not afford and we had to move out.” Yet another factor placing great pressure on the private rental market is the growth of companies such as Airbnb. By allowing owners to rent properties on a night-by-night basis to affluent visitors, their business model removes accommodation from the longer-term rental market while keeping purchase prices high. As a result, Airbnb has become a focus for housing activists across Europe and in the US, particularly in cities that attract large numbers of tourists such as New York, Barcelona, Berlin – and London. In New York, Barcelona and Berlin, city governments have restricted owners’ ability to rent out whole properties through Airbnb. But while oversight is being introduced in some places, it is a notoriously hard business to regulate, particularly when there are significant profits to be made. The bedroom tax, introduced in 2013 for occupants of housing association or council property, presents a mirror image of Airbnb. In a society where the idea of public housing has collapsed, a financial penalty is imposed on people in social housing with a spare room, while those who are lucky enough to own a house with extra space find themselves with an additional source of revenue. Another feature of the new economy in private renting is property guardianship, where developers offer lower rents to people prepared to live in properties due to be redeveloped. Often these are in edgy locations, such as the Ernő Goldfinger-designed Balfron Tower in east London, where groups of artists move in on a temporary basis, taking advantage of the subsidised accommodation costs and bringing cachet to the area. In the past, artists squatted abandoned buildings in places such as Shoreditch in east London and Brixton in the south, creating communities that have long been credited with maintaining the city’s diversity while also setting in motion a more manageable process of gentrification. In 2013, however, legislation was passed that made squatting residential buildings illegal, with a maximum penalty of six months in jail and a fine of £5,000. Property guardianship can be seen as an attempt to co-opt the “desirable” elements of squatting by young, creative people in a blatant bid to accelerate gentrification. At the same time, it is a highly lucrative, unregulated business, and “guardians”, who have no property rights, often have to put up with poor conditions and can be evicted at short notice. The major concern for the government and employers in London is that people who do not earn enough to meet extortionate rents will leave, hollowing out the city and threatening its labour market and culture. “We see this with employers saying they’re having a really hard time retaining professional level jobs, let alone cleaners. London is losing teachers – they’re commuting from Luton and they’re giving up – it’s having a massive knock-on effect,” Dilner said. The vacancy rate for nurses at London’s hospitals is 14-18%, according to a report from the King’s Fund thinktank, and the number of entrants to teacher training has fallen 16% since 2010, according to Ofsted. But it’s not just carers, nurses, teachers, artists and university lecturers who can’t afford to live in London. Fifty Thousand Homes is a business-led campaign group – including the Royal Bank of Scotland, the CBI and scores of London businesses – formed to push the housing crisis up the political agenda. Its research shows that on current trends, customer services and sales staff at almost every level are being pushed out of the capital. Three-quarters of business owners believe that housing costs are a significant risk to London’s economic growth and 70% of Londoners aged 25 to 39 report that the cost of their rent or mortgage makes it difficult to work in the city. Vicky Spratt is a 28-year-old journalist who worked as a producer of political programmes at the BBC but left because she felt the issues affecting her generation, such as the housing crisis, were not being covered properly. “A lot of issues were dismissed by the older generation – it didn’t affect them. They all owned their own homes,” she told me. Spratt joined the digital lifestyle magazine The Debrief, aimed at twentysomething women, and began an online petition against lettings agents’ fees that gathered more than 250,000 signatures. As a result, Philip Hammond, as chancellor of the exchequer, banned lettings agents’ fees in his 2016 autumn statement – the biggest victory for private renters to date. Spratt describes herself as a reluctant campaigner, but her circumstances pushed her into it. She currently pays £1,430 per month, not including bills, for a one-bedroom flat which she can afford because she shares with her boyfriend, but she used to live in a room “which was literally the size of a bed”. “The walls were very thin because it had originally been part of one room, which the landlord split into two. I noticed after about six weeks my mental health deteriorated. If I wasn’t in a relationship I would be looking at going back to that,” she said. Spratt earns enough to get a mortgage but, because rents are so high, not enough to save for the 20–30% deposit required. “The common thread for people my age is that we don’t own our own homes and potentially we never will. The housing crisis is older than me and it shocks me that nobody did anything about this, and I want it on the news agenda,” she said. “This is structural neglect. The buy-to-let boom and the unregulated market have a lot to answer for.” Spratt believes that a key reason for this political failure is that “people who don’t experience this issue are in charge”, pointing out that almost a third of MPs are buy-to-let landlords. An Oxford graduate who has worked in Westminster, she also suspects that a factor behind the success of her campaign is because “I look and sound like them”. Betsy Dillner, director of campaign group Generation Rent, said: “This is the neoliberal free market ideology which has been alive and well in the US for a long time and it is certainly taking over here.” Dillner fears that the outcome will be that the city will become soulless, “a place where you can’t raise families, be young, start up new businesses – all those things that make the city we love – housing costs will suck the soul out of that.” While population shifts to other towns may seem like a good way of rebalancing the wider British economy, the problem is that with nearly every FTSE 100 company headquartered in the capital, the majority of jobs are there too. It is not possible to contemplate real solutions to the housing crisis without profound structural economic change. A weak private sector in the regions and public-sector jobs shrinking rapidly as a result of cuts mean that many people still look for work in the capital. And while some will leave the city, others will put up with otherwise unacceptable conditions in order to keep their jobs and family ties. This means that generation rent must pay through the nose to live in an increasingly sterile city – a playground for the rich in the centre, surrounded by gentrifying hipster hinterlands, and substandard housing for cheap labour in places such as Barking, Dagenham and Edmonton. Expecting people to move each time they are priced out of an area brings its own problems. Moving house is rarely an easy experience, even when the move is voluntary. But it’s incomparably worse when it involves being wrenched away from the support networks, daily routines and the sense of identity that comes with being able to call a place home. Even the threat of being uprooted, known as housing insecurity, is a significant contributor to mental health problems. A secure and stable place to live is the most important factor in personal wellbeing, according to a study by psychiatrists Ciaran Abbey and TBS Balamurali. The study, titled “Housing the Mind”, cites evidence that prolonged periods in temporary accommodation can adversely affect a person’s mental health – and so can spending more than 30% of income on housing. “When a disproportionate amount of income is spent on housing, this leaves people less able to purchase other necessities such as adequate food, increasing the family’s vulnerability to disease but also the anxiety and sense of helplessness that results when unable to make ends meet,” says Abbey. When individuals lose their homes, they can lose not just physical shelter but their entire world. This is not just about building more houses, it’s about the kinds of houses that we build and who we build them for. It is also about our priorities as a society. Property is being built in London – for wealthy foreign investors instead of the people who need homes most. As the stock of social and genuinely affordable housing dries up, rents are soaring and the taxpayer is being forced to contribute billions of pounds in housing benefits for poor-quality private lets. So far, the proposed solutions from both main political parties involve only tinkering with the existing situation. Instead, we need a new social contract that ensures housing is once again viewed as a right for all, not just an asset for the few. This is an edited extract from Big Capital by Anna Minton, which will be published 1 June by Penguin • Follow the Long Read on Twitter at @gdnlongread, or sign up to the long read weekly email here. • This article was amended on 26 May 2017 to make clear that the metal spikes outside some buildings at Elephant and Castle are already there and not part of the Lendlease development.


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.

Loading Royal Bank of Scotland collaborators
Loading Royal Bank of Scotland collaborators