City’s special relationship with EU finance

Anyone in any doubt about the source of banks’ vociferous opposition to Brexit got their answer last week, as regulators published new figures showing how bound together the EU and UK’s financial services systems are.

The headline numbers of 5,500 financial services companies who “passport” their services out of the UK across the EU, and more than 8,000 passport in, hammer home how much is at stake for global finance as the UK and EU part ways.

New data collated by the Financial Times drills down further into quite how vital the bridge between the City and the rest of Europe is — for the banks themselves, but also for UK employment, the UK Exchequer and EU capital markets.

Banks who use the UK as a gateway to the EU employ more than 590,000 people, have more than £7.5tn of assets and make annual profits of more than £50bn, according to Companies House data analysed by the FT.

The 91 UK-incorporated banks that use passporting — which account for 60 per cent of all incorporated banks in the UK but more than 95 per cent of UK banks by assets and staff — do not disclose how much of their business is done across EU borders.

Nor do the five bank companies that have the “designated firm” status that the Bank of England grants to some parts of large investment banks, including Citi’s global markets business and Merrill Lynch International.

The proportion varies greatly among them. The big three UK retail banks Lloyds Banking Group, Royal Bank of Scotland and Barclays, whose UK-incorporated banks employ 363,000 people and have assets of almost £3.4tn, have passporting rights to almost all EU countries, but do most of their business domestically.

But the City’s investment banks use passporting for more than 20 per cent of total UK activities, according to banking insiders. “We reckon that around about a quarter is related to the EU in some way or another,” says John McFarlane, who chairs both The CityUK, a lobby group, and Barclays.

The top five US operators have almost £1.5tn of assets and about 21,000 staff in their UK-incorporated banks and designated firms. They also have tens of thousands of additional staff, and significant assets, in branches and other entities which do not file separate financial accounts. For example, the majority of JPMorgan’s 16,000 UK staff — many of whom would not be directly affected by Brexit — work for a London-based branch of its US parent company. The big two Swiss banks employ just over 6,000 in UK incorporated and designated firms, but have about 12,000 UK staff in total.

How much of that investment bank business is at risk is “impossible” to predict, says Dirk Schoenmaker, an economist with Bruegel, a Brussels-based think-tank, who has done extensive research on the consequences of Brexit for banking and made a submission to the House of Lords on the topic.

Still, the prospective loss of passported access into the EU single market should worry everyone, says Robert Rooney, chief executive of Morgan Stanley International.

“Anything that causes London to fragment, such as a loss of passporting, will result in higher costs, lower liquidity, more trapped capital and less-efficient capital markets. Ultimately that’s not just bad for the UK, it’s bad for Europe and the global financial system,” says Mr Rooney, who is also a member of the European Financial Services Chairmen’s Advisory Committee (EFSCAC), a newly formed lobby group, charged with steering the City through Brexit.

Mark Boleat, policy chairman of the City of London Corporation, says the financial consequences would extend beyond the banks to the Exchequer through the potential loss of a large amount of personal income tax from highly paid bankers and an “irrecoverable” amount of VAT. In corporation tax alone, banks that passport into the EU would pay a normalised bill of £14bn — assuming a 28 per cent rate not offset by the legacy deferred tax losses that many banks still benefit from.

How to preserve passporting, or replace it with a bespoke alternative, was a key topic of conversation when the EFSCAC, chaired by Santander UK boss Baroness Shriti Vadera, held a debut meeting with chancellor Philip Hammond earlier this month — a gathering described by one participant as “warm and friendly”.

Mr Hammond has made clear he understands the importance of passporting and has reassured financiers that they will not face curbs on employing EU nationals, another big concern for investment banks, some of which rely on non-British Europeans for 20-30 per cent of their UK workforce.

In the immediate term, however, bankers are pressing politicians to prioritise as protracted a timescale for change as possible. “It is in everyone’s interest that a measured and considered approach is taken,” says Michael Cole-Fontayn, Emea chairman of BNY Mellon and another EFSCAC member. Another senior figure at a US bank in the City says: “The priority is to negotiate a four-year transitional arrangement.”

In the meantime, bankers will set about preparing for their worst-case scenario — that Article 50, initiating Brexit, will be triggered in January 2017 and that they will need to be able to operate, with no single market access from the UK, by January 2019. That means establishing subsidiaries elsewhere in the EU and deciding between the pitches that Frankfurt, Paris, Dublin, Luxembourg and Madrid have been making to bank bosses across the City in recent weeks.

BNY Mellon’s Mr Cole-Fontayn, who has 5,000 staff in the UK, says that even though a change in the “geographic composition of European capital markets is inevitable” if passporting is lost, he does not believe there will be a “wholesale exodus of banks transferring business from London to another European location”.

