The New Governor From Canada

28 11 2012

Canada’s Mark Carney has had a long and successful career in global banking, finance and regulation. Yet prior to George Osborne’s announcement – just two days ago on 26 November 2012 – that Carney would replace Mervyn King (upon his retirement on 30 June 2013), the Canadian who has become the first foreigner to rise to the position of the Governor of the Bank of England was virtually unknown to the Brits. But Carney, who relishes a challenge, has had a very distinguished career and is currently the Governor of the Bank of Canada and is credited with guarding the Canadian economy against the worst of the global financial crisis. And, since last year, the celebrated regulator with a Goldman Sachs’ background, has also served as the head of the Financial Stability Board: a role which requires his oversight in respect of the regulatory agenda of the Group of 20 leading industrialised and emerging economies.

Here are some of the thoughts that Carney has shared with the media:

  • Global systemically important banks have been identified and will be subject to higher capital requirements and mandatory recovery and resolution plans. This framework is also being extended to other systemic financial firms. Read the rest of this entry »




Libor: Implementing Wheatley

28 11 2012

In the wake of this summer’s scandalous events in the banking sector, the UK government wants to demonstrate that it is acting swiftly to implement the recommendations made by Martin Wheatley – CEO designate of the Financial Conduct Authority – in respect of the London Interbank Offered Rate (“Libor”). To this end, HM Treasury has made clear through Greg Clark (the Financial Secretary) that “the government is committed to restoring global confidence in this important benchmark.” New criminal offences are envisaged for attempted manipulation of Libor and the treasury is looking into bringing other benchmarks within the scope of regulation. Earlier posts on Libor on this blog can be recalled as (1) Treasury Committee on Libor; (2) Libor Needs Strengthening; and (3) Wheatley Review on Resetting Libor .

Some of the proposed changes are set out in the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2013 (“the 2013 order”) which seeks to amend existing legislation contained in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 – (“the 2001 order”) specifying the types of activities and investments for the purposes of the Financial Services and Markets Act 2000 (“the Act”). Read the rest of this entry »





Rock Center: Ten Myths of Say on Pay

17 11 2012

This post summarises the findings of an interesting paper called Ten Myths of Say on Pay (Larker et al) published by the Rock Center for Corporate Governance. The executive remuneration debate is hard to balance and at times even harder to conceptualise. Other academics such as Professor Cheffins and Randall Thomas argue that sudden increases in pay can be controlled through say on pay but in the long run executive pay would continue to increase. It seems that there is truth in both approaches and the Rock Centre’s paper is worth reading to get insight on the remuneration debate in a US-UK perspective. In any event, the “ten myths” are:

(1) There is only one approach to say on pay: it is argued that given the views that are out there, no one can agree on how to solve the problems of compensation.

(2) All shareholders want the right to vote on executive compensation: it is said thatPrior to Dodd-Frank, shareholder support for proxy proposals requiring say on pay routinely failed to garner majority support. Among the 38 companies where shareholders were asked to vote whether they wanted the right to vote on executive compensation in 2007, only two received majority approval. Read the rest of this entry »





VTB v Nutritek: Piercing the Corporate Veil: UK Supreme Court Preview

9 11 2012

The truly important and absorbing case of VTB Capital plc (Appellant) v Nutritek International Corp and others (Respondents) UKSC 2012/0167 has made it to the UK’s court of final recourse which granted permission to appeal on 26 July 2012. The case is going to be heard for three days by Lords Neuberger, Mance, Clarke, Wilson and Reed JJSC from 12 to 14 November 2012 . There are a lot of issues in this case. Notably a couple of juicy ones are (1) whether the court can pierce the corporate veil and treat a person as a party to a contract if that person uses a puppet company to enter into a contract with a third party in order to perpetrate fraud on that third party and (2) when determining whether England is clearly the appropriate forum, is there a presumption that a defendant who has committed a wrong in England ought to answer for that wrong in England. For some reason this case is not being broadcast live. Maybe it is just too high profile and controversial to show live. Too bad …  because upon appeal to the UKSC, even Special Immigration Appeals Commission dealing with national cases are aired. 

Facts

VTB (“V”), a London-based bank (the appellant) entered a facility agreement with a Russian company (“R”) in 2007. Under that agreement, V loaned R $225m to fund the purchase of six Russian Dairy Plants (“the dairy companies”) from the first defendant (Nutritek, “D1”: the “defendants” (at first instance) also became the “respondents” in subsequent proceedings). R subsequently defaulted on the loan. In 2010, V began claims in deceit, alternatively conspiracy to defraud, against the defendants. In May 2011, Chief Master Weingarten granted permission to serve the claims on the defendants out of the jurisdiction. In August 2011, V obtained a worldwide freezing order against Konstantin Malofeev or “D4”: see below.

Read the rest of this entry »