WEDNESDAY 8 MARCH 2023 INTERNATIONAL NEWSPAPER OF THE YEAR USA $2.50 Canada C$3.

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The recycling nightmare of single-use vapes Where the EU fits in a nationalistic world
BIG READ, PAGE 17 MARTIN WOLF, PAGE 19

Ukraine war Briefing

Mourning for i N26 railed against
founders’ ‘culture of fear’
killed medic Top executives at one of Europe’s
most highly valued fintechs said
its founders promoted a “culture
Mourners hug in Vinnytsia, Ukraine, of fear” that threatened to spark a
yesterday during the funeral of 29-year- “downward spiral”.— PAGE 6
old-Yana Rikhlitska, a Ukrainian army
medic killed in Bakhmut who had i Unions in France lash out
appeared on video last week treating France was hit by fresh strikes,
wounded soldiers. with unions vowing to bring the
Volodymyr Zelenskyy yesterday said country to a standstill as they try
that instead of pulling back from the to derail a planned rise in the
frontline city in Russia’s war against national retirement age.— PAGE 2
Ukraine, his top generals had “unani-
mously” advised him to “reinforce”. i Blackouts dent S Africa
The Ukrainian president’s comments South Africa’s economy shrank
come the day after western allies sug- 1.3 per cent, which was more than
gested that a temporary withdrawal expected, at the end of 2022 after
from the eastern city would not be a set- being hit by Eskom electricity
back to the overall war effort. group-imposed outages.— PAGE 4
The battle for the city, surrounded on
three sides by Russian troops, has lasted i PwC and KPMG laggards
almost nine months, one of the most PwC and KPMG are falling behind
grinding stand-offs since Russia’s full- EY and Deloitte in promoting
blown invasion of the country more women to manage corporate
than a year ago. America’s most prestigious
‘Fortress Bakhmut’ page 2 audits, new figures show.— PAGE 6
Thibault Camus/AP

i China warns of US strife

China has warned of a clash with
the US unless Washington ceases

Powell signals return of larger Fed trying to contain Beijing, showing

the Communist party’s concerns
over escalating tensions.— PAGE 4

i Hedge funds hit at LME

rate rises amid battle to cool inflation Lawsuits are piling up against the
London Metal Exchange a year
after its decision to cancel nickel
trades. It now facing legal claims
in excess of $500mn.— PAGE 12

