Financial Times Europe - 14 12 2020

2020·6.74 MB·English

WORLD BUSINESS NEWSPAPER
MONDAY 14 DECEMBER 2020 EUROPE
Social mediation Climate of change Mistletoe and whine
Push against Facebook marks a Cross-border efforts lift hopes of Zoom Christmas parties are not so
turning point meeting Paris goals bad after all
— RANA FOROOHAR, PAGE 21 — ANALYSIS, PAGE 19 — PILITA CLARK, PAGE 22
Virus surge
Briefing
Merkel takes
i EU banks set to restart dividends
tough action European regulators are finalising new rules that
will allow the region’s strongest banks to resume
dividend payments, within limits, after a break of
nine months because of the pandemic.
— PAGE 2
Germany will go into a strict national
lockdown on Wednesday, after Angela i EY unit warned of Wirecard ‘red flags’
Merkel warned of “exponential growth” An anti-fraud team at EY warned the company’s
in Covid-19 infections. team in charge of Wirecard’s audit that there were
Schools and most shops will close “red flag indicators” over the collapsed payments
until January 10, while companies have group’s accounting, documents show.
— PAGE 6
been encouraged to let staff work from
home. “There is an urgent need for i China vows to triple green power
action,” the German chancellor said China has pledged to almost
yesterday. triple its capacity to generate
Governments across Europe are mov- electricity from solar and wind,
ing to tighten restrictions, as cases rise as President Xi Jinping and
in the run-up to Christmas. Germany, other world leaders set out
which weathered the first wave of the emissions targets at a UN
pandemic better than most of its neigh- climate summit.
— PAGE 3
bours, recorded nearly 30,000 new
cases and almost 600 deaths on Friday. i Kidnap highlights Nigeria violence
Analysis page 2 The violent kidnap of scores of students in Nigerian
Thijs van Rens page 21 president Muhammadu Buhari’s home state at the
weekend has shone a spotlight on the violence that
Bernd von Jutrczenka/AFP
affects every region of the country.
— PAGE 4
EU and UK trade talks extended i Russians greet vaccine with suspicion
The Kremlin is facing an uphill battle convincing
enough of its 134m population to take its Sputnik V
coronavirus vaccine and stem the daily tide of more
than 26,000 new cases of infection.
— PAGE 2
but parties still split on key issues
i Fed poised to extend crisis bond-buying
The US Federal Reserve is this week widely
expected to issue new guidance that it will extend
the $120bn a month bond-buying scheme it
launched at the start of the pandemic.
— PAGE 4
3 Hopes rise of saving deal 3 ‘Level playing field’ remains sticking point 3 MPs on standby
i Commodities surf wave of optimism
Optimism over a coronavirus vaccine and an
economic recovery as a result next year have driven
George Parker — London “We have time on our side to ratify — issues — thought to refer to the so-called two sides’ companies, even as EU and price rises in commodity markets, with resurgent
Jim Brunsden and Sam Fleming we can go up until Christmas,” said one level playing field and fisheries — but UK rules in areas such as environmental energy markets at the forefront.
— PAGE 6
Brussels
senior British official. EU diplomats there was relief in London that the EU law potentially diverge in future.
Hopes were rising in London and Brus- confirmed that talks would not be position was shifting. Brussels has pushed the idea of a sys-
Datawatch
sels last night that a post-Brexit trade “wrapped up in a day or two” as the EU officials acknowledged that there tem that would allow either side to
deal can be rescued, but there were high-wire brinkmanship continued. had been progress in the talks, with one request consultations and ultimately
Plastic not fantastic
warnings that the EU and UK remained MPs have been put on notice to be describing “incremental progress on all Ursula von introduce tariffs if it was concerned its Coca-Cola had by
Pieces of plastic found in global
“far apart” on key issues and that talks ready in the week before Christmas to fronts”, although Mr Johnson warned der Leyen, companies were being put at a competi- far the largest
clean-ups from the following
could go down to the wire. vote in order to pass the necessary legis- that a no deal outcome was still “the European tive disadvantage. plastic footprint
companies (’000)
Boris Johnson, UK prime minister, lation to enact a deal, while the Euro- most likely” outcome. Commission The UK rejected previous iterations of 0 2 4 6 81012 this year, among
and Ursula von der Leyen, European pean parliament is also ready for an Michel Barnier, EU chief negotiator, president, said the idea as an affront to sovereignty, but Coca-Cola 13,834 branded
Commission president, agreed in a emergency sitting. will brief EU27 ambassadors and MEPs a phone call over the weekend modifications were Nestlé items found in 51
countries. Despite
“constructive” call yesterday to “go the The decision to continue with talks on the state of play this morning. Talks with prime discussed in a bid to address its con- Colgate-Palmolive
claims to be
extra mile” in search of deal, as both beyond yesterday’s “deadline” came as with David Frost, his UK counterpart, minister Boris cerns. The talks have covered issues Unilever
working hard to
sides reported progress in the talks. both sides explored ways of cracking the will continue in Brussels today. Johnson was such as a role for arbitration, and the cri- Pepsico
reduce plastic
But no deadline was set for the conclu- main sticking point: designing a system People briefed on the negotiations ‘constructive’ teria for establishing when there is eco- Procter & Gamble waste, companies
sion of negotiations, with UK officials to satisfy EU demands for fair business said that the two sides were inching for- nomic harm. Philip Morris continue to use
admitting that they could drag on until competition. ward in their discussions on how to “They wanted to set the bar far too Mondelez harmful single-use
Christmas. The UK’s Brexit transition Mr Johnson told broadcasters that design a mechanism that would pre- low,” said one British official. Sources: Statista; Break Free From Plastic, 2020 plastic packaging
period ends on January 1. both sides remained “far apart” on key serve a level playing field between the Flow of talent page 8
FBI tasked with delivering vaccine data
to drugs watchdog amid hacking fears
aim of stealing intellectual property or the first doses to all 50 states. The cold
Hannah Kuchler — New York
Donato Paolo Mancini — Rome wreaking havoc by disrupting it. The supply chain required to transport vac-
Hannah Murphy — San Francisco risks were underlined last week when cines has already been the target of
Kiran STACEY — WASHINGTON Pfizer and BioNTech said some of their cyber attacks, according to a report
The US drugs regulator has taken the documents had been exposed in a cyber earlier this month from IBM’s threat
AstraZeneca branches out unusual step of having Covid-19 vac- breach targeting the European Medi- intelligence task force.
with $39bn swoop on rival cine data physically delivered by FBI cines Agency, the EU drug regulator. Michael Farrell, co-executive director
agents, refusing to send it over the The first Covid-19 vaccines could be of the Institute for Information Security
Report i PAGE 6 internet for fear of a cyber attack. administered across the US as soon as & Privacy at Georgia Tech, said the
today, after millions of doses of the inoc- lengths to which the FDA would go to
Vaccine makers had instead sent sensi- ulation developed by Pfizer and protect unclassified vaccine data
tive documents to the Food and Drug BioNTech were shipped to hospitals showed the severity of the threats.
Austria €3.90 Malta €3.70
Bahrain Din1.8 Morocco Dh45 Administration on a USB stick handed over the weekend. The FDA gave the “There are many parties involved in the
Belgium €3.90 Netherlands €3.90
Bulgaria Lev7.50 Norway NKr40 to the FBI, people familiar with the mat- shot official authorisation on Saturday, supply chain for Covid-19 vaccine:
Croatia Kn29 Oman OR1.60
ter said. The FDA, which usually takes making the US the sixth nation to research, development, testing, distri-
Cyprus €3.70 Pakistan Rupee350
Czech Rep Kc105 Poland Zl 20 submissions electronically, had taken approve the innovative vaccine. bution, and medical providers doing
Denmark DKr38 Portugal €3.70
Egypt E£45 Qatar QR15 the additional precautions because of Moncef Slaoui, head of the White inoculations. They are all under attack.”
Finland €4.70 Romania Ron17
the sensitivity of documents relating to House vaccine task force, said yesterday The US and UK have previously
France €3.90 Russia €5.00
Germany €3.90 Serbia NewD420 the vaccines, the people said. he hoped that 100m Americans would accused state-sponsored hackers in
Gibraltar £2.90 Slovak Rep €3.70
Greece €3.70 Slovenia €3.70 Cyber security experts have warned be vaccinated by the end of March. China and Russia of targeting groups
Hungary Ft1200 Spain €3.70
that hackers are scrutinising the vaccine Super-cooled trucks and aeroplanes developing vaccines and treatments.
India Rup220 Sweden SKr39
Italy €3.70 Switzerland SFr6.20 development process with the possible crossed the country yesterday, carrying Kremlin faces vaccine suspicion page 2
Lithuania €4.30 Tunisia Din7.50
Luxembourg €3.90 Turkey TL19
North Macedonia Den220 UAE Dh20.00
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DECEMBER 14 2020 Section:FrontBack Time: 13/12/2020 - 18:59 User: andy.puttnam Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1, 1
2 ★ FINANCIAL TIMES Monday 14 December 2020
INTERNATIONAL
Dividends Medical aid
ECB set to unveil bank payout conditions Sweden’s
neighbours
offer help as
Shift to resumption by 117 banks in the eurozone, is planning to arrived in Europe. Since then, the sector ing executives have warned that the if they will be left with enough capital to
strongest lenders eyed announce the conditions on which it will has been lobbying hard for stronger blanket ban on dividends risks backfir- absorb predicted losses from the impact second wave
accept some lenders restarting their banks to be allowed to resume payouts ing by driving investors away from the of the pandemic.
within strict limits dividend payments after its meeting early next year. sector and reducing its ability to raise It is expected to set the limit for
worsens
tomorrow. The issue has divided European fresh capital. shareholder distributions below the
Three people briefed on the discus- financial regulators. Some have argued “I think they are looking at the “guardrails” unveiled by the Bank of
Martin Arnold — Frankfurt
sions said the ECB was preparing to pro- that the banking sector should continue banks as a privileged sector, when it is England last week to limit payouts to
Europe’s top financial regulators are pose stricter limits on banks’ renewed to conserve capital ahead of a potential clearly the opposite if you look at 25 per cent of a bank’s profits over the
putting the finishing touches to new dividend payments than those outlined surge in defaults that is likely when gov- the share prices,” said one bank chair- previous two years or 0.2 per cent of Richard Milne
recommendations allowing the region’s by the Bank of England, which lifted its ernments wind down their loan guaran- man. “I think it is ideological.” The Euro its risk-weighted assets — whichever is Nordic and Baltic Correspondent
strongest banks to restart dividend ban on shareholder distributions in the tees and other policies to shield the Stoxx index of banks has fallen 22 per the higher. Finland and Norway have offered med-
payments within strict limits, ending a sector last week. economy from the pandemic. cent this year, underperforming the Eurozone banks were likely to be lim- ical assistance to Sweden, as their
nine-month hiatus imposed due to the The ECB ordered eurozone banks However, banks entered the pan- wider market. ited to only distributing between 10 and neighbour faces an increasingly severe
pandemic. to stop all dividends and share demic with much higher levels of loss- The ECB’s supervisory board is 20 per cent of their profits, said one per- second wave of coronavirus that has
The European Central Bank’s super- buybacks to conserve €30bn of capital absorbing equity capital than in the expected to announce that banks can son briefed on the ECB’s discussions. stretched clinical staff and intensive
visory board, which oversees the biggest in March, shortly after the pandemic 2008 financial crisis, and senior bank- only resume dividend payments The ECB declined to comment. care capacity to the limit in some areas.
