BBC Business News: Is Germany dragging down the eurozone?
Is Germany dragging down the eurozone?
Business Matters: HSBC scraps pay freeze after outcry from staff
Two weeks after announcing a pay freeze across its 266,000-strong global workforce, the bank sent a memo to staff reversing the policy, saying that there would be salary rises this year. These will be paid by using the bonus pool for this year.
The memo precedes a board meeting on Sunday, when the directors will discuss whether the bank will move its headquarters to its historical home of Hong Kong or stay in London. The bank will announce its decision late that day if the deliberations yield a unanimous result.
HSBC is expected to remain in London but may reaffirm its long-term commitment to Asia, which accounts for nearly 40 per cent of its revenues.
As part of its domicile review, HSBC considered moving some senior staff, such as Noel Quinn, global head of commercial banking, to Hong Kong but is not expected to do so at this point.
Observers have wondered whether, after ten months of reckoning, the bank may still keep the door open until Britain has voted on whether to leave the European Union in a referendum expected to take place on June 23.
HSBC has said that it favours Britain remaining in the EU but has decided that the issue is not central to the decision about its headquarters.
Stuart Gulliver, the chief executive, decided on the pay freeze U-turn after staff protested, having already been told by managers how much their pay rises would be this year.
“We will therefore proceed with the pay rises as originally proposed by managers as part of the 2015 pay review, noting that, consistent with prior years, not all staff will receive a pay rise,” Mr Gulliver said. A hiring freeze announced two weeks ago will remain.
Mr Gulliver highlighted the tough economic conditions caused by falling oil prices and slowing Chinese growth as the bank prepares to be the first big UK lender to report results, on February 22. “These macroeconomic pressures mean we must be cautious and realistic about the outlook for our revenues in 2016,” he said.
HSBC has laid out plans to identify annual cost savings of up to $5 billion by 2017. However, it is under pressure to cut costs more rapidly, particularly when global interest rates are set to stay at close to zero or in negative territory for longer. A decision to stay headquartered in London may prompt a challenge from Asian shareholders, who, according to Mr Gulliver, expressed annoyance last year that remaining in the UK and being subject to a raft of new regulations might threaten HSBC’s progressive dividend policy.
Since then, the government has made various concessions to keep HSBC, which has been based in Britain since its 1992 acquisition of Midland Bank. These have included cutting the unpopular levy on bank balance sheets and watering down rules for senior managers.
BBC Business News: First-time buyers' £50,000 rent bill
First-time buyers who purchase a house this year will have already spent £52,900 on rent, research for a landlords' trade body suggests.
Business Matters: Peer-to-peer lenders reject Turner’s criticism
Lord Turner of Ecchinswell, who led the Financial Services Authority during the credit crisis, predicted that losses on peer-to-peer loans “within the next five to ten years will make the worst bankers look like absolute lending geniuses”.
Peer-to-peer lenders use online platforms to link up consumers and small businesses that want to borrow money with retail and professional investors. The industry has lent an estimated £5 billion since the first platform, Zopa, emerged in 2005.
The Times reports that Lord Turner, who was appointed at the FSA, which has since been replaced by the Financial Conduct Authority, at the onset of the credit crunch, described peer-to-peer platforms as “a group of people [who] are going into a lending process on a technical platform without anybody really doing ‘go out and kick the tyres’ credit analysis”.
He told the BBC: “You cannot lend money to small and medium enterprises in particular without somebody going and doing good credit underwriting. This idea that you can just automate that on to a platform — it has a role to play but I think it will end up producing big losses.”
Lord Turner, who is on the board of Oak North, a start-up bank, said that people should invest in peer-to-peer platforms only “if they have money they can afford to lose”.
Andrew Holgate, managing director of Assetz Capital, a peer-to-peer lender that provides credit to small businesses, said: “Lord Turner’s sweeping statement isn’t a true representation of the sector.
“Speaking for Assetz Capital, we actually have fewer automated processes in the credit process than the banks, and our underwriting heavily relies on face-to-face relationships with [companies], not just credit-scoring algorithms or telephone interviews.”
Christine Farnish, chairwoman of the Peer-to-Peer Finance Association, the industry’s trade body, said that Lord Turner’s analysis “[flew] in the face of the evidence”.
“P2P lenders . . . take credit risk underwriting extremely seriously, and they have exactly the same information at hand, and do the same sort of analysis, that the banks do, if not more.
“P2P lending offers for the first time in history actually something that’s really clear, understandable to ordinary folk, that spells out the risks and the rewards, so people can make their own decision.
“Strict credit underwriting rules apply to all our members and this should not be confused with higher-risk forms of crowdfunding or lending to sub-prime customers.”
