Today’s “highly critical report” suggests regulators are likely to hold senior former HBOS managers to account, says Charles Kuhn, Partner at law firm Hickman & Rose.
It brings them a step closer to prohibition proceedings against the top tier of HBOS management for the bank’s liquidity failure.
Up till now we have witnessed a prolonged exercise in targeting lower-level personnel in an attempt to appease an angry post-crisis public and gain some much-needed credibility. There have recently been rumblings from Whitehall that the ‘reverse burden of proof’ may be reinstated into the soon-to-be in force Senior Managers’ Regime.
But Kuhn argues against this...
Despite this positive outcome we will continue to question the merits of trying to solve the problems of a deeply complex and flawed system by making it easier to prosecute former banking management.”
A spokeswoman from Skipton Building Society, where former HBOS finance director Mike Ellis is now chairman, said:
Skipton appointed Mike Ellis as Chairman in May 2011 due to his significant and valuable experience of building societies, banks and regulation, and the personal qualities that have enabled him to lead the Board and work closely with the Executive team.
Since his appointment Mike has provided outstanding leadership to the Board and overseen a significant improvement in the Society’s performance during the intervening four years. He has the wholehearted confidence of the Board for the contribution he has made and continues to make to the Society.
Skipton Building Society says chairman Mike Ellis (ex-HBOS) has "wholehearted confidence of the board"
— Jill Treanor (@jilltreanor) November 19, 2015
Updated
HBOS Report: A recap
A quick reminder of the key points from today’s report:
The Bank of England had vowed to respond quickly to a new report into the collapse of HBOS.
BoE deputy governor Andrew Bailey has promised ‘rapid action’, seven years after HBOS failed.
Bailey also announced he has sent the report into the failure of HBOS to the secretary of state for business, who has powers to ban directors under Britain’s Companies Act.
He told reporters:
“The directors’ regime is entirely within their body of operation, not ours.”
Senior MP Andrew Tyrie, and the Institute of Directors, have both demanded an urgent response.
However, the Department for Business has said that it has already decided to not ban HBOS directors, but might reassess the decision.
Former HBOS directors have also defended themselves. They argue that the financial crisis could not be predicted
The official report into HBOS was also released today, running to 400 pages . It found that senior managers had failed to set appropriate strategy, and ran a flawed business model.
But it also chastised the former regulators....and the light-touch regulation pioneered by former PM Gordon Brown.
If you’re just tuning in, here’s our full news story on the HBOS report:
HBOS directors: No justification for further action.
Eight former directors of HBOS are disputing today’s report into the bank’s failure.
They’re represented by Ashurst, an international law firm, which says there is no reason to take further action against anyone.
Here’s the full statement:
The former non-executives directors of HBOS for whom Ashurst acts disagree with a number of the conclusions of this report, particularly the way in which it downplays the unforeseen and unforeseeable effect of the financial crisis on HBOS. Indeed the report acknowledges that its judgements have been reached with the benefit of hindsight. The report does not contain evidence that would justify any further enforcement action against executives.
Equally, they understand the justified anger about what happened. The former Chairman and CEO resigned, apologised, waived contractual entitlements and lost their investments in HBOS. Their only wish now is that current and future bank boards learn to avoid the mistakes that they and others undoubtedly made.
Those eight directors are:
-
Sir Ron Garrick (former deputy chairman)
-
Anthony Hobson (former chair of the audit committee)
- Lord Stevenson (former chairman)
- Sir Charles Dunstone, Coline McConville, John Mack, Kate Nealon & Sir Brian Ivory (all former non-executive directors).
They feature in our comprehensive list of former key players:
Updated
The Department for Business, Innovation and Skills says it has already decided not to ban HBOS executives, two years ago.
But it might take a second look at the situation, if today’s reports have thrown up new evidence.
Here’s their statement:
“In 2013 the Insolvency Service looked at whether the disqualification of the directors of HBOS was in the public interest and concluded there was not sufficient evidence to commence proceedings at that time.
“Once the FCA and PRA have conducted their review into enforcement action, we will establish whether there is any new information to consider.”
