The fall of Woodford is another element in favor of passive management | Opinion

Neil Woodford believed himself the British answer to Warren Buffett. That ego helped the fund manager become one of the best-known stock pickers in the country, but it also caused his spectacular fall in 2019. A new book shows how changes in the UK pension scheme, combined with weak regulation, they left British savers exposed.

Built on a Lie: The Rise and Fall of Neil Woodford and the Fate of Middle England’s Money (Built on a lie: the rise of Neil Woodford and the fate of English middle class money) by Owen Walker traces the asset manager’s rise from relatively humble beginnings in a suburban London town. It owes its fame to two great bets. In the internet boom of the late 1990s, he avoided tech because he didn’t understand their stratospheric valuations. When the bubble burst, his High Income fund outperformed. Years later, he made a similar call to avoid bank stocks, before the financial crisis.

These successes made investors trust him with their money. The fees allowed him to embrace a lavish lifestyle, buying a mansion that was once owned by Formula 1 mogul Flavio Briatore. It also encouraged him to leave Invesco Perpetual, one of Britain’s best-known investment houses, and start his own company.

Investors who followed him avidly knew little about the risks he was taking with their money. This vulnerability was the result of radical changes in the British pension market. Walker, journalist for the FT, explains how the closure of company pension plans based on final salary forced savers to manage their own pensions. Faced with thousands of products, they relied on financial advisers, many of whom were loyal to Woodford, as well as the “best buy” lists of groups like Hargreaves Lansdown. The £ 7bn wealth manager supported Woodford to the end.

Woodford Investment Management’s strategy, which at its peak was overseeing £ 18bn, was to invest in riskier unlisted companies, along with large holdings in dividend-paying top-tier companies such as Imperial Brands. But seemingly strong firms like Provident Financial, the home-based lender that was once on the FTSE 100, disappointed. By the time Woodford’s Equity Income fund was discontinued in 2019, only 19 of the 72 companies it owned three years earlier were showing positive returns.

The lack of liquidity of Woodford’s funds hastened its demise. When the Kent County Council, one of his loyal customers, withdrew his £ 263 million investment, Woodford had no cash to meet the demand. While savers believed they had instant access to their money, their unlisted holdings were difficult to sell, and their listed positions had grown so large that they could not be liquidated without further plunging the price.
This flaw, which goes far beyond Woodford, is the lie of the book’s title. When former Bank of England Governor Mark Carney was asked at a parliamentary appearance about the implosion, he explained that the problem could be systemic for much of the asset management industry.

Walker believes that regulators share some of the blame. The Financial Conduct Authority cleared Woodford’s new venture in record time, despite the fact that it faced an open investigation into its Invesco operations. The regulator also allowed it to use outsourcing firm Capita Asset Services as a kind of external regulator, or Authorized Corporate Director, despite the fact that the manager was also the largest shareholder in the provider’s parent company.

Internal checks and balances also failed. Woodford planned to invest $ 250 million in US bioscience firm Evofem, even though he had only met twice in London with a company executive. When Equity Income was about to exceed the limit of 10% of assets invested in unlisted, it put pressure on some of those companies to issue their shares on the opaque Guernsey Stock Exchange.

Woodford’s disappearance is also another nail in the coffin of active management. The growth of cheap index funds has put pressure on active managers to show that they can add value. His successful counter bets seemed to justify higher commissions. But his clients would have fared much better if they had entrusted their pension funds to an indexed product.

Walker juxtaposes the lifestyle of managers with the pensioners whose money they manage. Woodford spent nearly £ 14 billion on a 400-hectare retreat in the Cotswolds and tested a Ferrari on the manufacturer’s private track. Meanwhile, the owner of a bed and breakfast The 67-year-old lost part of her savings and has to continue working.

But Woodford doesn’t seem to think there is no remedy. In February it revealed its plans to launch a new fund in Jersey, managing only institutional money. But with the results of an FCA review of its rulings still unpublished, it seems unlikely that it will return to the fray. The best he can hope for is that investors and regulators will learn the lessons from his failures.

The authors are columnists for Reuters Breakingviews. Opinions are yours. The translation, of Carlos Gomez Down, it is the responsibility of Five days


Casino News | Million fine for British casinos

Lack of player protection and violation of money laundering laws. The regulator is asking five casinos to pay.

