Thursday 27 February 2020 ★ 13
© The Financial Times Limited 2020 Week 9After years of false dawns amid efforts
to boost banking competition in the
UK, analysts say that the latest push
by US lenders to attack the British
market, which has come despite the
current unappealing state of the
sector, could have a serious impact.
AnalysisiPAGE 14Wall St plans fresh assault
on British banking sectorDANIEL THOMAS— LONDONNMC Healthhas fired its chief execu-
tive, suspended a member of its
treasury team and granted “extended
sick leave” to its chief financial officer
after finding discrepancies in its bank
statements.The announcements last night came
after Louis Freeh, a former FBI director,
presented the interim findings of his
independent review into the belea-
gueredFTSE100healthcareprovider.
NMC has been hit by a series of
embarrassing disclosures since short
seller Muddy Waters raised “serious
doubts” over the group’s finances in
December, highlighting reported asset
values,cash,profitsanddebt.Sincethen,questionshavearisenover
theownershiplevelsofitsbiggestshare-
holdersandthefinancingarrangements
behindthesepositions.
NMC said the board had removed
Prasanth Manghat as chief with imme-
diate effect and asked Michael Davis,
chief operating officer, to assume the
position on an interim basis. The com-
pany said it did not expect to be in a
position to publish its full-year earnings
beforetheendofApril.
The review had identified a supply
chain financing arrangement appar-
ently used by its founder and a leading
shareholder that was guaranteed by
NMC but had not been approved by the
board or disclosed to the market in line
withlistingrules.NMC said the review committee had
identified, and was now investigating,
potential discrepancies and inconsist-
encies in its cash position. The review
was seeking to determine how material
thesewere,itsaid.
The company said it believed the
review had been obstructed in its inves-
tigation and had suspended a member
of its treasury team until after its com-
pletion. The board is exploring whether
other individuals have been involved.
Prashanth Shenoy, the company’s CFO,
hasbeengrantedextendedsickleave.
Carson Block, founder of Muddy
Waters, said yesterday: “At this point,
the company’s announcements speak
for themselves and seem to be even
moredamningthanourinitialreport.”NMC fires chief after review reveals
fresh questions over bank statements
Companies
21stCentury Fox......................................
ASM International..................................
Alcon..............................................................
Alibaba...........................................................
Allianz.............................................................
ArcelorMittal................................................
Asos.................................................................
BMW..................................................................
BP.....................................................................
Bank of America...................................9,
Barclays...................................................14,
Baron Philippe de Rothschild..........
Barratt Developments.........................
Berkeley.......................................................
BioMérieux..................................................
BlackRock.....................................................
Blue Origin...................................................
Boeing............................................................
Breitling........................................................
Brevan Howard........................................
CME................................................................
Canon.............................................................
Carnival.........................................................
DR Horton..................................................
Daimler............................................................
Danone...........................................................
Denver Gardner........................................
Disney.......................................................12,
Eskom...............................................................
Expedia..........................................................
Fiat Chrysler.................................................
Fossil..............................................................
GFG Alliance.................................................
Goldman Sachs...................................13,
Greensill Bank.............................................
Greensill Capital.........................................
Handelsbanken.........................................
Hennes & Mauritz...................................
Huayi Brothers Media..........................
ISS....................................................................
Ikea...................................................................
InfraBuild........................................................
J Sainsbury.................................................
JPMorgan..........................................13,14,
KB Home.....................................................
Keystone Consolidated..........................
Klarna..............................................................
Kraft Heinz..................................................
LVMH.............................................................
Liberty House.............................................
Lightspeed Capital.................................
Live Nation Entertainment................
Lloyds Banking Group.........................
Lucasfilm.......................................................
MTA..................................................................
Marvel.............................................................
Metro Bank.................................................Mizuho...........................................................
Mizuho Financial Group......................
Monzo............................................................
Morgan Stanley........................................
Moët Hennessy........................................
NMC Health................................................
Naio Technologies..................................
Nestlé..............................................................
Netflix.............................................................
Nomura..........................................................
Norwegian Cruise Line.......................
Novartis........................................................
Oyo..................................................................
Penfolds ......................................................
Permira..........................................................
Peugeot .........................................................
Pimco..............................................................
Pixar................................................................
Platfarm.........................................................
PrivatBank.....................................................
PulteGroup.................................................
Renault............................................................
Restaurant Group..................................
Revolut.....................................................14,
Rio Tinto...................................................9,
Royal Bank of Scotland.................14,
Royal Caribbean......................................
Royal Dutch Shell...................................SSP..................................................................
SVM Asset Management....................
Sabre..............................................................