Business dept (BIS) says insolvency service looked at former HBOS directors in 2013 and concluded "not sufficient evidence" for proceedings
— Jill Treanor (@jilltreanor) November 19, 2015
HBOS report has been sent to Dept of Business which has power to investigate directors
— Jill Treanor (@jilltreanor) November 19, 2015
Updated
Gala Coral, where Andy Hornby now works as chief operating officer, has issued a brief statement.
It defends Hornby, while also avoiding commenting on the HBOS collapse:
Andy Hornby has been a key member of Gala Coral Group’s management team for nearly five years, most recently as COO. During this time he has played a central role in the transformation of the business and has earned the continuing support of our colleagues, management and shareholders.
Gala Coral Group is not in a position to comment on events relating to another organisation and sector some eight years ago.”
Gala Coral says Andy Hornby key member of management team for nearly five years and has no comment on events at HBOS eight years ago
— Jill Treanor (@jilltreanor) November 19, 2015
George Osborne: Labour's system of regulation failed
The Chancellor of the Exchequer, George Osborne, hasn’t wasted any time blaming the former Labour government for contributing to HBOS’s failure
“This report, from one of our most respected regulators, clearly shows that the collapse of HBOS was caused by those running the bank and those regulating it. It demonstrates that the system of regulation created by the last Labour government failed. In the end, this led to a £20 billion bailout of Lloyds Banking Group, funded by the taxpayer.
(that’s the ‘light-tough’ regulation cited in today’s report)
Osborne also claims that he has fixed some of the problems:
“I don’t want the British taxpayer to be on the hook for any more bailouts. So since 2010 we have made big changes. We have dismantled the failed tri-partite system, and put the Bank of England back at the heart of financial supervision.
“We have ensured that banks hold more capital and liquid assets, and that depositors are protected by a regulatory ring fence. And we have made bankers accountable for their actions, with those that bring down banks now facing up to seven years in prison. I welcome the fact that the report notes that this Government’s steps have addressed many of the failings that led to the collapse of HBOS. Next spring we will complete the sale of Lloyds Banking Group, putting the bank back into the private sector - its rightful place.”
The Institute of Directors has urged regulators to pull their fingers out, and decide whether to open new investigations into former HBOS bosses.
Oliver Parry, senior corporate governance Adviser at the IoD, says:
“There is justifiable anger that, so far, only one HBOS executive has been reprimanded for his involvement in its failure. The regulators have plans for further investigations and it is in everyone’s interest for these to be completed much quicker than the seven years we have waited for this one.
That’s the end of the press conference.....
Can @bankofengland tell panel to turn their mobiles off as the signal is interfering with the webcast!
— Louise Cooper (@Louiseaileen70) November 19, 2015
Nils Pratley gets the (crackly) microphone again:
Q: Given the blunders which regulators made over HBOS, can we have any confidence in the FSA’s report into Royal Bank of Scotland?
Bailey declines to comment.
Q: Could Andy Hornby and other senior HBOS officials now be disqualified as company directors?
Bailey (joking that he’s showing his age) says he remembers the collapse of Barings Bank in 1995, in which disqualification rules were exercised.
This is a matter for the Department for Business, he explains.
Q: Was the FSA under pressure from the Labour government to not ask for more tools, or to take more action against banks before the crisis?
Bailey says there was a “broad culture” of many years of economic growth, generally rising asset prices, bigger bank balances sheets.
And crucially:
There was a belief that this was a very good thing...don’t kill the goose that laid the golden egg.
That ‘broad consensus’ contributed to the banking crisis. And Bailey’s priority is to create a new regulatory environment when this can’t happen again.
Isn’t it staggering that it took so long to allow those criticised in the report to respond, asks our financial editor Nils Pratley. Is Maxwellisation* working as it should do?
It’s a good question, responds Charles Randell (a lawyer who serves on the Prudential Regulation Authority). But Maxwellisation wasn’t the only reason that the report took so long.
Randell also insists that powerful people were not allowed to water down the report.
(* - Maxwellisation gives the ‘right to reply’ to anyone criticised in an official report)
Updated
This press conference wouldn’t pass a “fit and proper” test -- a problem with the microphones means Andrew Bailey is struggling to hear the questions.
Q: What action could be taken against the people who were running the FSA when HBOS failed?
Bailey says those people were not in “approved roles” at the time - and they’ve now all left the regulator.
