The Times - UK (2021-11-10)

the times | Wednesday November 10 2021 2GM 33

Business

Callum Jones
US Business Correspondent

General Electric is to be split into three
public companies, dismantling Amer-
ica’s best-known conglomerate and
what was once the world’s most valu-
able company.
The industrial group yesterday
hailed a “defining moment” in its 129-
year history: an attempt to simplify its
once-sprawling empire, reduce debt
and revive a struggling share price.
Shares in GE hit their highest levels
in more than three years after it set out
plans to make separate businesses of its
aviation, healthcare and power divi-
sions.
Spawned from Thomas Edison’s
lightbulb and electrical business in the
late 19th century, GE is based in Boston,
Massachusetts, and employs 172,000
people worldwide. It has been under
pressure for some time after over-
expanding and making several bad bets
before the financial crisis.
GE’s stock market valuation — of
$120 billion today — declined to such
an extent that in 2018 it was removed
from the benchmark Dow Jones indus-
trial average, a symbolic blow for a busi-
ness that had been a founding member
of the share index in 1896. Yesterday its
shares jumped as much as 6.6 per cent
before easing to close up $2.88, or
2.7 per cent, at $111.30 in New York.
GE has spent years trying to dis-
entangle its web of interests, signifi-
cantly scaling back or ending alto-
gether its transportation, home

commoditiescommodities currenciescurrencies

$

1.450

1.400

1.350

1.300

$

£/$

$1.3550 (-0.0015)

90

85

80

75

Dow Jones

36,319.98 (-112.24)

38,000

36,000

34,000

32,000

1.200

1.175

1.150

1.125

FTSE 100

7,274.04 (-26.36)

Oct 11 19 27 Nov 4

7,500

7,000

6,500

6,000

£/€

€1.1694 (-0.0009) ¤

world markets (Change on the day)

Gold

$1,829.03 (+5.61) $

2,000

1,800

1,600

1,400

Brent crude (6pm)

$84.43 (+1.10)

Oct 11 19 27 Nov 4 Oct 11 19 27 Nov 4 Oct 11 19 27 Nov 4 Oct 11 19 27 Nov 4 Oct 11 19 27 Nov 4

Regulators will be required to promote
the international competitiveness of
the UK financial services sector under
plans by the Treasury for a post-Brexit
overhaul of the industry.
The move to boost the sector comes
as the business department separately
is considering its response to a consul-
tation on new audit and corporate gov-

Promote UK business, says Treasury, as audit reforms face dilution

Louisa Clarence-Smith
Katherine Griffiths

ernance, which it hopes to publish

before Christmas.

Officials are preparing to re-

commend that ministers water down a

controversial proposal that would see

company directors face fines and bans

for inaccurate financial statements.

A Whitehall source said: “We need to

strike the right balance between

strengthening the corporate govern-

ance regime, which is in dire need of re-

form, and ensuring that any burdens on

business are minimised asd we recover

from the pandemic.”

Ministers want the Financial Con-

duct Authority and Prudential Regula-

tion Authority to focus more on en-

abling the growth and competitiveness

of the economy and financial services

firms, on top of their existing responsi-

bilities. The new requirements would

be “secondary objectives” after the

FCA’s existing operational remit of con-

sumer protection, market integrity and

competition in financial markets, and

come under the PRA’s general objec-

tive: promoting the soundness of banks,

building societies, insurers and invest-

ment firms.

The plans, part of the second consul-

tation on the Treasury’s financial ser-

vices future regulatory framework re-

view, come after a previous competitive-

ness objective for the Financial Services

Authority, the FCA’s predecessor, was

criticised as having contributed to its

“light-touch” approach to regulation in

the run-up to the financial crisis.

The government said the new re-

quirements respected the need for high

regulatory standards”. The bodies will

report on their performance annually.

