Aurelia Butler

The UK’s financial watchdog has summoned bank chief executives to address concerns that savings rates are lagging behind the surging cost of mortgages.Top bankers at HSBC, NatWest, Lloyds and Barclays are expected to attend a meeting at the Financial Conduct Authority on Thursday amid accusations they are profiteering from rising interest rates, according to people familiar with the matter.The Bank of England raised rates to 5 per cent last month, its 13th consecutive rise in a protracted battle with high inflation. While the average rate on a two-year fixed-rate mortgage has leapt to 6.42 per cent, according to Moneyfacts, the average rate on an easy-access savings account is only 2.43 per cent, with many large banks offering much lower levels.The FCA and the executives are planning to discuss the pricing of cash savings and how banks communicate with their customers on rates, according to people familiar with the agenda. The meeting could result in a “savings charter”, or set of commitments, the people said. “We do think there is more value that can be provided to consumers. We are not happy with some of the lower savings rates we see, and we want banks to be supporting customers . . . and people to be able to make informed choices,” said one person familiar with the FCA’s position.However, some of those due to attend the meeting, which includes smaller lenders, warned that the FCA intervention was a regulatory over-reach. “The worry is you end up in a situation where you have regulators trying to dictate price: that is a dangerous place to be,” said one chief executive.Another senior banker noted that lenders had signed up to a “mortgage charter” last week in a move orchestrated by the Treasury to help homeowners with the sharply rising cost of borrowing. “It now looks like they’re considering something similar on savings,” this person said. “They don’t want to be in a market-setting terms. Then it suddenly becomes a regulated market.”Senior politicians have sounded the alarm over savings rates as inflation remains high. The House of Commons Treasury select committee on Monday wrote to the chief executives of the big four banks, accusing them of “blatant profiteering” by “squeezing higher profits from their loyal savings customers”.The Consumer Duty, which comes into force at the end of July and mandates financial services firms to deliver good outcomes for their customers, gives the regulator a new basis on which to justify action if they believe banks are behaving unfairly by keeping rates low.Current accounts, which tend to offer lower rates compared with savings products, could also come under scrutiny at the meeting, another banker said.John Cronin, an analyst at Goodbody, said banks were likely to focus on the higher fixed-rate savings offers to deflect from criticism of easy-access rates.“We’ll probably see some movement — we’ve already started to see it, as is typical of these situations where they do start moving savings rates in advance of the showdown,” he added.The FCA has expressed concerns about the savings market before and put forward proposals for banks to make their interest rates simpler and more transparent in January 2020, but the work has been on pause since the pandemic.The FCA declined to comment on the meeting specifically and said it would report “by the end of the month on how well the cash savings market is supporting savers”. It added: “This includes requiring the largest banks and building societies to explain the pace and extent of their pass through of interest rates, and how they are proactively supporting customers to switch to suitable high- interest rate products.”Barclays, Lloyds, HSBC and NatWest declined to comment. More

MEXICO CITY (Reuters) – The U.S. wants Mexico’s government to build strong institutions to protect worker rights as companies aiming to avoid supply chain disruptions in far-off production spots bring more jobs to the country, a top U.S. labor official told Reuters.Mexico has begun to benefit from “nearshoring” in which companies seek to move production closer to the U.S. market while maintaining competitive costs.The trend is further testing a trade deal known as the U.S.