But anyone who now works for the Prudential Regulatory Authority or the Financial Conduct Authority are subject to “continuous” tests to assess their fitness.
Updated
Andrew Bailey also confirms that HBOS executives cannot now be fined, because today’s reports took so long to be released.
Bank of England vows rapid action over HBOS
Q: How long will it take to decide whether to open enforcement procedures against former HBOS managers?
Andrew Bailey says action will be taken ASAP.
Q: Will it take months, or years?
It will certainly be not more than months.
Q: By the end of the year?
That’s barely a month, Bailey replies, effectively ruling out a decision in 2015.
HBOS press conference underway
Andrew Bailey, deputy governor of the Bank of England, tells the press conference that “rapid action” will be taken following today’s reports.
The HBOS case is an example of the perils of inadequate regulation, he adds.
Updated
The Bank of England is holding a press conference to discuss the report - it is being streamed live here.
Our financial editor, Nils Pratley, explains how some HBOS executives could be feeling worried today:
None of the big three at HBOS – former chairman Lord Stevenson and former chief executives James Crosby and Andy Hornby – would wish to work for a bank again, and no lender would want to hire them.
Stevenson concentrates on his charity gigs and Waterstones bookshops these days. Crosby gave up his gong and avoids the limelight. Hornby continued his executive career at Boots and now Coral, well away from the City.
But, in some cases, a ban could have direct consequences. The surprise in Green’s list of individuals that the FSA should have considered investigating is long. Apart from Stevenson and Hornby, it includes: Mike Ellis, former HBOS finance director, and now chairman of Skipton Building Society; and Lindsay Mackay, former head of the Treasury division and still an FCA-approved person. A further name, Colin Matthew, former head of HBOS’ international division, is retired.
Nils concludes that regulators could also face consequences...
Those former HBOS managers named in the report will have reason to sweat today – but so will former senior FSA officials, most of whom can now be found in senior private sector posts.
My quick take on HBOS report: a damning indictment of failed bankers and regulators https://t.co/YvDkuAG0hg
— Nils Pratley (@NilsPratley) November 19, 2015
The report highlights how HBOS’s aggressive mortgage lending accelerated ahead of its deposit base in the run-up to the crisis, leaving it unable to survive the credit crunch.
HBOS was one of the biggest offenders, although Northern Rock (which hit trouble a year before HBOS) was even worse.....
Tyrie demands fast action on HBOS bans
Andrew Tyrie MP, who chairs parliaments’ Treasury Committee, has called for regulators to decide quickly whether any HBOS bosses should be sanctioned.
He wants immediate action on Andrew Green QC’s recommendation to “consider afresh whether any former members of HBOS’s senior management should be subject to an investigation”.
Tyrie says:
“The Parliamentary Commission on Banking Standards asked the regulators to consider whether any former members of HBOS’s senior management should be subject to investigation proceedings with a view to prohibition. At the request of Parliament’s specialist advisers, the job of responding was passed to Andrew Green QC. We now have his clear answer. They should be.
“Better late than never. What’s more, Mr Green concludes that the FSA should have got on with this in 2009. And he has come to this view, not with the advantage of hindsight, but by basing his conclusions on the material available to the FSA at that time.
“The FCA and PRA should get on with this immediately. Parliament will expect an answer from them within months, not years. This has gone on long enough, to put it mildly.
"Better late than never" says MP Andrew Tyrie of the HBOS verdict
— Jill Treanor (@jilltreanor) November 19, 2015
A pithy summary, from Newsnight’s Duncan Weldon:
HBOS report in a tweet: bad business model & management failure, FSA failed to stop but operating in a political context of "light touch".
— Duncan Weldon (@DuncanWeldon) November 19, 2015
The regulatory structure put in place by the last Labour government contributed to the crisis, says the report.
It is now clear that the FSA’s pre-crisis approach to prudential supervision was not appropriate for the purpose of meeting its market confidence objective.
However, the FSA was responsible for a broad range of financial regulation issues and was expected to regulate within established global standards.
There was also a sustained political emphasis on the need for the FSA to be ‘light touch’ in its approach and mindful of the United Kingdom’s competitive position.