3 Congressional appearance 3 Remarks trigger market sell-off 3 Hawkish rhetoric chimes with ECB
COLBY SMITH AND JAMES POLITI
WASHINGTON
Jay Powell warned at a congressional
appearance yesterday that the US Fed-
eral Reserve is prepared to return to big-
ger interest rate rises to fight inflation.
In his first public intervention since
data releases showed the central bank
struggling to cool the US economy
despite a year-long campaign of mone-
tary tightening, the Fed chair signalled
his willingness to ratchet up rate
increases to combat persistent price
rises. Powell told the Senate banking
committee that “the ultimate level of
interest rates is likely to be higher than
previously anticipated” and said that
recent economic figures were “stronger
than expected”.
He added: “If the totality of the data
were to indicate that faster tightening is
warranted, we would be prepared to
increase the pace of rate hikes.”
The Fed chair’s remarks prompted a
stock market sell-off, with the S&P 500
and Nasdaq both falling nearly 1 per
cent by midday trading yesterday. The
two-year Treasury yield, which moves
with market expectations, rose to its
highest since 2007. The dollar increased
1 per cent against the euro to $1.0572.
Traders who had previously been bet-
‘The ultimate level of rates
is likely to be higher than
previously anticipated’
Jay Powell, Federal Reserve chair
ting on a quarter-point rise at the Fed’s
March 21-22 meeting now favour a half-
point increase, according to CME Group.
The central bank has reduced the size
of its rate rises from 0.75 percentage
points between June and November to a
half-point rise in December. It shifted
down again in February to a more tradi-
tional quarter-point increase.
The Fed’s main interest rate is now at
a target range of 4.5-4.75 per cent, com-
pared with near zero a year ago. In
December, Fed officials projected inter-
est rates would reach a peak of 5.1 per
cent this year. But Powell’s comments
signal he is willing to squeeze further.
His hawkish rhetoric is in line with
statements from Christine Lagarde,
president of the European Central Bank,
who warned at the weekend that price
pressures were “sticky”, requiring fur-
ther action to tackle the inflation “mon-
ster”. Financial markets now expect the
European rate to rise from 2.5 per cent
to above 4 per cent.
By contrast, Andrew Bailey, Bank of
England governor, has been cautious
not to give a precise steer on UK rates.
Investors and economists will be
watching to see whether the rebound in
the US labour market and consumer
demand in January was sustained last
month. Powell said the hot data “reflects
the unseasonably warm weather” but
also indicates “inflationary pressures
are running higher than expected”.
Democrats have been growing anx-
ious that the Fed will go too far in tight-
ening monetary policy, triggering a
recession that could undermine many
Datawatch
of the labour market gains achieved Glass ceiling
Women as a % of key decision-makers
during the recovery from the pandemic.
in the biggest companies, 2022*
But Powell maintained that getting France
core inflation to the Fed’s 2 per cent tar- Italy
UK
get from January’s level of 4.7 per cent Germany
would “very likely” require “some sof- Portugal
EU27
tening in labour market conditions”, Poland
Greece Gender
suggesting job losses ahead. Latvia parity
Turkey
“We cannot risk undermining one of Cyprus
the successes of our current economy,” 0 10 20 30 40 50
Sherrod Brown, chair of the Senate *Companies on the main blue-chip
index registered in that country
banking committee, said. Source: European Institute for Gender Equality
Elizabeth Warren, the progressive
Democrat from Massachusetts, accused Women make up a third of key decision
Powell of “gambling with people’s lives”. makers in the average large EU company,
Powell responded that the “social cost more than double that of a decade ago.
of failure” on inflation was “very, very Portugal has made the most progress. It
high” and warned of the risk of the has 4.5 times as many female decision
makers as it did in 2012.
“psychology” of “self-perpetuating”
inflation.

EU demands Musk hires more staff to

Sale of £250mn UK property
puts spotlight on Saudi pain
The sale of Britain’s most expensive
residential property, a 40-room house
worth £250mn in London, has shone a
light on the discreet top end of the UK
market and the love affair between
Saudi cash and the city. It also exposes
the pressures on Saudi royals amid a
crackdown on lavish state spending on
princes. A person familiar with the
royals’ finances said there was ‘less
cash to go around. If you have assets
in London, yeah, they have to be sold.’
Feeling the pinch i PAGE 9
moderate misinformation on Twitter
JAVIER ESPINOZA — BRUSSELS
CRISTINA CRIDDLE — LONDON
HANNAH MURPHY — SAN FRANCISCO
Elon Musk and the EU have clashed
over Twitter’s plan to use more artifi-
cial intelligence and volunteers to help
moderate his social media platform as
the company responds to strict new
rules designed to police online content.
Brussels has told the billionaire owner
of Twitter to hire more human modera-
tors and fact-checkers to review posts
on the platform, according to four peo-
ple familiar with recent talks between
Musk, Twitter executives and European
regulators.
The demand complicates Musk’s
efforts to reorganise the lossmaking
business he acquired for $44bn in Octo-
ber. He has slashed more than half of
Twitter’s 7,500 staff, including the
entire trust and safety teams in some
offices.
Twitter uses a mix of human modera-
tion and AI technology to detect and
review harmful material, in line with
other social media platforms. However,
it does not employ fact checkers, unlike
larger rival Meta, which owns Facebook
and Instagram. Twitter has also been
using volunteer moderators for a fea-
ture called Community Notes to tackle a
deluge of misinformation.
Musk told EU commissioner Thierry
Breton in January that it would lean fur-
ther on its AI processes, according to
people with direct knowledge of the
talks. Breton responded by saying he
expected Twitter to hire more people to
comply with the Digital Services Act.
The DSA is a landmark piece of legis-
lation that will force Big Tech groups to
police their platforms more aggressively
for illegal content. Major platforms,
including Twitter, will have to fully
comply by September or face fines of up
to 6 per cent of global revenues. Musk
told Breton that hiring would take time
but that staff would be in place to com-
ply with the DSA this year.
However, since the meeting in Janu-
ary, there have been further talks
between Twitter and EU regulators over
moderation plans where EU officials
said pursuing the voluntary model
could weed out a proportion of mislead-
ing information. “Community Notes is
not a terrible idea but Musk needs to
prove that it works,” said a person with
direct knowledge of the talks.
The commission said: “Ensuring suf-
ficient staff is necessary for a platform
to respond effectively to the challenges
of content moderation.” Twitter did not
respond to requests for comment.