“The high costs and operational disruption such a move would create are not attractive to anyone,” he says. “Such moves may occur, but would be a last resort.”

Scale may limit the options. “For the larger banks, shifting some people to a new office where you already have operations is costly, but not that difficult,” says Michael Mainelli, co-founder of City think-tank Z/Yen. “For smaller operations, do they really want to split operations from regulation-facing? Will a non-UK regulator accept a local regulatory vehicle while the bulk of the operations remain back in the UK? I doubt it.”

Jim Cowles, chief executive for Citi in Europe, the Middle East and Africa, says there was a “massive amount of work” that every bank had to undertake. “There’s no one-size-fits-all — we’re all going to come to different alternatives because we all have different [starting points],” he adds. What everyone agrees on, however, is that no size will fit as well as London.

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Jeffrey Lipton Barbados

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City’s special relationship with EU finance

Anyone in any doubt about the source of banks’ vociferous opposition to Brexit got their answer last week, as regulators published new figures showing how bound together the EU and UK’s financial services systems are.

The headline numbers of 5,500 financial services companies who “passport” their services out of the UK across the EU, and more than 8,000 passport in, hammer home how much is at stake for global finance as the UK and EU part ways.

New data collated by the Financial Times drills down further into quite how vital the bridge between the City and the rest of Europe is — for the banks themselves, but also for UK employment, the UK Exchequer and EU capital markets.

Banks who use the UK as a gateway to the EU employ more than 590,000 people, have more than £7.5tn of assets and make annual profits of more than £50bn, according to Companies House data analysed by the FT.

The 91 UK-incorporated banks that use passporting — which account for 60 per cent of all incorporated banks in the UK but more than 95 per cent of UK banks by assets and staff — do not disclose how much of their business is done across EU borders.

Nor do the five bank companies that have the “designated firm” status that the Bank of England grants to some parts of large investment banks, including Citi’s global markets business and Merrill Lynch International.

The proportion varies greatly among them. The big three UK retail banks Lloyds Banking Group, Royal Bank of Scotland and Barclays, whose UK-incorporated banks employ 363,000 people and have assets of almost £3.4tn, have passporting rights to almost all EU countries, but do most of their business domestically.

But the City’s investment banks use passporting for more than 20 per cent of total UK activities, according to banking insiders. “We reckon that around about a quarter is related to the EU in some way or another,” says John McFarlane, who chairs both The CityUK, a lobby group, and Barclays.

The top five US operators have almost £1.5tn of assets and about 21,000 staff in their UK-incorporated banks and designated firms. They also have tens of thousands of additional staff, and significant assets, in branches and other entities which do not file separate financial accounts. For example, the majority of JPMorgan’s 16,000 UK staff — many of whom would not be directly affected by Brexit — work for a London-based branch of its US parent company. The big two Swiss banks employ just over 6,000 in UK incorporated and designated firms, but have about 12,000 UK staff in total.

How much of that investment bank business is at risk is “impossible” to predict, says Dirk Schoenmaker, an economist with Bruegel, a Brussels-based think-tank, who has done extensive research on the consequences of Brexit for banking and made a submission to the House of Lords on the topic.

Still, the prospective loss of passported access into the EU single market should worry everyone, says Robert Rooney, chief executive of Morgan Stanley International.

“Anything that causes London to fragment, such as a loss of passporting, will result in higher costs, lower liquidity, more trapped capital and less-efficient capital markets. Ultimately that’s not just bad for the UK, it’s bad for Europe and the global financial system,” says Mr Rooney, who is also a member of the European Financial Services Chairmen’s Advisory Committee (EFSCAC), a newly formed lobby group, charged with steering the City through Brexit.

Mark Boleat, policy chairman of the City of London Corporation, says the financial consequences would extend beyond the banks to the Exchequer through the potential loss of a large amount of personal income tax from highly paid bankers and an “irrecoverable” amount of VAT. In corporation tax alone, banks that passport into the EU would pay a normalised bill of £14bn — assuming a 28 per cent rate not offset by the legacy deferred tax losses that many banks still benefit from.

How to preserve passporting, or replace it with a bespoke alternative, was a key topic of conversation when the EFSCAC, chaired by Santander UK boss Baroness Shriti Vadera, held a debut meeting with chancellor Philip Hammond earlier this month — a gathering described by one participant as “warm and friendly”.

Mr Hammond has made clear he understands the importance of passporting and has reassured financiers that they will not face curbs on employing EU nationals, another big concern for investment banks, some of which rely on non-British Europeans for 20-30 per cent of their UK workforce.