Seven reasons why HBOS failed
The report lays out the key reasons why HBOS’s risky lending and flawed strategy meant it was survive the financial crisis:
- Its Board failed to instil a culture within the firm that balanced risk and return appropriately, and lacked sufficient experience and knowledge of banking.
- The result was a flawed and unbalanced strategy and a business model with inherent vulnerabilities arising from an excessive focus on market share, asset growth and short-term profitability.
- This approach permitted the firm’s executive management to pursue rapid and uncontrolled growth of the Group’s balance sheet, and led to an over-exposure to highly cyclical commercial real estate (CRE) at the peak of the economic cycle, lower quality lending, sizable exposures to entrepreneurs, increased leverage, and high and increasing reliance on wholesale funding. The risks involved were either not identified or, where identified, not fully understood by the firm.
- There was a failure by the Board and control functions to challenge effectively executive management in pursuing this course or to ensure adequate mitigating actions.
- HBOS’s underlying balance sheet weaknesses made the Group extremely vulnerable to market shocks and ultimately failure as the crisis of the financial system intensified.
- There was an extended period of inflows of capital to developed economies, resulting in low yields, declining awareness of risk and asset price bubbles, in which market discipline – investors, analysts, rating agencies and other third parties – failed to constrain firms from undertaking risky strategies.
- An overall systemic crisis in which the banks in worse relative positions were extremely vulnerable to failure. HBOS was one such bank.
And that was exacerbated by the regulator’s own failings.
The report doesn’t spare the regulators’ blushes either.
It says that the Financial Services Authority had identified the key risks which HBOS faced -- but had then failed to take appropriate steps to mitigate these risks effectively.
This shows “deficiencies in the FSA’s prevailing approach to the supervision of systemically important firms”, says the report.
Supervisors need to employ their judgement and take appropriate actions in response where necessary.
A particular challenge is to intervene sufficiently early when a firm is apparently successful but supervisors can identify weaknesses that are sufficiently important to pose a threat to the firm that is inconsistent with the objectives of supervision. HBOS was such a firm
Report: Bosses had flawed strategies
The report has no time for the suggestion that HBOS was simply unlucky -- sunk by a once-in-a-lifetime financial crisis.
Its top managers should have been better prepared, it says:
The management of a firm is not required to have perfect foresight. The criticism in the Report is not that management failed to predict that there would be a global financial crisis. Rather, they should have put in place strategies that could in combination accommodate and respond to, in a timely way, changes in external circumstances.
Updated
The paradox of the HBOS story is that the bank was generally seen as a success, until close to its collapse, says the BoE’s Andrew Bailey:
The 2001 merger of Halifax and Bank of Scotland had yielded double-digit profit growth in all but one of the years up to end-2006 and analysts’ and brokers’ views were positive at least until early 2007.
But, by this time, the seeds of the firm’s destruction had already been sown as a flawed strategy led to a business model that was excessively vulnerable to an economic downturn and a dislocation in wholesale funding markets.
Read the HBOS reports
The 400-page report is online here:
The failure of HBOS plc (HBOS)
And the inquiry into why only one executive was sanctioned (so far....) is here:
Report into the FSA’s enforcement actions following the failure of HBOS
Andrew Bailey, deputy governor of the Bank of England, says HBOS simply didn’t understand what it was getting into.
And that left taxpayers on the hook for a £20bn bailout when its risky lending unravelled.
Introducing today’s reports, Bailey says:
“The story of the failure of HBOS is important both to provide a record of an event which required a major contribution by the public purse, and because it is a story of the failure of a bank that did not undertake complicated activity or so-called racy investment banking.
HBOS was at root a simple bank that nonetheless managed to create a big problem.”
Here’s Jill’s early news story, which she’ll be adding to through the afternoon:
The former regulator, the Financial Services Authority, has also been criticised.
The report founds that:
Flaws in the FSA’s supervisory approach meant it did not appreciate the full extent of the risks HBOS was running and was not in a position to intervene before it was too late.
The FSA was wound up after the 2010 General Election, amid criticism that it had failed to spot that Britain’s banks were running dangerous risks, and too reliant on borrowing in the wholesale money market (which dried up in the 2007 credit crunch)
HBOS review: Board and management to blame
The HBOS review has also concluded that “ultimate responsibility for the failure of HBOS rests with the Board and senior management”.
