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Hedge fund fined £875,000 for keeping its Premier Oil short secret

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hedge fund fined 875000 for keeping its premier oil short secret

City regulators have fined a hedge fund almost £875,000 after it failed to tell the market it had built up a huge short position against Premier Oil.

ARCM neglected to tell the Financial Conduct Authority 155 times and make public disclosures 153 times, between February 2017 and July 2019, about the bets it had made against the North Sea energy company’s shares.

The Hong Kong-based fund eventually built a short position worth 16.9 per cent of Premier’s total stock. 

Fined: Hong Kong hedge fund ARCM built a short position worth 16.9 per cent of the North Sea energy company Premier Oil's total stock

Fined: Hong Kong hedge fund ARCM built a short position worth 16.9 per cent of the North Sea energy company Premier Oil’s total stock

ARCM has said it had not realised it had made the breaches and reported them as soon as they were discovered.

It is the first fine over breaking short-selling rules the FCA has ever issued.

The FCA reduced ARCM’s fine by 30 per cent because it worked with the regulator during its investigation – or the charge would have been £1.2million.

Premier Oil had struggled for years before it went through a mammoth debt restructuring in 2017 following the collapse in oil prices.

It restructured again this year and last week agreed to be taken over by private equity group Chrysaor, which also works in the North Sea.

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VICTORIA BISCHOFF: Banks must not let us down

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victoria bischoff banks must not let us down

Budget day was always the most important date on the calendar of a financial journalist. 

We’d spend weeks poring over leaked proposals, examining how they might impact the average person’s pocket. 

There would be endless meetings with accountants and analysts — and essential discussions about what sugary snacks would keep us pumped on the day. 

Warning: One sniff of a threatening debt collection letter will be all it takes for banks to lose the trust they are only just starting to win back

Warning: One sniff of a threatening debt collection letter will be all it takes for banks to lose the trust they are only just starting to win back

Warning: One sniff of a threatening debt collection letter will be all it takes for banks to lose the trust they are only just starting to win back

But now, every and any day could be a budget day. In a desperate attempt to protect livelihoods and businesses, Chancellor Rishi Sunak is wheeling out major new policies almost routinely. 

But two of his very first financial safety nets unveiled back in March are about to come to an abrupt end — rather aptly, on Halloween. 

Before coronavirus, scores of workers had never even heard of the word ‘furlough’. 

Now many can’t imagine life without the scheme that protected 80 per cent of their wages when it finishes this weekend. There will still be help available for workers and businesses. 

But it will not be as generous, and there are very real fears that unemployment levels could explode as a result. 

The Financial Conduct Authority has already warned that 12 million people could soon struggle to pay their bills. 

Adding fuel to the fire, mortgage holidays will also no longer be widely available after Saturday. 

An astonishing 2.5 million borrowers have taken advantage of the repayment breaks since they were introduced in March.

Some seized the offer as a precautionary measure and have since been able to restart their repayments without a problem. But for hundreds of thousands of families — particularly those who have fallen through the cracks of the Government’s support packages — these payment holidays have been the only thing keeping a roof over their heads. 

Adding to their misery, blanket credit card, personal loan and car finance repayment holidays, along with interest-free overdrafts, are also being withdrawn. 

From Sunday, borrowers will instead be at the mercy of individual lenders. 

The financial watchdog has warned banks that they must work with customers to help them keep up with payments, but there are no longer any clear rules or requirements. 

Back in March, I wrote in this column that after the banks’ gargantuan failings in 2008, it was their turn to bail out the taxpayers they betrayed. And to their credit most have risen to the challenge. But they mustn’t stop now. 

One sniff of a threatening debt collection letter will be all it takes for banks to lose the trust they are only just starting to win back. 

We’ll be watching.

Mortgage dread 

While on the topic of banks and mortgages, is there any chance lenders could give a smidge more notice before pulling deals or hiking rates? 