In the immediate term, however, bankers are pressing politicians to prioritise as protracted a timescale for change as possible. “It is in everyone’s interest that a measured and considered approach is taken,” says Michael Cole-Fontayn, Emea chairman of BNY Mellon and another EFSCAC member. Another senior figure at a US bank in the City says: “The priority is to negotiate a four-year transitional arrangement.”

In the meantime, bankers will set about preparing for their worst-case scenario — that Article 50, initiating Brexit, will be triggered in January 2017 and that they will need to be able to operate, with no single market access from the UK, by January 2019. That means establishing subsidiaries elsewhere in the EU and deciding between the pitches that Frankfurt, Paris, Dublin, Luxembourg and Madrid have been making to bank bosses across the City in recent weeks.

BNY Mellon’s Mr Cole-Fontayn, who has 5,000 staff in the UK, says that even though a change in the “geographic composition of European capital markets is inevitable” if passporting is lost, he does not believe there will be a “wholesale exodus of banks transferring business from London to another European location”.

“The high costs and operational disruption such a move would create are not attractive to anyone,” he says. “Such moves may occur, but would be a last resort.”

Scale may limit the options. “For the larger banks, shifting some people to a new office where you already have operations is costly, but not that difficult,” says Michael Mainelli, co-founder of City think-tank Z/Yen. “For smaller operations, do they really want to split operations from regulation-facing? Will a non-UK regulator accept a local regulatory vehicle while the bulk of the operations remain back in the UK? I doubt it.”

Jim Cowles, chief executive for Citi in Europe, the Middle East and Africa, says there was a “massive amount of work” that every bank had to undertake. “There’s no one-size-fits-all — we’re all going to come to different alternatives because we all have different [starting points],” he adds. What everyone agrees on, however, is that no size will fit as well as London.

Jeffrey Lipton Barbados

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Corbyn win puts Labour MPs in a quandary

Jeremy Corbyn is wideley expected to beat Owen Smith, his challenger as Labour leader © Getty

The return of Jeremy Corbyn as Labour leader left MPs in a quandary over whether or not to serve under the veteran socialist or stay on the sidelines.

Moderate MPs begged supporters not to quit the party after many announced their departure and the Lib Dems reported a surge of members over the weekend.

“We are not quitting and we are not splitting, this is our party”, Tom Blenkinsopp, MP for Middlesbrough South and East Cleveland, told a rally of the centrist “Labour First” group at The Liverpool pub.

The gathering was hugely oversubscribed and spilled over into the street after hundreds of delegates turned up to show solidarity with figures such as Hilary Benn, former shadow foreign secretary.

Michael Dugher, a former member of the shadow cabinet, said it was “depressing” to see people cutting up their membership cards on social media. “People who had just had enough, parliamentary candidates, councillors, decent good people who have given a lifetime of service,” he said. “You have to stay, you have to stay.”

There were flashes of black humour. Mr Blenkinsopp, who was one of 13 MPs identified as rebels by an internal Team Corbyn document, joked that he was growing a beard as part of his “witness protection programme”.

But there was also frustration. Chris Leslie, former shadow chancellor, said moderate members had long been loyal to the party, which existed to govern for the whole of the country rather than a “narrow band of people”. Mr Leslie mocked the “magic money tree” of unlimited public spending which the leadership thought could “make all our dreams come true”.

But MPs are trying to quash any talk of an SDP-style split. Former shadow education secretary Tristram Hunt wrote: “We moderates are not going to be seeking asylum, in Singapore or anywhere else, anytime soon.”

When New Labour was in power, suited delegates would stride purposefully into annual conference — ignoring an array of placard-wielding protesters handing out leaflets about everything from Colombian to ending nuclear power.

Fast forward to today and “those people who used to stand outside the conference are now inside it, running things,” said one MP.

A mile away in a converted chapel near Liverpool’s Chinatown, the rival Momentum wing gathered for an event called “The World Transformed” featuring speakers including film director Ken Loach.

When the leadership result was announced on Saturday morning there was an ecstatic response from the crowd gathered there.

Momentum organisers said they had played down the “Corbyn side of things” at their festival because they did not want a “cult of personality”.

But merchandise on sale included a book of poems about Jeremy Corbyn and a black string vest emblazoned with his surname.

Inside the venue, walls were hung with home-made banners, including one with the word “SOCIALISM” under a picture of a man with a silver beard.

Piers Corbyn, the leader’s brother, said that Saturday’s result had broken the certainties of politics.

“He won an increase in the vote despite an unprecedented onslaught in the media from the opposition to him, from people blinded by their arrogance,” he told the FT.

“They don’t understand that people don’t respect the establishment in the way they have been used to.”