It says that:
they failed to set an appropriate strategy for the firm’s business and failed to challenge a flawed business model which placed inappropriate reliance on continuous growth without due regard to risks involved.
Our City editor Jill Treanor has spent the morning digesting the report.
She is tweeting that those bankers running HBOS before the crash could now be investigated, and potentially banned from the City.
City regulators told it is the public interest to conduct through investigation into former senior executives of HBOS
— Jill Treanor (@jilltreanor) November 19, 2015
Lord Stevenson, former HBOS chair , bears “responsibility individually and collectively and as board member for the failings of the board”
— Jill Treanor (@jilltreanor) November 19, 2015
FSA concluded in 2010 Andy Hornby, former HBOS CEO, could have been investigated but decided against launching formal investigation
— Jill Treanor (@jilltreanor) November 19, 2015
Former FSA official Clive Adamson told the HBOS investigation: “the people most culpable were let off”
— Jill Treanor (@jilltreanor) November 19, 2015
HBOS Report: Executives could face new charges
The reports are out!
And they are recommending that regulators should consider bringing fresh charges against those responsible for the failure of HBOS.
The Bank of England says:
As part of the Review, Andrew Green QC was asked to provide an independent assessment of whether the decisions taken on enforcement by the former regulator, the FSA, were reasonable.
The PRA and FCA are therefore also today publishing Andrew Green QC’s report into the FSA’s enforcement actions following the failure of HBOS.
In his report, Andrew Green QC recommends that the PRA and FCA should now consider whether any former senior managers of HBOS should be the subject of an enforcement investigation with a view to prohibition proceedings.
The PRA and FCA will conclude a review as to whether further enforcement action should be taken as early as possible next year.
(That’s the Prudential Regulation Authority and the Financial Conduct Authority)
More to follow!
Updated
Here’s a fateful photo from September 2008, showing HBOS CEO Andy Hornby alongside Lloyds chairman Sir Victor Blank.
Blank had just decided to take the plunge and rescue HBOS, urged by prime minister Gordon Brown.
A month later, Brown was signing off on a £20bn rescue package for Lloyds/HBOS, as the true scale of its problems became clear.
You can get up to speed on the HBOS affair, and relive the financial crisis, with this timeline:
We’re actually getting two reports today.
As well as the main inquiry into the collapse of HBOS, a top lawyer has examined why only one executive - director Peter Cummings - was ever sanctioned over the crisis.
Andrew Green QC’s report could potentially open up the prospect of fresh action being taken against other top bosses.
Cummings ran HBOS’s corporate lending division. He was fined £500,000 and banned from the City by the FSA. Cummings has argued it was unfair to single him out for the failings at HBOS.
The collapse of HBOS was one of the most dramatic events in the wild autumn of 2008, when the failure of Lehman Brothers triggered global panic.
Like Royal Bank of Scotland (which was also bailed out), HBOS epitomised the boom that grew in the UK financial sector at the start of the decade.
Created by the merger of a solid Scottish bank and the respectable Halifax building society, HBOS was determined to become a new force in banking. With disastrous results, when its risky lending turned sour in 2008.
In 2013, MPs blamed HBOS’s decision to pursue “aggressive, asset-led growth across divisions over a sustained period”, which meant it took on more risk across the group.
Updated
Preamble: HBOS report released
The official investigation into the collapse of HBOS in 2008 is about to be released.
At noon precisely, Britain’s Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) will issue their report on the bank’s 2008 collapse.
It will outline how and why HBOS, created by a merger of Bank of Scotland and Halifax, was brought down by the financial crisis - and only saved by a merger with Lloyds.
This report has been many years in the making - delayed as those facing criticism were allowed to respond, under Britain’s controversial Maxwellisation rules.
Ex-bosses such as CEOs Andy Hornby and James Crosby, and chairman Lord Stevenson, could face heavy criticism. But regulators at the defunct Financial Services Authority could also be singled out, for not stepping in to prevent reckless lending.
And the bank’s auditors, KPMG, may not escape the spotlight either -- Sky News reckons the report will show that HBOS managers pushed it to sign off lower bad loan provisions in a bid to reduce concerns about its financial health.....
