Comment: Gulliver’s confession is good for all our souls
WELL, at least they owned up to the mess. After some of the mealy-mouthed, buck passing, nothing-to-do-with-me excuses from some of the bank bosses, it was pleasing to hear HSBC’s chief executive Stuart Gulliver apologise for its share in recent scandals.
In view of the scale of the money-laundering outrage, he probably had little choice and he must have known that together with yet more admissions of misbehaviour over payment protection insurance (PPI) and interest rate swaps, there was little point pretending that the otherwise decent half-year figures would make up for what he termed “mistakes of the past”.
The contrition may extend to clawing back bonuses, though it appears that resignations – at least for the time being – have been limited to the head of compliance, David Bagley.
The shares were marked up, reflecting an acknowledgement of trading performance over the potential impact of penalties and reputational damage. But some observers were less than impressed. Investec analyst Ian Gordon, surely with tongue firmly in cheek, said in a note that “notwithstanding one or two legacy issues [Libor, PPI, interest rate swaps, money laundering, etc] it is fighting hard in the direction of ambitious 2013 targets”.
He expects these targets to be missed and that the revenue performance would disappoint the market. Gordon’s final analysis is that there is better value elsewhere.
He will have noted that the figures came in below consensus and that the cost:income ratio has worsened, albeit largely as a result of one-off items.
However, Gordon may be offering an overly gloomy prognosis of a business that is strongly capitalised and is benefiting more than its peers from being heavily-weighted to the growing Asian economies.
While its European business slumped into a loss, underlying profits in the Asia-Pacific region were 17 per cent up and in Hong Kong by 22 per cent. It is restructuring in the US and even in the UK it is benefiting from the bigger plight of its competitors.
Markets on guard for more stimulus
The economies of the UK, Europe and the US are bound together in gloom, putting more pressure on those holding the levers of power to take renewed action.
European Central Bank president Mario Draghi helped stir a rally in stock markets on Thursday and Friday after saying the bank would do “whatever it takes” to safeguard the euro.
The momentum carried on into yesterday’s session as prospects grew of imminent new measures, possibly more bond buying. Some believe that the ECB is more likely to act in September, but the noises emanating from around the eurozone suggest otherwise.
Hopes for an economic boost from the US, however, may be dented. The Federal Reserve is unlikely to push the button on more quantitative easing this week even though jobs data due out on Friday is likely to show the economy flatlining.
With the presidential vote so close the Fed is caught in a quandary, as anything it does may be interpreted as interference in the electoral process. But if the US economy slips, the Fed may also act in September.
In between all that, the Bank of England’s monetary policy committee meets on Thursday with the UK stuck deeply in recession. But any further moves by the MPC this week would be a surprise after announcing a further £50 billion of asset purchases only weeks ago.
Faced with a “no change” agenda, perhaps the members should skip the meeting altogether and help fill some of those empty seats at the Olympic Park.
Williams is straight out of the blocks
Good luck to Beverley Williams, who takes on one of the toughest jobs in a retail sector that needs as many friends as it can get.
Her appointment as interim chief executive of JJB Sports will pair her with retail recovery specialist Bob Corliss and they will hope they can find the silver bullet that has eluded others who have tried to turnaround the business. Williams left lingerie chain La Senza before it collapsed but she will have learned a thing or two about what works and what doesn’t.
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Weather for Edinburgh
Wednesday 22 May 2013
Temperature: 3 C to 13 C
Wind Speed: 23 mph
Wind direction: West
Temperature: 5 C to 11 C
Wind Speed: 23 mph
Wind direction: North west