The Times - UK (2022-06-11)

the times | Saturday June 11 2022 2GM 49

Business

the behaviour of comopanies, such as

governing the way in which a product is

sold or the information that is available

to customers.

Google has also been hit with an

investigation into its app store, Google

Play, mirroring a similar one already in

place for Apple. This will look at the

terms and conditions around listing

apps on its store, as well as its payment

system. At present, app developers have

to use Apple and Google’s own pay-

ment systems when selling to their cus-

tomers.

Apple said: “We respectfully disagree

with a number of conclusions reached

in the report, which discount our in-

vestments in innovation, privacy and

user performance.”

Google said: “Android phones offer

more choice than any other mobile

platform. Google Play has been the

launchpad for millions of apps, helping

developers create global businesses

that support a quarter of a million jobs

in the UK alone.”

militant tendencies

Three big British

lenders fall short

on plans to avoid

future bailouts

The Bank of England has declared that

Britain’s biggest lenders are no longer

“too big to fail”, despite finding short-

comings in crisis contingency plans

drawn up by HSBC, Lloyds Banking

Group and Standard Chartered.

Threadneedle Street said that its first

assessment of banks’ emergency prep-

arations for another financial crisis had

concluded that the country’s eight larg-

est lenders could all be allowed to fail

without the need for a taxpayer bailout.

It warned, however, that its work had

identified issues at HSBC, Lloyds and

Standard Chartered that may “compli-

cate unnecessarily” its ability to man-

age their collapse.

The trio have been told to address

these shortcomings and their progress

will be examined when the Bank carries

out its next assessment of lenders’ con-

tingency plans in 2024, with fur-

ther review every two years.

The central bank also

said that HSBC and

Standard Chartered

were among six len-

ders where it had

found less serious

“areas for further

enhancement” that

also would require im-

provements. The others

were Barclays, NatWest,

Virgin Money and Nation-

wide, the building society.

Santander UK was the only lender

where “no material issues” were found.

HSBC said its operations spanned 64

territories, across which it had shared

services, assets and technology, and

that some potential restructuring ac-

tions would require “complex” changes.

Lloyds said it had undertaken changes

to its ability to make liquidity projec-

tions that it believed “will work towards

addressing the BoE findings”. Standard

Chartered said that continuing “resolv-

ability work is a priority for the group”.

The findings are a milestone in regu-

lators’ efforts to overhaul the industry

after the 2007-08 financial crisis. The

credit crunch exposed crippling weak-

nesses in the banking system that

meant taxpayers were forced to pump

billions of pounds into some of the

country’s biggest lenders to recapitalise

them to avoid a meltdown.

NatWest, the former Royal Bank of

Scotland, is still dealing with the legacy

of its £45.5 billion state bailout and is

about 48 per cent-owned by taxpayers.

It took until 2017 for the government to

sell its last shares in Lloyds.

A series of reforms have been

brought in since then to avoid a repeat

of the bailouts, including rules forcing

lenders to legally separate, or ring-

fence, their high street businesses from

their riskier investment banking divi-

sions. Banks are also required to hold

much bigger capital buffers as a

cushion to absorb future shocks.

The Bank said yesterday that it would

be shareholders and debt investors, not

taxpayers, who would be “first

in line” to shoulder losses

and the costs of recapi-

talisations in the event

of a collapse. If a bank

did fail and entered

so-called resolution,

it would stay open as

normal, it said.

However, it said

that HSBC, Lloyds

and Standard Char-

tered had shortcomings

in their abilities to analyse

their liquidity requirements in a

crisis. The Bank said this could hinder a

resolution, during which it wants to en-

sure that a lender in trouble has the re-

sources to recapitalise “without expos-

ing public funds to loss”. HSBC and

Standard Chartered also fell short in

their restructuring planning.

Even so, Dave Ramsden, the deputy

governor for markets and banking, said

the assessments had shown “the UK

has overcome the problem of ‘too big to

fail’,” although he added: “Safely resolv-

ing a large bank will always be a com-

plex challenge so it’s important that

both we and the major banks continue

to prioritise work on this issue.”

Ben Martin Banking Editor

thing like inflation, that will drive the

coach and horses through the spending

review settlement made last October,

when nobody expected inflation to be

as high. Secondly, it might drive pay

expectations across the private sector

and drive higher inflation.”

Andrew Bailey, governor of the Bank

of England, asked workers to “think and

reflect” on whether to ask for pay rises

because they risk fuelling inflation. The

plea received short shrift from unions.

“We’re not taking lectures from well-

heeled prime ministers and the well-

heeled governor of the Bank of

England,” Smith said. “Frontline work-

ers should be emerging into a world

after the pandemic as heroes. Instead,

they’re emerging into an economic

calamity made in Downing Street.”

The planned national rail strike this

month would be the biggest since 1989.