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2 ★
Industrial action
French unions step up strikes over pensions Zelenskyy
strengthens
Rolling walkouts planned
in protest at Macron bid
to raise retirement age
LEILA ABBOUD AND SARAH WHITE
PARIS
A fresh wave of strikes hit France yester-
day as labour unions vowed to bring the
country to a standstill in an attempt to
force President Emmanuel Macron to
abandon his planned rise in the retire-
ment age.
In a tactical change, some unions rep-
resenting public transport workers,
truckers and nuclear plant technicians
said they would be going on rolling
Greece confident credit rating makes the grade
Central bank chief believes
‘junk’ days are numbered
while urging fiscal prudence
ELENI VARVITSIOTI — ATHENS
Greece is on the cusp of regaining its
investment-grade credit rating after 12
years in the junk-bond wilderness, cen-
tral bank governor Yannis Stournaras
has said as he urged the next govern-
ment to maintain fiscal prudence.
Stournaras said he was “confident”
that credit rating agencies would
upgrade Greek bonds within months,
should lawmakers signal their intent to
maintain reforms and take advantage of
a “window of opportunity” to signifi-
cantly lower the country’s debt burden.
“We think 2023 is the year we’ll get
the investment grade,” Stournaras said.
His comments come as the country
gears up for spring elections, with the
incumbent centre-right New Democ-
racy party leading in the polls. The party
has signalled it will continue to carefully
manage the public finances.
Stournaras said the most likely timing
of the upgrade was “immediately after
the election”, but it could even come
before the vote took place.
Greece lost its investment-grade sta-
tus in January 2011 after its economic
crisis threatened to break the eurozone
apart. Its ratings fell as low as CCC-,
before recovering to BB+, one notch
below investment grade, as the coun-
try’s recovery gathered momentum.
Athens managed to shave more
than 24 percentage points off its debt-
to-gross domestic product ratio last
year alone, with its economy expanding
by just over 5 per cent over 2022.
“A few years ago, few people expected
Greece to remain in the eurozone. Now,
not only does it remain, but it performs
better than the eurozone average,” the
governor said.
Stournaras, who has headed the cen-
tral bank since 2014, warned that this
“benign [economic] cycle” must not be
squandered and called on the govern-
ment to make some desperately needed
investments in the country’s battered
infrastructure following a railway crash
that has claimed the lives of at least 57.
“Greece has managed to correct
macroeconomic imbalances and im-
prove price and wage competitiveness,
but structural competitiveness remains
low compared to other eurozone mem-
bers,” he pointed out. “The country’s
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Published daily except Sundays, New Year’s Day,
strikes, unlike the less-disruptive day-
long walkouts that have taken place
since January.
Almost two-thirds of primary school-
teachers were on strike, and one-quar-
ter of civil servants. France’s national
railway cancelled three-quarters of
trains, while airlines ditched about one-
third of their scheduled flights.
“We are going into a higher gear,”
Philippe Martinez, head of the hardline
CGT union, told the Journal du Diman-
che. “The mobilisations will continue
and grow until the government hears
what workers are saying.”
By mid-afternoon, energy sector
workers cut production at EDF’s
nuclear reactors and other power plants
Public finances. Spring elections
Greek economy has performed relatively
well since start of Covid pandemic ...
Annual GDP growth (%)
Greece Eurozone
2000 05 10 15
Sources: IMF; Refinitiv
Rail rally: infrastructure and the modernisation of
students protest the public sector remain an issue.”
in Athens last Despite the gains of recent years,
week after a Greece still holds the highest debt
fatal train crash. load in the eurozone at 170 per cent of
Below, Yannis its output.
Stournaras
Aristidis Vafeiadakis/
Under the terms of its bailout, official
creditors took on a large chunk of
Zuma Press/dpa
Greece’s debt, while charging relatively
low interest rates for the government to
service it up until 2032.
“We have a window of opportunity
that should not be wasted,” Stour-