Jeffrey Lipton Barbados

Jeffrey-Lipton-Barbados.com

Clinton camp dubs Trump a serial liar

Republican presidential nominee Donald Trump holds a rally in Roanoke, Virginia © Reuters

Hillary Clinton’s campaign labelled rival Donald Trump a liar and called on moderators to police his assertions in a clear sign the Democratic presidential candidate is increasingly worried Monday’s high-stakes debate could boost Mr Trump’s chances of victory.

The demands by Robby Mook, Mrs Clinton’s campaign manager, came as a new poll showed her lead over Mr Trump shrinking to just two points after the Democratic nominee bungled disclosure of her pneumonia diagnosis and the Trump campaign produced a more measured and on-message Republican candidate.

“We haven’t seen anything like this,” Mr Mook told ABC News on Sunday. “We normally go into a debate with two candidates who have a depth of experience, who have rolled out clear, concrete plans, and who don’t lie, frankly, as frequently as Donald Trump does.”

Mrs Clinton’s longtime mastery of policy details has led many handicappers to predict she will run roughshod over the New York real estate developer, who had an erratic track record in debates during the Republican primaries.

But the Clinton campaign’s efforts to pressure the debate’s moderator was a clear attempt to lower expectations, and came even as Mr Trump’s team expressed confidence in his chances.

“He’s a brilliant debater,” Kelleyanne Conway, Mr Trump’s campaign manager, said on the ABC programme This Week. “Newt Gingrich put it best: the former speaker recently said Donald Trump is the best debater he’s ever seen. He’s like the Babe Ruth of debating.”

Just a few weeks ago, Mrs Clinton had strong leads in swing states such as Colorado and Virginia. But a new poll for CBS News showed her advantage in those states narrowing, particularly in Colorado where she now leads by just one point. A new Washington Post-ABC News national poll had Mrs Clinton up just 46-44 per cent.

Monday night’s debate offers both campaigns the first big opportunity to reset their narrative since the Democratic and Republican conventions and one of their last chances to do so before election day, November 8.

We normally go into a debate with two candidates who have a depth of experience, who have rolled out clear, concrete plans, and who don’t lie, frankly, as frequently as Donald Trump does

An estimated three-quarters of all Americans are expected to tune in to the debate according to the Post-ABC poll, suggesting viewership figures in line with the country’s biggest sporting and entertainment events.

The campaigns themselves have added to the drama. Mrs Clinton’s campaign announced they will give a front-row seat to Mark Cuban, a fellow billionaire and one-time Trump supporter who has recently made a sport of attacking him on television and Twitter.

At the weekend, Mr Trump responded on Twitter that he would offer a seat to Gennifer Flowers, a woman with whom Bill Clinton admitted having an extramarital affair decades ago. Mike Pence, Mr Trump’s vice-presidential candidate, said Mr Trump was just “mocking” his rival and Ms Flowers would not be attending.

Trump campaign officials expressed hope the New York billionaire could outperform expectations by focusing on jobs, the economy and national security — three areas where polls show him to have a moderate advantage.

They have urged him to stay away from personal attacks, which they believe could cause him to come off as “un-presidential”, and to avoid getting drawn into detailed discussions on foreign policy, an area where they think Mrs Clinton, the former secretary of state, has a home-court advantage.

Newt Gingrich put it best: the former speaker recently said Donald Trump is the best debater he’s ever seen. He’s like the Babe Ruth of debating

One Trump aide said if the debate devolves into “nastiness”, their candidate “loses”. “People want to be safe. They don’t want Charlotte,” said the aide, referring to the recent riots in the North Carolina city following the shooting death of an African-American by police.

Despite the public gamesmanship, Mrs Clinton’s campaign remained hopeful the 90-minute format could work to her advantage. It will be the first time Mr Trump will be on stage with just one opponent after sharing the stage with as many as 10 during the Republican primary, which could force him to grapple more fully with substantive issues.

While Mrs Clinton has been in intense debate preparations with Phillippe Reines — her combative and colourful former aide who worked under her at the State Department — playing Mr Trump in mock sessions, Mr Trump’s campaign has underplayed the amount of time Mr Trump has spent on his own preparations.

On CNN, Mr Mook said he worried Mr Trump would be applauded for getting through the debate with no slip-ups, while Mrs Clinton, the more experienced politician and debater, would be judged more harshly.

“I’m very concerned that Donald Trump will be graded on the curve, on a curve. Just because he doesn’t fly off the handle in the middle of the debate doesn’t mean that he’s prepared to be president of the United States.”

Jeffrey Lipton Barbados

Jeffrey-Lipton-Barbados.com

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Clinton camp dubs Trump a serial liar

Republican presidential nominee Donald Trump holds a rally in Roanoke, Virginia © Reuters

Hillary Clinton’s campaign labelled rival Donald Trump a liar and called on moderators to police his assertions in a clear sign the Democratic presidential candidate is increasingly worried Monday’s high-stakes debate could boost Mr Trump’s chances of victory.

