No IPO? No M&A? No problem.
Read the original post: DFJ’s unusual exit of Polaris Wireless
All EE will say is an ‘isolated technical error’ is to blame
I bought a mobile phone for emergency use only from Orange, now EE, in 2011 and retained my old phone number. In January this year a message claimed the sim card was invalid. A new one was fitted, but the same problem occurred. I was told the phone was faulty and bought a new handset. Within days messages warned the sim card was invalid and simultaneously showed my credit as being £62.50 and 40p. Again the problem was fixed and again it recurred. Then, when my wife called my phone, it was answered by a stranger who said the number had been allocated to her when she bought a phone in February. After numerous complaints we were promised that I would be given a new number and my credit would be restored but two weeks on we are still waiting, I’ve received a call for the stranger and my credit is now 1p. JS, Ashreigny, Devon
EE blames an “isolated technical error” which left you “without service”. Quite how this allocated your number and, presumably, your credit to someone else, as well as invalidating four sim cards, it can’t explain. Nor does it clarify why it took media intervention to rescue you but it’s decided to give you £250 for the inconvenience.
If you need help email Anna Tims at your.problems@observer.co.uk or write to Your Problems, The Observer, Kings Place, 90 York Way, London N1 9GU. Include an address and phone number.
SEC identifies social media problem, but fails to propose adequate solution.
Read more: SEC’s new social media policy falls short
Category : Business
My elderly parents lodged a cheque from Canada last June but are still waiting for the funds to clear
I’m writing on behalf of my parents, both of whom are in their seventies. They are being caused serious problems by Santander’s handling of a cheque for 5,000 Canadian dollars (approx £3,000) from a family member in Canada, drawn on an account at the Bank of Nova Scotia. This was presented to their local branch of Santander in early June 2012. The funds were credited a few days later “subject to cheque negotiation”. My aunt was also sent a similar cheque into her UK bank account, which is not with Santander. At the end of September the funds were removed from my parents’ account without notice, leaving them unable to cover direct debits.
Since then, nothing has happened. My parents have been told several different versions of what went wrong (branch error, wrong currency, cheque not honoured, etc). But my aunt, who banks elsewhere, had no problem. Is there anything you can do to try to get my parents their money? GT, Edinburgh
Nearly nine months after depositing the cheque, Santander has now finally managed to credit the cash — £3,222 to your parents’ account.
Santander says the money was taken back from your parents because it had received notice that the “cheque was unpaid”, possibly indicating that your family member in Canada did not have enough funds to cover the amount.
Not only was this wrong, Santander failed to communicate with your parents. There then seemed to be a discrepancy between reference numbers and names. This may have been because there were two cheques for the same amount, one for your parents and one for your aunt. But, according to Santander, this led to your parents’ money being debited in error.
It may have been the Canadian bank’s fault but Santander, your parents’ only point of contact, failed to sort out the problem. Santander acknowledges this and, as well as crediting the value of the cheque, has sent £265 as a goodwill gesture plus a gift.
This week’s column is guest-written by Tony Levene. We welcome letters but cannot answer individually. Email us at consumer.champions@guardian.co.uk or write to Bachelor & Brignall, Money, the Guardian, 90 York Way, London N1 9GU. Please include a daytime phone number
Bank says that online and telephone banking, cash withdrawals and payments have been affected for majority of UK customers
Millions of Natwest customers were left unable to withdraw cash or make transactions on Wednesday, less than a year after IT problems left many unable to move money or pay bills for days.
The bank said that online and telephone banking, cash withdrawals and payments had been affected. It said it understood that a majority of UK customers had been affected. But no reason was given for the problems.
NatWest also confirmed the problem on its customer services Twitter account: “We are aware of the problems our customers are having and apologise, we will provide more information as soon as we have it.”
But the apology was met with scorn by hundreds of its customers, with many angry that the bank had suffered yet another system failure.
Chris Holmes, from Lancashire, tweeted: “@NatWest_Help is there a problem again?!!! Suddenly can’t use my debit card and all of your on line services and apps aren’t working.
“@NatWest_Help less than a year after the last fiasco – this just isn’t good enough.“
Simon Brittain, another unhappy customer, tweeted: “#natwest card declined in Indian restaurant, really embarrassing #shambles #notagain.”
“#natwest @natwest time to switch? Twice in two years seems careless.“
NatWest is owned by the Royal Bank of Scotland group. Last June “technical issues” led to delays to balances being updated and millions of customers having problems using their cards for three days.
RBS, NatWest and Ulster Bank had to extend opening hours at their branches to help customers who had been unable to pay bills, move money or whose salaries had not been paid.
