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Davy and tracker scandal reveal toxic culture still at heart of Irish financial system

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Whatever you might think about the property market, the construction industry behind it has been transformed by the crash. Developers, builders and others are now subject to an onerous level of regulation – they complain the pendulum has swung too far, maybe it has – but they build to a higher spec and the industry exhibits a stronger culture of compliance.

Can the same be said of the financial sector, the other industry that played such a stellar role in our post-2008 economic meltdown?

In the next few weeks or months – the timeline isn’t significant – the State’s largest stockbroker, Davy, which is mired in a financial scandal involving its most senior staff and subject to the biggest fine ever levelled on a broker here, will most likely be taken over.

A sale process has begun and one of the parties eyeing up Davy is Bank of Ireland. The bank is itself mired in a scandal and facing a huge fine – which will be a multiple of the €4.1 million levied against Davy – for overcharging 10,000 tracker mortgage customers.

Of course this takeover scenario might not happen. Bank of Ireland is only the frontrunner in a list of candidates that might buy (rescue) the troubled stockbroker. It hasn’t yet been fined by the Central Bank of Ireland over the tracker mortgage scandal but a large penalty is coming.

Ulster Bank was last week fined €38 million by the Central Bank for its failures in the tracker scandal. The wider industry, which has admitted to more than 41,000 cases, has paid out more than €735 million to date in compensation, fines and other charges.

Maybe we are the “Wild West” of European financial services. The tag – thrown at us by the New York Times in 2005 – stung back then, the fact that it’s even remotely applicable now after 15 hard years trying to win back our financial reputation is a sorry statement of affairs.

Commentators talk about Ireland’s small financial ecosystem – how the same faces pop up in multiple areas, in public and private roles, and how this breeds cosy relationships – but that shouldn’t presuppose such financial misconduct.

The banks wrongfully took money from their tracker customers right in the heat haze of the financial crisis and, in the case of the Irish ones, directly after being bailed out by the State. Many families lost their homes as a result of this behaviour.

On the morning the Davy fine and reprimand were announced, its former chief executive Brian McKiernan issued an internal memo to staff, saying there were “no findings of actual conflict of interest or customer loss” in relation to the 2014 transaction in which businessman Patrick Kearney sold Anglo bonds via the company at a steep discount in order to settle a debt – seemingly without knowing the buyers were Davy employees who went on to sell the assets at a profit. The transaction bypassed Davy’s internal compliance function.

The memo was later retracted and sent again with the “actual conflict of interest or customer loss” line removed. For many, this was mere arrogance. The standard institutional response to a crisis – there’s nothing to see here. But this missive to staff was likely to have been picked over by lawyers and management for some time in the knowledge that it would quickly leak outside the office.

And remember the Central Bank’s finding was that Davy failed in its “ regulatory obligations in relation to conflicts of interest” by not considering if there had been one and by keeping its compliance team “in the dark” about the deal. In regulatory terms that’s enough. But why was McKiernan emboldened to state there was no conflict of interest when the finding seemed to suggest otherwise? On any objective analysis it was a clear conflict.

The fact that senior staff circumvented the firm’s own compliance team speaks volumes about the culture of the organisation.

In her testimony to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform earlier this month, Derville Rowland, who heads the Central Bank’s financial misconduct unit, described how Davy effectively stonewalled the regulator’s probe.

“We formed a view that the information provided mischaracterised the gravity and seriousness of the matter and what had in fact occurred,” she said.

The regulator had to deal with “litigious challenges” from Davy’s lawyers throughout the process.

Committee members queried therefore why the Central Bank did not level the maximum fine on Davy. Rowland said the regulator had determined that €5.9 million would be the appropriate fine but that this was reduced by 30 per cent to €4.1 million in accordance with the regulator’s settlement discount scheme because Davy had reached a settlement with the regulator- in legal parlance, copped a guilty plea.

This raises questions about the teeth we afford the regulator in these circumstances.