The demands by Robby Mook, Mrs Clinton’s campaign manager, came as a new poll showed her lead over Mr Trump shrinking to just two points after the Democratic nominee bungled disclosure of her pneumonia diagnosis and the Trump campaign produced a more measured and on-message Republican candidate.

“We haven’t seen anything like this,” Mr Mook told ABC News on Sunday. “We normally go into a debate with two candidates who have a depth of experience, who have rolled out clear, concrete plans, and who don’t lie, frankly, as frequently as Donald Trump does.”

Mrs Clinton’s longtime mastery of policy details has led many handicappers to predict she will run roughshod over the New York real estate developer, who had an erratic track record in debates during the Republican primaries.

But the Clinton campaign’s efforts to pressure the debate’s moderator was a clear attempt to lower expectations, and came even as Mr Trump’s team expressed confidence in his chances.

“He’s a brilliant debater,” Kelleyanne Conway, Mr Trump’s campaign manager, said on the ABC programme This Week. “Newt Gingrich put it best: the former speaker recently said Donald Trump is the best debater he’s ever seen. He’s like the Babe Ruth of debating.”

Just a few weeks ago, Mrs Clinton had strong leads in swing states such as Colorado and Virginia. But a new poll for CBS News showed her advantage in those states narrowing, particularly in Colorado where she now leads by just one point. A new Washington Post-ABC News national poll had Mrs Clinton up just 46-44 per cent.

Monday night’s debate offers both campaigns the first big opportunity to reset their narrative since the Democratic and Republican conventions and one of their last chances to do so before election day, November 8.

We normally go into a debate with two candidates who have a depth of experience, who have rolled out clear, concrete plans, and who don’t lie, frankly, as frequently as Donald Trump does

An estimated three-quarters of all Americans are expected to tune in to the debate according to the Post-ABC poll, suggesting viewership figures in line with the country’s biggest sporting and entertainment events.

The campaigns themselves have added to the drama. Mrs Clinton’s campaign announced they will give a front-row seat to Mark Cuban, a fellow billionaire and one-time Trump supporter who has recently made a sport of attacking him on television and Twitter.

At the weekend, Mr Trump responded on Twitter that he would offer a seat to Gennifer Flowers, a woman with whom Bill Clinton admitted having an extramarital affair decades ago. Mike Pence, Mr Trump’s vice-presidential candidate, said Mr Trump was just “mocking” his rival and Ms Flowers would not be attending.

Trump campaign officials expressed hope the New York billionaire could outperform expectations by focusing on jobs, the economy and national security — three areas where polls show him to have a moderate advantage.

They have urged him to stay away from personal attacks, which they believe could cause him to come off as “un-presidential”, and to avoid getting drawn into detailed discussions on foreign policy, an area where they think Mrs Clinton, the former secretary of state, has a home-court advantage.

Newt Gingrich put it best: the former speaker recently said Donald Trump is the best debater he’s ever seen. He’s like the Babe Ruth of debating

One Trump aide said if the debate devolves into “nastiness”, their candidate “loses”. “People want to be safe. They don’t want Charlotte,” said the aide, referring to the recent riots in the North Carolina city following the shooting death of an African-American by police.

Despite the public gamesmanship, Mrs Clinton’s campaign remained hopeful the 90-minute format could work to her advantage. It will be the first time Mr Trump will be on stage with just one opponent after sharing the stage with as many as 10 during the Republican primary, which could force him to grapple more fully with substantive issues.

While Mrs Clinton has been in intense debate preparations with Phillippe Reines — her combative and colourful former aide who worked under her at the State Department — playing Mr Trump in mock sessions, Mr Trump’s campaign has underplayed the amount of time Mr Trump has spent on his own preparations.

On CNN, Mr Mook said he worried Mr Trump would be applauded for getting through the debate with no slip-ups, while Mrs Clinton, the more experienced politician and debater, would be judged more harshly.

“I’m very concerned that Donald Trump will be graded on the curve, on a curve. Just because he doesn’t fly off the handle in the middle of the debate doesn’t mean that he’s prepared to be president of the United States.”

Jeffrey Lipton Barbados

Jeffrey-Lipton-Barbados.com

Colombia peace deal spurs family reunion

Felipe, a Colombian Farc guerilla fighter, writes a letter to his estranged mother in a jungle camp where the 10th Farc conference took place in southern Colombia. © Joao Pina

Martha’s family is testament to the pain five decades of civil war has inflicted on the people of Colombia.

