Risk Channel delivers the latest, most relevant and useful business intelligence to key decision makers and influencers, each weekday morning.

Firms offering payment services in the UK have been given until March 2025 to meet new 'operational resilience' standards. These standards aim to ensure that firms can effectively respond to disruptions such as cyber attacks, IT glitches, or extreme weather events. The Bank of England (BoE) has introduced these standards to minimise disruptions that can lock customers out of their accounts or prevent them from making payments. The standards include "impact tolerances," which determine the maximum acceptable duration of a disruption before it causes serious harm to customers or financial stability. Sasha Mills, the BoE's Executive Director for Financial Market Infrastructure, emphasized the importance of confidence in financial market infrastructure services and called for greater engagement between financial market infrastructure (FMI) firms, participants, and the wider market. Mills also highlighted the need for FMIs to improve their testing approaches and develop robust remediation plans.

 

Reuters

A series of FT reports considers how banks moving into the cloud prompts forecasts of security risk, and why cyber risk managers need to fight AI with AI, among other issues.

 

Financial Times

International companies are being urged to leave Xinjiang amid concerns over forced labour. The US government accuses Chinese officials of committing crimes against humanity against Uyghurs and other Muslim minorities in the region. Thea Lee, deputy undersecretary for International Affairs at the US Labor Department, stated that Beijing has made it "essentially illegal" to conduct independent human rights audits in Xinjiang. Lee emphasized that if it is impossible to conduct audits, companies should not operate in such an atmosphere. China's government denies allegations of abuses. German chemicals giant BASF and Volkswagen have already taken steps to address forced labour concerns in Xinjiang. Lee highlighted the challenges of monitoring the labour transfer program and the lack of access to workplaces to assess workers' origins.

 

Reuters

Dutch shipping companies accused of profiting from the exploitation of North Korean workers will not face prosecution, according to the Court of Appeal in the Netherlands. La Strada International, a human rights NGO, had filed a complaint against several Dutch companies that had ships built at a Polish shipyard where North Koreans were exploited. The court ruled that there was insufficient evidence to establish a direct link between the violations and the accused companies. The ruling has been described as a "huge disappointment" by La Strada International. Lawyer Barbara van Straaten stated that the outcome shows that current legislation does not provide sufficient protection for victims of these crimes.

 

NL Times

Global banking regulators have proposed stricter standards for banks to assess risks from customers in order to avoid mismanagement. The Basel Committee, consisting of banking regulators from the G20 economies and beyond, has called for improved management of counterparty credit risks (CCR) presented by clients. The committee highlighted weaknesses in due diligence, credit risk mitigation practices, risk measurement practices, and governance and senior management oversight of CCR. The proposed guidance emphasizes comprehensive due diligence during the onboarding process of new customers and on an ongoing basis. Banks are urged to use robust contractual terms, risk-sensitive margining, and a wide range of metrics to mitigate risks. The proposal comes in response to recent cases of significant mismanagement of CCR, including the collapse of Archegos Capital Management and episodes of volatility in commodities and the UK government bond market. The revised draft guidance is open for public consultation until August.

 

Reuters

Former Treasury committee chairman Lord Tyrie has defended the Financial Conduct Authority's proposal to "name and shame" companies under investigation, stating that disclosure is in the public interest. The regulator has faced criticism from Chancellor Jeremy Hunt, who believes the plan is inconsistent with the authority's duty to promote growth. Financial services experts consider the Chancellor's comments to be unprecedented, because the FCA is supposed to be independent from the Treasury. Nathan Willmott, a partner at law firm Ashurst, said: “This may signal a real fracture in relations between the FCA and the Treasury.” The FCA's proposal has also received objections from over a dozen financial services lobbying groups, who argue that it could negatively impact valuations and destabilise financial markets. The FCA aims to change its approach to inquiries to speed up investigations and increase transparency, but concerns remain about publishing the names of companies that are ultimately found innocent.

 

Bloomberg

The Times

The insurance industry has warned that the rise of 'shallowfakes' is contributing to increased insurance costs. Cases of using apps to manipulate real images, videos, and documents have risen by 300% in 2023, according to insurer LV. The Association of British Insurers reported a 33% increase in comprehensive car insurance prices compared to the previous year. However, the ABI also noted that insurers have absorbed significant cost rises to keep prices relatively stable.

 

The Times

The House of Lords communication and digital committee has criticised the government's approach to protecting copyright, stating that it is inadequate and deteriorating. Peers have accused the government of not acting quickly enough to tackle the unauthorised use of information by technology firms to power their large language models (LLMs). This inaction is seen as a de facto endorsement of such firms and reflects poorly on the government's commitment to British businesses and the equal application of the law, peers said. The committee's recommendations include resolving the issue of copyright, which has become a hotly contested subject in the development of generative AI.