Updated
Greek MP quits in 'mini crisis'
Back in Greece, Syriza MP Gabriel Sakellaridis has quit rather than support the government in tonight’s austerity vote (as explained in earlier post).
This is a blow to Alexis Tsipras’s government, as it struggles to implement its unpopular third bailout.
#SYRIZA MP #Sakellaridis gives up seat in parliament after Tsipras' request, says 'cannot contribute to the implementation of govt policy'
— Daphne Papadopoulou (@daphnenews) November 19, 2015
Tonight’s vote includes new measures to repossess houses from Greeks who cannot meet their mortgage repayments.
Athens correspondent Helena Smith reports that tensions are rising.
Insiders are now speaking of a “mini government crisis.”
Gavriel Sakellarides’ resignation is all the more poignant for the fact that he was the former government spokesman and a very close ally of Tsipras.
“It is impossible for me to contribute to the realisation of government policy,” the leftist wrote in his resignation requesting that Tsipras initiate the process to replace him.
The prospect of thousands losing their homes, as a result of the new foreclosure bill, is believed to have been the straw that broke the camel’s back for Sakellarides.
Sakellarides is ironically a member of the group of 53, the faction of intellectual dissidents lead by the finance minister Euclid Tsakolotos.
Helena adds that ANEL, Tsipras’s junior coalition partners, are the ‘wild card’ in tonight’s vote - they’re not happy about raising the tax on wine.
storm in a wine cup: at least one #ANEL MP the ever bizarre Nikos Nikolopoulos refusing to endorse multi-bill in 2night's vote
— Helena Smith (@HelenaSmithGDN) November 19, 2015
#Greek government's majority is likely to be reduced w expected desertions after tonight's vote on latest EU-mandated measures
— Helena Smith (@HelenaSmithGDN) November 19, 2015
Updated
European markets hit three-month highs
European stock markets have hit levels last seen before China’s Black Monday crash in August.
This morning’s rally has pushed the Stoxx 600 index of leading European shares up by 1.1%, to a three month high.
This reflects the Federal Reserve’s confidence in the US economy, and its guidance that future interest rate moves will all depend on economic data:
Alvin Tax, FX strategist at Société Générale bank, says (via Reuters)
“We have had an interesting FOMC minutes and risk assets have rallied across the board with the dollar weaker and EM [emerging market assets] leading the way.”
“That is the success of the Fed really. We expect they will hike in December but then proceed slowly after that and that has soothed markets.”
WorldFirst’s Jeremy Cook is first to react to the weak UK retail sales report:
“Retail sales in October are always a strange one – unable to benefit from the ‘back to school’ rush and unlikely to see too many Christmas shoppers and hence can see a slight slip in expenditure.
This year is no different given September’s number was boosted by strong spending around the Rugby World Cup and warm weather and we have seen a natural pause on the nation’s High Streets before the manic festive season begins.”
Updated
UK retail sales drop
Just in - UK retail sales declined month-on-month in October, even though shops continue to cut prices.
The Office for National Statistics reports that retail sales volumes shrank by 0.6% compared with September, while the amount spend fell by 0.7%.
Food, textiles and clothing were the biggest drag on sales, the ONS says. That suggests consumers may be cutting back ahead of Christmas, with the unusually warm autumn meaning less demand for warm clothes.
*U.K. OCT. RETAIL SALES EXCL. FUEL FALL 0.9%; EST. 0.6% DROP
— World First (@World_First) November 19, 2015
The report also shows that prices have been steadily declining in recent months, pulling down the cost of living.
A very chatty Praet repeats that the #ECB is ready to act, members are having "rich discussions" and rate cuts are part of the toolbox.
— Maxime Sbaihi (@MxSba) November 19, 2015
ECB chief economist hints at more stimulus
The European Central Bank’s chief economist is dropping a strong hint that monetary policy will indeed be eased next month.
Peter Praet is telling an audience in Frankfurt that downside risks are prevailing in the eurozone, with price pressures subdued and investment still depressed.
Praet also suggests that the ‘zero lower bound’ could be lower than previously thought. That means that banks could be hit with steeper negative interest rates, to spur them to lend to businesses and consumers, rather than leave money at the ECB.