Sweden has yet to formally ask for out-
side help but authorities in Stockholm
Pandemic. Curbs have requested assistance from the
country’s military and could get aid
from less hard-hit regions.
Europe imposes stricter Christmas lockdowns
“We have not received an official
request for help, but we assess on a daily
basis what the hospital situation looks
like and we are, of course, ready to help
Sweden if we can,” Kirsi Varhila, perma-
nent secretary at Finland’s ministry of
Rising Covid infections spur
social affairs and health, told Svenska
shop closures and limits on Dagbladet newspaper.
Her counterpart in Norway, Maria
movement across continent Jahrmann Bjerke, told state broadcaster
NRK that the Nordic countries had a co-
operation agreement that allowed med-
Victor Mallet — Paris ical assistance to be shared at short
Guy Chazan — Berlin
notice. “If the Swedish authorities turn
Europeans who looked forward to to us for assistance, we would have a
Christmas and new year holidays free positive attitude to it,” she said.
from burdensome Covid-19 lockdowns Norway and Finland have experi-
have been brought abruptly down to enced far milder first and second waves
earth in the past week, with persistently of Covid-19 than Sweden, which has
high infection rates across the continent been an exception in Europe in eschew-
obliging governments from London to ing a formal lockdown and the use of
Athens to strengthen or maintain face masks. Sweden has reported 1,400
restrictions on free movement. Covid deaths in the past month com-
Belgium has extended curbs through pared with about 100 in Norway and 80
the holidays and will allow people to in Finland, each of which have half its
invite only one adult friend — known as population. Sweden reports deaths dif-
a “cuddle contact” — to their homes, or ferently to the rest of Europe, which
two if they live alone. France has can- makes knowing their exact level diffi-
celled a reprieve for New Year’s Eve cult, but analysts at Nordea, the Nordic
gatherings and will impose an 8pm-6am lender, believe they could be higher
than their peak in April.
‘Corona is out of control. The region of Stockholm on Wednes-
day warned that 99 per cent of its inten-
We are at five minutes
sive care beds were full, while health-
to midnight’ care unions have warned of large num-
bers of workers quitting as infections,
Markus Söder, Bavaria premier hospitalisations and deaths continue to
rise. About 3,600 health personnel have
curfew from Tuesday. Italy, which at the quit in the Stockholm region since the
weekend overtook the UK to register the Gloom amid the worsening of the situation, with a record tions for Christmas and New Year. Now 64,000 planned — although the French will be start of the pandemic, according to state
highest Covid-19 death toll in Europe of lights: Berlin’s of nearly 30,000 new infections and 598 there is a growing realisation that all able to travel away from home and will broadcaster SVT, around 900 more than
Italy’s Covid-19
64,036, has imposed some of the conti- Friedrichstrasse deaths from Covid-19 on Friday. public life must be wound down over the death toll, the not be required to fill in government over the same period last year.
nent’s strictest Christmas travel restric- shopping street “Corona is out of control,” said festive season and beyond. highest in Europe forms justifying each movement. Police Johanna Sandwall, preparedness
tions that will ban Italians from moving will remain Markus Söder, prime minister of France was quick to impose restric- have made nearly 3m checks since Octo- director at Sweden’s National Board of
between regions from December 20 to quiet as a Bavaria, yesterday. “We are at five min- tions as the second wave of the pan- 14,000 ber, and more than 285,000 people have Health and Welfare, said yesterday that
January 10. Greece will remain under tougher utes to midnight.” demic took hold in the autumn weather been fined for breaking the rules. “One Sweden had no plans to seek help from
Number testing
lockdown until January 7. In the UK, lockdown is Germany imposed a “lockdown-lite” after the summer holidays, and until the positive in France new French person is hospitalised every its neighbours yet. “The situation in
infections have been rising and there is introduced in in November which saw the closure of beginning of December seemed on track per day minute thanks to Covid infection,” said healthcare is very strained in several
speculation that London and other Germany this restaurants, bars, theatres and gyms, to substantially relax the controls for health minister Olivier Véran. parts of the country but we have a
regions will face a tightening of restric- week though most businesses and schools Christmas. Jean Castex, prime minister, Even in Spain, where the infection nationally available capacity to meet
— Filip Singer/EPA-
tions to be announced this week. EFE/Shutterstock stayed open. But Ms Merkel said yester- boasted last week that France’s infec- rate has descended steadily since the the need right now,” she said.
But it is Germany, which managed the day that those measures had “not been tion rate on December 10 was lower country imposed curfews and travel Irene Nilsson Carlsson, senior public
first wave of the pandemic in the spring enough” and infections were once again than those of Germany, Italy and the US, restrictions in October, Pedro Sánchez, health adviser at the board, told the
better than most of its neighbours, that growing exponentially. having been higher than all of them six prime minister, warned citizens on Fri- Financial Times: “We are worried about
faces one of the most serious threats The leaders decreed that from weeks earlier. day not to let their guard down during the situation but not that it will run out
from the second wave as governments Wednesday, most shops and schools will But the slowdown in the number of the festive season. “Although we have a of control. There are tensions in the
seek to avoid a repeat of the US Thanks- be shut. Companies are to encourage people testing positive for Covid-19 in level of slightly more than 180 [infec- intensive care units, a heavy workload
giving celebrations last month that pro- employees to work from home wher- France has stalled and remains stub- tions per 100,000 people],” he said, “we for staff. But we can expand the capacity
voked a surge of infections and deaths. ever possible. Curbs on private social bornly high at about 14,000 a day — should be at 25.” beyond what we have at the moment. So
Germany had planned to relax the gatherings of more than five people will nearly three times the target set by Pres- Rising infections lead inevitably in it’s not an acute crisis.”
partial shutdown imposed at the start of remain, though they will be slightly ident Emmanuel Macron for a relaxa- two to three weeks to more hospitalisa- Sweden has toughened its recommen-
November for the festive season. It is relaxed between December 24 and 26 so tion. Health officials blame a combina- tions and deaths in a season when medi- dations at national and local level on the
now doing the opposite, decreeing a far families can spend Christmas together. tion of the cold weather and increased cal facilities are already under pressure, precautions people should take but has
more draconian lockdown that will Public consumption of alcohol will contact between people at home, in the and governments are anxious that shied away from legal restrictions, a
come into force on Wednesday and last also be proscribed from Wednesday, shops and at work. Christmas festivities will again allow the strategy that still enjoys significant pub-
for three-and-a-half weeks. “We have and big public gatherings and firework That prompted Mr Castex to pandemic to surge out of control. lic support. State epidemiologist Anders
been forced to act,” Chancellor Angela displays banned on New Year’s eve. announce the new nationwide, night- Additional reporting by Anna Gross in Tegnell said repeatedly in the spring
Merkel said yesterday after meeting the The shift in rhetoric has been striking: time curfew and to declare that cine- London, Michael Peel in Brussels, that Stockholm would soon reach herd
leaders of Germany’s 16 states. just a few days ago authorities were dis- mas, theatres and sports centres would Kerin Hope in Athens, Daniel Dombey in immunity, but it has been hard hit again
The trigger is a sudden, dramatic cussing loosening the current restric- not be able to reopen tomorrow as Madrid and Miles Johnson in Rome in the second wave.
Test of confidence
MAKE A SMART INVESTMENT
Kremlin faces wall of suspicion in race to roll out vaccine
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Max Seddon — Moscow cent, on a par with western competitors By comparison, only 26 per cent of a day at the 70 clinics offering the vac-
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Sweden: Responsible Publisher - Christer Norlander
Published by: The Financial Times Limited, weekend to try to help stem the daily who don’t believe in the vaccine,” he access to it and urged people to sign up.
BTeral:c +k4e4n H20o u7s8e7,3 1 3F0ri0d0a;y F Satxr:e +e4t,4 L 2o0n d7o4n0 7E C5470M0 9.BT. ©Re Cporopdyuricgthiotn T ohfe t Fhien aconncitaeln Ttsim oef st h2i0s 2n0e.wspaper in any tide of over 26,000 infections. said. “Everyone who did it feels better.” Although Mr Putin has not yet been
Editor: Roula Khalaf. manner is not permitted without the publisher’s prior The Kremlin is touting the vaccine as The challenge, however, is convincing vaccinated, enough senior figures have
consent. ‘Financial Times’ and ‘FT’ are registered trade
Germany: Demirören Media, Hurriyet AS-Branch marks of The Financial Times Limited. a global breakthrough. Its manufactur- the 70 per cent of the 143m population had the jab in the hope of retaining per-
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Khalaf. Responsible for advertising content, Jon Slade. self-regulation regime under the FT Editorial Code of duce doses for 1.2bn worldwide in 2021. to stop the virus spreading that the vac- men who received it, and on Friday, the
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153, Monza, 20900, Milan. Tel. [phone]
Owner, The Financial Times Limited; Rappresentante e Reprints are available of any FT article with your plete phase 3 trials, president Vladimir and anti-vaccine content online mean cinating the armed forces, claimed to
DViiare Gtt.o Prue eRcehsepr,o 2n s2a0b0il3e7 i nP aItdaeliran: oI. MD.uDg.Snraln-Mo a(MrcoI) ,P Itraolvya. si - c(mominpimanuym l oogrdoe orr 1 c0o0n tcaocpti edse)t.ails inserted if required Putin said it was “quite effective” when 61 per cent of Russians do not trust offi- have uncovered a foreign “in­formation
Milano n. 296 del 08/05/08 - Poste Italiane SpA-Sped. in One-off copyright licences for reproduction of FT articles he approved it for use in August. cial data on the virus, while 59 per cent sabotage” plot to discredit the vaccine.