In her testimony, Rowland used the word “culture” in relation to Davy multiple times. And it’s this culture of compliance – or lack of – that seems to surface time and time again in our financial system. We may have overhauled the regulation of the financial sector but the “culture” has yet to catch up.

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Madison International Realty invests in London Salesforce Tower (GB)

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Madison International Realty has acquired a minority stake in the Salesforce Tower, London EC2, through a Jersey Property Unit Trust (JPUT), joining other investors including Heron International.

 

The 230-metre tower, completed in 2011 at 110 Bishopsgate, is an island site in the City of London and provides 441,000ft² of office space over 37 floors. The property is over 93% let to a range of tenants, the largest of which is Salesforce. The Salesforce Tower also has an outstanding food and beverage offering with Duck and Waffle and Sushi Samba at the very top and the Drift on the ground floor. The building has a BREEAM ‘Excellent’ rating for design.

 

The asset’s central location in the core of the City of London means it benefits from excellent transport connectivity, with Liverpool Street and Bank within a short walking distance. Similarly, there are a large number of new world-class food, drink and entertainment options nearby including the new Pan Pacific hotel adjacent at Heron Plaza and Eataly in Broadgate. In January 2021, an ING-led syndicate of lenders completed a €465.2m (£400m), five-year refinancing of the Tower.

 

Alex Lukesch, Managing Director at Madison International Realty commented on the investment: “This acquisition has allowed us to secure a stake in a prominent London office building, which we believe delivers space that meets the demands of modern occupiers looking for world-class offices in one of the world’s leading financial centres. The investment reflects our conviction in the ongoing resilience of the office sector and the role we believe it will play post-pandemic. We have observed that demand for quality, well-located space remains robust, while companies are increasingly looking for properties that also have strong ESG credentials to help meet their own sustainability targets. In Heron, we believe we have an experienced and highly regarded partner and we look forward to working with them on this venture.”

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Britain’s blossoming love for Japanese design in the home

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The design has a red lid and a narrow neck which widens to form a base of sturdy hips. When poured, the contents flow in a singular, uninterrupted stream.

The Kikkoman bottle hasn’t changed since it was designed in 1961 by Kenji Ekuan for the world’s largest soy sauce producer.

Simplicity has made it ubiquitous. And crucially, it works — think of wrestling with glass Heinz ketchup bottles or constantly wiping lids on plastic iterations. Likely, Kikkoman’s bottle is the reason we’re so familiar with soy sauce.

Serene: A contemporary Japanese-style sitting room. The country's influence can be seen most clearly in the clean, elegant and functional everyday products we use in our homes

Serene: A contemporary Japanese-style sitting room. The country’s influence can be seen most clearly in the clean, elegant and functional everyday products we use in our homes

In the introduction to her book Japanese Design Since 1945 (£35, Thames & Hudson), Naomi Pollock writes: ‘In Japan, good design is everywhere. But most of all, it’s in the home.’

The trend for Japanese-inspired, UK-based brands, such as Wagamama, Superdry and Yo! Sushi, is well worn, but the country’s influence is likely seen most clearly in the clean, elegant and functional everyday products we use in our homes.

Inspired idea 

The Japanese approach to design is summed up well by a single product – Muji’s right angle sock (from £3.50, muji.eu). 

As the foot is perpendicular to the leg, the sock should follow the shape of the body: design centres on the user rather than the designer.

The word ‘Muji’ translates as ‘without brand’ and the company invites (often renowned) designers to create reasonably priced products anonymously. 

Design guru Naoto Fukasawa is an adviser to Muji, and his wall-mounted CD player for the company (£149) is in the permanent collection at the Museum of Modern Art in New York.

Naoto Fukasawa's butterfly-inspired Grande Papilio Swivel Lounge Chair (£2,869, chaplins.co.uk)

Naoto Fukasawa’s butterfly-inspired Grande Papilio Swivel Lounge Chair (£2,869, chaplins.co.uk)

In the UK, Chaplins stocks a large selection of products from Japan, including some from the designer.