naras said. “We need to bring down
the debt-to-GDP ratio to such a level
that nine years from now, the interest
payments, which are now under [a]
grace period, will not create a new debt
problem.”
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FINANCIAL TIMES
INTERNATIONAL
to remove roughly a fifth of the usual
daily electricity consumption. That led
that would be gradually introduced by
2030.
France to import electricity from its
neighbours.
But with three-quarters of the public
against raising the retirement age and
“It’s one of the biggest strikes and
impacts on the energy sector we’ve
seen,” said Kepler analyst Emeric de
unions carrying out the biggest protests
in decades, it is not clear that the gov-
ernment has the votes to get the changes
Vigan. through the National Assembly.
Macron’s vow to revamp the country’s Macron’s centrist alliance consists of
pension system was one of his central about 250 MPs so the government needs
re-election pledges last year after he to win over opposition politicians to
tried a more ambitious overhaul in reach 289 votes, or convince some to
2019, which he abandoned because of abstain to get to a majority.
the Covid-19 pandemic. With the far-right and left opposed to
His current proposal, which would the change, the government has been
raise the minimum retirement age from negotiating with the conservative Les
62 to 64 and require 43 years of work to Republicains, who hold 61 seats and
earn a full pension, is a more modest one have long supported raising the retire-
... but output still remains well below Greek bond yield spreads have stabilised
the 2007 peak Greek 10-year government bond yield spread over
Greece real GDP (2007=100) German bonds (% points)
10 100
5 90
0 30
80
-5
70
-10
Forecast
-15 60
20 23 2000 05 10 15 20 23 2007
Growth would also be lower this year, ‘Few people
with higher interest rates expected to
weigh on demand. expected
“A sustainable fiscal effort will be Greece
needed,” the former finance minister
said, adding that it would not be easy for to remain
the government to go from a small pri- in the
mary deficit to a position of fiscal sur-
plus by 2024. eurozone.
High inflation would also dampen the Now, it
economic outlook. Core price pressures,
which exclude changes in food and
performs
energy costs, and are seen as a better better than
gauge of underlying inflation, hit a fresh the eurozone
regional high of 5.6 per cent.
However, Stournaras, who sits on the average’
European Central Bank’s governing
council, flagged that headline inflation
readings were much “better”, or lower,
Legal requirements
Regulator hits at EU banks after quarter break diversity rules
LAURA NOONAN — LONDON largely white, male and middle-aged
The European Banking Authority
profile of their boardrooms and execu-
tive committees in the wake of the
wants supervisors across the EU to
financial crisis.
crack down on banks and investment
The rules included a demand that all
companies that flout rules on promot-
companies set a diversity policy for
ing diversity after its research showed
their management boards, and that
more than a quarter of groups were still
larger companies set targets for improv-
ignoring requirements introduced in
ing diversity in their leadership teams.
2014.
Adoption of the policies was better
The EBA, which writes the rule book among larger institutions, where com-
enforced by the European Central Bank pliance was 94 per cent among a group
and national supervisors, yesterday said mainly composed of large banks. But
27 per cent of almost 800 European the EBA criticised that group’s approach
banks and investment companies it to setting mandatory targets, with
reviewed had still not created the diver- almost 40 per cent found to have set
sity policies that became a legal require- “very low” goals, including some that
ment almost a decade ago. aspired to less than 25 per cent female
The EBA’s report also charted the representation on boards.
painfully slow progress of banks and Describing the number of companies
investment companies in improving the flouting the rules as “simply not accept-
diversity of their top management able”, Bernd Rummel, policy expert at
teams and supervisory boards, which the EBA, said the Paris-based rule-
remain almost 75 per cent male and con- maker would carry out a “specific exer-
