Each week QFINANCE will endeavor to bring you some of the biggest news stories from the past five days in finance and business, as well as some of the most fascinating websites and links that have crossed our path. We hope you'll enjoy reading, we hope you'll have a great weekend and we hope that you'll come back each Friday to brush up on your finance and business knowledge.
Monday September 26
At the beginning of this week it emerged that radical plans were being formed by the European Commission that would dramatically affect the UK’s biggest auditing firms. New draft regulations would outlaw all sales of advisory and consultancy services to the firms’ clients, from risk management to tax advisory. This would even apply to those that it does not audit. The result of this would be that the UK’s Big Four accountancy firms (Ernst & Young, PwC, Deloitte and KPMG) would need to hive off their consultancy arms and potentially even stop cross-selling services. The latter reality would see each firm potentially deprived of £1bn in annual revenue, the income from their consulting businesses. Amongst other wide-scale repercussions, the passing of such a law could mean that they would have to pull apart their business models and service clients from two separate entities. The draft plans also propose forcing companies to change auditor at least once every nine years. The Commission believes that this would break up long-term relationships between partners and their clients, and that the resulting competition would improve audit quality all round.
Read about Brussels' war with the Big Four in more depth here.
Tuesday September 27
On Tuesday, industrial investor Melrose backed out of its bid to buy Charter International after its share price fell too low to make its original offer viable, stating that “in the current climate Melrose is of the view that it is not in its shareholders’ best interests to proceed”. Melrose abandoned the bid despite admitting to having completed its due diligence on Charter and to having gained the required debt funding ready to use. Sources blamed the failed bid on panic selling in the stock markets since August, which saw Melrose’s share price drop 18 per cent whilst Charter’s stayed high because of the bid talk. Melrose would now have to see a 30 per cent increase in their shares before an offer for Charter would become affordable again, as they are not willing to raise the offer beyond their initial 850p one. Charter’s board has now recommended a 910p cash and paper offer from US rival Colfax.
Read about Melrose, Charter International and Colfax in more depth here.
Wednesday September 28
The middle of the week saw investors pulling money out of the Man Group at the fastest rate since early 2009. The world’s largest listed hedge fund shocked markets when it announced that clients had withdrawn a net $2.6bn (£1.67bn) between the start of July and the end of September. Man saw total assets under management drop 8.45 per cent to $65bn from $71bn at the end of June. Man share prices subsequently plunged 24.9 per cent to close on Wednesday at 180p. Chief executive Peter Clarke said that Man was able to continue buying and selling financial instruments, but warned that investor appetite might be “generally suppressed” for the remainder of 2011.
Read about this bad day in the history of the Man Group in more depth here.
Thursday September 29
On this day in history, just after midday, the German parliament approved the granting of additional powers for the EU’s main bailout fund. The measure will now go to Germany’s upper house of parliament on Friday and will be put to a vote. Many saw this as a test of Chancellor Angela Merkel’s authority, as many Germans are opposed to committing more money to save other eurozone member states such as Greece. Some in Merkel’s coalition even vowed to oppose the bill. However, the bill was approved in the Bundestag by 523 deputies, with 85 voting against it and three abstaining. Only 10 countries that have the euro as their official currency, but each of the total 17 countries must ratify the commitment in order to expand the powers of the European Financial Stability Facility, boosting its bailout guarantees to €440bn (£383bn). Germany, as Europe’s largest economy, would have to commit €211bn to this fund, rising significantly from the current €123bn.
Read about Angela Merkel and the European Financial Stability Facility in more depth here.
Friday September 30
In the latest dramatic development in the eurozone crisis saga (and it was dramatic), Austria today became the latest member state to approve the expansion of the European Financial Stability Facility. Whilst the decision was made, the debate in Vienna was briefly suspended after the far-right Alliance for the Future of Austria party heckled the Austrian finance minister Maria Theresia Fekter so loudly that she was unable to continue. The party then produced a banner demanding a public vote on the plan to enlarge Europe’s bailout fund in an attempt save the ailing Greek economy, a plan that the finance minister defended provided that it would not be paid out unless Greece meets the conditions set by the troika (EU, ECB and IMF). In Athens, protesting civil servants stormed the transport ministry, delaying talks between international inspectors and the crisis-hit government for the second time.
See how the events of the day unfolded here.
Come back next Friday for another report on the world of business and finance.
Featured Events:The 4th Annual Risk Management in Energy Trading Conference, from November 8-9 in Houston, will be a two-day, industry focused event, specific to those within Risk Management, Risk Analysis, Energy Trading and Energy Derivatives.
This conference will bring together the leading energy supplies and producers as well as banks, hedge fund and asset management companies to clarify unclear rules stemming from the impending Dodd-Frank regulations and to determine best practices for an integrated risk management system. Attendees will discuss how to implement an integrated risk management system, market risk and finding best practices for evaluating the independent risks.
Tags: 4th Annual Risk Management in Energy Trading Conference , Alliance for the Future of Austria , Angela Merkel , auditing , Bundestag , business and finance news , business news , Charter International , Colfax , consulting arms , default , Deloitte , Ernst and Young , European Commission , european debt crisis , European Financial Stability Facility , eurozone , finance news , Financial Markets , German economy , German parliament , Greek debt , Greek economy , hedge funds , IMF , International Monetary Fund , KPMG , Man Group , marcus evans , marcusevans , Maria Theresia Fekter , Melrose , Mergers and Acquisitions , panic selling , Peter Clarke , PricewaterhouseCoopers (PwC) , troika