Abb.Post.DL. 353/2003 (conv. L. 27/02/2004-n.46) art. 1 are also available.
.comma 1, DCB Milano. For both services phone [phone], or email The institute says interim trials data do not plan to get it, a poll by the inde- Russian trials put Sputnik V’s Additional reporting by Donato Paoli
Spain: Bermont Impresion, Avenida de Alemania 12, CTC, [email protected] showed the vaccine’s efficacy was 92 per pendent Levada Center found recently. efficacy on a par with western rivals Mancini in Rome
DECEMBER 14 2020 Section:World Time: 13/12/2020 - 18:32 User: timothy.digby Page Name: WORLD1 USA, Part,Page,Edition: EUR, 2, 1
Monday 14 December 2020 ★ FINANCIAL TIMES 3
INTERNATIONAL
China flashes
‘Chairman
Mao said
we must
some star quality
reach for
the moon.
We will
in push to eclipse
achieve
this and
comfort
Washington
him’
Space, tech and pharma advances touted
as diplomats fire anti-western broadsides
Tom Mitchell — SINGAPORE ing a knife to the throat of an Afghan
It is shaping up to be a good month child. Watch this
for the Chinese Communist party and Such provocations elicited a stern space: the
Xi Jinping. response from Jake Sullivan, Joe Biden’s ascender
If all goes to plan and a Chinese space- choice as national security adviser, who module of the
craft safely delivers its 2kg cargo of said the US would “stand shoulder to Chang’e 5 blasts
moon rocks to Earth in about two shoulder with our ally Australia and off from the
weeks, some of the precious payload will rally fellow democracies to advance our lunar surface in
be proudly displayed in the home prov- shared security, prosperity and values”. this simulation.
ince of Mao Zedong. A week later, Mr Sullivan criticised Below left, Zhao
The ambition to display a small piece China’s crackdown on the Hong Kong Lijian is a top
of the moon in Hunan — possibly in Sha- pro-democracy movement, which has ‘wolf’ diplomat
oshan, where Mao was born — was high- been thrown into disarray by this year’s China National Space
lighted in 2019 as engineers outlined the enactment of a national security law in Administration simulation/
Xinhua/AP
mission. It will be a feat that has not the territory, and promised to “help
been accomplished since the former those persecuted find safe haven”.
Soviet Union did so in 1976. Ren Yi, a Chinese blogger and political
“Chairman Mao said we must reach commentator, recently angered fellow
for the moon,” Wu Weiren, a Chinese nationalists with an online post suggest-
space engineer, said at the time. “We will ing that Beijing should tone down its
achieve this and comfort him.” approach.
In addition to closing in on Mao’s “It’s better for China to avoid direct
dream, last week researchers claimed confrontations with the US and the Five
that they had built a quantum computer Eyes for the time being,” Mr Ren said. “If
that could run trillions of times Beijing steps back a bit, it will give Biden
more space to handle China issues.
‘We cannot submit “I’m just suggesting some different
tactics. A more moderate approach
to humiliation . . . and
might help de-escalate conflicts and
have to carry out provide a more benign environment for
China-US relations.”
a tit-for-tat struggle’
But Mr Zhao’s bosses appear to
encourage his belligerence, which they
faster than the present generation of argue is a proportionate response to US-
supercomputers. led provocations.
And on Wednesday, the UAE said a “International anti-China hostile
vaccine made by Chinese state-owned forces have suppressed China, deliber-
Sinopharm had proved 86 per cent ately attacked the Chinese Communist
effective, the first such official endorse- party and China’s political system, and
ment China has received. It could pave coerced other countries to ‘contain’ and
the way for use of Chinese vaccines ‘confront’ China,” Le Yucheng, Beijing’s
across the developing world — a coup for second-highest-ranking foreign minis-
the country whence coronavirus try official, said last weekend. “We can-
emerged. not submit to humiliation and compro-
Until the UAE announcement, Chi- mise, and have to carry out a tit-for-tat
nese pharmaceutical groups appeared struggle.”
to be slipping further behind western Lu Xiang, at the Chinese Academy of
rivals that had completed phase 3 clini- Social Sciences, agrees with Mr Le that
cal trials, allowing the UK to begin the “the [Trump administration] has
first official widescale vaccination pro- attacked China frantically since March”,
gramme this week. when Covid-19 began surging across the
China’s accomplishments echo the US. “We merely spoke back occasionally
cold war rivalry between the US and when they went too far.”
USSR, when the superpowers tried to Beijing is sensitive to any suggestion
better each other’s scientific accom- that it mishandled the initial outbreak
plishments, notably in space. in Wuhan. It argues that the virus was
Beijing’s successes have coincid­ed probably introduced into the central
with a series of bitter propaganda bar- Chinese city through imported food —
rages largely directed against members despite lack of any supporting evidence.
of the Five Eyes alliance, comprising the Shi Yinhong, an international rela-
US, Australia, Canada, New Zealand and tions professor at Renmin University in
the UK. Beijing, argues that there is little that
But the salvos jeopardise a rare oppor- Chinese leaders can do to reverse the
tunity for China to stabilise its relation- downward trajectory of China-US rela-
ship with Washington as Joe tions after Mr Biden is sworn into
Biden prepares to become pres- office next month.
ident. During the presidential cam-
Zhao Lijian, who is paign, Mr Biden said Mr Xi was
prominent among “a thug”.
China’s “wolf war- Mr Shi said: “The US and its
rior” diplomats, allies, especially the UK, Australia
recently warned the and Canada, have reached a
US and its anglo- consensus that they
phone allies to be need to treat
careful lest their China as a
“eyes be plucked threat.”
out”, and tweeted a Additional
doctored image of an reporting by
Australian soldier hold- Xinning Liu
Climate summit
Beijing plans to triple wind and
solar capacity within a decade
Leslie Hook — ENVIRONMENT AND “unacceptable”. “The trillions of dollars
CLEAN ENERGY CORRESPONDENT needed for Covid recovery is money we
China vowed to nearly triple its wind are borrowing from future generations.
and solar capacity during the next dec- This is a moral test,” he said.
ade, as President Xi Jinping joined other New climate targets from all 189
world leaders at a UN climate summit countries that signed the Paris accord
focusing on new emissions targets. are due for submission to the UN by the
year end. More than 40 countries have
Mr Xi’s statement was the most conse- already made submissions, while others
quential at a virtual summit that have been delayed by the pandemic.
included more than 70 heads of state, Mr Johnson warned that “humanity
hosted by Boris Johnson, the UK prime has been quilting our planet in a toxic
minister, and French president tea cosy of greenhouse gases”. Last
Emmanuel Macron to mark the fifth month he announced a ban on the sale
anniversary of the Paris climate accord. of new petrol and diesel cars in the UK
António Guterres, UN secretary-gen- from 2030. “Today we are putting our
eral, called on all countries to declare a foot to the accelerator, in a carbon-
“climate emergency”, saying the world friendly way,” he said at the summit.
needed to cut emissions by 45 per cent The US, the world’s second-largest
by 2030, relative to 2010 levels. emitter, did not have a federal repre-
He noted G20 countries were spend- sentative at the summit, but President-
ing 50 per cent more in their coronavirus elect Joe Biden has said he will rejoin the
stimulus packages linked to fossil fuels Paris agreement on his first day in office.
than on low-carbon energy, calling this See Big Read
DECEMBER 14 2020 Section:World Time: 13/12/2020 - 18:18 User: timothy.digby Page Name: WORLD2 USA, Part,Page,Edition: USA, 3, 1
4 ★ FINANCIAL TIMES Monday 14 December 2020
INTERNATIONAL
Stimulus focus Bandit violence
Fed poised to extend crisis bond-buying Nigeria school
kidnapping
puts Buhari
US central bankers the start of the pandemic will continue In addition, the Federal Open Market over into hiring. Meanwhile, fiscal pol- agency mortgage-backed securities per
grapple with need for until the recovery meets certain condi- Committee will be forced to consider icy is way up in the air — we have no idea month. in spotlight
tions, according to economists and Fed whether bolder monetary easing what we’re going to get,” said Julia Coro- Fed officials have been cautious about
further monetary lift watchers. through the asset-purchase programme nado, an economist at MacroPolicy Per- taking such extra steps. Last month,
At the moment, the Fed says its bond is warranted. spectives. “I just don’t think it makes they said the asset purchase scheme as
purchases will continue at their “cur- With Covid-19 cases increasing, lay- sense to come to the table with nothing currently designed was effective and
James Politi — Washington
Colby Smith — New York rent pace” only over the “coming offs rising and confusion on Capitol Hill in your hands.” they would only move to boost it if the Neil Munshi — Lagos
months” — a far more limited time- about the prospects for fiscal stimulus, If the Fed decides to take more aggres- economic situation changed.