A&S Leisure Group, Clockfair, Shaftesbury Casino, Double Diamond Gaming and Les Croupiers Casino are set to pay £ 1.35 million. The A&S Leisure Group bears the largest share. The company operates that Napoleons Casino in Sheffield and has to pay £ 377,340. The staff failed to spot problem gamblers and didn’t look into how regular customers fund their heavy losses.

The other companies had the same problems. For example, a customer gambled in Broadway Casino (Clockfair) in Birmingham between 2018 and 2019 nearly £ 60,000. It wasn’t until the summer of 2019 that the casino asked the customer. This assured to be able to cope with the losses. However, records showed that the player’s companies lost £ 100,000 over the same period.

Four of the companies already have a statement to the UKGC submitted. In addition to fines ranging from £ 202,500 to £ 260,000, casino operators also pay litigation costs. The A&S Leisure Group has not yet published any comments.


A European banking union for international financial institutions would have many advantages

The author

Axel Weber is Chairman of the Board of Directors of UBS Group AG.

(Foto: Bloomberg [M])

Now that Brexit has been finally resolved, the EU should address the question of how it intends to further develop its banking system and financial center and thus promote economic dynamism. Because despite great progress in harmonizing the regulation, supervision and resolution of banks, the European banking union is still incomplete. In addition, national regulatory requirements continue to dominate in key areas.

From the point of view of a cross-border banking group, the EU is not a single economic area, but a conglomerate of 27 differently regulated markets, with a 28th EU regulator at the top. As a result of this fragmentation, European consumers suffer from a limited supply of banking services, the European economy from a sub-optimal supply of capital and European banks from different regulatory requirements, which prevents them from taking advantage of economies of scale through the application of new technologies and so with the American one Keeping up with competition.

There are two possible routes to a banking union. Firstly, a continuation of the previous gradual harmonization and orientation at the pace of the savings banks and cooperative banks, which can take decades and does not guarantee success. Or a regulatory bang in the form of the creation of a uniform European legal framework for cross-border banking groups.

Similar to the USA, European banks with cross-border activities would then have the freedom to choose whether they want to be regulated EU-wide under the new EU law or whether they want to continue to be subject to the existing patchwork of different national regulations. For banking groups that opt ​​for EU law, this would have several consequences:

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Firstly, in many areas such banks would only be subject to EU law, which would be applied consistently across the EU.

Second, such banks would only be supervised by the ECB as the primary supervisory authority.

Third, these banks are likely to offer their full range of banking services across the EU, from bank accounts and payment services to lending and asset management. Analogous to the principle of free movement of persons, there would be free movement of financial services – all citizens of the EU would have the right to use the same financial services. An EU IBAN code would replace the national codes for these banks in order to remove the intra-European hurdles in payment transactions.

Uniform EU bankruptcy framework for banks

Fourth, deposits in these banks would be covered by a common EU deposit guarantee scheme. A common EU deposit guarantee scheme would guarantee all customers the same protection across the EU.

Fifth, these banks would be subject to a single EU bankruptcy framework. The Single Resolution Board would be the only authority responsible for resolution in the event of bankruptcy.

Banks that do not want to be regulated according to the new EU law, such as the savings banks and cooperative banks‧, can remain in the previous national‧ differentiated regulatory framework.

In order to use the full potential of a single financial market, the Capital Markets Union should also be promoted at the same time in order to facilitate the financing of companies via the capital market and to reduce the dependence on the bank financing that is widespread in continental Europe.

Consolidation in the banking sector would be initiated

The EU must not isolate itself from other countries because it is dependent on capital and financial services from outside: The two most important European financial centers are outside the EU (London and Zurich); Luxembourg is the first EU financial center in twelfth place, and Frankfurt follows in 16th place.

Such a regulatory bang could in no time create a banking union that really deserves its name. This would bring significant benefits for consumers, businesses, banks and the economy as a whole: consumers and especially small and medium-sized enterprises would benefit from better and cheaper financial services and easier access to credit and capital, and the long overdue consolidation in the fragmented European banking sector would get under way and triggered an economic growth spurt. The EU would emerge from the crisis stronger and more united than before.

The author is Chairman of the Board of Directors of UBS Group AG.