 

The Times

Tesco has filed a claim against Scania in the Competition Appeal Tribunal (CAT) over alleged monetary losses suffered in the UK. The claim is for damages and other monetary sums for losses Tesco claimed to have suffered as a result of alleged infringements of competition law relating to unlawful and anti-competitive behaviour regarding trucks. Tesco is relying on the infringement decision by the European Commission in 2017, which found that Scania colluded with other truck manufacturers on pricing and passing on the costs of new technologies.

 

City AM

The government has said it will bring forward proposals to ensure that malicious complaints lodged with social services and other agencies can be deleted, the Times reports. The move was driven in the wake of a harassment campaign against Labour MP Stella Creasy. Vexatious complaints about Ms Creasy were made to Waltham Forest Council, which subsequently said it was barred by law from deleting the complaint from her record even after her harasser was convicted. The government, which had resisted Ms Creasy's call for an amendment to the Victims Bill, has now said it will address the issue.

 

The Times

London's stock exchange is set to lose another high-profile company after shareholders in Paddy Power owner Flutter voted in favour of moving its primary listing to New York. The move is expected to become effective by the end of May. Flutter is the latest company to abandon the London Stock Exchange in favour of the US, following in the footsteps of Tui, CRH, Indivior, and potentially Ocado. Flutter, which owns Sky Bet PokerStars and FanDuel, is projected to generate almost 40% of its revenues from the US market this year.

 

The Guardian

Barclays has reportedly started cutting hundreds of roles, including at its investment bank, as the group looks to cut costs and improve its share price. The cuts will impact several hundred employees in Barclays' global markets, investment banking, and research divisions. The news comes as Barclays implements its biggest restructuring since the financial crisis, designed to save £2bn in costs and return £10bn to shareholders by 2026.

 

Reuters

City AM

HSBC shareholders in Hong Kong are calling for the bank to hire an Asian CEO in the wake of Noel Quinn’s surprise resignation. Hong Kong is HSBC’s largest market and shareholders there have been pushing for the bank to re-domicile its headquarters to Asia, split off an Asia-focussed unit and give more prominence to Asian talent.

 

The Daily Telegraph

Unions say that around 37 trading-related jobs are at stake as Exxon Mobil plans to move its trading floor from Brussels to London. Protesters gathered outside Exxon's Brussels office to voice their concerns over the job cuts. The move is part of the company's expansion in trading, but employees are dissatisfied with the terms being offered. The new contracts would tie half of a trader's pay to undisclosed performance criteria. The majority of affected traders do not want to relocate to London due to family concerns and unsatisfactory moving conditions. Exxon is trying to avoid triggering official negotiations with employees by favouring informal bilateral conversations. Over the past three years, more than 300 employees have left their jobs in Brussels, with trading-floor departures accounting for a further 6%.

 

Bloomberg

The eurozone's "big four" economies - France, Spain, Germany, and Italy - have shown signs of recovery with a stronger than expected growth of 0.3% in the first quarter of 2024. This marks the best growth performance for the eurozone since Q3 2022. Lower energy prices, falling inflation, rising real wages, and the prospect of interest rate cuts have contributed to the boost in activity. While Germany and France grew by 0.2%, Italy and Spain posted growth of 0.3% and 0.7%, respectively. Analysts believe that the lower inflation rate opens the door for interest rate cuts in the coming months.

 

The Times

The Guardian

Shares in Aston Martin fell 14% on Wednesday after the company revealed losses almost doubled in the first three months of the year. Overall sales fell 10% to £268m, fuelled by a 63% drop in the number of SUVs sold to dealerships. The poor performance comes a month after Lawrence Stroll, the carmaker’s executive chairman, criticised the government’s net zero ban on petrol cars, warning that attempts to force the sale of more electric cars were a mistake as regulations were moving faster than consumer demand.  

 

The Daily Telegraph

Shareholders in Smith & Nephew have revolted over plans to increase pay for its United States-based executive directors closer to American levels. More than 43% of voting shareholders opposed the FTSE 100 medical equipment company's resolution on a new remuneration policy. Despite the vote, Texas-based Deepak Nath will receive up to $11.8m next year if all targets are met, a 28.9% increase on his current maximum package of $9.2m. The rebellion is part of a larger trend, with other companies also facing investor rebellions at their annual meetings.

 

Financial Times

The Times

Daily Mail

The Guardian

Austria has called for fresh efforts to regulate the use of artificial intelligence (AI) in weapons systems, as concerns grow over the development of autonomous weapons. Austrian Foreign Minister Alexander Schallenberg has urged the international community to agree on rules and norms to ensure human control over AI weapons. He says the use of AI in weapons systems poses ethical and legal challenges that need to be addressed urgently. "We cannot let this moment pass without taking action. Now is the time to agree on international rules and norms to ensure human control," Austrian Foreign Minister Alexander Schallenberg told a Vienna meeting of non-governmental and international organisations as well as envoys from 143 countries.

 

Reuters