‘The idea is to create designs that appear to have been sculpted by the elements,’ says Ludovic Aublanc, creative director at Chaplins. ‘It’s the kind of minimalism that brims with emotion, that makes you grateful and happy to come home.’

The company stocks Fukasawa’s butterfly-inspired Papilio range – chairs and sofas sporting headset ‘wings’ to protect the user’s head (Grande Papilio Swivel Lounge Chair, £2,869, chaplins.co.uk).

Simple seating

Japanese designers have described the chair as the centre of design and an extension of the human form. It follows that these things should be easy on both the body and the eye.

Habitat’s Mori charcoal two-seater sofa (£716, habitat.co.uk) certainly fits the bill. It is compact, unfussy and elegant with its plush curved armrests and contrasting thin, wooden legs.

Simple unfinished woodwork is a key part of design in Japan, like the solid oak dining chairs from Oak Furnitureland (£140, oakfurnitureland.com) which would pair well with the Japanese oak Castor Table by Karimoku New Standard (£1,169, nest.co.uk).

Clutter free

Last year, decluttering guru Marie Kondo took the world by storm with her hit Netflix show. The programme has been talked of plenty, but we’re perhaps unaware of how key these principles are to Japanese design.

A large part of the focus on user-friendly products comes down to space. As ever, it’s important for Muji, with its storage bed (from £299) which has spacious drawers to banish clutter. Loaf has the Woody storage bed (from £995, loaf.com).

Simple boxy shelving units such as the Ikea Kallax range (from £15, ikea.com) are practical, but can also be used for displaying plants, books and records.

Or, for a modern twist, try the John Lewis Dice shelving unit bookcase (£450, johnlewis.com). The company also stocks Japanese brand Like-it’s clear storage products (from £8).

Crockery that rocks 

Japanese pottery has long been a feature of our homes, and a collection by John Lewis is a nod to this. Inspired by woodblock prints, the range includes glassware, plates, mugs and even Christmas decorations. 

It’s all delicate, bright patterns and the infuser mugs by Tokyo Design Studio (from £25) are a highlight.

But elegant motifs are only part of the story. The earthy charcoals, whites and beiges of Hasami Porcelain (hasami-porcelain.com) are a calming, elegant addition to any kitchen.

Hasami teapots start from £65 and mugs from £22 (la-gent.com) – also pick up a copy of Okakura Kakuzo’s The Book Of Tea, written in 1906, an insight into the Japanese ritual of tea-making. Elsewhere, an Oriental Hobnail tea set costs from £22.98 (wayfair.co.uk).

For eating, Denby Pottery has Japanese-inspired bowls from £58 for four in grey and white (denbypottery.com).

Finally, being able to serve Japan’s other favourite drink – the highball – is a must. Try LSA’s Mia Highball glasses (£27 for four, lsa-international.com) or, for something cheaper, a set of six Duralex Prisme highballs is £11.99 at rinkit.com.

Then grab a bottle of Akashi whisky (£28.50, waitrosecellar.com), add ice, stir clockwise 13 times, add soda water, stir again and appreciate another example of elegance and simplicity in Japanese design.

What your home really needs is… a Christmas throw

At this time of year, people fall into two groups: those who believe more is more, with bright lights and decorations aplenty; and others who keep things simple, with a few holly sprigs and a carefully adorned tree.

Yuletide luxury: You could use this Alpaca Fair Isle Throw, £99.50, all year round

Yuletide luxury: You could use this Alpaca Fair Isle Throw, £99.50, all year round

But whether you’re a maximalist or a minimalist, your home will need a Christmas throw because someone in your festive bubble is bound to complain about being cold.

If glitter is your thing, you’ll like the fleece star throw from Marks & Spencer (£25, marksand spencer.com). 

Or snuggle up under Dunelm’s red cable-knit design with a fleecey inside (£60, dunelm.com).