-Mexico-Canada Agreement (USMCA), in effect since July 2020. The pact has tougher labor rules than its 1994 predecessor and underpins new Mexican laws that empower workers to push for better wages and conditions after years of stagnant salaries and pro-business union contracts.Three years into the deal, experts say, some workers have begun to benefit but broad impacts are still far off. “Hopefully that will ensure that Mexico doesn’t become a dumping ground for companies looking for cheap labor and lax regulations,” said Thea Lee, U.S. Deputy Undersecretary for International Labor Affairs who polices USMCA compliance.She said in an interview that Mexico was working to fulfill its commitments, backed by leadership keen on helping workers.Mexico’s new regulations favor companies taking on higher ethical standards, she said.”Maybe 20 years ago it was okay for a multinational corporation to throw up their hands and say, ‘we have no idea what’s in our supply chain, what the labor conditions are,'” she added.”That doesn’t seem to be acceptable anymore.”Mexico has made progress improving labor courts, resolving worker complaints faster and easing union organization, but needs to do more, Lee said.”Our hope is that Mexico will be well-poised to take advantage of nearshoring … if they continue on the path towards really building labor institutions that work, where workers can have confidence.”Since 2020, several U.S. labor complaints in Mexico have paved the way for independent unions to land pay raises and even expand. Lee said such examples inspire workers who in the past may have feared threats or dismissals for trying to organize. Four more cases are under review: At a garment factory, an auto parts plant, a Goodyear tire plant, and a mine owned by conglomerate Grupo Mexico.Yet one employer that faced two USMCA complaints, U.S.-based VU Manufacturing that makes interior car parts in the northern city of Piedras Negras, recently dismissed dozens of employees just months after a new union, La Liga, pressed for better wages. VU did not respond to a request for comment.Lee said the company risks penalties if it does not uphold an agreement around worker rights. But La Liga members have already been laid off, and fear the company aims to discourage organizing, said union leader Cristina Ramirez, who lost her job.”It’s very disappointing and frustrating,” Ramirez said. “We wanted to fight for things to improve.” More

Today’s top storiesSaudi Arabia and Russia, the two most powerful members of the Opec+ cartel, announced new cuts to oil production in a renewed effort to boost the price of crude.Currency speculators have boosted bullish bets on the pound to the highest level for nine years despite signs that sterling’s recent rally is flagging. Markets now think the Bank of England will have to raise interest rates further just as other big central banks are nearing the end of their tightening cycles, pushing the interest rate-sensitive two-year UK government bond yield to a 15-year high.UK drivers are paying more for fuel because of weakening competition between petrol station owners, the country’s competition watchdog warned. The CMA also called for a government-backed scheme to give motorists access to real-time pump prices for ease of comparison.For up-to-the-minute news updates, visit our live blogGood evening.The second visit of a high-ranking US official to Beijing in just a fortnight and a Chinese charm offensive on US business highlight increasing efforts between the two countries to fix a relationship in its worst state since the establishment of diplomatic ties in 1979.The US Treasury department confirmed yesterday that Janet Yellen would visit the Chinese capital later this week. Her visit follows the delayed trip by secretary of state Antony Blinken last month and aims to improve US-Sino relations, which have been damaged by rising trade and military tensions this year. Yellen’s visit aimed to “deepen and increase the frequency of communication between our countries moving forward and to stabilise the relationship to avoid miscommunication and expand collaboration where we can”, said a Treasury official.The US rhetoric of “decoupling” may have been replaced by “de-risking” but this too was criticised by China last week as a “politicisation of economic issues”. The situation had not been helped by US president Joe Biden referring to his Chinese counterpart Xi Jinping as a “dictator”.Beijing, meanwhile, has passed a new foreign relations law that deepens Xi’s control, making it easier to enact “countermeasures” against western threats to national and economic security, following earlier crackdowns on foreign consultancies.At the same time, China has been making overtures to US business leaders, including Tesla’s Elon Musk and Apple’s Tim Cook, as its economic recovery falters. At the weekend, it appointed a western-trained risk firefighter to lead the People’s Bank of China, a move expected to provide some certainty to markets. It is also determined to ramp up its exports, led by a huge assault on Europe’s car market, as it utilises a quarter-of-a-century’s expertise in electric vehicles. China dominates the production of almost every resource, material and component used to make them.Many global businesses nevertheless are looking to pivot from China and de-risk their supply chains. Countries such as Vietnam are beginning to emerge as part of a “China plus one” strategy, where production is being supplemented with expansion in other nearby countries. World Trade Organization director-general Ngozi Okonjo-Iweala said