The following month more than 700,000 customers were affected by a “human error” that resulted in some accounts being debited twice.
Venezuela’s recent devaluation has excited predictions of an economic collapse. Luckily, such wishful thinking is ill-informed
Venezuela’s recent devaluation has sparked quite a bit of discussion in the international press. The Venezuelan opposition has naturally framed it as desperate move to head off inevitable economic collapse.
The opposition argument, supported by most of the international media (which relies on opposition sources), goes like this: Venezuela had to devalue because the government has run out of money. But the devaluation is too little and too late, inflation will get out of control, there will be more devaluations and more money will leave the country and the government will go broke and collapse.
Opponents of the Venezuelan government are hoping for an “inflation-devaluation” spiral that will help bring down the government. In this scenario, the devaluation raises the costs of imports, fueling inflation; with higher prices, the currency is more overvalued in real terms, and another devaluation follows, and so on. As people lose confidence in the currency, more people exchange their domestic currency for dollars, building more pressure for devaluation and causing the country to run out of foreign exchange reserves – a balance of payments crisis.
Of course, to the extent that the opposition can convince people that this is actually happening, it can help the process unfold – just as rumors of insolvency can cause a bank run. In both Venezuela and Argentina, the media is mostly opposition, and so it is not surprising that these views get prominent coverage in both countries.
Let’s examine the argument. The first premise – that Venezuela had to devalue in order to get more domestic currency (the bolivar fuerte) for each dollar of oil revenue – has been the foundation of most news reporting. But this does not make much economic sense. When the government devalues the currency from 4.3B to 6.3B per dollar, what does it do? It credits itself with two additional bolivares for each dollar of oil revenue that it receives.
Of course, it could create the same amount of money, without devaluing; opponents would object, “but creating money increases inflation.”
But the government’s creation of two additional bolivares for each dollar received is also creating money, no different from creating money without the devaluation. The main difference is that, in addition to any inflationary impact of creating more money, the devaluation also adds to inflation by raising the price of imported goods.
Creating money, though, does not always add to inflation. The US Federal Reserve has created more than $2tn since 2008, and inflation has not significantly increased. But if the Venezuelan government just wanted to have more bolivares to spend, it would be less inflationary to just create the money without the devaluation.
Why devalue, then?
Devaluation has other effects. Although more expensive imports add to inflation, they also help domestic production that competes with imports. And, perhaps more importantly, devaluation makes dollars more expensive, and therefore increases the cost of capital flight. This helps the government keep more dollars in the country.
Not surprisingly, a lot of what passes for analysis in the press is based on wrong numbers and flawed logic. The award for wrong numbers this time goes to Moisés Naím, who writes in the Financial Times that “during Hugo Chávez’s presidency, the bolivar has been devalued by 992%.”
Fans of arithmetic will note immediately that this is impossible. The most that a currency could be devalued is 100%, at which point it would exchange for zero dollars. Apparently, a very wide range of exaggeration is permissible when writing about Venezuela, so long as it is negative.
But, for a number of reasons, inflation-devaluation spirals in Latin America are a thing of the past – and a devaluation every few years is a far cry from such a spiral. In fact, despite press reports that inflation would reach 60% after the January 2010 devaluation – which was larger than the latest one – core inflation did not even rise, and headline inflation rose only temporarily. Inflation then fell for more than two years, even as economic growth accelerated to 5.2% last year.
The amount of inflation that follows this devaluation will depend on what other measures that the government takes and how effectively they are implemented: price controls, the provision of dollars for importers (including food), and capital controls. But if the past few years are any indication, the government will do what it needs to do in order to keep inflation and shortages from getting out of hand.
As for Venezuela’s public debt, the government is a long way from having a problem of unsustainable debt. The IMF projects Venezuela’s gross public debt for 2012 at 51.3% of GDP (as compared to more than 90% for Europe). A better measure is the burden of the foreign part of this debt, which in 2012 was about 1% of GDP, or 4.1% of Venezuela’s export earnings.
There are a number of distortions and problems with Venezuela’s economy – including recurrent shortages – and some of them have to do with the management of the exchange rate system. But none of these problems presents a systemic threat to the economy, in the way that – for example – real estate bubbles in the US, UK, Spain and other countries did in 2006. Those were truly unsustainable imbalances that made an economic collapse inevitable.
Despite the wishful thinking that is over-represented in the media, Venezuela’s economy will most likely grow for many years to come, so long as the government continues to support growth and employment.