More: Europe’s banks are facing a wave of consolidation – but not immediately


Santander links its British investment bank to Spain | Companies

Banco Santander has restructured its business in the United Kingdom. As a consequence of the Ring Fence law, the new banking regulations of the British country, the entity has decided to make its investment banking business in the country depend directly on Banco Santander SA and leave the retail banking business in the country as the sole asset of Santander UK. the country. The movement is also part of the United Kingdom’s exit from the European Union, whose effects have been in full effect since January 1, 2021.

“In January 2021, we announced to clients plans to simplify the operational structure of Santander Corporate & Investment Banking (Santander CIB) business in the United Kingdom. The transfer of the business and functions of Santander CIB from Santander UK to the London Branch of Banco Santander, SA will allow Santander CIB clients to benefit from Banco Santander’s global capabilities and continue to progress, “says a bank spokesperson.

In essence, it is a corporate movement of 3,200 million in assets that brings together the subsidiary Santander Corporate & Investment Banking UK. From now on, they will depend on the London Branch (the branch of the Spanish bank) with which the headquarters of the bank domiciled in Spain, Banco Santander SA, has in the City.

The Ring Fence regulation, in force since 2019, has already forced Santander to separate its retail banking and investment banking businesses in the United Kingdom. The move he is making now aims to improve customer service and avoid duplication.

This means that, from now on, all the investment banking businesses of the entity will be backed by euros and will fall under the supervision of the EU. This will also mean a reduction in costs and lightening of the structure.

The application of this rule, as well as the effects of Brexit, already meant that the bank recognized in 2019 a deterioration of 1,500 million in the goodwill of its British subsidiary. As the bank explained then, this rule causes the bank’s London branch to see its assets increase by 40,000 million euros (of which 25,000 million are from an initial transfer of assets from Santander UK). It also foresees an increase in costs as some functions are duplicated, which will reduce the ability to generate profits of its subsidiary in the British country.

The Santander subsidiary in the United Kingdom obtained a net profit of 438 million pounds (494 million euros) in 2020, 38% less than in the previous year.

In addition, in November the entity chaired by Ana Botín agreed to relieve its president in the subsidiary in the United Kingdom and appoint William Vereker. He replaced Shriti Vadera in office.


London favors SMEs in its new public procurement guidelines

The measures are welcomed by the defense high technology sector

British soldiers. Photo: British Army

12/17/2020 | London

In the last 14 months, a team of specialists in international recruitment has prepared a Green Book with the new public procurement guidelines. London wants to take advantage of the powers that are released after its departure from the European Union to transform the purchasing system, so that they are more profitable, cut red tape and benefit small businesses.

The new plans, launched this week, include long-standing changes to UK procurement regulations, which are especially welcomed by high-tech SMEs in the defense sector, according to the website specialized in military electronics. Battlespace. Thanks to this transformation, adds the source, it will be possible to expedite and accelerate the acquisition of advanced technology materials so that they enter service faster and at an affordable price. Previously, it is explained in the information, SMEs have been hampered in these acquisitions, to accounts of their size, by the regulations of the Treasury, so that a main contractor has frequently been used to execute each program, which increases the price paid for the Ministry of Defense, in addition to delaying the process.

Transparency is also behind the changes. The new plans are expected to cut through the bureaucracy that generates greater benefits in society with the money spent on public procurement. They are expected to facilitate access to these contracts for SMEs based in the United Kingdom while saving and promoting competition with much simpler procurement procedures.

In the words of the Minister of State for Efficiency and Transformation, Lord Agnew, the new measures “will transform the current obsolete system with new rules, providing flexibility to the public sector and less burden on companies.” The minister notes that these guidelines “have been developed with international procurement specialists and unleash innovation throughout the country and provide a fairer system for small businesses.”

A regulation instead of 300

The changes include, among others, creating a single uniform regulation that replaces more than 300 complex regulations; replace complicated and inflexible procedures with three more modern and simple ones; the inclusion of broader social benefits; a new public procurement oversight entity capable of enhancing the business skills of contractors; a unique digital platform to register contracts, improve transparency and simplify processes, and more effectiveness to make purchases during times of crisis, such as those experienced now with the covid pandemic.

The executive director of the Open Contracting Association, Gavin Hayman considers it “a unique opportunity to make sure that public money is spent wisely”, and gives as an example of what had been happening to “the problems” that “old-school acquisitions during the pandemic” have had.

