Aurelia Butler

HOUSTON (Reuters) -A U.S. judge on Monday signaled he was prepared to go ahead with selling Venezuela-owned oil refiner Citgo Petroleum’s assets to satisfy creditor claims while pushing back against one of Venezuela’s key objections.U.S. District Court Judge Leonard Stark also will not seek permission to launch the auction without having shares of Citgo parent PDV Holding in the hands of the court, he said after a hearing on the auction. Stark plans to start regular meetings in July with the court officer who established auction process, he said. His decision whether to approve the auction calendar and address objections to the sales process also would come by late July, he said. Venezuela had objected to holding the auction without having the shares in court possession.Citgo declined to comment on the court proceedings. Stark has laid out an auction to sell shares in a Citgo parent whose only asset is the oil company to repay billions of dollars in claims against Venezuela. A proposed schedule aims to kick off marketing in September and wrap up any sale by mid-2024. Citgo and parents PDV Holding and Citgo Holding split from Venezuelan state-run oil company PDVSA in 2019 under an order by Venezuela’s National Assembly after the U.S. imposed sanctions intended to oust Venezuelan President Nicolas Maduro.Stark has recognized claims from miner Crystallex International, oil firm ConocoPhillips (NYSE:COP), Siemens Energy and Red Tree Investments that could receive auction proceeds. Several other companies with billions of dollars in claims have sought to piggyback on the judgments. The U.S. Treasury has said the auction could go ahead, but participants would have to obtain a license to take possession of assets. Russian oil firm Rosneft last week turned over its 49.9% stake in another parent of Citgo, Venezuela’s attorneys told the court. However, the Citgo Holding shares have no bearing on the proposed auction. Rosneft did not immediately reply to a request for comment. More

The EFF/ECF program will help address macroeconomic imbalances while the RSF arrangement will help with longer-term challenges related to climate change, the fund said.The board’s decision allows for an immediate disbursement of about $216 million under the EFF/ECF, the IMF said. More

Central banks must accept the “uncomfortable truth” that they may have to tolerate a longer period of inflation above their 2 per cent target in order to avert a financial crisis, the deputy head of the IMF has warned.Gita Gopinath told the European Central Bank’s annual conference in Sintra, Portugal, that policymakers risk being faced with a stark choice between solving a future financial crash among heavily indebted countries and raising borrowing costs enough to tame stubborn inflation.“We are not there yet, but that is a possibility,” Gopinath told the Financial Times before her speech. “In that environment is when you could see central banks adjusting their reaction function and saying ‘OK, maybe we tolerate inflation being higher for some more time.’”The high debt levels of many European governments leave them vulnerable to another financial crisis, said Gopinath, who was last year promoted from being the IMF’s chief economist to become its deputy managing director.“We are getting into a period where we have to recognise that inflation is taking too long to get down to target — that is my first uncomfortable truth — and that means that we risk inflation getting entrenched,” Gopinath said.“When governments lack fiscal space or political support to respond to the problem, central banks may need to adjust their monetary policy reaction function to account for financial stress,” she said in her speech.But she added there should be a “high bar” before leading central banks accept inflation staying above their 2 per cent target for longer because it could make price growth even more entrenched, as happened in the US in the 1960s.Financial stress in the eurozone “may also have diverse regional effects, with [interest rate] spreads rising more in some high-debt economies”, and this could “amplify other vulnerabilities arising from household indebtedness and a large share of variable-rate mortgages in some countries”, she said.Gopinath said in her speech that the ECB and other central banks “should be prepared to react forcefully” to signs of persistent inflation even if it leads to “much more cooling” in labour markets.The ECB has raised its benchmark deposit rate at an unprecedented pace from minus 0.5 per cent last year to 3.5 per cent earlier this month and signalled another quarter-point rise is “very likely” in July.Governments could also help fight inflation by reducing deficit-funded spending to cut demand and lower the amount by which the ECB needs to raise rates, she said. “Given the economic conditions we have, both because of high inflation and record high debt levels, the two would call for a tightening of fiscal policy,” she said. “If you look at projected fiscal deficits for many G7 countries, they look too high for too long.”The ECB has created a bond-buying programme, called the transmission protection instrument, designed to avoid rising borrowing costs triggering another eurozone sovereign debt crisis. But this is untested and Gopinath said more could be done to prepare for potential financial stress.She called on EU governments to agree to new rules for reducing their budget deficits and debt levels, which have risen above 100 per cent of gross domestic product in many countries including France and Italy, and to create a single deposit insurance scheme for all eurozone banks to replace the current patchwork of national systems.The US government provided additional deposit guarantees to ease the crisis in US banking sparked by the collapse of Silicon Valley Bank in March. “You could have an episode of that kind, or something more severe than that, where it is politically not feasible to get that kind of fiscal support,” Gopinath told the FT. “Or you are dealing with non-banks, in which case it becomes very politically difficult.” More

