RBS fails toughest BoE stress test

 

London (Reuters): Royal Bank of Scotland has promised to take extra steps to bolster its financial resilience after the Bank of England found the lender could struggle in any future recession or financial crisis. Barclays and Standard Chartered were also found to have “some capital inadequacies” and will have to build further capital buffers to keep themselves safe. The Bank of England’s third annual stress test calculated what would happen to Britain’s biggest lenders in a global recession on the scale of the financial crisis, including a crash in house prices and stock markets. HSBC, Lloyds Banking Group, Santander UK and Nationwide Building Society all passed the test. RBS was the hardest hit. The bank, which is still mainly owned by the Government, failed to maintain its core capital buffers under the scenario, even once its coco bonds - intended to top up capital buffers - were bailed in. It hit the standard target of a 6.6pc capital buffer, called the hurdle rate, once predicted management actions to combat a crisis are taken into account, but missed the tougher 7.1pc level demanded to reflect its importance to the financial system.

Shanghai-Singapore Financial Forum held

 

Singapore (AFP): The Monetary Authority of Singapore (MAS) and Shanghai Municipal Financial Services Office (Shanghai FSO) held the 2nd Shanghai-Singapore Financial Forum (SSFF) in Shanghai. The SSFF is a regular platform to deepen cooperation between the two financial centres and to facilitate collaboration between industry participants from Singapore and Shanghai. In line with the theme “Shanghai and Singapore – A Partnership for a New Asian Financial Landscape”, Forum participants discussed new change-drivers in Asia’s financial landscape and opportunities for Shanghai and Singapore to forge a stronger partnership ahead. The panel sessions focused on cross-border collaboration in the areas of Renminbi internationalisation, China’s Beltand-Road initiative, infrastructure and project financing, and financial technology. Ms Jacqueline Loh, Deputy Managing Director of MAS, said, “We are pleased to partner the Shanghai FSO to deliver a successful second edition of the SSFF.

 The Forum has emerged as an important platform, and signifies Shanghai and Singapore’s commitment to financial cooperation. The topics conferred on today were relevant and timely, and we look towards deepening our partnership with Shanghai to develop and strengthen our financial markets.”

In his keynote address, Mr Zheng Yang, Shanghai FSO Director-General, said, “Under a growing bilateral economic and trade relationship between China and Singapore, significant progress has been made in the collaboration between the financial sectors in Shanghai and Singapore. In November last year, Shanghai FSO and MAS co-organised the Singapore-Shanghai Financial Forum; a new platform to strengthen financial cooperation between Singapore and Shanghai. I believe that the continuation of this Forum will cultivate closer interactions between Asia’s two major financial centres in terms of knowledge sharing, common understanding and increased collaboration so as to realise mutual benefit.”

Barclays to boost creative tech sector

 

London (afp): Creative England and Barclays announced a new partnership that will focus on boosting fast-growing, creative technology businesses. Together, they are launching a new accelerator, providing creative technology entrepreneurs with the support and help they need early on in their business lifecycle. ‘Barclays’ Eagle Lab – Flight’ will be implemented through Barclays’ successful Eagle Labs programme and led by Creative England. The accelerator will run in the Brighton Eagle Lab in early 2017. Matt Hancock, Minister of State for Digital and Culture said: “This government is committed to backing the success of the UK’s creative industries as design and digital capability will be at the heart of the future economy. This great initiative from Creative England and Barclays will help deliver vital knowledge and skills to businesses in this sector and ultimately boost the number of UK scale-ups. I’d urge any creative business wanting to expand and grow to apply for this scheme.”

A twelve-week intensive accelerator consisting of workshops, masterclasses and mentor programme, aiming to unlock creativity for aspiring businesses and provide business acumen. It will cover topics such as business planning, sustainability, leadership, culture, global impacts and markets and audiences and evaluation. With a focus on creative thinking and cross collaboration, participating companies will learn how to scale-up and define their product, with input from industry thought leaders, Creative England and Barclays experts.

Creative England will bring the ‘creative spark’ essential to inspire the extraordinary and highly ambitious projects that the programme aims to incubate. Creative England will programme an unrivaled series of ‘Flight’ talks from world class creative leaders, and a series creative workshops and collaborative events devised to disrupt thinking and unlock creativity.

The programme will offer eight investments* to creative tech and digital companies with an interesting product to market, following an application process. Aimed at companies with digital ideas, including apps, gamification, Internet of Things, VR, AR and 3D modeling, and creative technology being applied to other sectors that may not be seen as traditionally digital, like health care or tourism.

Caroline Norbury, CEO Creative England, commented: “As recognised in the Autumn Statement, digital is future critical, as is the need to back start-ups to scale up. Our partnership with Barclays and the launch of Barclays’ Eagle Lab – Flight is an important step in our mission to support creative, digital businesses across the country, both driving economic growth and creating high wage, high skill jobs.”

Steven Roberts, MD Strategic Transformation at Barclays said: “We are determined to support UK entrepreneurs and enterprise and help to close the UK’s scale-up gap. We are delighted to be the first bank to partner with Creative England – and working together means we can target the creative sector with a solution to help them to grow, and in turn stimulate UK economic growth. Our joint accelerator will be open to any business nationwide, with a focus on the South East.”

OPEC deal a big step towards

market rebalancing

Moscow/London (AFP): OPEC’s agreement to cut production by 1.2 million barrels of oil per day, and the potential agreement to cut with non-OPEC countries, should help accelerate market re-balancing and increases the chances of more rapid oil price recovery than previously expected, says Fitch Ratings. But implementation risks remain, including OPEC’s adherence to the agreement and the willingness of other participants, notably Russia, to co-operate fully. These issues and US oil production dynamics will be key drivers of the oil price direction in the medium term. On Wednesday OPEC agreed to curtail its oil supply, the first cut in nearly eight years. The decision to cut is the first significant intervention to support price since 2008 and is likely to result in a much quicker market re-balancing, which may be further accelerated by the agreement with non-OPEC participants. Russia has already publicly indicated it is ready to cut production in the first half of 2017 by up to 300 thousand barrels of oil per day (mbpd).

 

although it is not completely clear from which level production will be cut.

 

OPEC says that non-OPEC producers have agreed to cut output by 600 mbpd, which would mean a total cut of 1.8 mmbpd, almost 2% of global output.

The OPEC commitment alone could end market oversupply, and should result in a gradual decrease in OECD oil stocks throughout 2017. Using IEA forecasts as an input, we estimate that crude consumption may exceed production by around 400mbpd in 1Q17 and 1,300mbpd in 4Q17 if the deal is extended and the new OPEC quotas are respected; the difference may be even higher if non-OPEC members join the deal. Without the deal, stocks, which we estimate to be around 300 million barrels above their five-year average, would more likely remain flat.

But significant risk remains that OPEC members will produce crude above quotas, as has happened in the past. This could slow market re-balancing. Another unknown is how quickly the US short-cycle crude production will react to higher oil prices. US shale production has already begun to bounce back from recent lows, and may accelerate at prices above USD50. In addition, the deal is for six months, and there is no guarantee OPEC members will reach a consensus to extend it. These factors mean our gradual oil recovery scenario remains a valid conservative assumption, although the stress case, assuming oil retreating below USD40/bbl, is now much less probable.