The kidnap of scores of students in
The Federal Reserve is poised to issue frame. some economists say the Fed may have sive monetary action, the most likely Roberto Perli, economist at Corner-
Nigerian president Muhammadu
new guidance extending its emergency If agreed, the change would make it to act now to meet its pledge to do more possibility would be to shift the matu- stone Macro, cited a “number of rea-
Buhari’s home state over the weekend
bond-buying programme, as it grapples harder for the central bank to make an to support the recovery if needed. Last rity of its debt purchases towards long- sons” for the Fed to take stronger easing
has thrown a spotlight on the ex-
with the need for another monetary early move to wind down its bond pur- week, the European Central Bank er-dated bonds. Purchases so far have action, including a need to offset grow-
general’s handling of national security,
boost to buttress the US economic chases, cementing its easy monetary increased the size of its bond purchases been slightly weighted towards the ing virus risks and its desire to stoke
as violence afflicts every region of
recovery. policy for years to come. The shift would and extended their duration after the shorter end. higher inflation. But he was not sure the
Africa’s most populous country.
At this week’s meeting, US central complement its pledge to keep interest eurozone economy was hit with more A far less likely option would be an Fed would follow through, given that
bankers are widely expected to approve rates close to zero until inflation is on infections and restrictions. increase in the overall value of the debt “we haven’t heard anything” about set- Armed bandits abducted an unknown
language specifying that the $120bn per track to exceed 2 per cent and the econ- “We have a worse virus, more shut- purchases, which currently amount to ting it up from senior central bankers. number of pupils from a boys’ high
month in debt purchases launched at omy reaches full employment. downs and more evidence it’s spilling $80bn of Treasury debt and $40bn of See Market Questions school in Katsina state on Friday night
in what has become a familiar occur-
rence in Nigeria, where kidnapping for
ransom is rife.
Sanctions burden. Muted outlook Mr Buhari condemned “the cowardly
bandits’ attack on innocent children” in
a statement on Saturday. He said the
Investors wary of sitting down with Iran Inc
military had located the kidnappers in a
forest and engaged them in a firefight,
aided by air support. A spokesman for
Mr Buhari did not respond to a request
for comment.
Aminu Masari, Katsina governor, told
Hopes of deal revival grow but
reporters that 426 of the 884 students in
school that day were safe, but authori-
economic woes and red tape
ties did not yet know the total number
keep ‘business tourists’ away who had been kidnapped. Some of the
students had escaped during a shootout
at the school between the bandits and
Najmeh Bozorgmehr — Tehran police, according to a statement from
When Iran’s nuclear negotiations with local police.
world powers began in 2013, hotels and Mr Buhari has faced widespread criti-
restaurants in Tehran were full of for- cism over increasing violence in Nigeria.
eign businesspeople eager to tap an Motorcycle gangs wielding AK-47s and
untouched market. machetes operate with seeming impu-
“In this office in 2014 and 2015, we nity across the country, ransacking vil-
received a long line of what we called lages, kidnapping busloads of travellers
‘business tourists’ who were offering us and rendering highways all but impass-
various kinds of businesses, many of able. Such violence has killed at least
them irrelevant to us and to Iran’s mar- 8,000 since 2011 in the north-west, the
ket,” said a manager at Griffon Capital, heart of the bandit crisis, according to
an asset management and private the International Crisis Group, a think-
equity group. “We stopped taking meet- tank.
ings, as it was getting crazy.” Friday’s attack came as Mr Buhari was
The nuclear deal agreed in 2015 visiting his home village about 200km
nearly collapsed three years later when away from the Government Science Sec-
the US abandoned it and imposed sanc- ondary School in Kankara in northern
tions that limited trade with the coun- Nigeria. The abductions occurred days
try. Total, Airbus, Peugeot and Boeing after the president cancelled an appear-
pulled out of billions of dollars’ worth of ance before a joint session of the
agreements. National Assembly, which had invited
While Joe Biden has promised to him to brief legislators on national secu-
revive the deal provided Iran return to rity after jihadi group Boko Haram mas-
full compliance, this time round, busi- sacred scores of farmers in northeastern
nesses are more circumspect. With Iran Borno state last month.
reluctant to broaden the nuclear talks to A woman walks while the fall of the national currency as bly not worth the compliance risks.” ‘In relative Wednesday that he was confident his “Buhari’s national security record is
include its military and regional poli- past a mural well as losing the US market have been Smaller foreign businesses are open to government would produce and sell abysmal,” said Cheta Nwanze, partner
terms, the
cies, there is a lot of uncertainty. in Iran’s capital. big punishments. “Many have been increasing trade with Iran. Last month more crude oil next year, a sign that he at Lagos-based consultancy SBM Intelli-
The head of business at Griffon Capi- Inflation is travelling with suitcases full of cash. You about 100 Italian groups in the technol- market’s was hopeful of re-entering talks before gence and a critic of the administration.
tal said: “Investors have started running near 50 can deal with this situation for some ogy, machinery and banking sectors he steps down next summer. “Unfortunately, on his watch . . . kid-
strategic
approaching us, but cautiously. We are per cent, youth time, but it is not sustainable.” attended a webinar by the Italy-Iran The Islamic republic is concerned napping has become Nigeria’s biggest
also cautious. Both sides are taking their unemployment At the same time, while the global chamber of commerce, according to one value was that any talks could broaden not only to growth industry, police brutality has
time and are no longer daydreaming is 16.9 per cent economy had grown, Iran’s had participant. “The companies showed a regional and military issues but also its grown and all six geopolitical zones of
much bigger
about what a nuclear deal can do.” and the rial is remained largely static, the Griffon lot of appetite to increase or start new human rights records which western the country now have active non-state
He recalled the company buying back tumbling. manager noted. “In relative terms, the businesses [in Iran],” the person said. in 2005 governments see a major problem. actors, up from three when he came in.”
some of their foreign partners’ shares Below, brokers strategic value of Iran’s market in 2005, “But the message from Italian bankers On Saturday, Iran executed Ruhollah According to the ICG, bandit violence
than it
when they left. People no longer at the Tehran for instance, was much bigger than it is was clear: ‘Guys, we cannot support Zam, a dissident who allegedly stirred has displaced more than 200,000 peo-
thought that “Iran’s doors would open exchange today. A $1bn business in Iran was a your business unless there is an execu- is today’ up unrest three years ago from outside ple in the north-west. Killings in Katsina
and big foreign companies would come”. Abedin Taherkenareh/ lucrative opportunity for a big Euro- tive order by the US administration.’” the country and spied for Israel and have doubled this year compared with
According to western diplomats, the epa-EFE; Vahid Salemi/AP pean bank years ago, but now it’s possi- With inflation at nearly 50 per cent, France. The European Union, France 2019.
big businesses that left in 2018 were youth unemployment at 16.9 per cent (where he was a resident), Canada and “Northern Nigeria has never been hit
unlikely to return quickly. The few that and the rial tumbling, Iran’s economy Germany and human rights organisa- this hard in the history of the country —
stayed but downsized would scale up if has been hit hard by sanctions, as have tions condemned the action. on a daily basis, citizens are kidnapped,
they received the green light from the western exporters, supplanted in many Griffon’s business head said that gruesomely murdered, raped,” said Ida-
US, they said. Some foreign entities cases by the Chinese. rather than a big return to growth if yat Hassan, head of the Abuja-based
partnered with Iranian, Turkish and Iranian analysts say pockets of the talks resumed, “what seems probable Centre for Democracy and Develop-
Emirati investors, but have since found economy remain resilient and, despite is that . . . we should not wake up ment. “Life has become nasty and brut-
that they have not been able to repatri- recent declines, shares are buoyed by in the morning with a lot of stress about ish under the Buhari administration.”
ate profits because of sanctions, and the fact that investors have nowhere new sanctions or the possibility of a war. The government has sought to defend
have instead reinvested in Iran. else to put their money. Since 2016, “With regards to sanctions, it feels its record. Mr Buhari declared Boko
A businessperson who deals with Ira- Griffon capital’s fund had had a return like an aggressive tumour in your body Haram “technically defeated” in 2015
nian and European companies said: on investment of more than 100 per has suddenly stopped growing. This is and the administration has argued that
“The biggest problem of the companies cent in euros, another manager said. good news, but you still have that cancer it has taken back control of the north-
that stayed is the difficulty of getting But the outlook is, at best, muted. in your body and you don’t know how it east from the jihadi group despite con-
their money into or out of the country, President Hassan Rouhani said last will behave.” tinued attacks.
Campaign race. War chests
US Senate run-offs spark fundraising frenzy in Georgia
it will give Democrats a 50-50 split with Among the PAC’s top donors since In contrast, the Democrats’ Senate grassroots, small-dollar support since since election day, raising $28.5m
Donors pour money into state
Republicans in the Senate, with Demo- November 3 are Blackstone’s Stephen Majority PAC raised just under $90m November 3. Between November 4 and between November 4-23.
election that will determine cratic vice-president elect Kamala Har- Schwarzman, who gave $15m, and Cita- between October 15 and November 23, 23, ActBlue — the Democrats’ main These numbers are incomplete, as the
ris serving as the tiebreaker — a win for del’s Ken Griffin who gave $10m. GOP the vast majority of it coming in before online fundraising platform for small- total amounts each candidate has raised
balance of power in Congress the incoming Biden administration. donors Timothy Mellon and Steve Election Day, and just over $10m since. dollar contributions — processed almost since October 14, including other online
But if Republicans manage to hold Wynn have each given $5m, while Among the biggest donors since Novem- $112m in donations to Mr Ossoff and Mr donations as well as money from other
one or both seats, it will give the party a Rupert and Lachlan Murdoch have each ber 3 are Reed Hastings of Netflix, who Warnock. The Republican equivalent, PACs and big donors, will not be pub-
Courtney Weaver — Washington
narrow majority in the chamber and given $1m. Home Depot’s Bernard Mar- gave the PAC $500,000, and Carlyle’s WinRed, processed $55.6m in online lished until December 24, when their
Christine Zhang — New York
give current Senate majority leader cus and TD Ameritrade’s Joe Ricketts William Conway who gave $250,000. donations to Ms Loeffler and Mr Perdue, campaigns file updated fundraising
Big-name donors and small-dollar con- Mitch McConnell leverage in negotia- have also each given $1m. The Democrats have the edge in FEC filings showed. reports to the FEC. However, the dona-
tributors from across the country have tions with Joe Biden’s White House. Mr Warnock has received over $57m tions coming through ActBlue and Win-
turned their fundraising firepower on to Both run-off races are extremely in donations funnelled through ActBlue Red show the substantial influx of cash
a pair of US Senate races in the state of competitive. In-person early voting in since November 3, more than double to candidates from both parties in
Georgia that could determine control of Georgia begins today. While the Demo- the total amount he raised in individual recent weeks.