Banks have been warned by chancellor Jeremy Hunt they could face a regulatory crackdown unless they pass on higher interest rates to savers, amid claims the sector is profiting at the expense of struggling households.Hunt said on Monday that while mortgage rates had soared, it was taking “too long” for savers with instant access bank accounts to enjoy higher returns.“I’m working on a solution,” he told the House of Commons. “It’s an issue that needs to be resolved.”The chancellor wants to boost interest rates on savings, partly to help households but also to cut consumer spending, as he seeks to help the Bank of England fight inflation. Last week the central bank raised its base rate to 5 per cent to try to curb price rises.Hunt said he had told lenders “in no uncertain terms” at a private meeting last Friday that he wanted to see action to address the issue facing savers, but on Monday the political heat increased.Downing Street said: “We absolutely expect banks to pass through higher rates to savers, as they are for mortgage holders, and we’re working closely with the Financial Conduct Authority, who we know are monitoring it closely.”

Government insiders said it was too early to state what action by the UK financial regulator might follow, with one pointing out that political pressure alone might push banks to act.However the FCA told banks in February that under a new “consumer duty” banks will have to act in “good faith in respect of their cash savings accounts” and ensure they are giving “good outcomes” to customers. The government has said the consumer duty, which comes into effect at the end of July, will represent a “step change” in the way the sector is regulated.Harriett Baldwin, Tory chair of the Commons Treasury committee, said MPs would be closely watching the banks’ quarterly results. She added: “The UK’s largest high street banks continue to take advantage of their most loyal savings customers to boost profit margins.”While rates for savers are coming under increasing political scrutiny, the cost of mortgages continues to rise following poor inflation data and the latest monetary tightening by the BoE, with a number of lenders raising their prices on Monday.Santander said it would raise rates across a range of its mortgages for new customers by up to 0.46 percentage points.Rates for existing as well as new borrowers are set to increase at Virgin Money. It said it would raise fixed rates by up to 0.15 percentage points. Average rates on two year fixed mortgages rose to 6.23 per cent on Monday, up from 6.19 per cent on Friday, according to data provider Moneyfacts. Five year fixed mortgages reached 5.86 per cent, up from 5.83 per cent previously.Easy access savings rates are averaging 2.36 per cent, according to Moneyfacts. For those prepared to lock away their money for a year, the average savings rate on Monday was 4.61 per cent, up from 4.55 per cent on Friday.One senior banker said profit margins on mortgages were thin, as low as 25 basis points, adding it was a very competitive market.

UK Finance, which represents the banking and finance industry, said: “Saving and mortgage rates aren’t directly linked and therefore move at different times and by different amounts. Savings rates are driven by a number of factors, not just the Bank of England’s bank rate.“One key factor is whether someone wants instant access or can deposit money for a longer period of time. Savings rates have increased and we always encourage people to shop around for the product and interest rate that is suited to their needs.”In a letter to the Commons Treasury committee in April, the FCA mentioned a preliminary consultation that it had started in 2020 about a “single easy access rate” that would be applied across all easy access bank accounts with the aim of addressing concerns about a potential “loyalty penalty” in the market. The FCA work was later stopped because of the Covid pandemic, but Nikhil Rathi, chief executive of the regulator, said in the letter to MPs: “We are open to revisiting [single easy access rate]-type measures or considering other more onerous interventions if we later conclude that potential ‘loyalty penalty’ harms that we identify have not been adequately mitigated.”Hunt insisted again on Monday he would not be making a fiscal intervention to help households cope with higher mortgage bills, warning such a move would simply fuel inflation.Instead on Wednesday he will bring together regulators covering a range of industries, including energy, telecoms, water, plus the Competition and Markets Authority, to discuss ways to hold down prices for consumers.Government insiders said there would be a particular focus on food prices, as well as the cost of energy for business customers. More

