Companies in the news ... and how they were assessed
Deutsche Bank: clearing off
News that Deutsche Bank has moved “almost half” its euro clearing business to Frankfurt will come as a blow to the City, said Caitlin Morrison in The Independent. It may be unglamorous, but “clearing” – the process through which financial transactions are settled – is a vital part of the financial system’s plumbing. And since the Brexit vote, it has become a key battleground between London and rival European centres. The City has long “dominated” the sector, with LCH – the clearing house owned by the London Stock Exchange – processing almost £900bn daily. Deutsche’s decision to jump ship to Eurex (owned by the LSE’S rival exchange Deutsche Börse) won’t have an immediate impact on jobs – “effectively, the move means the bank will push a different button to route the clearing to Eurex”. But it is a threat to London’s status as a derivatives hub, said Philip Stafford in the FT. So far, the amount of business that has shifted is “very limited”, but momentum is growing. “From virtually nothing before Christmas”, Eurex has cleared derivatives with a notional value of s8trn for banks including JP Morgan, HSBC, BNP Paribas and BOA Merrill Lynch, and now commands some 8% of the market. What’s the German for thin end of the wedge?
Ryanair: drop the pilots?
Ryanair was “once an icon of Europe’s budget travel boom”, but falling profits and growing competition have been hurting its bottom line, said The New York Times. But right now the biggest headache for the airline – and its long-suffering passengers – is a rash of strikes that have forced it “to cancel hundreds of flights”. Action taken by Irish pilots and cabin crew in Portugal, Spain, Belgium and Italy over pay and conditions saw some 600 cancelled last week. And the conflict appears to be worsening, said Ellen Proper and Benjamin D. Katz on Bloomberg. Ryanair pilots in Germany and the Netherlands have now also joined the action, claiming that “Ryanair needs a wake-up call”. The airline’s boss, Michael O’leary, “made an about-turn in December” by agreeing to recognise unions, and he “had warned investors to expect industrial action during the critical summer travel season”. But he might not have reckoned on its scale. The airline has “hit back” by publishing details of its pilots’ salaries, which range from s150,000 to s200,000, said Jennifer Newton in the Daily Mail. If the industrial action continues, it warns, there could be job losses.
HS2 Ltd: spiralling bill, mass defections
When Robert Nisbet, a regional director of the Rail Delivery Group, suggested this week that other EU countries could “only dream” of having Britain’s levels of punctuality and efficiency, he was accused of “living on another planet”, said The Daily Telegraph. Sadly, said Gill Plimmer in the FT, there was no such incredulity when HS2 Ltd – the company charged with building the high-speed line from London to the North – “slipped out” its annual report this week. It showed that the project, currently estimated to cost some £56bn, has cost taxpayers £4.1bn “before construction has even started”. Unsurprisingly, experts now predict the final cost to be “rather higher than expected”. The spiralling costs come amid “a wave of departures” at the company. A third of HS2’S board members, and nearly a fifth of its staff, have hopped off the train in the past year.