If professional brokers can’t keep up with the constantly changing goalposts, what hope do ordinary homebuyers have? 

Axing deals when borrowers are midway through the application process causes major hold-ups. And the clock is already ticking for those hoping to make stamp duty savings before the end of March.

Watch wonder 

After my moan last week about how facial recognition technology doesn’t work when you’re wearing a face covering, several readers had the bright idea of carrying around a photograph of a mask-less me that I could hold up to log in. 

This tickled me, so I tried it. Alas, it didn’t work — though my partner Chris enjoyed my attempts. 

The good news is Money Mail’s letters editor Tony Hazell reminded me that my Apple Watch lets me make payments with ease. 

As you have to enter a passcode each time you put the watch on your wrist, there is no need for facial recognition, fingerprint technology or even a PIN — you just double-tap the side button and hold it up to the card reader. 

The watch also knows when it is removed, and prompts you to enter the passcode the next time you put it on — vital to ensure thieves don’t go on a shopping spree. 

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ALEX BRUMMER: Piling up the coronavirus bills

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Finding positives amid the corporate gloom unsheathed by three FTSE100 big beasts, HSBC, BP and Whitbread, is extraordinarily difficult. 

All these companies have been stalwarts of the stock market for decades, reliable dividend payers which support pensions and investment funds. Each is suffering badly from the pandemic and seeking to build resilience. Market values have tumbled and moderate earnings will also impact the public finances. 

When BP was throwing off billions of pounds of profits each year, motoring groups would complain vociferously. The reality is that BP, as one of the UK’s biggest taxpayers, has been a big contributor to public services as have unpopular fat-cat bankers. 

Gloom: Not only has government spending climbed at an alarming and unchecked rate this year as a consequence of coronavirus, but revenues also are suffering

Gloom: Not only has government spending climbed at an alarming and unchecked rate this year as a consequence of coronavirus, but revenues also are suffering

Gloom: Not only has government spending climbed at an alarming and unchecked rate this year as a consequence of coronavirus, but revenues also are suffering

Not only has government spending climbed at an alarming and unchecked rate this year as a consequence of Covid-19, but revenues also are suffering. 

The Government has sacrificed business rates and VAT in the hope of keeping retail and hospitality firms alive. Over the longer term some of the tax losses being built by the biggest companies could lower the revenues for HMRC from corporation tax for some years to come. 

Eliminating the 2020-21 borrowing needs of the UK, heading towards £400billion this year, is going to be a horrendous task. 

Looney tunes 

BP chief executive Bernard Looney is riding two horses. Along with peers, BP is suffering from the catastrophic fall in energy demand and a current $40-a-barrel price for Brent crude. At this price, the group is able to eke out a small underlying profit of £100m. After a £5.2billion loss in the second quarter, inflated by write-downs, that is a relief. 

Looney, appointed in February, is also riding climate change. He has set ambitious targets to cut oil production 40 per cent by 2030 and make up the difference with wind power and solar. In spite of all the talk of environmental, social and governance (ESG) investing, the market is less than convinced. 

Perhaps it is because BP has always been better at exploring and extracting oil than its cohorts. Abandoning competitive advantage for something that is still intangible has produced a credibility problem. That may be why BP shares are selling at a huge 40 per cent discount to book value compared to the granddaddy of drilling, Exxon Mobile, which trades at a 75 per cent discount. BP’s heavily hit share price means that even after cutting the dividend the shares still yield an enticing 8 per cent. 

You have to think that the pessimism is way overdone.

Chinese burn 

BP is joined down in the doldrums by Britain’s biggest bank, HSBC. 

Its turnaround plan largely consists of cutting exposures to slower growing markets in the US and Europe and refocusing resources on the Pacific. The 36 per cent decline in third quarter profits still meant it made £2.4billion of earnings, assisted by cost cutting, strong fixed interest trading and lower than expected bad debts. But with the shares at a 25-year low, chief executive Noel Quinn and chairman Mark Tucker have hardly covered themselves in glory. The main worry is geo-political. By aligning itself with Beijing over Hong Kong’s new security law, it won few friends in the West. 