the upper chamber of Congress. cratic campaigns have received more in donations prior to Election Day. Mr With massive war chests to deploy,
Three weeks before election day, the small-dollar donations, Republicans Ossoff’s share was nearly $55m, about the race is playing out on the airwaves.
run-off races are already set to be among have retained the cash advantage 1.3 times as much as he raised from indi- So far, the campaigns for Mr Warnock
the most expensive in the history of the among well-financed political action vidual donors up to November 3. and Mr Ossoff have spent or reserved a
Senate, according to AdImpact. committees — a departure from last After financing her original campaign combined $104.8m on broadcast and
The two races will pit Democratic month’s general election, when big primarily through a $23.3m loan to her- cable television ads in the nine weeks
challengers Raphael Warnock and Jon fundraisers and online donors helped self over the course of the 2020 cycle, Ms before the January 5 vote, while Ms
Ossoff against Republican incumbents Democrats outspend Republicans in Loeffler is raising more from outside Loeffler and Mr Perdue have booked
Kelly Loeffler and David Perdue, respec- eight of the nine big Senate races sources during the run-off. Between $78.3m, according to AdImpact.
tively, after no candidate managed to According to the latest Federal Elec- November 4 and 23, she raised $27m Political action committees backing
win an outright majority in the Novem- tion Commission filings, the Republican from donors giving through WinRed, six the Republican Senate candidates,
ber election. The amount of money Senate Leadership Fund, a PAC tied to times the $4.2m she earned from indi- including the Senate Leadership Fund,
pouring into the state reflects just how Mr McConnell, raised $104.2m between vidual donors before the November 3 have booked or spent $85.8m on TV ads,
high the stakes are for both parties. October 15 and November 23, $71.1m of election. Mr Perdue has also doubled his compared to $77.4m by Democratic-
If the Democratic candidates both win, which came in post-election day. Both parties are spending on rallies and ads to get the vote out fundraising from individual donors backed groups.
— Jeff Amy/AP
DECEMBER 14 2020 Section:World Time: 13/12/2020 - 18:26 User: timothy.digby Page Name: WORLD3 USA, Part,Page,Edition: USA, 4, 1
Monday 14 December 2020 ★ FINANCIAL TIMES 5
DECEMBER 14 2020 Section:Ad Page Time: 13/12/2020 - 14:22 User: john.lee Page Name: AD UN, Part,Page,Edition: USA, 5, 1
6 ★ FINANCIAL TIMES Monday 14 December 2020
y
Not so fast Flood of bankers expected to leave Brexit Britain has so far been more of a trickle
FUTURE OF THE CITY, PAGE 8
EY fraud unit
Deutsche eyes
Brighter skies Commodity prices strengthen
shift of many
as vaccine progress spurs growth optimism
warned about
New York jobs
to lower-cost
Wirecard ‘red
US centres
flags’ in 2018 Laura Noonan — New York
Olaf Storbeck — Frankfurt
Deutsche Bank could move as many as
half its 4,600 Manhattan staff to
smaller US hubs in the next five years,
the lender’s US head said, underlining
the threat to New York’s status as a cor-
3 Dissenting views in firm revealed
porate centre after the pandemic.
3 Audit team opted against probe
“It [the pandemic] has taught us a
tonne,” said Christiana Riley, chief exec-
utive for Deutsche in the Americas.
Olaf Storbeck — Frankfurt that in the months to March 2018 EY’s The fact that many staff had been suc-
anti-fraud team repeatedly pointed out cessfully working from home for the
An EY anti-fraud team warned in 2018 problematic “observations” it had made past nine months had neutralised what
that “red flag indicators” at Wirecard during the probe. were previously “bitter fights” over
pointed to potential accounting manip- For instance, EY had discovered that whether jobs could be sent to lower-cost
ulation and required further investiga- one-off items such as proceeds from the centres.
tion, according to documents seen by sale of internet domains and IT infra- Ms Riley, who is a member of Deut-
the Financial Times. structure were added to operating prof- sche’s management board, said the New
Just weeks later, the separate EY team its with no clear justification. It also York headcount could “conceivably” be
in charge of Wirecard’s annual audit found that interest income was added to Oil de­mand is estimated to have declined 8.8% for the year but has rebounded in recent weeks cut in half within five years, depending
— Andrey Rudakov/Bloomberg
decided against investigating the matter a gauge of operating profit that explic- on the evolution of “smaller hubs and
further and subsequently issued an itly excludes interest. pockets”.
unqualified audit. The investigation discovered two cop- Jab hopes trigger broad rally She expected banks to concentrate
Wirecard, a once high-flying German ies of an invoice by an Indian Wirecard people in several hubs, mostly in lower-
% change since start of November
payments group, this summer collapsed subsidiary that were issued on the same cost areas, rather than embracing the
Energy Livestock 25
into insolvency in one of Europe’s big- day for the same transaction, but were “work from anywhere” model offered
Industrial metals Precious metals
gest postwar accounting frauds. on letterheads showing two different 20 by some technology companies.
Agriculture
corporate logos for the firm and stated 15 Deutsche’s US workforce includes
Munich prosecutors different sums. 10 about 2,000 staff in areas such as
EY’s anti-fraud team said that these human resources, compliance and risk
are already investigating 5
“red flag indicators . . . could poten- in Jacksonville, Florida, as well as 600 in
three current and tially sustain” the allegation that profits 0 a tech centre in Cary, North Carolina.
were inflated and should be investigated -5 Manhattan was losing finance centre
former partners
further. In a “status memorandum” -10 jobs to cheaper cities such as Tampa and
issued in late March 2018, it recom- Dallas even before the pandemic
Nov 2020 Dec
The dissenting views within EY raise mended “comprehensive additional upended companies’ thinking on cen-
GSCI indices Source: Refinitiv
new questions about the firm’s decade- investigation steps” into the matter. tralising staff.
long work as Wirecard’s auditor. Less than three weeks after EY’s fraud Commercial vacancy rates in the city
Munich prosecutors are already prob- team summarised these issues in a 63- Emiko Terazono and Neil Hume the global economy next year, trigger- tainer ships return to the seas and have risen from 5.7 per cent in the first
ing three current and former EY part- page status slide deck that was shared london ing bets on higher commodity prices. delivery trucks hit the roads. quarter to 7.6 per cent in the third quar-
ners after Germany’s audit watchdog with Wirecard’s board, EY’s audit team Vaccine optimism and hopes of an “Speculative flows are in the driving Brent crude, which regained the ter, according to data from estate agency
said they may have acted criminally by came to a different view about “Project economic recovery next year have seat amid easy financial conditions,” $50 per barrel mark last week for the Colliers International.
knowingly issuing a “factually incor- Ring”, documents seen by the FT show. ignited sweeping gains in commodity said Morgan Stanley, adding that, with first time since December, has risen Other finance groups have signalled
rect” audit opinion in 2017 and 2018. EY’s audit team subsequently issued prices, with rebounding energy mar- recovery expected in 2021, “the peak 28 per cent. they may shift staff. Goldman Sachs was
Among other issues, the audit watch- an unqualified audit for Wirecard’s 2017 kets leading the way higher. for commodity prices is yet to come”. Even thermal coal has risen by a considering moving a number of asset
dog suspects EY audit partners in 2018 financial report, stating that “Project Oil and other energy product prices quarter, led by tight supplies in the management jobs to Florida as part of a
failed to properly take into account the Ring” had been “concluded” without The broad S&P GSCI index has rallied plunged this spring as countries China market, where Australian low- broader plan to reduce costs, a person
findings of a forensic audit into alleged delivering “any evidence indicative of 14 per cent since the start of Novem- locked down, people stopped driving, grade material is trading above familiar with the bank’s plans said.
accounting manipulation. In that probe, flawed accounting or other violations of ber, with the energy sector jumping and air travel stalled. Rmb700 per tonne for the first time Deutsche is next year due to relocate
which started in 2016 and was code- law”. In fact, “Project Ring” had been 24 per cent, industrial metals up Global oil de­mand is forecast to since 2018. its Manhattan staff to a 1m sq ft building
named “Project Ring”, an EY anti-fraud terminated by Wirecard's second-in- 14 per cent and agriculture 5 per cent. have fallen an un­precedented 8.8 per Iron ore has risen 25 per cent since at Columbus Circle, near Central Park,
team investigated fraud allegations command Jan Marsalek days after he Gold, which had hit record peaks cent in 2020, says Commerzbank, but the start of November to a seven-year with workspaces for 4,200 people.
raised by a whistleblower in India. received the “status memorandum” earlier in 2020, has been among the has recovered sharply in recent high on Chinese demand. Copper is up The building is cheaper than Deut-
Project Ring was commissioned by from EY’s anti-fraud team. few outliers, falling 3 per cent as weeks. 16 per cent to a seven-year high of sche’s existing offices at 60 Wall Street,
Wirecard’s management board and was Asked to explain why its two teams investors took profits on their ETF Marine fuel and diesel have been $7,749 a tonne. Lead is up 16 per cent. contributing to cost savings that Ms
conducted by EY Forensic & Integrity had diverging views on the relevance of holdings. among the biggest winners since the China also lifted the agricultural Riley said would help lift the return on
Services, an arm of the Big Four firm the “red flag indicators”, EY said it Vaccine breakthroughs last month start of November, with low sulphur markets. Soyabeans rose 11 per cent equity in Deutsche’s US investment
that specialises in white collar crime. “cannot comment on Wirecard due to have led to a rethink among analysts gas oil futures, a group that includes and cotton 7 per cent. bank from 9 per cent this year to 11 per
New documents seen by the FT show ongoing confidentiality obligations”. and traders about the trajectory for both, rising almost a third as con- Market Questions page 10 cent by 2022.