Peter Praet sees "confirmation" of downside risks in global economy. Easing in December a done deal, in case there was any doubt left.
— Frederik Ducrozet (@fwred) November 19, 2015
ECB's Peter Praet says lower bound for interest rates "may be lower than we thought months or years ago"
— Howard Archer (@HowardArcherUK) November 19, 2015
We’re just seeing reports that a Greek government MP has been ordered to resign, after saying he wouldn’t support the austerity measures being voted on tonight.
If Gavriil Sakellaridis steps down, he could be replaced by a new Syriza candidate.
#Greek PM @atsipras asks lawmaker @gabriel_athens to quit #Greece
— Nektaria Stamouli (@nstamouli) November 19, 2015
#Tsipras asks SYRIZA MP Gavriil Sakellaridis to resign following reports that he plans to abstain from tonight's parl't vote via @geoterzis
— Kathimerini English (@ekathimerini) November 19, 2015
— Damian Mac Con Uladh (@damomac) November 19, 2015
Updated
Nothing is ever easy in Greece, when bailout funds are involved.
And over in Athens, the government is racing to tweak its latest austerity plan after some MPs protested against raising the tax on (gulp) wine.
This measures was agreed this week to unlock €10bn of bank recapitalisation funds and €2m loans.
Greece’s socialist-led government decided to hit wine guzzlers, after backtracking on a plan to tax private education.
The Kathimerini newspaper says:
According to sources, the new proposal is likely to propose a smaller tax on wine (of 0.15 euros rather than the 0.30 euros originally mooted) along with another measure to cover the difference.
MPs will vote on the measures tonight.
Tensions are already quite heightened in Athens - yesterday, farmers clashed with riot police in a protest against austerity.
It feels like a December US interest rate hike is in the bag. Which means investors can move on to pondering other things, like the eurozone.
The ECB could well ease monetary policy next month -- boosting its QE programme, and hitting banks with more negative interest rate to force them to lend.
But there’s some uncertainty over how bold Draghi and co will be, as Jeremy Cook of Worldfirst explains:
It is becoming clear that the most important Central bank meeting in December is not that of the Federal Reserve but instead the European Central Bank on December 3rd.
Even then we are having difficulty pricing expectations; while traders are pricing in a 10bps cut in the deposit rate with 100% certainty and a 20bps cut to about a 50% certainty there is no real way of pricing in increases in quantitative easing.
World First Morning Update September 19th - December is a given, after is a puzzle - https://t.co/Olc0fi1VJj
— World First (@World_First) November 19, 2015
Fed optimism give European markets a lift
Mining stocks are helping to drive European markets higher this morning.
In London, Glencore (+3%) and BHP Billiton (+2.6%) are among the top risers, pushing the FTSE 100 up over 1%.
Last night’s Federal Reserve minutes, showing growing confidence in the US economy, are having an effect, as Mike van Dulken of Accendo Markets explains:
Markets are clearly liking the US central bank’s faith in US economic recovery and belief in a gentle ‘testing of the water’ first move towards policy normalisation, whilst peers are doing the exact opposite, will not derail economic recovery or deliver market mayhem.
Just that little bit more certainty goes a long way.
Good news for anyone who took part in Royal Mail’s flotation in 2013 -- shares are up 4.5% this morning.
The company reported that its UK cost savings programme had accelerated this year (that’s City-speak for getting rid of more posties).
Rapid cost-cutting has taken investors’ minds off a 30% drop in profits in the last six months.
Royal Mail is another company desperate for a decent Christmas. But it also faces several threats. Analyst Mike Dennis of Cantor FitzGerald has listed a few risks:
Demand for parcels and mail in the UK and Europe, pricing and cost pressures, upcoming union negotiations on wages and productivity, higher cash pension costs and regulatory risk with an on-going review of the UK mail market by the regulator Ofcom.
Updated
Poundland has been relegated to the bargain bin this morning, after the discount retailer’s latest results failed to impress.
Shares in Poundland have slumped by 14%, after it reported a 26% drop in underlying profits and warned that trading is currently ‘highly volatile’.
The company is currently digesting its acquisition of 99p Stores, which are now being rebranded under the Poundland livery (very inflationary!). That’s had a short-term impact on profitability.