It wouldn’t be so bad if it hadn’t annoyed China too, over the US investigation into Huawei. But given the way China has pulled out of the pandemic slump, and Hong Kong has managed the Ant Group float, it is hard to question HSBC’s decision to stick with what it knows best. 

It has history on side.

Seeing purple 

No UK company is more exposed to hospitality than Whitbread and it shows with its nasty half-year loss of £725m. 

Remarkably, chief executive Alison Brittain is not down in the dumps and the Premier Inn-owner remains cash-flow positive with low occupancy rates. More lockdowns would be the problem. 

In a display of bravado, Brittain is taking the purple emblem of Premier Inns deeper into the no-frills German market, snapping up 15 more hotels, bringing its exposure up to 70 and making it a real presence in a fractured sector. There are Travelodge leases in the UK to be snapped up too. 

With £3.3billion of liquidity, Whitbread is equipped to withstand and bounce back from the virus. But it needs pandemic hawks to recognise the immense economic social costs of closures and lockdowns. 

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Outgoing CBI boss tells PM to save economy from Covid

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Tough at the top: Outgoing CBI boss Carolyn Fairbairn

Tough at the top: Outgoing CBI boss Carolyn Fairbairn

Tough at the top: Outgoing CBI boss Carolyn Fairbairn

Carolyn Fairbairn, the first female director general of the CBI, is stepping down after one of the most turbulent periods in the business organisation’s 55-year history. 

In her time at the top she has dealt with three prime ministers, a seismic rupture with the European Union, endless political turbulence and a lethal pandemic. 

None of this was remotely foreseeable when she arrived five years ago, a time that now feels like a far away, half-forgotten era. 

The ‘Cameroons’ were in Downing Street, Brexit was a mere blip on the radar, Boris Johnson was Mayor of London and no one had even heard of Covid-19. 

‘We had just had the David Cameron victory, which looked like a vote for stability and continuity,’ she says with a wry smile. 

Now, with the nation facing the biggest threat for generations to health and wealth, Fairbairn is laying down the gauntlet to Boris to set out his plan to rebuild the economy. 

She wants the Prime Minister to present his blueprint at the CBI Conference next week. 

‘This is an invitation to him to set out his vision,’ she says. 

It is a task she puts on a par with the reconstruction following the Second World War – and she wants Boris to get behind what she calls ‘compassionate growth’. 

By that she means the health of the nation should be seen as an asset, not as a cost or a burden, and that talented individuals should not be held back because of gender, race or class. 

His plan, she believes, should include a rebooted industrial strategy, plus training and re-skilling so people are able to move out of unviable jobs and into new areas such as green technology. 

‘I do think the parallels with wartime are valid,’ she says. 

‘In 1942, at the height of the Second World War, when we were sending young men on to the front line and facing the most terrible personal and national tragedy, Churchill commissioned the Beveridge report. 

Fairbairn says: ‘Out of that the welfare state and the NHS were born and it set the stage for an extraordinary period of compassionate growth. 

‘We cannot wait until Covid is defeated for this. We need a sense of national unity and ambition, as we did then. That is what people want from the Prime Minister.’ 

In what sounds like a poke at the PM’s tendency towards ‘boosterism’, she adds: ‘There are no prizes for unbounded, unplanned optimism. It is time for a really hard-nosed plan. 

‘There is a sense in which people think that if you paint a glorious picture it will be self-fulfilling, but I don’t believe that. 

‘There is a need for national unity. We have had so much division over the last five years in so many ways.’ 

It would help, she says, if there were an economic component to the Government’s Covid briefings. ‘In Sage there is an independent team of scientists who have been hugely influential, but I have wondered over the last few months where was the economic analogue?’ she says. ‘I would really welcome a dashboard for the Covid discussion that includes the impact on employment.’ 