Pharmaceuticals. Drug development
AstraZeneca is transformed from prey to predator
risen more than 12 per cent in the past share], increase of our core operating Alexion chief executive who earned
Anglo-Swedish group’s $39bn
year to stand at about £81 on Friday. margin and increase in our cash flow.” $18.9m in 2019 and stands to make
purchase of Alexion brings The question now is whether Mr Alexion forecast 2020 revenues of $56m from a golden parachute clause if
Soriot, who spent months talking to around $5.9bn, up from $5bn for the he leaves following the deal’s comple-
the drugmaker full circle rivals including larger targets such as previous year when it reported net tion, according to FT calculations using
California-based Gilead Sciences, has income of $2.4bn. The company has less data from the company's most recent
settled on the correct partner to bolster than $1bn in net debt. proxy filing.
Sarah Neville and AstraZeneca’s pipeline of drugs in the Under the terms announced on Satur- AstraZeneca’s entry into the rare dis-
Arash Massoudi — London
Donato Paolo Mancini — Rome new arena of rare diseases. day, Alexion shareholders will receive eases arena, where drugs typically come
Hannah Kuchler — New York By picking up Alexion, Mr Soriot is roughly $175 per share, $60 of which with sky-high price tags reflecting their
Pascal Soriot, AstraZeneca chief execu- adding a business focused on treating would be cash and the rest in shares. limited market, is not without potential
tive, spent most of 2020 with two things diseases caused by uncontrolled activa- Negotiations led by the companies’ reputational and political peril, how-
on his mind: creating a Covid-19 vaccine tion of a part of the immune system. chief executives and chairmen pro- ever. Alexion’s flagship immune-
and hunting for a mega-deal to take Alexion has a pipeline of 11 molecules ceeded without fireworks but turned disease drug Soliris sells for about
advantage of the drug company’s soar- that hinder these diseases. into a slow war of attrition over several $600,000 a year, a striking contrast to
ing share price. Mr Soriot on Saturday touted the months as Alexion sought to drive the the planned $3-$4 cost of AstraZeneca’s
Businesses The hard yards of the first are largely advantages of the tie-up, which he said offer price higher. One factor, however, Covid vaccine.
done, with the announcement last would allow AstraZeneca to apply its will be whether Alexion shareholders — Alexion told the Financial Times yes-
month that the vaccine developed with signature capabilities in areas such as including activist hedge fund Elliott, terday that “developing transformative
For Sale
Oxford university was safe and effec- genomics to rare disease targets, while which in May demanded the company new medicines is difficult, costly and
tive. The second is only now getting using its heft in emerging markets and sell itself — are satisfied with the 45 per time consuming . . . The pricing of our
under way. On Saturday Mr Soriot China to globalise Alexion’s portfolio cent premium AstraZeneca has paid, medicines reflects these challenges as
struck the largest deal in AstraZeneca’s and apply the US company’s scientific given the fast-rising market for pharma well as their life-changing benefits to
history, agreeing to buy US rare disease insights to more common diseases. stocks during the pandemic. patients and society”.
specialist Alexion in a $39bn cash-and- “This is an acquisition that will create If the deal goes through, one clear In 2016 the company faced difficulties
stock agreement. substantial accretion of [earnings per winner will be Ludwig Hantson, the when its chief executive and chief finan-
Samuel Johar, who chairs board advi- cial officer left, weeks after Alexion had
sory group Buchanan Harvey, said the said it was launching an internal probe
purchase underlined the Anglo-Swed- over unspecified accusations of fraud in
Business Opportunities ish company’s transformation from the sale of Soliris. Marc Dunoyer, Astra-
“prey to predator”, five-and-a-half years Zeneca’s chief finance officer, told
Readers are strongly recommended to take appropriate
after Pfizer swooped on a then-faltering reporters on Saturday that Soliris’s “sec-
professional advice before entering into obligations.
AstraZeneca. ond generation” successor Ultomiris
Mr Soriot saw off the US group with a was about 30 per cent cheaper.
promise to revitalise his company’s The next battles over drug pricing in
research and development operation the US, the world’s largest drug market,
but for years lucrative new drugs are likely to focus on regular hikes in
Business for Sale, Business Opportunities, remained elusive and AstraZeneca’s commonly used drugs such as those for
Business Services, share price languished far below the £55 diabetes, rather than costly treatments
Business Wanted, Franchises
offered by the US pharma giant. for rare diseases. The timing of Astra-
Runs Daily
............................................................................................................................. Those memories have been banished Zeneca’s Alexion deal may yet prove
Classified Business Advertising in the past two years with the revival of politically and strategically propitious,
UK: [phone] | Email: AstraZeneca’s fortunes largely through allowing Mr Soriot to claim a success
[email protected] a string of cancer drugs. Its shares have Pascal Soriot has been searching for a way to revitalise R&D that has been many years in the making.
— Charlie Bibby

DECEMBER 14 2020 Section:Companies Time: 13/12/2020 - 18:53 User: jeremy.wright Page Name: CONEWS1, Part,Page,Edition: EUR, 6, 1
Monday 14 December 2020 ★ FINANCIAL TIMES 7
DECEMBER 14 2020 Section:Ad Page Time: 13/12/2020 - 14:22 User: john.lee Page Name: AD CME, Part,Page,Edition: USA, 7, 1
8 ★ FINANCIAL TIMES Monday 14 December 2020
COMPANIES & MARKETS
Exodus of London bankers fails to materialise
Flow of talent from City to EU proves a trickle, although Frankfurt’s clean air and green spaces remain a pull for some
MARTIN ARNOLD — FRANKFURT London for places at the bilingual École
DAVID KEOHANE — PARIS Jeannine Manuel in Paris, from 50-60
SILVIA SCIORILLI BORRELLI — MILAN
a year before Brexit to a peak of
For months after the Brexit referen- 264 last year.
dum, Japanese bankers were invited on There was a dip in 2020, but Bernard
tours of Frankfurt. Manuel, chairman of the school’s board
Some took in a football match and of trustees, said: “We see a substantial
met one of the local club’s players: increase next year and many, many
Makoto Hasebe, former captain of phone calls from major banks . . . One
Japan’s national team. bank just told us they have 70 kids that
Impressed by the city’s clean air, need places.”
green spaces and family-friendly atmos- Jean Pierre Mustier, chief executive of
phere, most of the Japanese bankers Italian bank UniCredit, said it suited
switched plans for establishing a post- lenders to shift some staff out of London
Brexit EU base in Amsterdam, opting after Brexit because of the UK capital’s
for Frankfurt instead. high costs.
“One of the biggest issues we have “There will be an adjustment — it’s
with people is to get them here to see it, gravity at work,” he said. “Probably a lot
and then they are pleasantly surprised of banks will look to relocate French
by what they find,” said Hubertus Väth, staff to France, Italian teams to Italy and
German teams to Germany.”
‘We expect another 1,000 More than 7,000 wealthy Italian
expats chose to come back between
jobs to come in the
2017 and 2019, and have benefited from
following months’ a 50 per cent tax exemption on their
Italian income, according to data from
Hubertus Väth, Frankfurt lobbyist the tax administration. The exemption
was increased to 70 per cent from this
head of the Frankfurt Main Finance year.
lobby group. Another benefit, under which indi-
Mr Väth admitted, however, that his viduals pay a flat yearly €100k on their
headline-grabbing projection on the day foreign income, has attracted football-
after the referendum that 10,000 jobs ers such as Cristiano Ronaldo, of Juven-
would shift from London to Frankfurt tus, and private equity executives earn-
had failed to materialise. ing large sums of “carried interest” from
He said that he now believed that buyout funds.
Brexit created about 3,000 extra jobs in Luigi de Vecchi, Citigroup’s corporate
the German financial capital by June, and investment banking chairman for
including related consultants and IT Stepping out: jobs have shifted to Frankfurt, Paris, and other centres but many City bankers are choosing to stay in London for now continental Europe, moved from Milan
— FT montage/Reuters
services providers. to Paris three years ago. However, he has
“We expect another 1,000 jobs to spent most of 2020 in of Italy because of
come in the following months, which assets expected to leave London as dinner at Versailles in 2018, urging tral bank governor, said Brexit would as the centre of world finance. So, tear- the pandemic. From here he watched a
may extend into early next year as 500 Brexit threatened the UK’s access to the them to “choose France”. herald a return to a time before Big Bang ing it down . . . I find it hard to believe flurry of arrivals.
jobs are still being negotiated with regu- bloc’s single market. Despite all this, the expected flood of — deregulation of the City of London in that can take place in less than 10 years.” “I feel like a real estate agency lately.
lators because of the Covid-19 situa- France, Italy, the Netherlands and bankers leaving London has so far the 1980s — when finance was much less Yet Mr Benamou believes that instead I’ve had around 30 acquaintances ask
tion,” said Mr Väth. “The traders have Spain introduced special tax breaks for proved to be more of a trickle. And the concentrated in one place. of setting up in London and expanding me for advice on where to live in Italy,”
been the big holdouts so far.” financiers relocating to their countries. spoils are spread between many differ- “If we go back 30, 40 years, there was into Europe, the opposite is happening. he said. “People are willing to pay rent-
When Britain voted to leave the EU — Germany changed its rigid labour law to ent cities. Most investment bankers and a time when the financial centre was “Now if I had to start a business from
a process that will culminate in the end make it easier for companies to fire traders headed to Frankfurt and Paris, much less concentrated in Lon- zero, of course I would start from the ‘I wanted my British kids
of the transition period on December 31 highly paid “risk-takers” including trad- while asset managers favoured Luxem- don . . . when banks had more staff in Continent, because there wouldn’t be
to have an international
— it prompted a scramble by rival finan- ers in investment banks. bourg and back-office operations have Paris than in London,” he said. “The any point starting from the UK.”
cial centres across Europe. They were Emmanuel Macron welcomed 140 gone to Dublin and Warsaw. moves might have been slowed down by Davide Serra, founder of asset man- experience’
competing to attract the many jobs and global industry and banking bosses to Christian Noyer, a former French cen- Covid-19, but we are going to have lots ager Algebris Investments and a big
more of these traders moving at the end donor to the Remain campaign, remem- Davide Serra, Algebris founder
of this year and all through next year.” bers his son’s disappointment shortly
French bank Société Générale has after Brexit. This is partly why he als that might be peanuts for the London
moved about 300 jobs out of London. moved from London to Milan with his market but are very high for Italy.”