Frenchman Pascal Lamy says France’s ‘GPS is a little wonky’ and lambasts minister for industrial regeneration
The head of the World Trade Organisation has delivered a hard-hitting critique of France, saying the country has lost its bearings and needs profound reform to increase its competitiveness.
Pascal Lamy, a Frenchman, said his country needed to stop thinking it was “an island of temporary happiness in a world of catastrophes”.
“This is not a good approach. We cannot deduce from it that if France has problems it’s the world that must change.”
Lamy, a former European commissioner and supporter of the Socialist president, François Hollande, saved his harshest criticism for Arnaud Montebourg, the minister for industrial regeneration, whom he lambasted for blaming the Chinese for France’s economic woes.
“If there is an example of a GPS that has a few problems, in my opinion it’s him,” he said in an interview with French radio and television. “I don’t think he has the right figures in his head. When you look at the French economy the problem is not, as he says, competition from the Chinese. That’s wrong. They may be paid five times less than the French but they are five times less productive.
“France’s GPS is a little wonky. The world is hard and experiencing extremely rapid globalisation and there are those doing well. I think France has a lot of advantages but she doesn’t see them, doesn’t recognise them. We are world champions in pessimism.”
Last October Montebourg declared that the WTO’s “global free-market record is a disaster”.
In his riposte, Lamy, 65, who retires from his job as WTO director general at the end of August, told RMC Info and BRMTV: “France has an unemployment problem; the solution is greater growth, and the solution to greater growth is competitiveness.”
He dismissed rumours of a government job in the autumn as “exactly that, rumours”, and said he was not calling for greater austerity to reduce public spending but for “doing things differently”.
“There is no doubt France is doing less well than many other countries in terms of competitiveness,” he said.
“I don’t believe we need more austerity, we just have to do things differently; find a more efficient way of doing things that brings better results. It’s doable, but there has to be a vision, a desire to do them, and the problem is that the French don’t want to do them because they cannot see what it will bring them.”
On optimistic estimates, reforms might be complete at Hester’s bank before the next election. But no one will know if it will be even worth investing in until weeks before the poll
Roll up, roll up, who wants to buy a share in a loss-making bank that may need more capital and has yet to spin off two subsidiaries?
This opportunity may soon be yours, fellow citizen. Sir Philip Hampton, chairman of Royal Bank of Scotland, said on Thursday he hoped the government would be able to sell part of its 82% stake “as soon as possible” and that it would “be good if we could make that 2014″.
However, meeting that timetable would be going some. There is no iron rule that says RBS has to be a “normal” bank at the point of privatisation. But that has always been the expectation and it is adventurous to think that the goal could be achieved by, say, the autumn of next year. It feels about a year too soon.
Think of the long list of things that still have to happen at RBS. The final stage of restructuring the investment bank has to be undertaken, and more non-core assets have to be shed. Capital levels have to be increased in order to meet the various demands of the Basel and UK regulators – with the latter’s precise thresholds still unclear. The government has to agree to lift the block on dividend payments imposed via the “dividend access share” under the terms of the 2008 bailout. Under orders from the EU, 316 branches have to be sold, probably via flotation as Williams & Glyn’s. And, now that George Osborne is insisting more loudly that RBS be a “British-based bank,” 25% of US subsidiary Citizens has to be floated off.
Those last two actions are probably not essential ahead of privatisation – Williams & Glyn’s, after all, is only 2% of group assets – but the others are.
Negotiations with the government on the access share should be straightforward since both sides clearly want to deal and it’s just a question of price (RBS would have to pay £1bn-£2bn, think analysts). Capital levels at the bank, while still too low, are clearly improving. And chief executive Stephen Hester might complete the rest of financial restructuring within 18 months – after all, on the asset-shedding front, it’s been hard to fault his speed. So, making a few heroic assumptions, the checklist might be completed in 2014.
There’s one final problem. The unveiling of a credible dividend policy – essential to attract retail investors – surely implies that RBS has reached a point where there are some profits to distribute. The earliest RBS is likely to make a clean and meaningful profit is 2014, with the full-year numbers to be announced in February 2015. That, surely, would be the natural moment to start talking seriously about privatisation.
The problem for the government is that it would love to get in ahead of the general election in May 2015. It rather looks as if Thursday’s whetting of appetites is designed to make that politically-dictated timetable seem credible. It’s a risky game to play since a 2014 ambition could be blown off course by events – fresh flames in the eurozone debt crisis, some new banking scandal, and so on.
Common sense suggests the best time to sell shares in RBS would be when the UK economy – the real driver of the value of the bank – is showing some real growth. That is when the state is likely to gain the best return (or smallest loss) on the £45bn invested in RBS.