On Brexit, she fears that firms already battered by the virus will struggle to cope with the added blow of a No Deal departure.

‘It is so incredibly important we get a deal – and that is only amplified by Covid. We have to protect every single job right now,’ says Fairbairn. ‘A chaotic Brexit, leaving without a deal, has consequences we can’t even see.’ 

She is clearly frustrated that fishing rights have become a sticking point. 

‘Not that fishing doesn’t matter, it does. But speak to our automotive sector. The impact there is devastating and that industry is forty times larger than fishing.’ Her one ‘real disappointment’ from her five years at the CBI is that financial services will not be included in any deal that is done. 

‘But if we get the shape of a free trade agreement over the next few weeks I do think that can happen next year,’ she says. 

‘It is really important and it isn’t just about the City. Two thirds of the jobs are outside London. There need to be conversations around the role the City could play in funding the recovery from Covid, not just in the UK but in Europe.’ 

On a recent video call on Brexit for 250 business leaders, with Boris Johnson and Cabinet Office Minister Michael Gove, she proposed a joint Brexit taskforce. 

On the same page?: Carolyn Fairbairn with Prime Minister Boris Johnson, who she hopes will adopt her Brexit task force plan to bring Britain’s business leaders and ministers together

On the same page?: Carolyn Fairbairn with Prime Minister Boris Johnson, who she hopes will adopt her Brexit task force plan to bring Britain’s business leaders and ministers together

On the same page?: Carolyn Fairbairn with Prime Minister Boris Johnson, who she hopes will adopt her Brexit task force plan to bring Britain’s business leaders and ministers together

The idea, to bring together business leaders and ministers, was welcomed by the PM. There are promising signs it will be adopted: Whitehall officials have already been in touch. It is needed, she believes, because government and the civil service simply don’t have the bandwidth to deal with Covid and Brexit. 

‘The Government can’t go it alone, they need to do things in collaboration. I would bring in the unions, because carrying employees along with you on the Brexit journey is so important. Watch this space.’ 

Fairbairn will be succeeded at the end of November by Tony Danker, the boss of Be The Business, an organisation set up in 2017 to help improve Britain’s productivity, which is dire. 

‘We need a transformation in productivity,’ says Fairbairn. 

‘Remember that quote from the economist Paul Kruger? Productivity isn’t everything, but it’s almost everything.’ 

Now 59, Fairbairn had a distinguished career spanning 25 years before joining the CBI and is also a mother of three.

Her past jobs include directorships of Lloyds Bank and outsourcing group Capita. 

She is going to take a well earned break once she says her farewells at the CBI and wants to enjoy some time with family. ‘It’s worklife balance. I have a very long-suffering husband,’ she smiles.

The spouse in question is entrepreneur Peter Chittick, one of the original founders of the Hotel du Vin chain. Perhaps he shouldn’t get too used to her being off work, as she says she intends to return to the commercial world. 

It hasn’t all been Brexit and Covid-19 at the CBI. 

She has led a drive to help women in business – when she took the top job she created a stir by calling for an end to boozy, blokey business dinners that alienated working mothers. 

Fairbairn has also forged a relationship with Frances O’Grady, her counterpart at the TUC, that defies the old macho antler-clashing that has scarred industrial relations since the Seventies. 

The two women have appeared on the same platform several times. They even wrote a joint letter last year to the then Prime Minister Theresa May, warning the shock of a No Deal Brexit would be felt for generations. 

More partnerships, she says, are needed between government, business leaders and unions to tackle challenges like climate change and new skills. 

‘We are going to see a tsunami of redundancies. Whatever happens it is coming. 

‘So unless we match young people with new opportunities in green technology and other areas we will be really letting them down,’ she says. 

Whether her preference for collaboration over conflict is a particularly feminine approach is open to debate. 

But it seems Fairbairn would like to see her male successor carry on down the same route.

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