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LIGA MX – Official Page of the Mexican Professional Soccer League

Article 15:

The first twelve Clubs of the General Classification Table of each Tournament at the end of the 17 Days, automatically participate for the LIGA MX Champion Title in the 2020 Guard1anes and Clausura 2021 Tournaments.

Clubs classified in positions 1, 2, 3 and 4 will be located directly in the Quarterfinal phase

Clubs classified in positions 5, 6, 7 and 8 will play at home in Local Reclassification matches

Clubs classified in positions 9, 10, 11 and 12 will play as visitors in the Away Reclassification matches.


A hard Brexit would get Frankfurt very well | Markets | 04/11/2020

Great Britain’s final farewell to the EU is imminent, and the island is leaving the European Union at the turn of the year. How exactly this happens has not been clarified in detail. For the financial market and thus for the banks, there have so far been no detailed regulations for the period after December 31, 2020. Nevertheless, the Bundesbank remains relaxed. Board member Joachim Wuermeling said at a conference call last Monday (November 2nd) that the Bundesbank is expecting up to 2,500 new jobs in the banks in Germany as a result of the business relocation. Frankfurt should mainly benefit from this, reports the “Frankfurter Allgemeine Zeitung” (FAZ).

According to an estimate by the Bundesbank, the banks from London will transfer EUR 675 billion in balance sheet items to Frankfurt. By the end of June, the five largest banks coming to Germany had already increased their total assets of the subsidiaries operating in this country by 158 billion to 213 billion euros, reports the FAZ. The Bundesbank expects a further 397 billion euros to be relocated by the end of the year. According to the Bundesbank, banks, financial service providers and investment firms have submitted a total of 64 license applications in Germany. The supervisory authority has already given the green light to over 40 of them. The remaining applications are still pending and mainly concern smaller institutions and financial service providers.

All or nothing
Wuermeling firmly rejects possible attempts by Great Britain to support the City of London, the second most important financial center in the world after New York, with more generous, less strict regulation: “A hard Brexit must not be the starting signal for a deregulation race.” It is important to develop an efficient financial market on the continent so that the European economy can finance itself on its own. “What role London will play in the medium and long term is completely open today,” he said. (fp)


Arsene Wenger proposes radical changes in football

Former Arsenal manager, Arsene Wenger, has said it wants to see changes to several rules of the game, including the current offside law.


Act. a las 12:45


The Frenchman now serves as FIFA Director of Football Development and he says he would like to make some radical modifications to the way it is played.


Wenger would change the way the offside law is currently written to benefit attackers.

“At the moment, you are offside if a part of your body that you can score with is in front of a defender’s body.”added the former Arsenal manager.

“I would like it not to go offside as long as a part of the body that a player can score with is aligned with the defender. This could be an advantage for an attacker.”

Corner kicks

“We are also considering other things: a corner kick that goes off the pitch and re-enters could be valid, this would generate new scoring opportunities. There is also the option of quickly taking a free kick.”

“Five minutes before the final whistle, a serve for your team should be an advantage, but in these situations you face 10 players, whereas you only have 9.”

“Statistics show that in eight out of 10 of those service situations, you lose the ball.” añade Wenger.

It remains to be seen whether FIFA shares his vision. What if these new rules could be adopted in the next few years?


Arsene Wenger proposes four changes to football rules

Former Arsenal coach Arsene Wenger has come out with some rule changes he would like football to implement.


Upd. at 12:45


The Frenchman, 70, is FIFA’s Head of Global Development and has been looking into the following.


“For the moment, you are offside if a part of your body that you can score with sits ahead of the body of a defender,” Wenger told L’Equipe (reported by GetFrenchFootballNews)

“I would like it to be that there is no offside so long as a (single) body part which a player can score with is in line with the defender.

“This could be too much of an advantage for an attacker, because that obliges the defenders to play higher up.”


“An in-swinging corner that goes out of play and comes back in could be made valid, this would create new goal-scoring opportunities. There is also the option of quickly playing a free-kick to yourself.”


“I would also like to change the throw-in rule: five minutes before the end, a throw-in for you should be an advantage, but in these situations you are facing 10 outfield players in play, whilst you only have 9.

“Stats show that in 8 out of 10 of those throw-in situations, you lose the ball. In your half of the pitch, you should have the possibility to take a kick instead.”