Investors unite in Canary Wharf dispute

Subsidiaries of insurance giants Aviva and Legal & General are among a group of investors that have been cleared to act together in a case against Canary Wharf Group related to early bond repayments. 

The dispute centres on CWG’s sale of 10 Upper Bank Street to Qatar Holdings and China Life in June, proceeds from which were used to partly repay debt worth around £577 million held by noteholders. The bonds were issued as part of a mortgage-backed security known as Canary Wharf Finance II.

Deutsche Bank, acting as a trustee on behalf of the noteholders, has argued this should have triggered an additional payment of £168.8 million to reflect a so-called "Spens clause".

Buyout firms disclose more fees

More than a dozen private equity firms have revised their regulatory filings amid pressure from federal securities regulators, publicly disclosing for the first time some fees and expenses charged to public pension funds and other investing clients.

The new disclosures—made in unusual midyear revisions to documents required to be filed annually by investment advisers—cover an array of buyout-firm practices that the Securities and Exchange Commission has scrutinised over the past six months. Among those revising their disclosures are large publicly traded investment shops such as Apollo Global Management and KKR.

The disclosures reflect a cat-and-mouse game now playing out between regulators and the buyout-firm industry. The SEC, which gained new power to regulate the industry under the Dodd-Frank financial-overhaul law in 2010, took the unusual step earlier this year of publicly accusing the industry of having widespread problems.

Goldman Sachs sweeps the board at FN Awards

Goldman Sachs was the big winner at Financial News's annual Awards for Excellence in Investment Banking last night, retaining its title as the top investment bank and picking up five other awards.

Some of Europe's most senior banking executives attended last night's private dinner at Boisdale of Belgravia.

Goldman Sachs took home six prizes including European Investment Bank of the Year, a category in which it pipped long-time rival JP Morgan for the second year running.

FICC cuts set to continue

Despite an uptick in third quarter revenues within the fixed income businesses at the largest global banks, downsizing within the units is poised to continue over the next two years, according to new research.

Front office headcount within fixed income, currencies and commodities businesses at the 10 largest banks has fallen sharply in recent years, down 25% or about 5,900 roles over the last three years, according to consultancy Coalition.
Front office FICC staff at the banks was down 10% year-on-year to 17,600 at the end of the third quarter.

But those cuts have even further to run, according to the UK consultancy. FICC headcount could decline a further 10% in the next 12 to 24 months, according to research manager Eric Li. He said: “We think fixed income is the most vulnerable area.”

Fund fees droop at Allianz

German insurer Allianz’s asset management business suffered a two-thirds drop in performance fee income to €126 million in the nine months to September, including a 4.8% drop in the third quarter.

Performance fee income was down significantly from 2012, as well as 2013. Allianz generated €396 million from performance fees in the first nine months of 2013 and €383 million in the corresponding period of 2012. In the nine months to September 2011, its performance fee income was just €182 million.

Total fee income at Allianz's fund division fell 11% to €5.82 billion and expenses were cut by 3% to €1.08 billion. Performance fees only contributed to part of the decline, but their receipt is viewed as an important test of asset manager virility.

Career Clinic: Bonus clauses to look out for before resigning

As your boss reflects on your input for the year, are you getting itchy feet and thinking of resigning? If you do wish to be considered for a bonus and receive any award, you may want to hold off on quitting your job.

Many contracts of employment and company bonus rules state you will only be eligible for a bonus if you are in employment on bonus payment date. Often eligibility is also subject to you or your employer not having given notice before the payment date. In these circumstances, should the bonus be worth waiting for, perhaps, do not resign until the cash hits your account.

Many bonuses are discretionary. Common wording may be that payment of a bonus in one year does not guarantee payment in subsequent years, bonuses may be dependent on a number of factors and the bonus rules may change from time to time. It is important to know though that even where your employer has discretion, that discretion must not be exercised arbitrarily, capriciously or unreasonably. While it is not a very high threshold for the employer to pass, in some instances, the courts have held that discretion has not been exercised properly.

Career Clinic: Caught out lying about your salary

I lied about my previous salary to get a better deal with my new employer. Could there be repercussions if they find out?

The simple answer is “yes”. It would probably be construed that you deliberately misled at interview and that there are significant trust and integrity issues.

There is a big difference between being vague about your pay package – many people talk about their total compensation and try to lump together salary, bonus, pension contribution and any other benefits that they get – and deliberately lying about your salary level. Bear in mind that when you join the firm you will have to bring your P45 tax document with you – which details your pay – so they will find out your real pay eventually.

Swiss bank’s deputy CEO resigns

A Swiss bank said Friday one of its top executives has resigned amid a German tax-fraud investigation that is recently expanded across national borders.