Opening his “Summit for a New Global Financial Pact” late last week in Paris, French president Emmanuel Macron told delegates the world needed a “public finance shock” to tackle the ever more urgent and interlinked goals of combating climate change and global poverty, and protecting nature. In emerging market and developing countries excluding China, more than $2tn in investments each year is estimated to be needed to tackle climate change and its impacts by 2030; current investments are running at about $500bn. Mobilising such sums will entail huge efforts from multilateral development banks, governments, and the private sector. But as well as being more ambitious in raising finance, global actors must be cleverer about how they do it.Raising finance will not be straightforward. Total government debt currently equates to about $86tn. Around 60 per cent of low-income countries are in debt distress, or at high risk of it. Many feel they should not be paying for the damage caused by historic emissions from industrialised economies. Competition to attract green investment is meanwhile heating up, and the private sector is put off by the higher cost of capital in developing countries. Shifting from “billions to trillions” needs innovation. It means leveraging multilateral development banks better, de-risking private sector investments, being more creative about debt reduction, and building new revenue streams.The MDB system, which holds around $1.8tn in assets, will be central. MDBs should accelerate efforts to use their balance sheets more efficiently — which some studies suggest can raise investment capacity by up to $1tn more, without undermining their triple-A credit ratings. Encouraging wealthier shareholders to inject even modest extra capital could also boost lending capacity, as would issuing hybrid capital to institutional investors. MDBs could also consider assembling multi-asset portfolios from their projects into which institutional asset managers can invest. The mobilisation of private capital by MDBs remains relatively small. Part of this reflects the real and perceived risk of investing in low-income countries. The cost of capital of a typical utility-scale solar project can be three times higher in key emerging economies than in advanced nations, the International Energy Agency says. MDBs need to play a greater role in de-risking projects. This may involve taking subordinated tranche positions in deals, being ready to accept first-loss slices, or providing foreign exchange guarantees for financing in volatile currencies.MDBs and governments should build up a suite of financial products to match the funding problem they are trying to solve. For example, supporting research and development into potential climate solutions may involve tools such as grant competitions and long-term contracts, which pre-commit funding for innovative but expensive projects. Reducing low-income nations’ debt load will also free up funds for sustainable development. International co-ordination among creditors, including China, remains key. There are creative options to be explored, including “debt-for-climate” swaps, which provide debt relief to fund green initiatives. The World Bank’s plan to allow countries hit by disasters to pause repayments on loans is also sensible.Unearthing new revenue streams will be important too. A global carbon tax would, for example, both provide incentives to curb emissions and funds to redistribute to low-income countries, but consensus is elusive.The penny is dropping on the scale of money and effort needed to meet the climate challenge. Seriousness must be matched by smartness if the planet is to get there before it is too late. More

