Capital Markets Corporate

July 6, 2018

Our Weekly Newsletter

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Across Instinctif Partners’ Financial Services team, we are always keeping an eye on the key developments taking place across the sector to evaluate their impact on the many businesses we work with. Here we share our picks of the week’s most interesting news, and our expert views.

Not Quite Getting Pensions

Recent research has found that a huge gap has formed in pension understanding among millennials, with nearly half thinking they have a final salary pension scheme as opposed to a defined contribution scheme. Worryingly, retirement expectations among millennials are perhaps overly optimistic as a result – but can younger generations’ financial awareness be addressed before it’s too late? (From FT Adviser, 28 June 2018)

Dividends Too High For Comfort?

The continuing demand to pay dividends and make investments, even during a period of weak profitability, has forced Britain’s listed companies to increase borrowings, leading to record-high debt levels. However, corporate debt levels have been given approval from the Bank of England, who suggest they pose no immediate risk to commercial banks. (From The Times, 2 July 2018)

Another Mortgage Crisis May Loom

A decline in property transactions due to unaffordable house prices is potentially forcing mortgage lenders and borrowers to take greater risks and ease criteria to achieve lending targets. This risk hike comes after house purchase approvals fell 3.8% year-on-year in May, according to UK Finance. Is yet another mortgage crisis in the works? (From The Express, 1 July 2018)

Keeping A Close Eye On Business Ethics

A new rating agency for conduct risk is set to be launched globally, as the world’s banks struggle to avoid doing business with organised crime. A first batch of ratings will be published this month, focusing on the conduct of 500 financial groups in 16 emerging markets, including Saudi Arabia and Panama. The move highlights how regulators remain increasingly concerned with how unchecked practices foster money laundering. (From Financial Times, 2 July 2018)

Reaching ‘Peak Pensioner’

The pre-retirement generation is in danger of facing a pension’s crisis, as their wealth is increasingly exposed to the unpredictability of the stock market. This warning comes as pension income is beginning to drop, marking a ‘peak pensioner’ moment. Those retiring with defined contribution pensions will be subject to market fluctuations, eroding their security against inflation and placing an enormous amount of risk on their shoulders. (From The Telegraph, 1 July 2018)

A Worthy Backlash?

The Financial Conduct Authority (FCA) has come under fire this week for introducing changes to the listing requirements of sovereign-controlled companies. In a high stakes move worth £1.5 trillion, many have pointed the finger at the regulator accusing it of pursuing the change as part of a ‘charm offensive’ to attract Saudi Aramco to list on the London Stock Exchange, instead of choosing New York.

Fund manager groups and directors have been some of the most outspoken critics of the regulatory change, claiming it will lower corporate governance standards. However, some have welcomed the move with open arms. Bankers and other sell-side institutions have argued that it will improve information quality and timeliness for investors, encouraging more companies to go public.

For the undecided amongst you, here’s our selection of some of the recent reports on the topic to help you make up your mind:

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