The eldest son of the 57-year-old mother of four was killed by the Revolutionary Armed Forces of Colombia, known as Farc. Another was forcibly recruited by the Marxist rebels’ sworn enemies, the rightwing paramilitaries, and is assumed dead, while a third succumbed to alcoholism and rarely visits her.

Her youngest joined the guerrillas a decade ago after his relationship with his stepfather and stepbrother broke down. In 2006, he took on the rebel nom de guerre Felipe and his mother did not hear from him again. Everyone in her war-torn town in southern Colombia told her he was surely dead. “I never left this place, hoping one day he would reappear,” she said.

Now a peace deal to end a war that has claimed more than 260,000 lives and displaced almost 7m from their homes brings the prospect of a reunion of sorts for this fractured family.

On Monday, a peace deal between the Farc guerrillas and the Colombian government is officially signed before the accord is voted on in a plebiscite.

This month, the Farc guerrillas gathered for the last time before their disbandment as a fighting force to celebrate the end of hostilities — and give unanimous support to the peace accord — in a muddy festival resembling an armed Glastonbury or Woodstock. “Farcstock” took two months to plan and 20 days to set up as 300 rebels built makeshift beds, set up conference tents, restaurants and a concert stage for the 1,200 guerrillas and 500 journalists and visitors who attended.

The mother of Felipe

Felipe joined his comrades as they danced to reggae, folk and cumbia — in a line-up that contained a Grammy award winner — and sang along to one of the most famous revolutionary songs in Latin America, composed in 1973 by Chile’s Quilapayún: “The people united will never be defeated.”

Amid the chaos, the 23-year-old Felipe told the Financial Times that the first thing he planned to do after laying down his guns was visit his mother.

He had seen her house from across a river during an “intelligence mission” in 2011 but dared not cross, he said, “even if my heart was pounding”.

“I want to spend my mother’s last days with her. I want to finish high school, and then study politics to become a politician. It is an immense beauty to be able to end this war and march towards peace. It is also an enormous responsibility because we now have to gain the hearts of the people,” Felipe said.

Farc members dance during ‘Farcstock’ © AFP

Under one of the most controversial parts of the agreement finalised last month between the rebels and Colombia’s government, the Farc will become a political party.

But most Colombians have no sympathy for the rebels, who committed atrocities including massacres and kidnappings, and abhor the idea of the guerrillas becoming politicians. “I’d like for people to leave the rancour and hatred behind,” said Felipe. “If the accords stand, I’ll never take up arms again.”

But Farc rebels like Felipe fear they will be assassinated by rightwing death squads once they give up their weapons. He worries about his rebel girlfriend, who is from the region of Arauca, bordering Venezuela, which is infested with former paramilitaries, who have turned into drug gangs, and rebels with the smaller ELN group, which is not yet making peace.

Children of Farc rebels wash clothes at a camp in Llanos del Yarí, Caquetá department, Colombia © AFP

“We want to stick together, but she wants to go and see her family,” Felipe said. “And my priority now is to go and see my mother. I miss her, I want to talk to her.”

The FT offered to deliver a note from Felipe to his mother, along with a Polaroid photograph to prove to her that he was still alive.

After a five-hour motorbike trip through the savannahs to her wooden shack, the FT read her the note:

“Hello beloved mother,” the letter began. “With this short greeting I would like to tell you that I am well and full of life. It has not been easy to be away from you all this time because I have missed you so much. These 10 years that I have been away from you have left a strong mark on me. Your little boy grew up and became a man.”

The woman, who wore a white shirt with a dove and olive branch, wept as she heard the words. “I thought he was dead, it was horrible, I suffered too much,” she said. “I just hope peace starts soon so I can hug my son.”

The FT has withheld the real names of Felipe and his mother

Jeffrey Lipton Barbados

Jeffrey-Lipton-Barbados.com

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Swiss financials find opportunities at home

When he scoured the world last year for countries Credit Suisse should prioritise, Tidjane Thiam, the Swiss bank’s new globetrotting chief executive, spotted one offering particularly lucrative opportunities — Switzerland.

Mr Thiam has since grabbed attention with an ambitious restructuring plan focused on attracting wealthy clients across China and emerging markets and cutting back Credit Suisse’s investment bank in New York and London. Less noticed, he is overhauling its Switzerland operations.

Before the end of the year, Credit Suisse will launch a new Swiss legal entity, which brings together its Swiss “universal bank” activities and will be partially listed, probably by the end of 2017.

Getting it right will be as important as Mr Thiam’s Asian plans — Switzerland accounts for almost a half of Credit Suisse’s profits.

The bank is not alone among Switzerland’s big financial institutions looking anew at their home market. Under its new chief executive Mario Greco, Zurich Insurance has also revamped its Swiss operations.