The plans are a victory for TheCity-

UK, the financial lobby group, but the

Association of British Insurers said that

“unless regulators have economic

growth as a primary objective, we are

unconvinced anything will change”.

US giant was once world’s most valuable company

End of an

era as GE

broken up

appliances, oil and gas and financial

services operations. It unveiled annual

revenue of $79.62 billion last year, less

than half the $180 billion-plus it made

in 2008.

Under the leadership of Jack Welch,

chief executive between 1981 and 2001,

GE became the world’s largest

company, praised for its managerial

efficiency and raising revenue nearly

fivefold. Now it is dividing up what

remains of its businesses.

The company will spin off its

healthcare unit, which makes hospital

equipment, in early 2023 and expects to

retain a stake of 19.9 per cent. It is

combining its power division with its

renewable energy business, which

makes products including wind tur-

bines, and plans to spin off this in early

2024. This will leave GE to focus on
      aviation as one of the world’s leading
      makers of aircraft engines.
      Larry Culp, chairman and chief exec-
      utive, said the split “is a defining mo-
      ment for GE. We are ready. Our teams
      have done exceptional work strength-
      ening our financial position and oper-
      ating performance. And we’re not fin-
      ished: we remain focused on continuing
      to reduce debt, improve performance
      and strategically deploy capital to drive
      sustainable, profitable growth.”
      As three independently run busi-
      nesses, GE said that it would be better
      placed to “deliver long-term growth
      and create value”. The future brands
      and their names have yet to be deter-
      mined. The spin-offs would deepen the
      Continued on page 36, column 2

TOLGA AKMEN/AFP/GETTY IMAGES

Grenfell tax threat for materials firms

Louisa Clarence-Smith

Michael Gove has indicated that he will

go after big building materials compa-

nies whose products were used on

Grenfell Tower to help to fund repairs

to thousands of unsafe buildings

around the country.

The communities secretary seemed

to take aim at Kingspan, Saint-Gobain

and Arconic as he told MPs on the

housing select committee yesterday

that leaseholders should not have to

foot the bill to fix construction flaws.

When asked why the government

should not fund all remediation costs

associated with new regulations it has

introduced since the Grenfell fire in

London in 2017, which killed 72 people,

Gove said: “Developers and construc-

tion product manufacturers, if they say

that they are squeaky clean, are wrong.”

He added: “If I were defending the

construction products industry, I

would say that it’s not that a product is

intrinsically unsafe, it’s how you use it.

Nevertheless, what the inquiry has

uncovered is tests of the safety of a

product in particular circumstances

being manipulated, it would appear, in

order to evade responsibility.”

The Grenfell inquiry was told that

Kingspan, the €18 billion Irish construc-

tion company whose combustible insu-

lation was used on Grenfell, had used

fire test data from an out-of-date pro-

duct to market combustible insulation

as being safe for high-rise buildings.

Celotex, an insulation producer that

is part of Saint-Gobain, the €32 billion

French materials group, whose flam-

mable product also was used on Gren-

fell, was accused by a former employee

of being “dishonest” by “overengineer-

ing” a cladding fire safety test so that its

RS5000 insulation product would pass.

Gove also appeared to take aim at Ar-

conic, the American maker of flamma-

ble cladding panels used on Grenfell.

He said: “One company... is hiding

behind the law... to avoid answering

questions.” Arconic has sought to use a

French law to prevent employees living

outside the UK from providing oral

evidence. The company denies wrong-

doing and has insisted that it has co-op-

erated with the inquiry.

The government plans to tax resi-

dential developers to claw back £2 bil-

lion to fund remediation work. How-

ever, construction materials firms have

so far evaded a similar financial penalty.

Kingspan said its product was used

on Grenfell without its knowledge.

Saint-Gobain declined to comment.

Celotex has apologised for “unaccept-

able conduct on the part of a number of

former employees”.

Alistair Osborne, page 35

Michael Gove says the companies that made the tower’s cladding are as responsible for the disastrous fire as developers