Saga Robotics............................................
Salesforce.....................................................
Samsung ......................................................
Sequoia Capital...................................14,
Serco...............................................................
SoftBank.......................................................
South African Airways...........................
SpaceX...........................................................
Sprint..............................................................
Superdry.......................................................
Symington Family Estates.................
T-Mobile US...............................................
Taylor Wimpey........................................
Tesco Bank.................................................
Toll Brothers.............................................
Total................................................................
Treasury Wine Estates........................
Tui...................................................................
Tule Technology......................................
Uber Eats.....................................................
Vino Farms..................................................
Virgin Galactic .........................................
Virgin Money.............................................
Visa..................................................................
Volkswagen..................................................
Weir Group...........................................12,Wolf Blass....................................................
Wyelands Bank...........................................
Yorkshire Building Society................
Sectors
Aerospace & Defence...........................
Automobiles.................................................
Banks.........................................2,13,14,14,
Basic Resources.......................................
Construction..............................................
Energy............................................................
Financials...................................14,15,19,
Food & Beverage...............................12,
Healthcare..............................................4,
Industrials................................................9,
Media..............................................................
Mining............................................................
Oil & Gas...........................................12,13,
Retail........................................................14,
Support Services....................................
Technology................................11,14,16,
Travel & Leisure....................12,13,15,
People
Agarwal, Ritesh........................................
Block, Keith.................................................
Branson, Richard......................................
Byrne, Chris................................................
Chapek, Bob..........................................12,
Cook, Tim.....................................................Diess, Herbert.............................................
Dimon, Jamie.............................................
Droege, Jason............................................
Fink, Larry...................................................
Frumkin, Dan.............................................
Greensill, Lex...............................................
Gupta, Sanjeev............................................
Hambro, Jay.................................................
Iger, Bob..................................................12,
Jacques, Jean-Sébastien...............14,
Jeff Bezos, ..................................................
Jobs, Steve..................................................
Kapito, Rob.................................................
Kern, Georges...........................................
Krumphanzl, Petr......................................
Looney, Bernard......................................
Madgett, Oli................................................
Mayer, Kevin.........................................12,
McLean, Colin............................................
Murdoch, Rupert......................................
Musk, Elon...................................................
Novick, Barbara........................................
Setterdahl, Michael..................................
Siemiatkowski, Sebastian....................
Soames, Rupert........................................
Son, Masayoshi.........................................
Storm, Chris................................................
Whitesides, George................................arepractisingrotatinginoneortwo-day
stints, with an assumption that could
switch up to the two-week rotation sys-
temanytimenow.”
The measures have been taken amid
criticism of Tokyo’s handling of the
virus outbreak, and a plea by Shinzo
Abe, prime minister, for companies to
letstaffworkremotelyifpossible.
But that edict has come up against a
corporate culture that has only reluc-
tantly embraced the concept of remote
working. Many Japanese companies do
nothavethesystemstoallowit.
Editorial Commentpage 10
Lexpage 12
Fears for Tokyo Olympicspage 14operations with three groupings. One
group will work in the main office, one
from home and the other in the com-
pany’s “business continuity planning”
sites — emergency facilities that, in
most cases, were envisaged as coming
into use in the aftermath of a Tokyo
earthquake. Most of those sites are in
the outskirts of the city, though some
aremuchfurtherawayinOsaka.
Allthebanksdeclinedtocomment.
A senior staff member at one global
financial group said: “There is a lot of
planning going on around these split
operations, on the basis that we may
havetohavesomethinglikethisinplace
for perhaps months. At the moment weness into an A and B team, according to
peoplefamiliarwithplans.
One will work from home for two
weeks while the other will continue to
work in the main Tokyo office during
thattime.Attheendofthatperiod,they
will switch but under strict conditions
thatmembersoftheAandBteamshave
no physical contact. The two-week
period is based on the presumed incu-
bationperiodofthevirus.
Another large US bank intends to
make each switch at the end of one-
month stints, according to people famil-
iarwiththeplans.
Other banks, including Morgan
Stanley and BofA, are moving to splitLEO LEWIS— TOKYO
The Tokyo offices of the biggest Wall
Street banks are planning to split staff
into groups and keep them segregated
for weeks at a time as the financial sec-
tor braces itself for a significant out-
breakofthecoronavirusinJapan.
Although the banks, includingBank
of America,Morgan Stanley andGold-
man Sachs, are devising slightly differ-
ent “split operation” strategies, the
broad aim is constant: to confine any
intra-company cases that do strike a
department.
