Good morning. Welcome to what could be another rollercoaster week for the banking sector. Frantic negotiations over the weekend saw two Swiss banking giants come together (more on that below) and last night six central banks, including the Bank of England, announced they would boost the flow of US dollars through the global financial system.
UBS rescues rival Credit Suisse
On Sunday Switzerland’s two largest banks – UBS and Credit Suisse - agreed to merge to avoid a repeat of the 2008 global banking crisis. UBS is buying its troubled rival for $3bn after a week of tumult which saw Credit Suisse’s share price nosedive to a record low amid concerns over its financial health. The Swiss central bank has also agreed to offer a $100bn liquidity line to the two banks as part of the deal which values Credit Suisse at less than 99% of its peak valuation in 2007. Scandals and mismanagement have plagued Credit Suisse for years with mounting losses. 167-year-old bank is considered a "systemically important financial institution" because of its deep ties to global financial markets and therefore is “too big too fail”.
John Lewis mulls ownership shake-up
Reports emerged over the weekend that the John Lewis Partnership, which is 100% owned by its staff, is considering diluting its partnership structure to raise up to £2bn in new investment. The partnership, which owns John Lewis department stores and Waitrose supermarkets, was put into a trust in 1950 by the founder’s son John Spedan Lewis. It’s the UK’s largest employee-owned business with around 74,000 staff, known as partners. Selling a stake would need approval from the partnership council, made up of around 60 staff. Last week the group announced it would cancel staff bonuses for the second time in three years and warned of fresh job cuts after what it described as “a very tough year” where “inflation hit us like a hurricane”.
SVB UK’s staff windfall
The UK staff of failed US bank Silicon Valley Bank will receive up to £20m in bonuses just days after it was bought by HSBC for £1 in a deal arranged by the Bank of England. Sky News reported that the payouts to the 650 staff were signed off by the new owners in a show of confidence in the business and to retain talent. In the US, the bank’s parent company, SVB Financial Group, has now filed for Chapter 11 bankruptcy protection buying it time to pay off creditors and making it easier to sell off its assets (but the bank itself, currently in the hands of the US regulators, isn’t part of the filing).
French retirement age change
A bill raising the retirement age from 62 to 64 for most French workers passed last week after President Macron used special constitutional powers to force it through the National Assembly without a vote. He's framed the controversial measure, which has sparked weeks of protests and strikes, as the best path to preserve pensions for an aging population. France’s pension age is already amongst the lowest in Europe with other developed economies raising the retirement age in recent years amid longer life expectancy. Italy, Germany and Spain have moved towards raising the official retirement age to 67, while in the UK it is currently 66.
Grounded: Passport Office workers are to strike for five weeks in an escalation of a dispute over jobs, pay and conditions.
Wage inflation: Aldi has announced its fourth pay rise in just over a year with shop workers to get a minimum of £11.40 an hour from July.
RIP: Jacqueline Gold, who led the high street lingerie chain Ann Summers, has died at the age of 62.
Walking out: Security guards at Heathrow Airport are to strike over Easter in a dispute over pay, with passengers warned they face "severe delays".
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Number Of The Day
How much the OECD predicts the world economy will grow by this year, up from an earlier forecast of 2.2%, as food and energy prices trend down, and China opens up.