Osborne, if he wants to hurry things along, should concentrate on addressing Britain’s growth problem. Maybe that dangerous radical, Lord Lawson of Blaby, has him rattled with talk of full nationalisation of RBS.
The European parliament thinks it has fixed the problem of excessive bank bonuses. It hasn’t. It has underestimated banks’ ingenuity and determination to pay top staff life-changing sums.
Placing a cap on bonuses at one times salary (or two times if shareholders approve) will inevitably be met by increases in fixed pay. Indeed, that process is under way already as regulators have demanded that bonuses be paid partly in shares that have to be held for specified periods. The traders wanted to be “compensated” for this change and, by and large, they got their pay rises.
There is, it is true, some pressure in the other direction. Even in banks’ boardrooms, they’ve noticed that the cost of entry to the investment banking casino has gone up. Higher capital thresholds, and lower profits, have led to smaller bonus pools. In their quiet way, shareholders have also demanded a greater share of the spoils for themselves.
But how is the European parliament’s intervention meant to aid this process? It won’t. Instead, banks will introduce higher fixed salaries and convoluted pay schemes. In terms of making banks safer, this measure is most likely to be counter-productive. It’s too blunt.
Many feel their industry has been tarred with a problem caused by supermarkets’ sourcing practices
Once again, farmers face having to pick up the tab for a crisis not of their making. They say horsemeat in the food chain is a scandal tarnishing their industry – and they’re angry. “Farmers have been furious about what has happened,” said Peter Kendall, president of the National Farmers’ Union. “They have spent many years working to ensure the British supply chain is fully traceable from farm to pack and have upheld strong principles which are embodied in assurance schemes like Red Tractor. For me, this is fundamental for consumer confidence.”
Farming and food production are often overlooked as the UK’s biggest manufacturing sector, accounting for £18bn in exports in 2011, supporting 4m jobs and adding £90bn to the economy. British farmers like both to boast and to grumble that their standards of animal welfare are the highest in the world – with the costs that go with it.
But farmers do not know whether they will be required to pay for the testing and monitoring regimes that are to be brought in as a result of the scandal.
So when environment secretary, Owen Paterson, told the conference the scandal offered “a fantastic opportunity for British farming”, there were doubts as well as guarded support. Colin Smith from Staffordshire said: “This [scandal] highlights the underhand practices of some in the supply chain – but British produce is very traceable, and we should get support for that from the supermarkets.”
“I’m not sure this is an opportunity,” said Trevor Cligg from Dorset. “It’s been a long time coming – what the supermarkets are really saying is that they have problems with their sourcing, which they need to sort out.”
Tesco’s announcement that it would buy more British meat was greeted sceptically, though few were willing to speak out publicly against the supermarkets that are their biggest customers.
One senior figure in the food industry told the Guardian: “It’s all very well they’re saying they will buy more British products – the question is, at what price? If it’s below the cost of production, then it’s worth less than nothing.”
A farmer from north-east England, who would not be named, said: “I do not like supermarkets. I found Tesco’s attitude patronising – they’re just looking after themselves.”
Farmers in the UK already feel disadvantaged compared with their continental counterparts, because of the government’s embrace of reforms to the common agricultural policy. Paterson, like his predecessors, wants to move away from the old system of subsidies based on food production, which led to the notorious “wine lakes” and “butter mountains” of the 1980s. Instead, he wants a “decoupling” of subsidies from production for them to be tied instead to other services, such as improving the environment. The problem is that the proposed reforms are not accepted by all, leaving UK farmers at the mercy of the market while their competitors are insulated. A British dairy farmer receives on average €262 per hectare from the CAP – in the Netherlands, that is €500 and in Denmark €447.
Before the horsemeat problem, UK farming was already reeling from last year’s disastrous weather, with months of drought followed by one of the wettest summers on record. Profits for beef, dairy, pig and sheep farmers were down between 42% and 52%, according to the NFU, while yields on wheat were the worst since 1998.
The Royal Agricultural Benevolent Institution reports that it spent £250,000 more than usual last year, with two thirds of applications for help coming from working farmers. Normally, most requests come from retired, old, sick or disabled farmers.
For farmers, the horsemeat scandal could yet have the positive effects that Paterson claims, if people permanently change their shopping habits to buy British. But is that likely?
“People in this country forget after six weeks,” said Kevin Bowes, a Norfolk livestock farmer. “Then they will go back to normal and forget that they wanted to buy good British meat.” Meanwhile, farmers could still be bearing the cost.
Category : Stocks
Scooter Store has a big problem, but it’s not really a private ‘equity’ problem.
Read more: Sun Capital’s Scooter Store situation