last week there was evidence that investment was shifting.China is also facing increased hostility from other countries following the lead of the US and Japan in imposing tough curbs on tech exports. The latest example comes from the Dutch government, which has placed restrictions on ASML chipmaking machines to prevent them being used for “advanced military applications”. China, in turn, hit back today with restrictions on exports of two key metals used in chipmaking and communications equipment. But with a meeting between Xi and Biden on the cards for later this year, the delicate dance between their two countries looks set to continue, as Washington’s security concerns vie with Beijing’s attempt to show that the country is open for business. Need to know: UK and European economyThe UK is to take action over banks blacklisting customers who hold controversial views after leading Brexiter Nigel Farage claimed his account had been shut down without explanation. Upbeat trading updates from UK clothing chains have confounded policymakers who have been trying to tame inflation by lifting interest rates. Summer clothes, shorter breaks and occasional treats are in but household appliances are out. FT writers analyse where embattled consumers are spending their money.Ukraine’s finance minister Serhiy Marchenko in a Financial Times interview urged the US and other powers to follow the EU’s four-year €50bn aid pledge to fund his country’s recovery and reform plans. The FT revealed that the EU was considering allowing a sanctioned Russian bank to reconnect to the global financial network to safeguard the Black Sea grain deal.Sanctions have left Belarus ever more reliant on Russia’s economy. Our Big Read examines President Alexander Lukashenko’s claim that he can be loyal to Moscow while staying independent.Need to know: global economyPimco, the world’s largest active bond fund manager, said markets are too optimistic about central banks’ ability to dodge a recession as they battle inflation in the US and Europe and should prepare for a “harder landing”.This October, after a three-year break, 27mn Americans with student debt will once again have payments due, the effects of which are likely to ripple through the US economy.There are several ways of measuring a country’s success other than gross domestic product. Life expectancy is the simplest and most directly comparable, argues columnist Sarah O’Connor.

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Need to know: businessApple has been hit by manufacturing problems involving its Vision Pro headsets, which were unveiled just last month after seven years in development.Blue Origin, the rocket company owned by Amazon founder Jeff Bezos, is on the hunt for a site where it can build an international launch facility as it looks to compete with Elon Musk’s SpaceX. The crisis at Thames Water could deter foreign investment in the UK, ministers and industry figures warned, as the company tries to raise at least £1bn to shore up its finances. Columnist Helen Thomas says the financial problems of water companies are largely to do with private equity rather than private ownership. Japan hopes a $6.4bn government-backed deal will strengthen its arsenal in the global chip wars. JSR, the Tokyo-based company that controls a critical link in the global semiconductor supply chain, last week accepted an unexpected buyout offer from JIC — a fund overseen by Japan’s powerful Ministry of Economy, Trade and Industry.Netflix is revamping its advertising strategy as it seeks to boost revenues, including the introduction of “episodic” ad campaigns, which would avoid the common complaint from customers that they are shown the same ad multiple times.The world of workThe shift to remote working has brought many changes to office life, including limiting the face-to-face experience of summer internships and frustrating those hoping that a placement at a big bank, law firm or accountancy group will lead to a lucrative City career.Voiceover and performance artists are facing a threat to their livelihoods as generative AI developments make voice cloning more accurate, leading to an erosion of their work and rights, and leaving them in effect competing with themselves.Categorising people into age-related groups such as “snowflake millennial narcissists” and “greedy boomer technophobes” can feed real generational hostility in the workplace, argues columnist Pilita Clark.Some good newsNew images from the James Webb Space Telescope capture much more detail of Saturn’s shining rings as well as three of its moons, Dione, Tethys and Enceladus.A new image of Saturn and three of its moons, captured by the James Webb Space Telescope © AP More