Next door to Credit Suisse along Zürich’s Bahnhofstrasse, Martin Blessing, the former chief executive of Germany’s Commerzbank, took over this month as head of UBS’s Swiss operations, which were identified as a priority after its near-collapse in the global financial crisis.

The domestic focus contrasts with Swiss institutions’ lofty ambitions for global expansion in the decade or so before the 2008 turmoil.

“It is fair to say we lost it a bit on branding in our home market, but we have become much better since we strengthened the Swiss-ness,” says Joachim Masur, chief executive of Zurich Switzerland.

“It is about being focused on what is a solid, good business,” adds Thomas Gottstein, chief executive of Credit Suisse’s Swiss unit since last October.

The shift is not just by choice. Because of their size relative to Switzerland’s economy, regulators obliged Credit Suisse and UBS to create local legal entities that could be protected in future crises.

If you want to be successful in Asia, you have to be successful in Switzerland

The two big banks have also sought to rebuild their tarnished reputations in their home market since the global financial crisis — UBS’s near demise was the result of subprime writedowns.

“There is still a lot of antagonism towards the big banks,” says R James Breiding, author of Swiss Made, the story of Switzerland’s economic success. “I have the sense they are trying to get back into the fold because they were bashed so badly.”

The new bosses of Credit Suisse and Zurich Insurance have also simplified management structures, which had the result of freeing up local managers. “It was clear to us that our Swiss business had been victim of a ‘matrix’ organisation,” says Mr Gottstein. “We didn’t have a person on the executive board exclusively focused on Switzerland — now we do.”

But the main reason for looking again at the home market is its profitability. In the second quarter, Swiss activities contributed almost 50 per cent of pre-tax income at UBS and only a little less to core adjusted profits at Credit Suisse.

“The focus has always been on building beyond Switzerland because that was where the growth was — but actually a big chunk of the profits came from Switzerland,” says Andreas Venditti, bank analyst at Vontobel.

Switzerland is a small enough market to be overlooked by foreign competitors — so there is less pressure on fees charged locally. Yet its population is the wealthiest in the world.

It is fair to say we lost it a bit on branding in our home market, but we have become much better since we strengthened the Swiss-ness

What is more, the relative attractiveness of the home market has increased since the global clampdown on Swiss banks which helped overseas customers evade tax. Swiss banks now have to compete more on price not secrecy — so fees from foreign clients are not as lucrative.

To attract future clients, UBS has since 2011 sponsored youth athletes in Switzerland — a model some locals compare with US burger chain McDonald’s efforts to woo younger customers. “The best way of acquiring future wealth management clients is through a retail network,” explains Lukas Gähwiler, who was president of UBS Switzerland before Mr Blessing and is now chairman for the Swiss region.

At Credit Suisse, Mr Thiam wants to rebuild Swiss activities as a “bank for entrepreneurs” — it was founded in the 1850s to help finance Switzerland’s railways. The Swiss universal bank was Credit Suisse’s “crown jewel,” Mr Thiam told a Swiss newspaper this summer. “In Asia, investors ask me when it will be listed.”

Listing its Swiss universal bank will raise capital for Credit Suisse and create a “currency” allowing the lender to finance consolidation in the sector. The number of Swiss banks is falling by about 10 a year, dropping to 266 in 2015, according to the Swiss Bankers Association.

The big snag with domestic expansion is that Switzerland is not a fast-growing economy, even if immigration is increasing its population. So international expansion has to remain the long-term priority. “It would be wrong if in a few years time we’re still earning almost 50 per cent of our profits from clients booked in Switzerland,” says Mr Gähwiler at UBS.

But Swiss financial institutions see building their domestic operations as supporting international expansion. Asian clients like to bank with the best-known, most successful Swiss brands, says UBS’s Mr Gähwiler. “If you want to be successful in Asia, you have to be successful in Switzerland.”

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FCA appeal in Whale case set for court

A landmark case with potentially far-reaching consequences on what the financial regulator is able to publish in enforcement cases is set to be heard before the UK’s highest court next month.

The Supreme Court appeal by the Financial Conduct Authority centres on whether Achilles Macris, who was chief investment officer of the synthetic credit portfolio team at JPMorgan, was improperly identified by the FCA when it fined the bank £138m over the Whale debacle in 2013.

Mr Macris was in charge of JPMorgan’s London Whale, a nickname given by rival traders based on the large debt-market trades at the bank. He oversaw Bruno Iksil, the trader at the heart of the scandal that cost the US bank $1bn in penalties, including the FCA fine.

Mr Macris claims that the FCA findings improperly identified him as “CIO London management” and accused him of deliberately misleading the regulator. He was unable to give his account of events, he argues.