Bank J. Safra Sarasin AG said deputy chief executive Eric Sarasin has resigned, in a bid to ensure that accusations raised as part of the investigation “do not tarnish the image and reputation of the bank.” Officials are looking into Sarasin’s and the bank’s role in providing investments that allegedly enabled clients to fraudulently earn tax rebates.

The investments at the heart of the ongoing German probe involve what are known as “cum/ex” stock trades, which can be used to claim tax credits based on transactions timed around dividend payouts.

Citigroup hires from Morgan Stanley for oil and gas role

Citigroup is adding a managing director to its European oil and gas team, despite the regional fee pool in the sector being down 20% on a year earlier.

Shreyas Bordia, previously an executive director at Morgan Stanley, is in the process of joining Citi, according to people familiar with the matter. The oil and gas team at Citi is run by Stephen Trauber, head of global energy investment banking at the bank in Houston. Citi and Morgan Stanley declined to comment.

Bordia’s move comes as the oil and gas mergers and acquisitions market, long known for its mega deals, is surviving on pockets of activity.

Inflexible views on flexible pay

In just 36 hours last week, a crack widened into a chasm between two key regulators on the issue of bankers’ pay. Closing that gap is going to take a very long time.

The public brawl between the European Banking Authority and the Bank of England’s Prudential Regulation Authority has happened because of a fundamental difference of philosophy, which, in turn, stems from a different definition of what problem needs solving.

The issue is, of course, allowances – the mechanism that banks have used to circumvent – yes, let’s be honest about it – the new European cap on bonuses. The European Banking Authority ruled last week that the vast majority of the payouts, which were supposed to sit somewhere between variable and fixed pay, should be considered as the former rather than the latter and were, therefore, not in line with Capital Requirements Directive, the document that contains the bonus rules.

Dark pools boost trade sizes to rise above EU caps

The operators of European dark pools are stepping up efforts to encourage larger institutional orders because forthcoming European Union caps on dark pool volumes will not apply to large trades.

Turquoise, the equity market majority-owned by the London Stock Exchange, on Monday started a new service to facilitate block trades. It is designed for institutional investors and allows Turquoise members to issue a “block indication”, announcing interest in buying a large order of a given stock. If a matching block indication is found, the two parties are asked to complete the trade.

James Baugh, head of sales at Turquoise, said seven companies had committed to using the service at launch, including JP Morgan, Instinet, Barclays and Societe Generale.

Cross-border wrangles spark talks on new EC body

Calls are growing among market practitioners for a single body within regulators such as the European Commission, focused solely on solving ongoing issues related to the cross-border impact of securities regulation.

The effect of new regulation to the $600 trillion over-the-counter derivatives markets, in particular rules that mandate the clearing of standardised swaps, are those causing most disruption to firms that operate across different jurisdictions.

A lack of agreement, or mutual recognition, between the European Commission and the US Commodity Futures Trading Commission on their post-crisis regulatory regimes has threatened to subject firms with transatlantic businesses to overlapping and contradictory regulations.

Hedge funds target fall in UK house prices

Hedge funds are building short positions against the UK residential property sector, targeting firms such as Zoopla, Rightmove, Barratts and Foxtons, as signs of a slowdown in the property market begin to build.

Their move come as a number of surveys have suggested that property prices, particularly in the crucial London market, are starting to cool.

Tom Walker, co-head of global property securities at UK fund manager Schroders, said: “It is clear that volumes are decreasing, and prices have fallen, albeit a percent of two. What [the hedge funds] are calculating is that the trend continues and it isn’t just a one off or a seasonal slowdown.”

Analyst duo ditch Espirito Santo for HSBC

Two Panmure Gordon analysts who were due to join Espirito Santo's Investment Bank last month have made a last-minute move to HSBC, according to four people familiar with the matter.

Graham Jones and Damian McNeela were hired by Espirito Santo's Investment Bank in July, as part of a bid to strengthen Espirito's coverage of the European consumer sector. They were due to start the new roles last month.
However, they have now agreed to join HSBC instead, according to four people familiar with the matter. Jones is already a former HSBC alumni, having been the bank's head of European food produce before he joined Panmure Gordon in 2004.

Banks slow to embrace 'digital revolution'

Open source systems, peer-to-peer lending, cloud computing, big data and crypto-currencies are some of the technologies bank fintech funds will consider investing in, as the largest financial firms seek to play technological catch up.

Speaking at a session at the Sibos conference in Boston, six senior executives from global banks engaged with fintech startups said they will be backing companies that can improve their existing technology. The representatives have roughly $600 million to invest in startups.

Manuel Silva Martinez, vice president at BBVA Ventures, a $100 million fund launched by Spanish bank BBVA last year, said: “The way entrepreneurs are seeing the future of the industry is very powerful and probably more powerful than how we see the future of the industry.”