Published: 15 September 2022
Location: London, UK
By Suzanne Evans, Director, Political Insight
Chancellor Kwasi Kwarteng is said by the Financial Times to be considering scrapping caps on bankers' bonuses to boost London's post-Brexit competitiveness against financial capitals like New York and Hong Kong. The idea was ruled out by former Prime Minister Boris Johnson's administration in June, but new Prime Minister Liz Truss, who has promised to "really unshackle" the City of London from financial rules inherited from the EU which she has said "hold the City, and its contribution to the entire country, back," hence the idea is being reconsidered. An EU-wide cap on bankers' bonuses was introduced following the 2008 financial crash and remains in place in Britain despite the country leaving the bloc.
Carmaker Aston Martin Lagonda (AML) has been issued with a £150m lawsuit from former dealers who claim they're owed the funds for underwriting the development of its Valkyrie hypercar. Aston Martin confirmed yesterday that Nebula Project, a Swiss company owned by Andreas Baenziger and Florian Kamelger, had filed a case against it in London. According to the Financial Times, the case focusses on a deal to underwrite the development of the £2.5m Valkyrie, as well the slightly cheaper Valhalla supercar, and a third model. Baenziger and Kamelger had been guaranteed royalty payments of roughly 3%, equating to approximately £150m, when the cars went on sale. However, AML later claimed that the pair had withheld customer deposits for the Valkyrie, and sued them in order to recoup the £15m it said it was owed and cancelled their contract. AML said it is “confident in our legal position and believe their counterclaims are retaliatory and without merit,” however AML shares slumped 9.76% to 141.90p yesterday morning, before ending the day just 2.26% down.
Shares in Naked Wines ended the day 37.7% down yesterday after it said it was reviewing operational and financial plans for the next 18 months and announced the departure of non-executive director Pratham Ravi with immediate effect, less than one month after he joined. The online wine retailer said it will provide an update on the plans alongside a trading statement due on the week commencing 17 October. Shares have tumbled a further 4.45% at the time of writing this morning.
Housebuilder Redrow has returned to pre-Covid levels of profitability, but the FTSE 250 company warns that high inflation and rising mortgage costs are leading to a loss of momentum in the UK housing market. Revenue grew 10% to a record £2.14bn in the year to 3 July. Pre-tax profit fell 22% to £246m from £314m after booking exceptional fire safety costs of £164m. Excluding these costs, underlying pre-tax profit rose by almost a third to £410m.
The owner of Butlin’s is on the brink of sealing a £300m sale of the holiday camp chain to one of its parent company’s founding families, Sky News says. The Harris family's bid to acquire Butlin's comes just over 18 months after it sold Bourne Leisure to Blackstone, the giant American private equity firm, for more than £3bn. Paul Harris, the family member understood leading the deal, is likely to become Butlin's chairman. The transaction will take the total proceeds from the sale of Butlin's to more than £600m. An auction of the Butlin's chain, which comprises three holiday camps, has been underway since earlier this year. Butlin's was established by Billy Butlin in 1936 and in its heyday, entertained 1 million holidaymakers each year across nine sites.
Low-cost carrier Wizz Air is to purchase a further 102 A321neo aircraft from Airbus, the bulk of which will be delivered between 2025 and 2027. CEO József Váradi said: "We remain on track to become a 500 aircraft airline group by the end of the decade while delivering our commitment to reduce our already industry-leading CO2 emissions by 25% by 2030."
Oil and gas giant Shell said this morning that CEO Ben van Beurden is to step down from the role at the end of 2022. He has spent 39 years with the group, the previous nine as CEO. He will be succeeded by Wael Sawan on 1stJanuary, but remain with the group until 30 June, acting as an advisor to the board, in order to ensure a smooth transition.
German gas importer Uniper said yesterday that it is seeking further aid from the German Government. In July, Berlin said it would take a 30% stake as part of a bailout package which has since grown to €19bn (£16.42bn), but which is no longer enough. The Bundestag could now take a controlling stake in the company, potentially paving the way for a what could result in a full nationalisation of the firm, Sky News says. Uniper is Germany's largest importer of Russian gas, and quickly burned through its cash reserves when Moscow cut gas flows to the country, as it had to source alternative sources of gas on the expensive spot market.
Tech giants Google and Amazon are both in the firing line again over antitrust regulations this morning:
- has lost its legal antitrust challenge to the European Union's General Court yesterday as Brussels "confirmed" its decision to issue the Silicon Valley tech company with a multibillion-euro fine, having concluded that the Alphabet-owned company used its Android mobile operating system to undermine competitors. "The General Court largely confirms the [European] Commission’s decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine," it said in a statement. However, the court trimmed the fine to be paid by Google from €4.3bn (£3.7bn) to €4.1bn (£3.54bn) to "better reflect the gravity and the duration of the infringement" as its "reasoning" differed in "certain respects from that of the Commission," judges said. A spokesperson for the European Commission said it will "carefully study the judgment and decide on possible next steps". Google has not commented so far.
- Amazon meanwhile, will face a fresh lawsuit filed by the State of California yesterday, alleging that the company violated antitrust law by blocking price competition and pushing up prices for consumers. California Attorney General Rob Bonta said Amazon's rules bar merchants from selling products at lower prices on their own websites or at the stores of Amazon's rivals. "Through its actions, the everything store has effectively set a price floor, costing Californians more for pretty much everything," Bonta said. However, Amazon has responded by saying that consumers could see higher prices if the lawsuit succeeds. The company has the "right not to highlight offers to customers that are not priced competitively," it said. "The relief the (attorney general) seeks would force Amazon to feature higher prices to customers, oddly going against core objectives of antitrust law."
Cryptocurrency investors have been closely watching the so-called “ethereum merge” which took place in the early hours of this morning. In a nutshell, it was the most ambitious software upgrade in cryptocurrency history, re-configuring the network which runs Ether, the world’s second largest cryptocurrency after Bitcoin. Originally scheduled to take place five years ago, the “merge,” between the existing Ethereum blockchain system and a parallel network that’s been running for almost two years to test the new concept, should cut the system’s energy consumption by 99.95%. Cryptocurrency creation has long been criticised because of the amount of electricity it uses – enough to power Finland for a year, according to some estimates. The new system also operates on a “proof of stake” model, making it more of a traditional financial asset that pays interest, like a bond or a certificate of deposit. Reuters speculates that this could entice hedge funds, asset managers, and wealthy individuals who’ve stayed on the crypto sidelines so far to invest. The supply of Ether currently totals some $170bn (£147.01bn).
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