She added that members of the trade body, which represents about 90 per cent of the sector in the UK, “operate with high standards of transparency and business conduct”.
“This includes publishing their full loan books on their websites and providing clear information on all fees and charges to both investors and borrowers. I would challenge anyone to find this level of transparency in any other part of the financial services market.”
The organisation added that the industry’s default rate is low, running at present at about 3 per cent.
Christian Faes, co-founder of LendInvest, an alternative finance platform, said: “These comments are self-serving and timed to drum up more sales of Lord Turner’s book. Surely, he is conflicted too, given that he’s now a regulator-turned-banker.”
Landbay, a peer-to-peer mortgage lender, said that “to presume that all platforms use automated underwriting processes is incorrect and misleading”.
Business Matters: Majority of British businesses do not believe full employment will be achieved
The data, released today, also reveals that 43 per cent of jobseekers say that they have been more selective about the roles that they have taken over the last three years. As a result, almost a quarter (23%) of businesses have experienced restricted growth due to a shrinking talent pool and 55% say that they currently have a skills shortage in their business.
The research found that nearly half of British businesses anticipate recruitment will be difficult over the next couple of years, with the average number of candidates interviewed per role currently six.
Interestingly, despite employers finding it harder to find new talent, 65% of jobseekers think it has been more difficult to get a job compared to the last time they were looking for a new role. This contradiction demonstrates the continued mismatch between the skills held by candidates and those demanded by employers, as highlighted by the IPPR and totaljobs’ report: ‘UK labour market insights – the entry-level dilemma’.
With the national unemployment rate at 5.1%, its lowest level since May 2008, the recruitment industry is seeing a shift in candidate supply and demand with the significant majority of employers saying it is now more candidate-led than in the last five years.
A large business operating in the retail sector, who took part in the research, said it believed that “as the economy continues to get stronger, finding talent becomes a bit more difficult”. This is a view shared by over a third of the businesses surveyed who say they believe that the time it takes to fill roles will increase in the next five years.
John Salt, Group Sales Director, totaljobs, said: “The research reinforces the argument that the UK economy will struggle to maintain long-term sustainable growth if the mismatch between the supply of jobs and existing jobseeker talent pool is not addressed. In an increasingly candidate-led market, there are a number of ways businesses can ensure that they are recruiting and employing the right talent.
“It’s never been more important to ensure that businesses retain a clear focus on employer brand positioning across multiple channels to attract the right talent. This should then be complemented by initiatives that speak directly to candidates as individuals, headlining what appeals to them most. This can include company culture, not just skills and experience, the type of working environment and a business’ approach to work-life balance.”
The Office for Budget Responsibility predicts that 60,000 people will lose their jobs as a result of the changes to the national living wage. However, encouragingly for jobseekers, 95% businesses say the new national living wage won’t discourage them from hiring and 77% of employers regularly train people into roles demonstrating that employers are already adapting to a tougher recruitment outlook.
BBC Business News: Firms forced to reveal gender pay gap
Companies that fail to address pay differences between male and female employees will be highlighted in new league tables.
Business Matters: Entrepreneur sells West Country air for £80 a jar
For just £80 you too could be the proud owner of a jar of Somerset air.
Leo De Watts – founder of Aethaer – claims he’s found a market for his product overseas, particularly in heavily polluted cities such Shanghai and Beijing, where “fresh” air is hard to come by.
“The AETHAER project provides clean, fresh and pure natural air in bottled form. The process involves travelling to some of the most beautiful, pristine areas of countryside, far away from industrial pollutants, motorways, and impurities, in search of the most immaculate quality of air.”
It’s hard to tell if Leo’s endeavour is serious or not – indeed videos on the website showing him running around ‘catching’ the air seem to be a little tongue-in-cheek.
In another, he tells us about how the air is kept so fresh…
We couldn’t decide if it was a joke or not, so Ian Axton and Kylie Pentelow had to find out for themselves by video calling the ambitious creator, Leo de Watts.
Aethaer’s products include samples from Somerset, Dorset and Wiltshire and while some might say £80 is a bit steep, we can certainly see the appeal of breathing some fresh West Country air.
BBC Business News: 'Lack of interest' in rail franchises
Taxpayers could end up out of pocket because not enough companies want to bid to run rail franchises in England and Wales, a group of MPs warn.
BBC Business News: VIDEO: UK's gender pay gap explained
Large businesses will have to provide details of how much they pay men and women, in an attempt to tackle the gender pay gap.
Business Matters: Business Secretary scrums down with England Rugby supplier
OPRO UK was set up by dentist Dr Anthony Lovat in his home over 20 years ago after realising the damage rugby was having on children’s teeth.
Awarded a Queen’s Award for Innovation, the UK based company now exports to 30 countries worldwide and supplies top national and international rugby teams from around the world.