tinue to pay men more than women for cise” to see if supervisors were rising to
their services. the task.
The report comes almost a decade The EBA wants them to use supervi-
after the EU created legal requirements sory powers to force banks and invest-
mandating banks and other financial ment companies to comply with rules.
services companies to address the Those options could include higher cap-
ment age. But a splinter faction in LR
has emerged that is trying to wring out
more concessions.
As a last resort, the government can
over-rule parliament and pass the law
by decree. But such a move risks gener-
ating a political crisis.
“The protest movement will not cause
the government to pull the text or back
down from changing the retirement
age,” said Marc Ferracci, an MP from
Macron’s Renaissance party.
The government has put the draft law
on an accelerated timetable so the proc-
ess must finish before the end of the
month. A final vote could be held as
early as March 16. “No one wants to drag
this out,” Ferracci added.
50
40
20
10
0 several main cities in Ukraine’s eastern
10 15 20 23
than rate-setters had anticipated in
December because of a sharp fall in
energy prices.
He would not commit to specific fur-
ther rate rises in an environment where
headline inflation was declining. “That
could lead to an increase in market con-
fusion rather than limit it.”
His comments clash with the increas-
ingly hawkish tone coming from many
of his fellow ECB rate-setters.
Its president, Christine Lagarde, has
said the central bank is “very, very
likely” to raise its deposit rate from
2.5 per cent to 3 per cent at its March 16
meeting, warning “inflation is a mon-
ster that we need to knock on the head”.
Additional reporting by Martin Arnold in
Frankfurt
ital requirements and restrictions on
business.
The EBA claims enforcing the stand-
ards would not only make businesses
fairer but also safer by combating
groupthink.
Rummel said a discussion among the
EBA’s board of European supervisors
had suggested there was “a lot of willing-
ness” to fix the problem.
Banking supervisors have already
made complying with diversity rules
one of the elements of their annual
supervisory reviews. If a bank was
found to have repeatedly breached its
The European Banking Authority:
found diversity progress very slow
Wednesday 8 March 2023
‘Fortress Bakhmut’
commitment
to defending
eastern city
ROMAN OLEARCHYK — KYIV
Ukrainian president Volodymyr Zelen-
skyy has doubled down on defending
Bakhmut despite earlier signals of a
withdrawal from the eastern city that is
almost surrounded by Russian troops.
In a video address, Zelenskyy said he
had met his top generals who had
“unanimously” advised “do not with-
draw but reinforce”.
His intervention comes amid reports
of concerns among western officials,
analysts and some Ukrainian troops at
the front line about the merits of hold-
ing on to the city despite the costs. US
defence secretary Lloyd Austin said on
Monday a retreat from Bakhmut should
not be seen as an “operational or strate-
gic setback”.
Zelenskyy said he had ordered Gen-
eral Valeriy Zaluzhnyi, commander-in-
chief of Ukraine’s armed forces, “to find
the appropriate forces to help the guys
in Bakhmut”.
The battle for the city, known among
troops as “Fortress Bakhmut”, has
lasted almost nine months, one of the
most grinding stand-offs since Russian
president Vladimir Putin launched his
full-scale invasion of Ukraine in Febru-
ary 2022. The largely bombed-out city
has been assailed by Russian troops
from its east, north and south.
“The Ukrainian defence of Bakhmut
continues to degrade forces on both
sides,” the UK’s defence ministry said on
Twitter yesterday.
Sergei Shoigu, Russia’s defence minis-
ter, said taking control of Bakhmut
would allow his troops to “continue an
offensive” into the Ukrainian defences,
according to Interfax. He estimated
Ukrainian casualties grew 40 per cent in
February to 11,000. Ukraine’s general
staff yesterday said 1,060 Russian sol-
diers had been killed along all front lines
since February 24. The claims could not
be independently verified.
Kyiv claimed it had identified one of
its soldiers from a video circulating on
social media on Monday that appeared
to show Russian troops executing him as
a prisoner of war. The footage shows the
soldier, unarmed and smoking a ciga-