It had previously guided the market that profits would pick up towards the end of 2015, so talk of volatile trading is a worry, with Christmas closing in fast....
Updated
#Germany's Dax jumps above 11k as markets reacted w/ calm to Oct FOMC minutes which pointed to a liftoff in Dec. pic.twitter.com/KooBuArY6S
— Holger Zschaepitz (@Schuldensuehner) November 19, 2015
A solid start to trading in Europe has seen the FTSE 100 rise by 0.5%, or 32 points, to 6311.
The German DAX is up almost 1%, with France’s CAC gaining 0.7%.
FXTM research analyst Lukman Otunuga confirms that traders are encouraged by the Federal Reserve’s belief that America can shoulder higher interest rates.
Markets received further confidence following the highly anticipated FOMC minutes release that the Federal Reserve will finally begin to raise US interest rates in December.
The comment that “it may well become appropriate” to raise US interest rates in December installed confidence among investors, especially considering that this meeting took place before the exceedingly impressive employment report released at the beginning of this month.
Asian markets boosted by Fed hopes
Asian stock markets have jumped overnight, as expectations grow that the US central bank is ready to raise interest rates.
Shares rallied in Tokyo, Shanghai, Hong Kong and Sydney after the minutes of last month’s Federal Reserve meeting showed that most policymaker believe the US economy could handle higher borrowing costs from December.
And that’s likely to feed through to Europe this morning too.
The rally was sparked by the minutes of October’s Fed meeting. It showed that just “a couple” of members had raised concerns that raising rates in December could be premature.
Investors have been enjoying record low interest rates, so you might expect a rate hike to hit shares. But the old adage that “markets hate uncertainty” also comes into play.
Also, traders are anticipating that the Fed will be eager to emphasise that it will be cautious about any subsequent rate hikes, meaning monetary policy will stay quite loose for a while.
Tom Porcelli, chief US economist at RBC Capital Markets, says:
“If - when - they lift rates in December, the Fed will likely be very aggressive in highlighting the idea of a very gradual pace.”
Updated
The agenda: HBOS report finally published
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
If a week is a long time in politics, then seven years is an absurdly lengthy stretch in finance.
But that’s how long we’ve been waiting to discover exactly why one of Britain’s leading banks, HBOS, collapsed in 2008.
The official report into the failure of HBOS comes out at noon today, followed by a press conference. Over 500 pages, it will explain how the bank was brought down in the financial crisis, prompting a rescue merger with Lloyds.
A separate report will also examine why only one executive ever faced sanctions. Former HBOS chief executives James Crosby and Andy Hornby, and the bank’s former chairman Lord Stevenson, have all avoided charges.
The regulator at the time, the Financial Services Authority, is also likely to feel the heat after allowing HBOS to lend aggressively, and end up in a position where it couldn’t survive the crash.
Our City editor Jill Treanor sets the scene:
Former HBOS executives will learn whether they face fresh investigations into their conduct in the run up to the bank’s near collapse in 2008.
Thursday’s publication of the much-delayed and long-anticipated report into what went wrong at the bank will be published alongside an opinion commissioned by the regulators into the decision in 2012 to only punish one former executive.
There were reports that the review will say there are grounds to reconsider the scope of the original investigation and that the regulators will assess whether to embark on a fresh wave of investigations. Individuals are not expected to be singled out....
What else is afoot?
We get the latest UK retail sales figures, at 9.30am GMT. They’re expected to show a fall in takings on the high street,
Investors are digesting the minutes from the US Federal Reserve’s most recent meeting, released last night. They show that many policymakers are ready to hike rates next month.
FOMC minutes signalled that a notable number of Fed officials believe that the US economy is now ready for interest rates to be lifted
— RANsquawk (@RANsquawk) November 19, 2015
Overnight, the Bank of Japan has left monetary policy unchanged, despite Japan dropping back into recession in the last quarter.
The Greek parliament should vote through new budget measures tonight, to unlock its next aid payment.
And in the City, Royal Mail and Poundland are both reporting results.
Royal Mail has posted a 30% drop in profits, and revealed that 3,000 staff have left the business in the last six months.
We’ll be tracking all the main events through the day....
Updated