These include World Cup winners New Zealand, former Premiership Champions Harlequins and 10 of the current Aviva Premiership teams. OPRO also supplies mouthguards to over 1,000 schools and clubs from all over the UK.
Business Secretary Sajid Javid said: “Many successful entrepreneurs start by spotting a gap in the market and working from home. OPRO shows what can be achieved with hard work and a can-do attitude. It’s a company that has been rightly recognised for its innovation and world-leading technology.
“I am hugely impressed by the success the company has had exporting all over the world, to world class teams like Australia and New Zealand, as well as supplying the England team, schools, amateur clubs and individuals.”
From its UK base in Hemel Hempstead, OPRO can produce up to 15,000 mouthguards a week. The mouthguards are then shipped to schools, colleges, sports players and clubs all around the world.
Dr Anthony Lovat, founder of OPRO said: “We are a team at OPRO and everything you see here today is the result of the hard work of a group of dedicated employees. I am passionate about maintaining a manufacturing base in the UK and delighted that the work we have done and continue to do in oral protection has prevented many children and adults from losing teeth as a result of a sporting accident.”
Dr Mike England, Rugby Football Union Community Rugby Medical Director added: “We’ve been working with OPRO for a number of years, including through our All Schools programme. Their support of our player safety education embedded in that programme, and through the provision of their high quality mouth guards especially for the young players has been invaluable for the community game.”
Paolo Bona / Shutterstock.com
BBC Business News: VIDEO: EU: A brief history of UK-Europe trade
BBC's Allan Little considers how Britain's trading history with its European neighbours has shaped what has proved a controversial political relationship.
Business Matters: Transport for London announces 100 new jobs for former military members
The new jobs are in addition to 27 posts already filled by ex-service members who TfL have helped make the transition back into full-time civilian employment.
One scheme beneficiary is John Wilson, a Traffic Controller at TfL, who lost both his legs after being hit by an IED whilst on patrol in Helmand Province, Afghanistan.
He said: “I was medically discharged from the Army in 2014 and have struggled to find work because employers just look at me and think I won’t be up to the job.
“I was speaking to the Career Transition Partnership who told me about TfL’s scheme which sounded like a great opportunity. I was offered a place on the scheme and joined in January 2016. I’m now working in their Traffic Control team and I absolutely love it. I never saw myself working in an office but we’ve got a really good team who make every day enjoyable.”
Other support offered to current and former military members includes free travel on the Tube, bus and TfL rail networks for all personnel travelling in uniform and free travel for war veterans who hold a Veterans Oyster photocard.
London’s Transport Commissioner, Mike Brown, announced the new jobs at TfL’s annual Industry Day where he also signed the Armed Forces Covenant to formalise TfL’s commitment to the military.
Speaking after the event, Mr Brown said: “Our ex-Service placement scheme has been extremely successful, and we’re delighted that, together with our suppliers, we’re going to help even more former Armed Forces members back into employment.
“We have an engineering skills shortage in the transport industry and the scheme is helping us benefit from the skills these brave men and women gain during their careers in the Armed Forces.
Brown was joined for the signing by Minister for Defence Personnel and Veterans, Mark Lancaster TD MP, who said: “TfL is already a strong supporter of our Armed Forces community, offering free travel to serving personnel in uniform and free travel for veterans through the Veterans Oyster photo card. This support makes a real difference.
“And now, having signed the Armed Forces Covenant, they are making a commitment to continue and grow this support – for example, offering TfL insight days for ex-service personnel, offering assisted entry routes into TfL and increasing support for their Reservists.”
TfL suppliers who’ve joined the agency in pledging jobs for ex-Service members include Siemens PLC, Imtech ICT Ltd, Telent Limited, Cubic Transportation systems, Ringway Jacobs and CSC.
Niall Ahern, Employment Engagement Director at the Reserve Forces’ and Cadets’ Association for Greater London, commented: “TfL already shows great support for the Armed Forces family, recruiting service leavers, supporting Reservists, providing discounted travel for the Armed Forces and pulling out the stops to back the Poppy Appeal.
“It’s great to see Commissioner, Mike Brown, taking that support a step further by signing the Armed Forces Covenant and backing that up with a set of concrete promises for further action.”
BBC Business News: Fruit and veg goes digital in South America
The apps aiming to shake up grocery shopping in South America
BBC Business News: Anxiety hits US and European markets
The FTSE 100 has fallen 2.4%, with US and European markets also posting sharp declines amid continued anxiety about the state of the global economy.
BBC Business News: Morgan Stanley to pay $3.2bn settlement
Morgan Stanley will pay $3.2bn (£2.2bn) to US authorities to settle claims that it misled investors about risky mortgage bonds sold before the financial crisis.