China has hit back at US-led semiconductor restrictions by seeking to throttle exports of two metals used in chipmaking and communications equipment as the geopolitical tit-for-tat between the two superpowers steps up. Gallium and germanium will be subject to export restrictions in order to “safeguard national security and interests”, China’s Ministry of Commerce and Administration of Customs said on Monday. Exporters will have to apply to the ministry for permits from the beginning of August, it said. Both materials can form alternatives to traditional silicon wafers in specialised applications, as well as for components used in military and communications equipment. The Chinese measures come days after the Netherlands announced its plans to apply the latest set of controls that will limit the sale of high-end chipmaking equipment abroad, in a move that is expected to prevent dozens of ASML’s immersion lithography machines from reaching Chinese companies. The Dutch controls, which are nominally “country neutral”, are due to be enforced from September 1 and follow similar restrictions on semiconductor manufacturing equipment from the US and Japan. The Netherlands’ announcement comes on the heels of Washington’s block on the most advanced US chips needed for artificial intelligence from being sold to China. The US is weighing further limits on exports of AI chips made by Nvidia and AMD, people familiar with the matter said last week. Beijing’s most pointed response to date to these attacks on its tech sector had been its move in May to ban the use of US memory chipmaker Micron’s products in “critical national infrastructure”, citing security risks that the US commerce department has argued have “no basis in fact”. China is the world’s leading producer of gallium and germanium, according to the US Geological Survey, so any reduction in its output to the rest of the world is likely to slow production or increase prices for manufacturers and their clients in the tech, telecoms, energy and automotive sectors. Gallium is used in compound semiconductors, offering faster operation with lower power consumption or greater heat resistance, although it is harder for manufacturers to work with than silicon. Gallium nitride is already widely used in the chips that power 5G network base stations, as well as by the military in radar systems and, increasingly, in electric vehicle chargers. Gallium arsenide is used in some components for wireless communications and lasers. Germanium, which was used to make the first transistors in the mid-20th century, is sometimes added in small quantities to silicon to facilitate more advanced chip structures. It is widely used in fibre-optic cables, solar panels and LEDs, as well as in thermal imaging cameras by the military. Some Chinese companies are worried that the export controls may backfire. “It may affect the business of Chinese manufacturers instead during the economic downturn, but with a limited impact on the international market in the short term,” said an executive from a Chinese semiconductor material company. More

The Financial Times is planning the sixth edition of the FT High-Growth Companies Asia-Pacific ranking, to be published in March 2024 — and this is your chance to seek inclusion. Our ranking, compiled with data partner Statista, will aim to identify those Asia-Pacific businesses with the strongest revenue growth between 2019 and 2022 — the period in which the Covid-19 pandemic disrupted the global economy. So we are looking for companies in the region that found ways to harness technology or adapt their business models to keep expanding. To determine whether your company should be included in this high-profile list, we invite you to submit your revenue figures for 2019 through to 2022, along with some additional information — including your company’s headcount at the end of each of those years (see eligibility criteria below). Additional checks will be made if your company is not a legal entity or has an unusual structure. Potential candidates will be contacted by Statista or can put their names forward for consideration via this registration form. Please register and provide the necessary data by 31 October 2023.We will publish the final ranking in a special report in a weekday edition of the FT newspaper and on FT.com. The 2023 report, including an interactive version of the ranking, can be found here.Why should my company participate? NEW BUSINESS OPPORTUNITIES Inclusion in the list is a visible and public acknowledgment of your company’s performance that extends far beyond your specific industry and country. It will also generate attention for your business on the part of potential partners, customers, and investors around the world. EMPLOYER BRANDING Corporate growth usually generates demand for new employees. Being featured in the high-profile ranking will not only increase awareness of you as an employer, it also gives potential employees an understanding of your company’s future potential. EFFECTIVE MEDIA COVERAGE The ranking will be covered in a special report, a