“All banks had to rebalance,” said family in 2018. With many banks allowing most staff
Frédéric Oudéa, chief executive. “The “He told me he was sad and felt lost to work remotely during the pandemic,
ones that had all their trading opera- because we are Europeans. Through some question whether they still need to
tions in London had to repatriate people that feeling of being ripped apart I move for Brexit.
to deal with eurozone-related activities. understood I wanted my British kids to Yet supervisors at the European Cen-
There was a certain shift, but the magni- have an international experience,” Mr tral Bank suspect that lenders are drag-
tude has been relatively moderate.” Serra said. ging their heels on relocating staff and
Doomsday predictions in a London While Algebris has offices in Milan, using coronavirus as an excuse. The ECB
Stock Exchange survey in 2016 esti- Rome, Luxembourg and Dublin, he warned last month: “Remote working
mated that 232,000 financial services flies back and forth to its London arrangements do not change the funda-
jobs could leave the UK as a result of base for a few days each month, “Covid mental need to relocate staff to the EU.”
Brexit. permitting”. Even Deutsche Bank, which initially
Not only have far fewer jobs left People moving to Frankfurt often identified 4,000 jobs at risk of moving,
the country, but many footloose finan- started by commuting to the UK at the has only shifted about 100 positions out
ciers continue to operate at least par- weekend, according to Daniel Ritter, of London to Frankfurt, with another
tially in London — commuting each executive partner at Von Poll, a German 200 to 300 to follow. The timing and
week between the city and the Conti- estate agent. exact number of the extra moves hinges
nent, at least before the pandemic “A lot of buildings here were refur- on regulatory and political decisions.
complicated travel. bished as serviced apartments, as many Frankfurt-based public lender Helaba
David Benamou, chief investment of the bankers moving here leave their estimates that about 1,500 positions
officer at French asset manager Axiom family in London and fly back there on have been moved to the city, and
Alternative Investments, set up a UK Fridays,” he said. expects 2,000 to follow over the next
offshoot in 2013. He has lived in London After the Brexit vote, there were fears two years.
since, while spending a night a week in a that other European cities would lack But that not offset the jobs Frankfurt-
hotel next to its Paris headquarters. capacity in housing and schools to cope based lenders are axing: overall banking
About 3,500 financiers have moved to with the new arrivals. jobs in the city are expected to fall 3 per
the French capital since the Brexit vote, But Paul Fochtman, headmaster of cent to below 63,000.
according to the Paris Europlace lobby Frankfurt International School, has “This is very regrettable,” said Helaba
group, including executives from Bank only seen a steady trickle of Brexit-re- chief economist Gertrud Traud. “Banks
of America, JPMorgan and BlackRock. lated admissions, which he estimated at that have to move jobs scrutinise very
But Mr Benamou is among those bet- just under 100 in total. closely if they really do need those posi-
ting that the City will remain a big “We’ve always had people moving tions at all in the future.”
enough market, with enough talent, to from London, but there is a bit more Additional reporting by Laura Noonan in
make sticking around worthwhile. urgency now,” he said. New York, Owen Walker in London and Olaf
“It took 20 years to build up London Brexit boosted applications from Storbeck in Frankfurt
Automobiles
Truckmakers in 2040 pledge on diesel
PETER CAMPBELL energy grids and a higher tax on carbon areas to decarbonise. “It’s the backbone
MOTOR INDUSTRY CORRESPONDENT across Europe to help drive the change. of any society in the world today but we
“If we can make this happen, we need have to recognise that they are very
Europe’s largest truckmakers have
to work all together,” said Mr Henriks- dependent on the internal combustion
pledged to stop selling vehicles that
son, who chairs ACEA’s commercial engines to transport all the goods of
produce emissions by 2040, a decade
vehicle board. every industry,” he said.
earlier than originally planned.
The pledge comes as European regu- Long-distance haulage vehicles still
An alliance of Daimler, Scania, Man, lators and governments seek to phase require diesel because of the need to
Volvo, Daf, Iveco and Ford have signed a out emissions from road transport. charge. Hydrogen, which requires its
pledge to phase out traditional combus- The EU plans to reduce CO2 emissions own refuelling infrastructure network,
tion engines and focus on hydrogen, by 50 per cent by the end of the decade. is expected to be a more likely solution
battery technology and clean fuels. The UK has said it will end the sale of for the largest long-distance trucks
The industry will spend about new petrol and diesel cars including while biofuels are expected to help cut
€50bn-€100bn on new technologies, hybrids by 2035, and will consult on try- emissions in the shorter term.
Scania chief executive Henrik Henriks- ing to end the use of diesel lorries. Mr Henriksson added: “There is no
son told the Financial Times, ahead of Professor Johan Rockström, director silver bullet; it won’t be that one tech-
the pledge announcement. of the Potsdam Institute, said freight nology will rule everything, there will be
The truckmakers, under the umbrella delivery was one of the most difficult parallel technologies over time. They
of EU carmaker association ACEA, are will come in different paces but if we sit
working with the German-funded ‘If we sit and wait for and wait for the perfect technology to
Potsdam Institute for Climate Impact emerge, we will burn the planet.”
the perfect technology
Research to consider the best technolo- The changes will require investment
gies and approaches. to emerge, we will in battery charging bays or hydrogen
The pledge signed by the chief execu- stations, as well as grid upgrades so the
burn the planet’
tives of the truck and van businesses network can handle the demand for a
also calls for widespread investment in fast-charger on a large lorry.
Monday 14 December 2020 ★ FINANCIAL TIMES 9
DECEMBER 14 2020 Section:Ad Page Time: 13/12/2020 - 14:22 User: john.lee Page Name: AD FT1, Part,Page,Edition: EUR, 9, 1
10 ★ FINANCIAL TIMES Monday 14 December 2020
COMPANIES & MARKETS
Financials Mining
Oslo fund enhances voting transparency Emails raise
new questions
about group’s
Intentions to be published topic as shown by the Wirecard fraud age, 1.5 per cent of every listed com- had prepared a position on diversity and data from ISS and Glass Lewis, which
five days ahead of 12,000 in Germany. pany. It has laid out its expectations on gender balance but it was not published, advise shareholders on how to vote — Kazakh ties
Asked if the move to publish about everything from what chief executives former chief executive Yngve Slyngstad that would allow it to publish all its vot-
annual meetings next year 120,000 voting decisions a year meant should be paid and how they should not said two years ago. ing intentions from January. It chose five
the fund was becoming an activist inves- combine the role with that of chairman Mr Tangen declined to comment on days ahead of meetings to allow compa-
tor, Mr Tangen said: “No, it just shows to how board directors should be chosen the matter, but it is understood that the nies to respond, as well as for ISS and
Richard Milne — Oslo
we are great believers in transparency. It and how companies should report on fund might issue its views on diversity Glass Lewis to issue their own recom- Tom Burgis
Norway’s $1.2tn oil fund will publish its will make us the leading fund in the sustainability. next year. mendations. “You need to have some
Fresh evidence has emerged indicating
voting intentions five days ahead of world in terms of announcing voting One issue it has shied away from is Mr Tangen has shown a particular kind of platform, otherwise it’s too cum-
staff at a London-listed mining com-
12,000 annual meetings next year in a intentions. From the beginning of next gender equality on boards, amid debate interest in the fund’s work on environ- bersome,” Mr Tangen said.
pany made personal holiday arrange-
move set to make it one of the biggest year, we will release the votes five days among government and central bank mental, social, and governance issues, He brushed aside concerns that tak-
ments for the rulers of Kazakhstan,
voices on corporate governance. ahead of time so everyone can see how officials about whether the fund could saying in October that it should sell out ing a more vocal stance on ESG issues
where it owns lucrative copper rights.
Nicolai Tangen, chief executive, said we vote.” take a different position to Norway, of more companies that perform badly could lead companies or governments
it would also tackle companies’ relation- The fund is taking an increasingly where a quota law ensures that at least in such matters. He said the fund had to conclude the fund was a Norwegian In September, the Financial Times
ships with auditors and how they choose active ownership role as its assets 40 per cent of non-executive directors done “a phenomenal job” on ESG and foreign policy tool. “It isn’t. It’s a strict reported that, in 2011, Kazakhmys
them, an increasingly controversial swell to the extent that it owns, on aver- at listed groups are women. The fund had created a platform — incorporating commercial and financial institution.” organised for the family of Kazakhstan’s
then prime minister Karim Massimov
to fly to France by private jet, visit Dis-
neyland Paris and stay at Hotel George
Market Questions. FOMC meeting V, triggering scrutiny under the UK’s
anti-bribery law. The Serious Fraud
Office said it was “aware of the allega-
Investors watch for Fed moves on asset purchases tions” but declined to comment further.
Now emails seen by the FT reveal that
two years later the same Kazakh official
sent instructions to the company’s boss
regarding a trip to London. By then, Mr
Massimov had become chief of staff to
FT Reporters
Kazakh dictator Nursultan Nazarbayev.
Will the Federal Reserve adjust The questions these emails raise about
its bond-buying scheme? whether the company — now called Kaz
Minerals — broke UK anti-corruption
When members of the Federal Open laws come as its billionaire founder,
Market Committee convene for their Vladimir Kim, leads a £3bn bid to take it
final meeting of the year tomorrow and private, 15 years after its London listing.
Wednesday, the fate of the US central In November 2013, an aide to Mr Mas-
bank’s asset purchase programme will simov wrote to Eduard Ogay, the execu-
be in focus. tive director at Kazakhmys who had in
Since June, the Federal Reserve has 2011 taken instructions on the Paris
committed to buying $120bn of US gov- trip. This time, the aide explained, the
ernment debt each month, with $80bn Massimovs wanted to go to London. He
earmarked for Treasuries of all maturi-
ties and $40bn for agency mortgage- The exchange suggests
backed securities.
such instructions to the
It is an unprecedentedly large pro-
gramme, one that has helped fuel a head of a UK public
roughly 70 per cent increase in the size
company were routine
of the Fed’s balance sheet since March,
taking the total to over $7tn.