The Rail, Maritime and Transport

workers’ union has accused Network

Rail of intending to cut at least 2,500

jobs as part of a £2 billion reduction in

spending on the network, and says that

staff at train companies have been sub-

ject to pay freezes, threats to jobs and

attacks on their terms and conditions.

Further strikes have been threatened

by workers at BT, where the Communi-

cation Workers Union rejected the tele-

coms group’s biggest pay rise in more

than 20 years, calling a proposed aver-

age 5 per cent pay increase for 58,000

employees a “bruising real-terms pay

cut” and “nothing short of an insult”.

British Airways’ check-in staff at

Heathrow are prepared to strike over

pay, while the Public and Commercial

Services Union has warned of potential

industrial action over government

plans to cut 91,000 civil service jobs.

Elsewhere, Unite has warned of the risk

of “letter and parcel delivery chaos” as

thousands of Royal Mail delivery

drivers are balloted for strike action

against plans to cut remove hundreds

of frontline delivery managers.

Frustrations are mounting among

businesses and organisations that will

be affected. Mark Bailey, co-founder of

Collaboration Network, a business

group that faces having to cancel a

members’ event in London at huge cost,

has little sympathy with the RMT.

“There is an industry which is not as in

demand as it was, but the union expects

the companies and ultimately us as cus-

tomers to pay an increased wage and

guarantee the jobs within an environ-

ment where the demand is shrinking

and it’s just not sustainable,” he said.

The CBI, Britain’s biggest business

lobby group, is calling for the govern-

ment to consider new curbs on strike

action. “Rail strikes are the last thing the

economy needs at such a critical time,”

a spokesman said. “A failure to keep

people moving and goods flowing will

hit every sector, so it’s right that all op-

tions to avert industrial action are con-

sidered.” It pointed out that other coun-

tries had minimum staffing require-

ments that must be maintained for

strike action to be legal, “so maybe that

could work in the UK, too. But right

now the top priority must be avoiding

any form of strike. That means both

sides getting back around the table.”

Sources: ONS, BEIS

Trade union membership

Annual pay growth

12m

10

8

6

4

2

0

8%

6

4

2

0

-2

1900

2005 2010 2015 2020

20 40 60 80 2000 20

return has reignited pay demands, with the shortage of labour also a key factor

Octopus Energy enters bidding for Bulb

Octopus Energy, Britain’s fourth big-

gest energy supplier, has made a late

entry in a race to buy Bulb, the col-

lapsed electricity and gas supplier.

Centrica, the owner of British Gas,

and Masdar, an Abu Dhabi-based

energy company, are also in talks with

the government as it tries to secure bids

ahead of a closing deadline on June 30,

according to the Financial Times.

Bulb, Britain’s seventh-biggest

household supplier collapsed in No-

vember with 1.6 million customers and

was placed into a government-backed

special administration regime. The

administrators, Teneo, were provided

with an initial £1.7 billion taxpayer loan.

Octopus was founded in 2016 and

now has 3.2 million customers operat-

ing in 13 countries covering the

generation and the retail markets. It

also licenses its technology to other

providers including Eon and EDF, the

state-backed energy group. A spokes-

man last night declined to comment on

the Bulb bid.

Ovo Energy is also considering a last-

minute offer after making a bid in

November, which it later withdrew,

although it is not part of the formal

process, which is being run by the

financial advisers Lazard.

While bigger rivals took on the cus-

tomers of about 30 smaller failed rivals,

Ofgem, the industry regulator, consid-

ered transfers would be too difficult to

carry out at Bulb due to its size.

The government wants to offload

Bulb as taxpayers have spent hundreds

of millions of pounds supporting the

failed company since its collapse. It has

set aside up to £2.2 billion to keep the

business running over the coming

months, making it the biggest state

bailout since Royal Bank of Scotland in

2008.

To sell the energy provider this sum-

mer, the government is expected to

offer bidders a clean balance sheet with

no debt as well as a generous financial

support settlement to secure a deal.

However, the government has not set

out how much money it would be pre-

pared to inject in the deal and is instead

waiting to see what the bidders offer.

Wild fluctuations in the price of gas,

which has dropped in recent weeks,

have made it harder to predict how

much support Bulb will need to con-

tinue as a going concern.

Ofgem has already given companies

taking over the customers of 30 smaller

failed suppliers £1.84 billion, with the

cost added on to household bills.

Robert Miller

engines, which stifled competition and

prevented any real difference between

them. Furthermore, it said that Apple

was unique in banning alternatives to

its own browser engine on its mobiles.

Andrea Coscelli, chief executive of

the watchdog, said: “Choice in this

space is severely limited and that has

real impacts: preventing innovation

and reducing competition from web

apps.”

The watchdog claimed that Apple

had blocked the emergence of cloud

gaming on its App Store because

gaming apps were an important source

of revenue and it was trying to prevent

customers from circumventing the

store.

The proposed market investigation

will look at the competition concerns

identified to date in both areas and will

decide what, if any, action is appro-

priate. The CMA has powers to change

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continued from page 47

Google and Apple under scrutiny