rette, being shot after he chanted:
“Glory to Ukraine.” An army spokesper-
son told the Financial Times relatives
had confirmed his identity but an
autopsy was not possible.
Capturing Bakhmut, one of the last of
Donbas region not under Russian occu-
pation, would give Putin his first big bat-
tlefield victory since his forces captured
the nearby sister cities of Severodonetsk
and Lysychansk early last summer.
Ukraine counter-attacked last
autumn twice to retake areas in the
north-east as well as the southern city of
Kherson. But Russian forces still occupy
eastern and southern regions of
Ukraine, accounting for just under 20
per cent of its territory.
Some western officials and experts
say Kyiv should pull out to preserve its
forces ahead of its own planned counter-
offensive, expected after the arrival this
spring of fresh western weaponry. But
Ukrainian officials and experts have
said their continued defence of
Bakhmut is eroding Russia’s military
firepower. They say Russian losses in
the battle have far exceeded Ukraine’s.
diversity obligations, “then the meas-
ures taken by supervisors will get
harder”, he said.
The EBA also wants supervisors to
examine whether companies’ pay poli-
cies are “gender neutral”, as required
under EU law. The EBA review found
female executive directors earned an
average of 9.5 per cent less than male
peers, even excluding the pay of chief
executives. Female non-executive
directors earned almost 6 per cent less.
The EU’s policies promote diversity of
gender, age, educational background
and geography, but policy work has
chiefly focused on gender.
Overall, the EBA found that women
accounted for 18 per cent of banks and
investment companies’ executive direc-
tors, up from 15 per cent three years ear-
lier when the data also included the UK.
“The effect is not huge,” said Rummel,
detailing how the number of institutions
analysed dropped from 834 only to 791
as both the UK and Norway fell out.
Women’s representation on supervi-
sory boards rose 4 percentage points to
26 per cent in the 2018-21 period, while
the percentage of female chief execu-
tives rose from 8 per cent to 11 per cent.
Wednesday 8 March 2023
Iran cracks down
on newspaper
reports of rising
cost of living
Temporary closure reflects authorities’
fears of protests over economic crisis
NAJMEH BOZORGMEHR — TEHRAN
Akbar Montajabi ran front page stories
about anti-government protests that
had rocked Iran for months without
attracting the ire of the authorities, but
that changed when he mentioned lamb.
The demonstrations, triggered by the
death in police custody of 22-year-old
Mahsa Amini for allegedly failing to
adhere properly to the Islamic dress
code, have faded but the regime fears
that a cost of living crisis could stoke
another wave of dissent.
Last month, authorities shut down
the reformist Sazandegi newspaper for
more than a week after it reported on
the rise in lamb prices ahead of Nowruz,
the Iranian new year.
“Writing about protests was writing
about Iranians’ dreams of freedom and
equality, but writing about meat was
highlighting a daily, tangible reality and
clearly seen as more sensitive,” said
Montajabi in the empty newsroom.
“Our sub-headline was seen as worse.
It said ‘Meat eliminated from the diet of
the working and middle class’.”
The regime has arrested at least 70
journalists, according to Reporters
Without Borders, during the protests
that erupted in September.
But while the civil unrest has dimin-
ished, the economic hardship for mil-
lions of Iranians continues to deterio-
rate. The rial has lost more than a third
of its value this year, while inflation
soared to 47.7 per cent last month.
Against this tough economic back-
ground, the Islamic republic believes its
enemies, western states such as the US
and opposition groups abroad, are using
a mix of conventional and unconven-
tional methods, including information,
to overthrow the regime in Tehran.
“Authorities know that the street pro-
tests are over only on the surface,” said
one anonymous analyst. “The economy
is feared to be the next trigger. They
want to control the information dissem-
ination to foil that threat.”
State television still pumps out propa-
ganda but many Iranians have VPN
(virtual private network) software,
which allows them to circumvent
restrictions on the internet and social
media apps. Overseas satellite television