A growing number of investors told Mr Ogay to arrange a hotel, trans-
believe it is time for the Fed to clarify port and “cultural programme” for the
more explicitly its plans for its asset pur- family. Both used personal email
chase programme. Some think it should addresses in the exchange of messages,
which were part of a large online leak in
2014 but have only now come to light.
$120 70 One email suggests Mr Massimov
bn %
may have called off the London trip. But
US government Increase in the
the exchange suggests such instructions
debt the Fed has size of the Fed’s
committed to balance sheet from a top Kazakh official to the head of
buying per month since March a UK public company were routine.
Kaz said it had investigated the 2011
shift the bulk of its bond-buying to Some believe table, may again be the Fed’s modus traditional Gulf ally of Saudi Arabia, are Yields have stock index, a valuation measure devel- trip — worth some $100,000 — and
longer-dated Treasuries to ensure that the central bank operandi.” Colby Smith looking to pump at a higher level than oped by economist Robert Shiller, “found no evidence of payment by the
pushed up
borrowing costs for US companies should shift previously agreed, while Russia is reluc- reached a level not seen since the dot- company (or by any of its employees)”
Can Brent hold above $50?
remain low. the bulk of tant to lose market share to rivals. in recent com boom. but did not establish who did pay for it.
Fed officials discussed these issues purchases to Lockdowns and travel bans caused On the demand side, while a pick-up Absolute Strategy Research has found On the 2013 exchange, the company
months
at length at their last meeting on mone- longer-dated Brent prices to plunge to an 18-year in consumption as the global economy global investors are the most bullish said: “We have not seen any of the pri-
tary policy in November, but some mar- Treasuries, to low of below $20 a barrel in April, and rebounds is likely, it will take months towards 1%, about the prospects for 2021 than they vate email correspondence in question
ket participants say the urgency has ensure that even briefly sent the US benchmark for the rollout of vaccinations and for have been in any year since it began car- and have no evidence of company time
a level they
increased now that 10-year Treasury borrowing costs spiralling below zero. the market to return to previous levels. rying out surveys on sentiment five or resources being involved.”
prices are slipping. Yields have for businesses But this month’s rollout of mass vacci- There are also concerns about surging have not years ago. The FT has also seen a £30,000 bill for
pushed up in recent months towards 1 remain low nation programmes has lifted the oil cases of the virus, particularly in the US The independent market research a 2006 stay by the then president Mr
breached
per cent, a level they have not breached Stefani Reynolds/Bloomberg market as hopes grow that demand for and Europe, and stockpiles that remain shop warned in a new report that mar- Nazarbayev at The Lanesborough hotel
since March. crude will increase next year. high. Anjli Raval since March kets were veering dangerously towards in London that was sent to the company.
But while some investors also point to Can the rally that has taken Brent “groupthink”. It said it “made a legitimate contribu-
Will markets keep rising?
a waning economic recovery as virus back above $50 a barrel — the highest “This crowding of views points to vol- tion to an official presidential visit to the
cases surge, others believe the Fed will since early March — be sustained? A series of vaccine breakthroughs has atility if the consensus stance gets chal- UK in 2006, which included a visit to
keep rates on hold this week, especially All eyes will be on the oil producers’ injected extreme giddiness into global lenged by events,” said ASR. Policymak- Kazakhmys’ offices in London”.
since markets have recovered so alliance between Opec and Russia that markets, triggering broad gains across ers should worry about the “growing Tom Mayne, a Kazakhstan expert who
robustly since the pandemic wreaked agreed in April to end a price war and equities, commodities and just about gulf” between their cautious macro out- uncovered the 2006 hotel bill, said that,
havoc earlier this year. enact record supply cuts of 9.7m barrels every other variety of risk asset. look and investor expectations for a in the ex-Soviet republic, some businesses
“A big lesson from 2020 is that the Fed a day to bring the market into balance. Investors have shrugged off rising val- “vigorous” recovery. — known as “pocket companies” — were
intervenes as circumstances demand, Not only have these cuts started to uations, political uncertainty in big Whether or not the sanguine outlook “required to pay for whatever top gov-
not as the meeting schedule dictates,” ease but they are due to taper further in economies such as the US, EU and UK, will hold is anyone’s guess. Perhaps a ernment officials require”. He said the
said Christian Scherrmann, US econo- the coming months, leaving a question and rising virus cases, instead looking better question is: will the fear of miss- emails “raise questions about what was
mist at DWS Group. “Keeping its pow- over the pace at which barrels will be forward to a brighter 2021. ing out keep investors locked in markets known by the company’s British manag-
der dry, while saying that all tools to added to the market from January. This month, the cyclically adjusted through the rest of 2020 and beyond? ers and auditors, and how far [it] went
support the economy remain on the Some countries such as the UAE, a price-to-earnings ratio for the S&P 500 Adam Samson & Camilla Hodgson in trying to please Kazakh leaders”.
Energy. Green funding
US renewables sector struggles as virus blows hole through tax breaks
The US government has been grant- to collect tax refunds for projects, which Some investors deny they are with- icantly more than we had in the past,” congressmen — two Democrats from
Wind and solar investment
ing tax credits for renewable energy would bypass tax equity investors. holding tax equity. Yale Henderson, and looked forward to a “busy 2021”. California and New York and two
developments since the 1970s. Because Abigail Ross Hopper, chief executive head of energy investments at JPMor- Avangrid — a US utility and renewable Republicans from Arizona and Califor-
incentive weakens after
new projects often have no tax liabili- of the Solar Energy Industries Associa- gan, said the bank was going to have its energy developer controlled by Spain’s nia — introduced a bill last month to
pandemic reduces profits ties, developers turn for funding to tion, said changing the recipient of the “biggest year ever” in tax equity trans- Iberdrola — recently told investors it allow tax refunds to be paid directly to
deep-pocketed institutions such as credit would be “the most elegant and actions. He did not anticipate any slow- had issued $600m in tax equity financ- solar projects that broke ground by the
JPMorgan Chase, Bank of America and the most simple solution”. down in 2021 and he believed the same ing. The company “has been able to exe- end of 2021.
Gregory Meyer — New York Berkshire Hathaway, which can claim Tax equity for renewable energy is a held true for other leading investors. cute the tax equity needed for our The renewables industry has also
For decades, big banks and investors the credits against their own tax bills. $12bn-$13bn market, with JPMorgan “I would argue that there’s sufficient projects and has not experienced con- asked Congress to stretch out scheduled
have ploughed tens of billions of dollars Some developers complain that tax and Bank of America each investing tax equity to allow all the good projects straints”, a spokesman said. expiry dates for the credits. The wind
into US renewable energy projects equity investors have become harder to about $3bn last year, said Keith Martin, to get financed,” Mr Henderson said. However, business at Bank of Amer- tax credit ends after this year and the
through a section of the tax code ena- find. Of the 24.5 gigawatts of wind a lawyer at Norton Rose Fulbright Philip Hopkins, head of renewable ica had been slow, said a person familiar solar credit is gradually decreasing.
bling them to offset income with solar projects scheduled to start construction in Washington. The top five investors energy and environmental finance at with the matter. The bank declined to One banker warned that paying cash
and wind investments. this year or next, as much as 16.6GW hold 80 per cent of the market, one Wells Fargo, said his bank had “a very comment. refunds directly to developers could cre-
But the incentive is weakening as the were still in search of a tax equity part- banker said. strong year in 2020, and invested signif- Smaller banks, including First Hori- ate incentives to build “not great
pandemic cuts corporate profits, mak- ner as of October, said Stephen Munro, zon, M&T Bank and SunTrust, part of projects” in poor locations or with infe-
ing deals under the financing system policy analyst at BloombergNEF, a Truist Financial, have either paused or rior designs. Tax equity investors “eval-
known as “tax equity” harder to strike. clean-energy research group. For 34GW decelerated investment, according to uate the quality of projects before
Renewables companies are lobbying of scheduled solar projects, 20GW still executives who spoke on a panel hosted investing”, a system that “outsources a
for direct payments from federal gov- needed tax equity. by Mr Martin. portion of the oversight and compliance
ernment instead of allocating tax credits “Our markets right now are some- The tightening market is hitting monitoring to investors in exchange for
to outside investors. The push comes what frozen,” said Tom Buttgenbach, developers without the scale or banking a financial return”, said a report by the
during a burst of bills on tax credits for chief executive of California-based relationships to command attention. US Congressional Research Service.
energy and capturing carbon dioxide 8Minute Solar Energy, one of the largest When developers first contemplated a Bill Parsons, head of policy at the
late in the US congressional session. developers in the country. He said shortfall last spring, it set off a rush to American Council on Renewable
“The market isn’t iced but it’s not banks were hesitant to commit while secure financing that squeezed less- Energy, warned that there was no time
completely liquid. It’s more like walking they were unsure of the future profits. nimble companies, bankers said. to waste. “The climate clock is ticking,
through Jell-O to get stuff done,” said The chill is hampering growth in wind “The midsized developers are shut and 13 per cent of clean energy workers
Conor McKenna, senior managing and solar projects just as the climate cri- out,” said Jim McGinnis, managing are still out of work due to the pan-
director at CohnReznick Capital, an sis calls for overwhelming investment in director in the infrastructure, power demic. We need to get them back on the
investment bank that advises clients in zero-emissions resources, renewables and renewables group at PJ Solomon, an job building America’s clean energy
the tax equity market. “Everything just executives contend. They support legis- investment bank. future, and that’s precisely what these
takes more time.” lation allowing developers themselves Tax equity for renewable energy is a $12bn-$13bn market Responding to industry pleas, four renewable credits are designed to do.”
— Daniel Acker/Bloomberg
DECEMBER 14 2020 Section:Companies Time: 13/12/2020 - 17:39 User: jeremy.wright Page Name: CONEWS3, Part,Page,Edition: USA, 10, 1