Efforts atJPMorganinvolve dividing
staff across different parts of the busi-
US banks to isolate teams in Tokyo
3 Virus contagion fears rise 3 Wall St lenders plan to split staff 3 Japan response criticised
VirginGalacticsharesfellbacktowards
earthyesterdayasRichardBranson’s
visiontoputpeopleintospacecontinues
toburnthroughcash,reportinganet
lossof$73mforthelastquarterof2019.
Sharesinthebillionaire’sspace
tourismprojecthaverisen200percent
sinceitwaslistedontheNewYorkStock
ExchangeinOctober,butdropped3per
centyesterdaymorningafterreportinga
netlossfor2019of$210m.
VirginGalactic,ElonMusk’sSpaceX
and JeffBezos’sBlueOrigin,allhopeto
cashinonawaveofenthusiasmfor
spaceexploration.Virginrecruiteda
heavyweightaerospacebackerin
Boeing,whichhasinvested$20minthe
company,andhassignedupmorethan
600peopleforits$250,000spaceflights,
includingpopstarJustinBieberand
actorLeonardoDiCaprio.
“Wearecontinuingtobuildonour
strongmomentumasweenterthemost
excitingchapterofourstorytodateand
prepareforcommerciallaunch,”said
GeorgeWhitesides,chiefexecutive.
Thecompany’s$73mlossinthe
Decemberquarterexceededthe$46m
deficitinthesameperiodlastyear.An
adjustedebitdalossof$55mwasworse
thanthe$45.7mforecastbyanalysts.
Antonia Cundy and Matthew RoccoGravity’s pull
Virgin Galactic falls
after $210m losses
‘We may
have tohave
somethinglike this
in place forperhaps
months’Companies / Sectors / People
UncorkedVineyards raise a toast to the
tech genie improving yields— ANALYSIS, PAGE 16
Point of no returnSoftBank’s lenders are
in too deep to back out now— INSIDE ASIA, PAGE 14
David
Sheppard
Tail
Risk
As coronavirus fears rattle global markets, the oil industry
is facing up to an uncomfortable truth: things are likely to
getworsebeforetheygetbetter.
FGE, an energy consultancy, has forecast that global
demand growth for oil will be, essentially, zero in 2020,
failingtoriseforthefirsttimesincethefinancialcrisis.
The projection, while more bearish than some rivals,
takesaccountofthefactthattheviraloutbreakhasnowhit
severalnationsbeyondChina.
Significant numbers of cases in Iran, South Korea and
Italy have increased the chances that the virus will spread
further, constraining oil demand as countries move to
isolateaffectedareasandrestricttravel.
The oil industry has good reason to be worried. At the
height of the quarantines in China, oil demand in the
country was down at least 25 per cent from where it would
normally have been. That alone was enough to send oil
pricesintoatailspin,knockingthemmorethan20percent
belowtheirhighsinearlyJanuarytowards$50abarrel.
Few expect western coun-
tries to impose the draconian
measures seen in China, with
entire cities locked down.
The effects on the wider
public and economy might
betoomuchtobear.
But even if you extrapolate
just a third of the demand hit
seen in China on to US oil
consumption, it still implies
ashort-termlossofalmost2mbarrelsaday,oralmost2per
centofglobalconsumption.ForEurope,itisnothardtosee
demand falling another 1.5m b/d should Covid-19 become
a truly global pandemic. That is even before getting to the
knock-on effects on the wider economy, which would
reducefueldemandfurther.
So if you expect the coronavirus to keep spreading, then
FGE’s forecast of near-zero demand growth globally starts
to look a little conservative, even if consumption rebounds
inthesecondhalfoftheyear.
The forecast certainly rings more true than those of oth-
ers who say the coronavirus will shave just a few hundred
thousand barrels of demand a day. Some have made only
modesttweakstopredictionsatthestartoftheyearthatoil
consumptionwouldexpandbymorethan1mb/din2020.
For Opec and its allies there are few good solutions.
Hopes that Saudi Arabia and Russia would announce addi-
tional production cuts of about 600,000 b/d when they
meetnextweeknowappeartobetoolittle,toolate.
Oil prices have started to tumble again, even though
China’s own demand would appear to be slowly stabilising,
or at least not getting much worse. Opec’s best bet may be
to hold on and pray that the worst predictions for the out-
break’sspreaddonotmaterialise.
But it would be a brave trader who bets against prices
fallingfurther.[email protected]If the US suffered
a third of the oil
hit in China itwould imply a
short-term loss of2m barrels a day
FEBRUARY 27 2020 Section:2Front Time: 26/2/2020 - 19: 09 User: nick.miller Page Name: 2FRONT USA, Part,Page,Edition: ASI, 13, 1