section within the weekday edition of the FT newspaper and on FT.com. While the full ranking will be published online, FT reporters will focus on particularly interesting companies, sectors and trends in the articles of the report that will appear in both print and on FT.com. REPUTATION Winners will also have the opportunity to license a special logo that states they are one of APAC’s High Growth Companies¹. Who is eligible? In order to be included in the ranking your company must meet the following criteria: Headquartered in one of the following 14 Asia-Pacific locations: Australia, Hong Kong, India, Indonesia, Japan, Macau, Malaysia, New Zealand, Philippines, Singapore, South Korea, Taiwan, Thailand or VietnamRevenues of at least $100,000 in 2019²; Revenues of at least $1mn in 2022²; Independent, ie not be a subsidiary;Revenue growth between 2019 and 2022 that was primarily organic, not primarily via acquisitions; A share price that has not experienced irregularities or fallen 50 per cent or more in the past 12 months (if the company is listed on a stock exchange)³. Please note: additional checks will be made if your company is not a legal entity or has an unusual structure.How do I register? Please register with Statista by October 31 by filling out this online registration form, as mentioned above. After you have registered, your company’s revenue will need to be verified on a separate form signed in person by a managing director or a member of your executive committee (CEO or CFO). More

LONDON (Reuters) – British billionaire Richard Branson severely damaged Virgin Group’s reputation by residing in a tax haven while UK-based airline Virgin Atlantic sought a government bailout during the pandemic, according to internal Virgin emails cited in a $250 million London lawsuit on Monday.The emails were cited by lawyers for U.S. train operator Brightline, which is being sued by the Virgin Group after cancelling a deal to use the Virgin brand in 2020, just over 18 months after it was signed.Under the deal Brightline operated a rail line in Florida using the name Virgin Trains USA.Brightline says it cancelled the deal because the Virgin brand had been hit by negative press coverage of Branson’s 2020 claim that Virgin Atlantic would need a bailout from the British government to survive the pandemic.Brightline’s lawyers cited internal Virgin Group emails describing group founder Branson being based in the British Virgin Islands for tax purposes as “a reputation killer”, while one email from an external public relations adviser said: “Richard needs to show he’s not a ruthless, tax-evading billionaire.”In an April 2020 email, Virgin Group CEO Josh Bayliss referred to Branson’s tax residency in relation to the request for a bailout, saying: “Richard cannot escape the criticism. The truth is he has paid as little tax as possible”.Virgin argues its brand was not materially damaged by the group’s handling of COVID-19, meaning Brightline was not entitled to cancel the licensing deal without paying an exit fee of up to $200 million. The company is also seeking unpaid royalties.Virgin’s lawyer Daniel Toledano said in court filings that the brand suffered some negative press in Britain in 2020 following Virgin Atlantic’s request for government support, but its reputation quickly recovered and was unaffected in the United States.Brightline’s lawyer Nigel Tozzi, however, said the deal had entitled his client to a brand with a high international reputation, like Coca-Cola (NYSE:KO) or leading European soccer teams Real Madrid and Barcelona.”It is the Beatles, not the Bay City Rollers,” he said in court filings. More

Services such as tourism and telecommunications generate more than two-thirds of global GDP but barriers for services trade are higher than for goods, the joint report by the two institutions entitled ‘Trade in Services for Development’ said.The WTO has a mandate to liberalise services but its member states have not collectively improved market access since 1997 when deals were struck on telecommunications, it said. “There is a need to reignite international cooperation in the services sector,” said World Bank President Ajay Banga and WTO Director-General Ngozi Okonjo-Iweala in the report’s foreword.”Such efforts need to expand trade and investment, reduce trade costs, bring about greater transparency and predictability on trade policy regimes and, ultimately, increase the participation of developing economies…,” it said.The report did not give prescriptive solutions, saying its aim was to “recall the benefits of advancing the negotiating agenda on trade in services and the opportunity costs of doing nothing”. The two bodies stand ready to help governments, it said. Banga began as World Bank president last month and asked staff to double down on development and climate efforts to accelerate the bank’s evolution to tackle global problems. More