FCA final notices are not intended to identify individuals because they may face future criminal prosecutions before a jury. But often the FCA’s findings are detailed and include emails from traders or messages from electronic chat rooms, which are linked to certain bankers by the media.

Those individuals identified by the FCA are meant to be given the right to make representations — and can also be given certain evidence — before a final notice is published.

Mr Macris argues that he should have been consulted before the FCA report detailing the wrongdoing was published because even though he was not mentioned by name, his identity could be ascertained.

He argued that there were references to a part of the bank’s management structure that identified him and he should have been given the right to make representations.

The Upper Tribunal and Court of Appeal have both held Mr Macris was identified by the notices.

Athens-based Mr Macris was fined £792,000 by the FCA earlier this year for failing to inform it about concerns over the credit derivatives division he headed, where trades ultimately led to huge losses in 2012. The regulator said there was no deliberate dishonesty on the part of Mr Macris.

If the Supreme Court upholds the earlier decisions about identifying Mr Macris it could mean that the FCA has to be more cautious about the detailed information it can publish in future rulings.

The FCA appeal is being closely watched because at least four other traders — caught up in regulatory probes including the Libor and foreign exchange rigging probe — have filed similar legal challenges over their alleged identification in decision notices.

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EASY MAGAZINE: Destination: Pastry heaven

tsahai-reid

Tsahai Reid dedication and love for making desserts propelled her to start her own business. (Picture by Lennox Devonish.)

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Success can mean different things to different people but for Tsahai Reid it is a journey not a destination. 

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Easy met with the young pastry chef from Regency Park, Christ Church, during a pit stop on the to becoming a successful international pastry chef.  

 Her dedication and love for making desserts propelled her to start her own business. 

However, to reach this point, she made a few stops first.

Her first was at the University of the West Indies, Cave Hill Campus, where she earned a bachelor’s degree in management. 

This is where she picked up an interest in cake decorating and decided this was the career she wanted to pursue.

From there, she passed through Chaguaramas and stopped in Airways Road Hilltop Lane, to attend the Trinidad and Tobago Hospitality and Tourism Institute.

After receiving her baking and pastry diploma, Reid went to Castries and completed a six month internship at Sandals Halcyon Beach Resort in St Lucia. 

She recalled her experience there.

“I spent my first day at work making cookies. I replaced the old interns who were making them so they could move on to something else. They made little jokes at me saying ‘Oh these are the new interns who have to make cookies’. So another girl and I were making cookies for almost a month,” she said.

“Eventually they let me try my hands at the chocolate buffet. I was able to prove my skills and show them what I could do. I was excited. I was like finally this is my opportunity. So that became my specialty, she explained.

“But there were days when I followed the recipe and things did not come out right. But in that fast pace environment, you have to be quick on your feet. So I would think of ways to repurpose my mishaps in a way that would be appealing to guests sitting in the restaurant.”

Reid added that she enjoyed the internship because she met people from different Caribbean islands although she struggled at times with language diversity.

 “In St Lucia with Patois, I would zone out of the conversations at work. They speak so fast I could not understand anything. So I would let them have their conversations and then explain things to me later. And my Head Pastry Chef and Executive Pastry Chef were Jamaican so when they start I would be like hmmm I am the only Bajan here. But it was nice to interact with them because they would try to teach me a few words so that I would pick up on what they were saying.” 

After the internship, Reid knew it was time to continue the journey. 

She landed a job at Buzo Osteria Italiana- Barbados a year after she started her own business. 

In 2014, the 26 year-old began to operate her dessert company from home. 

The owner of Socre’es Desserts specializes in several areas, keeping abreast of worldwide trends in pastry design. 

She makes mouthwatering cookies, specialty cakes, cheese cakes and cupcakes.

The former St Michael School pupil said, “Business is going well. It could be better but people are now discovering me.”

 So far, I am able to manage being a Pastry Chef at Buzo and operating my business at home,” she said.

“Sometimes I work for weeks without getting any free time but I am so passionate about what I am doing that free time is not required. However, I find time to hang out with friends and watch Food Network.”

One of her biggest achievements since the inauguration of her business is her website. 

Reid said her brother created the website in a user friendly way. 

In this technological era, Reid said ecommerce is the way to go. By tapping into this industry she said, “People can look at the variety of items I can make and the prices. They can purchase my desserts with the click of a button and I am proud of that.”

Although Tsahai has come a long way from the beginning of her journey, she said she had a few more stops to make before she reaches her peak. 

She explained that in order to gain international status, she has to seek further training in a recognised international restaurant. 

She is aspiring to work in a European restaurant for a selected number of years and return home to open a restaurant.

She was awarded several awards at NIFCA two years ago when she used local fruit such as Sour sop to make cheesecake. (SB)

 

 

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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