One year on, and the impact of the credit crunch has extended beyond the financial sector, new data from the Insolvency Service shows.
Banks are considering moving their corporate and individual customers to a Web 2.0 environment, according to a consultant’s report.
Merger and acquisition deals on both sides of the Atlantic in the first half of 2008 show a sharp decline on a year ago, figures from investment bank Robert W Baird suggest.
Pensions buy-out company Paternoster has expressed concern that the use of cash inducements by companies to incentivise defined benefit pension scheme members to transfer out of corporate pension schemes will lead to a significant loss of pension entitlement.
The world’s biggest retailer has looked to the East to prise open financial markets in the grip of the credit crunch. Wal-Mart, the giant US supermarkets group, has sold Y100bn of samurai bonds worth around $930m. Not only is it the largest such issue by a non-financial company this year, it reinforces the 2008 trend for foreign multinationals to tap the Japanese investment community. The issuing of samurai bonds – paper sold by foreign institutions to Japanese investors – is up by around 50% this year by value, making it the mst successful year for the securities since 2000.
The summer holidays mark a definite slowdown in financial activity. It is particularly frustrating for treasury departments that want to make rapid progress on projects only to find that key people are away from their offices. For governments and the financial authorities across Europe nothing much happens in August, but the corollary is that officials clear their desks at the end of July and announce all manner of ideas and consultations, before heading off to the beach. For that reason this month’s Technical Update is distinctly overweight on a host of changes that might affect a corporate treasurer.
The latest statistics on employment from the Office for National Statistics (ONS) showed that the unemployment rate had risen, the employment rate had fallen and the inactivity rate was unchanged. The number of job vacancies was also down. And a final indicator that life is getting tough was the news that growth in average earnings, both excluding and including bonuses, had fallen.
Building a collaborative model. Is supply chain management a challenge or an opportunity?
Darren Clark (Assistant Treasurer, Sainsbury’s), Dominic Broom (European Head of Global Trade Services at Bank of New York Mellon), Stuart Morrison (Chief Executive Officer at EZD Global) and Ulrike Rowbottom (Director of Strategic Projects at UTI Worldwide) provide some answers.
Both Sir David Tweedie and his son Mark recognise the importance of communication and are highly skilled at selling their message. As Sir David puts it: “Ultimately, you have to sell your products, whether that is some sort of financial product or an accounting standard.”
The pressures for change in how foreign profits are taxed in the UK have been building for some time. Some of the pressure arises from the need to improve the international competitiveness of the UK tax regime, especially the controlled foreign companies (CFC) rules, which have come under attack for being too complex and far-reaching. The CFC regime has been in existence for more than 20 years and has been amended almost every year since its creation, which has obscured its original stated purpose. However, the most significant pressure on the government in this area has come from recent decisions of the European Court of Justice (ECJ).
Sal Settineri, managing director of capital markets at GE Commercial Finance, has no doubts at all about the virtues of asset-based lending. “It’s a good product in good times and a great product in tough times,” he says.
According to The Financial Times, the sector is “rising up the food chain” and has managed to shrug off the effects of the year-old credit crunch that continues to plague the markets. The industry was estimated to be worth more than £191bn at the end of 2007 and has continued to grow this year.
At a time when the rate of business failures is accelerating, companies are more reliant than ever on accurate health checks of their major customers and suppliers. Since the onset of the credit crunch, more businesses have gone under, and larger companies are forcing their smaller suppliers towait even longer for payment.
The year started with a very confusing picture, caused by two diametrically opposite effects. The slowdown in the economy led to nervousness and therefore less deal-making, and at exactly the same time fiscal changes in capital gains tax rates and non-domicile rules created a huge incentive for owners to sell their businesses. A few months ago, we were very unsure how things were going to turn out as the year progressed.
Standard & Poor’s ratings represent our opinion of the likelihood that a particular obligor or financial obligation will repay on time owed principal and interest. Put another way, we assess the likelihood, and in some situations the consequences, of default.
Supply chains are increasingly international and complex. As a result, the risks involved, which once consisted mainly of safely moving goods from A to B and optimising inventory levels, have grown more numerous and complex. European and US consumers have developed a taste for foreign goods and companies have outsourced more production to cut costs. But as supply chains have become more intricate and effective, so have the associated risks. Companies can reduce input costs, but it will often be at the price of increasing their exposure to possible disruption. Supply chain risk was not only a main feature on the schedule at this year’s ACT conference, but very much in focus when insurance and risk managers met in Edinburgh this summer for the annual gathering of their representative body, AIRMIC.
The ACT’s MCT qualification is about judgement and independent strategic thinking. Focusing on those qualities, Simon Murray, a leading international businessman, spent some time with MCT students talking about life, business and leadership.
With little formal education Murray has reached the heights of the business world, working at top levels in sectors as varied as banking, energy and telecoms. His determination and can-do attitude is reflected in a thirst for challenges that has seen Murray, who served in the French Foreign Legion in Algeria in the 1960s, trekking through some of the harshest climates this planet has to offer. Perhaps if you survive and prosper in those sorts of conditions, dealing with difficult business problems is not quite as daunting.
The amount and pace of change in the legislative and investment environments for pension schemes has highlighted the pressures on the role of trustee. So how should trustees be responding to the changes?
During June and July 2008, Mercer and the ACT approached chief financial officers (CFOs) and treasurers for the fourth annual survey on managing pension financial risk. As in previous years, the survey sought to determine the extent to which this group viewed pension schemes and their deficits as significant corporate risk issues, and their perception of stakeholder attitudes towards such risks. This year, 89 responses were received, with FTSE-350 companies well represented. This article summarises those responses. Several of the questions asked were deliberately similar to those of previous years, but we have again tried to address additional issues that have become increasingly high profile over the last 12 months.
How is the credit crunch affecting pension investments? Should more companies take a serious look at the pension buy-out market? And what essential information on pension funds should be readily to hand for any treasurer? These were some of the issues addressed by this year’s ACT annual pensions conference in late June, chaired by Paul Thornton, a veteran of Watson Wyatt and now managing director of the pensions advisory team at Gazelle Corporate Finance.
Competency-based interviewing assesses a candidate’s suitability for a given role by analysing their past experiences to predict their future behaviour. By asking the candidate to give examples of past behaviour in work-related or real-life situations, it is thought that the candidate will demonstrate what their core competencies are, thereby highlighting how suited they are to the job.
