Global banks operating in London have been warned by the Financial Services Authority (FSA) that this year’s staff bonuses must reflect the mis-selling and market manipulation scandals that have damaged the sector in the past 12 months. Andrew Bailey, head of the FSA’s prudential business unit, wrote to chief executives at the end of October ahead of this year’s bonus round. He warned them that the watchdog would be looking for evidence they had “clawed back” deferred bonuses from people involved in scandals. He also told them to consider firm-wide bonus reductions to account for the impact of the scandals, echoing calls by other regulators and shareholders. This kind of pressure on banks has been further amplified this summer by the escalation and eruption of a series of scandals including the more than £10bn PPI mis-selling scandal, and Barclays’s £290m settlement over the alleged manipulation of Libor and other benchmark interest rates. (Financial Times*)
JP Morgan power trading rights restricted
The US energy regulator has banned JP Morgan Chase from trading electricity at market rates for six months, accusing the bank of submitting false information to a continuing investigation into alleged market manipulation. JPMorgan, which has been the subject of a number of investigations by regulators this year, was charged with an order from the US Federal Energy Regulatory Commission (Ferc) on Wednesday evening related to its activities in California. The regulator has been particularly active in recent months, levying large fines against market players including Barclays. The order bars JPMorgan from selling electricity at market rates in California for six months from April 1 2013. However, the bank will still be able to trade electricity at prices determined by counterparties and it can continue to trade other energy products and derivatives. In essence, the order limits the bank’s profits while allowing it to continue operating in power markets. In the past year, Ferc has alleged that Barclays and Deutsche Bank manipulated electricity markets, and has compelled Constellation Energy to pay $245m to settle another case. (Financial Times*)
Corporate Reputation
BP in 'advanced' talks to settle Gulf disaster claims
BP says it is in "advanced discussions" with US agencies about settling criminal and other claims from the Gulf of Mexico well disaster two years ago, although in a statement BP said that "no final agreement has yet been reached". Any settlement is likely to involve the company paying a record corporate fine in the US. The 2010 Deepwater Horizon disaster killed 11 workers and released millions of barrels of crude into the Gulf of Mexico over 87 days. On Wednesday, Reuters cited unnamed BP sources as saying that the company would plead guilty to criminal misconduct in exchange for a waiver of future prosecution on the charges. A settlement is expected to dwarf the largest previous corporate criminal penalty assessed by the Department of Justice, the $1.2bn fine imposed on drug maker Pfizer in 2009. BP is expected to make a final payment of $860m into the $20bn Gulf of Mexico compensation fund by the end of the year. (BBC)
‘Tax Amazon or it will kill us off’, says MD of John Lewis
Andy Street, the managing director of John Lewis’s stores, said last night that the UK Government must urgently “address the Amazon problem” and create a level playing field for business, or risk putting companies like his out of business. His comments come two days after MPs on the Public Accounts Committee lambasted executives from Amazon, Google and Starbucks for paying practically no corporation tax in the UK. Mr Street said that the difference between the taxes paid by his company and Amazon could have severe consequences, and that John Lewis’s customers would also expect “a fair and level playing field” in which all companies were treated in the same way. He added that Lord Myners, City Minister in the previous Labour Government, had been right to call for an investigation into the tax policies of foreign multinationals. (Times*)
Employees
South Africa mine strikes end
The last of a wave of illegal strikes that have swept South Africa's mining sector since August this year ended today after workers accepted an offer from Anglo American Platinum, the world's top producer of the precious metal. South Africa's platinum and gold sectors have been rocked for months by wildcat action, spawned by income disparities and a union turf war for members. More conflict could be sparked by looming job cuts and wage talks next year. The labour unrest has troubled investors in the continent's largest economy and has claimed the lives of over 50 people, including 34 shot dead by police in one incident in mid-August near a mine operated by platinum producer Lonmin. Amplats has said the strikes would cut annual profit by more than a fifth and tensions in the sector remain, with 37 workers scheduled to appear in court today after being arrested for violence during protests near a chrome mine run by Xstrata. (Reuters)
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