Today’s top storiesRussian warlord Yevgeny Prigozhin is still facing prosecution for his armed insurrection at the weekend, despite the Kremlin promising that charges against him would be dropped, according to Russia’s main state news service. Moscow also released images of defence minister Sergei Shoigu visiting troops, the first time he has been pictured in public since Prigozhin’s move against the country’s military leadership. Prigozhin today denied trying to overthrow the government, saying he had wanted to object to a decision to disband his militia as well as demonstrate the weakness of Russia’s domestic defences.HSBC is to move its global HQ from Canary Wharf to central London in a blow to the business district that highlights the trend of companies cutting office space as they adapt to homeworking. The Lex column says the bank could be the canary in the coal mine for the Docklands area.One of the first mid-stage human trials of a drug designed by artificial intelligence has begun. Insilico Medicine’s therapy aims to treat the chronic lung disease idiopathic pulmonary fibrosis. For up-to-the-minute news updates, visit our live blogGood evening.The weekend’s failed putsch in Russia may have ended abruptly, but it has still highlighted deep problems within Vladimir Putin’s regime, raising the spectre of state collapse and putting new urgency into debates about sanctions and disinvestment from the west.As well as western contingency planning for potential chaos in Russia, the issue of how to make Russia pay for its destruction in Ukraine is also likely to be a hot topic at a meeting of EU foreign ministers today. Brussels wants to raid Russian assets to pay for reconstruction but Germany has warned that any hasty move could bring legal or financial risks. One of the objections to the plan is that it could set a precedent for others to follow, such as Poland’s reparation claims against Berlin for damage during the second world war.The EU and its allies immobilised hundreds of billions of euros of Russian central bank assets after the invasion but have backed away from the idea of confiscating them outright, instead looking for a way to harvest some of the proceeds for Kyiv. Brussels agreed an 11th package of sanctions last week, including unprecedented new powers to punish countries suspected of helping Moscow evade existing restrictions. Overall support for Ukraine’s reconstruction also remains solid.It is still unclear what effect the weekend’s events will have on investors and markets. European stocks slipped this morning, led by a sell-off in defence shares as hopes rose of an early end to the war in Ukraine, while oil prices were unsteady as analysts tried to price in the impact on energy supplies.As FT Alphaville reports, some argue there will be no big energy dislocation given that few investors remain exposed to Russia and there is no reason to expect any short-term problems, although in the longer term any major domestic civil conflict poses risks to oil infrastructure.“There’s a possibility of supply disruption any time you get a serious geopolitical event in a major oil supplier,” said one asset manager. “It opens up a can of worms and we’re going to have to see how that plays out.” As JPMorgan argues, the investor mood depends on whether you believe in a status quo scenario or one where the war is moving to a conclusion. In the latter case, stocks in the Czech Republic, Hungary and Poland would be likely to rise at the prospect of work from Ukraine’s reconstruction. Existing exposure to Russia among big European companies is mostly among the banks.Domestic unrest also bodes ill for Russia’s domestic economy: the weekend’s events sparked a surge in demand for cash at bank branches as well as long queues at grocery stores and petrol stations.Need to know: UK and Europe economyChief economics commentator Martin Wolf urged the Bank of England to stick with its plan to get inflation back to its 2 per cent target and avoid a repeat of the mistakes of the 1970s.The Bundesbank may need a bailout to cover losses from the European Central Bank’s bond-buying scheme, potentially affecting the ECB’s plans for similar programmes in the future. Greek prime minister Kyriakos Mitsotakis pledged to continue to steer the country away from economic turmoil during his second term in office after securing a landslide election victory at the weekend.Need to know: global economyFT columnist and former Bank of England policymaker Andy Haldane welcomed the revival of global manufacturing after a long period of decline, underpinned by green technologies, remilitarisation and the race to reshore or onshore supply chains. “It may be just the impetus the world needs to break free of its economic and environmental torpor,” he writes.Governments need to cut spending or lift taxes to help central banks restrain inflation and minimise the risks of a financial crisis, according to the Bank for International Settlements, the central bankers’ bank. BIS also warned that in the long term, policymakers should avoid trying to solve all of society’s problems with economic stimulus.Two centre-left candidates will battle for Guatemala’s presidency in an August runoff after an election tainted by the exclusion of four candidates and high levels of spoilt ballots.Vietnam, one of Asia’s fastest-growing economies last year, is experiencing a slowdown as demand wanes for its exports. The rise in petrol and consumer prices has put pressure on manufacturing input and trade costs and depressed buyers’ appetites.

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Need to know: businessCornish Lithium, one of the few British groups aiming to produce the metal essential for electric car batteries, said it could go bust without a £10mn cash injection. The UK produces none of its own lithium, with most of the world’s supply coming from Australia and Chile. Oil and gas majors are stepping up their efforts to produce the metal. Big western banks have spent months lobbying to work on Syngenta’s planned $9bn initial public offering — one of China’s biggest-ever stock market listings — but could yet be locked out as geopolitical tensions with the US continue to rise.Primark owner Associated British Foods raised its profit forecast after strong demand for summer clothes and higher prices following similar news from rival UK retailer Next.A South Korean “master” of chips has been accused of sharing Samsung secrets with China, underlining how the country is torn between geopolitical rivals. Several Italian fashion houses are facing succession dilemmas as their visionary founders start to leave the scene. A Big Read has all the drama.UK motor insurers had their worst underwriting performance in a decade last year as surging claims and other costs far exceeded premiums, with further losses expected in 2023.The world of workA new survey suggests most workers are “quiet quitting”, putting in a minimum effort while feeling disconnected from their work. Lost productivity owing to low employee engagement has been estimated at $8.8tn or 9.9 per cent of global gross domestic product.

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To celebrate Pride month, business leaders talk to the Financial Times about their experiences of coming out at work. The battle over rights for gig economy workers in Europe is about to intensify, writes EU correspondent Javier Espinoza. Companies such as Uber and Deliveroo are pushing back, arguing that workers actually want more freedom instead of more rights. Employees need better support at work to help cope with personal problems in this difficult post-pandemic era, especially with the onslaught of issues that come with late middle age, writes Miranda Green.Some good newsThe first minke whales in more than a decade have been spotted off Cardigan Bay in Wales. The Sea Watch Foundation said it was a significant event, highlighting the importance of this vital marine environment. “Minke whales are an indicator species, meaning that their presence indicates that the ecosystem is healthy,” it said.A minke whale in Cardigan Bay, Wales © K Lohrengel/Sea Watch Foundation More