For something more fun, Redbubble has one that reads: ‘This is my Hallmark Christmas movie watching blanket’ (£34.73, redbubble.com).

Going low-key? How about a white and grey reindeer pattern with red pompoms (£40, barkerand stonehouse.com)? 

Or this Alpaca Fair Isle Throw , £99.50, notonthe highstreet.com), which you could use all year round.

Anne Ashworth 

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Extending grace period on checks in North would be ‘problematic’ – Taoiseach

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Taoiseach Micheál Martin has said it will be “very problematic” if the UK again extends unilaterally the grace period for Northern Ireland Protocol checks.

But speaking on the Trevor Phillips on Sunday programme on Sky News, Mr Martin also insisted a breakthrough between the EU and UK was still possible “if there’s a will there on both sides”.

His comments came after Boris Johnson escalated his dispute with the European Union by warning he will do whatever it takes to keep goods flowing from Great Britain to Northern Ireland.

Following talks with the EU’s key figures on Saturday, the British prime minister said he would not hesitate to take unilateral action to protect the position of Northern Ireland in the increasingly bitter row over post-Brexit trading arrangements.

The row – dubbed the “sausage war” – could mean chilled meats will not be shipped across the Irish Sea because of EU rules after the end of the month.

The UK is considering extending the current grace period without the consent of Brussels to ensure that sausages and mince can continue to reach Northern Ireland’s shops.

But Mr Martin told Sky News that the “channels do exist to get this resolved”.

He added: “In particular, the Sefcovic/Frost process should be fully explored and optimised to get an agreement and I think the prospects, in my view, if there’s a will there on both sides, and there is a will there from the European Union side I know that, I detect from the British prime minister Boris Johnson that the British government is anxious to get a resolution of this, so I think we should work at it.”

Mr Martin said he believed an SPS agreement (on plant and animal health measures) could remove 80 per cent of protocol checks.

When asked about the possibility of the UK unilaterally extending the grace period for checks, Mr Martin said: “I think it will be very problematic because it’s not about sausages per se, it really is about the fact that an agreement had been entered into, not too long ago, signed off by the British government with the European Union.

“If there’s consistent, unilateral deviation from that agreement, that clearly undermines the broader relationship between the European Union and the United Kingdom, which is in nobody’s interest and therefore that’s why the UK with the EU have to work very hard now in the coming weeks.

“I know the European Union are anxious to resolve this and want to resolve it but they need to see a similar reciprocity from the UK side.”

When asked if the protocol is undermining Northern Ireland’s place within the UK, Mr Martin said: “We’ve never seen the Protocol as a constitutional issue, it doesn’t in any way interfere with the constitutional status of Northern Ireland as defined and articulated in the Good Friday [Belfast] Agreement.

“We’re very clear from the Irish Government perspective on that, but we do believe in seamless trade on the island of Ireland, it makes sense. We believe in seamless trade insofar as we possibly can between the United Kingdom and Northern Ireland.”

‘A bit of respect’

British foreign secretary Dominic Raab accused EU leaders of trying to undermine the status of Northern Ireland as part of the United Kingdom.

After talks at the G7 summit in Cornwall between Boris Johnson and key EU figures failed to achieve a breakthrough in the dispute over the implementation of the Brexit Withdrawal Agreement in Northern Ireland, Mr Raab said the EU was showing a lack of respect.

“What we cannot have is the continuing disruption of trade and effectively try to change the status of Northern Ireland, contrary to the consent and wishes of the people, which is not just contrary to the Northern Ireland Protocol but also to the Belfast Agreement,” he told Mr Phillips on Sky News.

“We have serially seen senior EU figures talk about Northern Ireland as if it was some kind of different country to the UK. It is not only offensive, it has real-world effects on the communities in Northern Ireland, creates great concern, great consternation.

“Could you imagine if we talked about Catalonia, the Flemish part of Belgium, one of the lander in Germany, northern Italy, Corsica in France as different countries. We need a bit of respect here.– PA

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