stations are also widely available, even
though they are illegal.
Last month, Rahim Safavi, a military
adviser to Iran supreme leader Ayatol-
lah Ali Khamenei, said that the republic
was “not only behind in the media war-
fare . . . but we have failed” in it. “We
have to get out of the defensive position
and get ready to multiply our offensive
approach.”
Hossein Taeb, who advises the Revo-
lutionary Guard commander, added
that “the pawns of the soft war” that the
enemy relied on “are those who tweet,
are writers, [TV] hosts and poets”.
Iran International, widely viewed as
an opposition channel, ceased broad-
casting in London in February and
moved to the US after British authorities
said they had uncovered plots to kill or
kidnap its journalists.
When the protests broke out, authori-
ties blocked access to Instagram and
★ FINANCIAL TIMES
INTERNATIONAL
Street food: WhatsApp. But so many Iranians have
a boy queues at VPNs that Meta was able to report last
an outdoor month that hashtags related to the dem-
restaurant in onstrations had been used more than
southern Tehran 160mn times on Instagram.
Morteza Nikoubazl/
NurPhoto/Reuters
Analysts believe hardliners used the
protests as an excuse to tighten access to
the internet. That focus on social media
meant that papers were generally left
alone, given their limited impact.
Abbas Abdi, a reformist analyst, told
the Ham-Mihan paper that the closure
of Sazandegi over the lamb headline
revealed that the political establish-
ment “lacked an understanding of the
concept of media”.
He added: “Due to disastrous media
policies, the press are at an abyss and
their power to influence public opinion
is very limited. The impact of that
report on meat was equal to a mosquito
biting an elephant.”
There are about a dozen reformist
papers and news agencies in Iran,
mostly run by politicians. But Montajabi
pointed out that “our coverage is read
and taken seriously by politicians”,
while most people only read the paper if
a story was first carried on social media.
The Sazandegi editor said he never
received any letters from the Supreme
National Security Council, the country’s
top security body, regarding what was
and what was not allowed to be printed.
While Montajabi knew that highlight-
ing the fall of the rial and rise in the price
of gold coins was considered a red line,
he had no clue that red meat crossed the
barrier, too. It was recommended that
‘The pawns cartoons of leaders of neighbouring
countries should not be printed, “but we
of the soft have published cartoons of [Vladimir]
war’ that Putin since his war on Ukraine at least
12 times”.
the enemy The paper has reopened since Satur-
relied on day and continues to address controver-
sial issues. Montajabi was not sure if it
‘are those still faced a further hearing but was ada-
who tweet, mant it still had a vital role to play.
Journalism in Iran may not offer
are writers, much “bread for reporters, but it is still a
[TV] hosts respected job”, he added. “And when the
paper is shut down, it gains extra credi-
and poets’ bility, as this is a country of paradoxes.”
3
Gun battle
Israeli forces
kill at least 6
Palestinians
in West Bank
JAMES SHOTTER — JERUSALEM
Israeli forces killed at least six Palestin-
ians during a gun battle at the Jenin ref-
ugee camp in the occupied West Bank,
Palestinian officials said yesterday.
The incursion is the latest in a string of
deadly raids by Israeli forces in the West
Bank and comes amid an escalation in
violence that has intensified fears that
Israeli-Palestinian tensions could erupt
into a broader conflict.
The Palestinian health ministry said
more than two dozen people were
injured during the raid, which targeted
a gunman suspected of shooting dead
two Jewish settlers in Huwara last
month.
In the wake of the shooting, around
400 Jewish settlers set fire to buildings
in Huwara and surrounding villages
during a 17-hour rampage that a senior
Israeli official described as a “pogrom”.
Settlers injured another Palestinian in
Huwara on Monday night.
The Israeli military said the suspect in
the Huwara shooting was among those
killed in Jenin yesterday and that two of
his sons, who were suspected of helping
him prepare the attack, had been
arrested separately in Nablus. Israeli
police said two Israeli security person-
nel were injured in Jenin.
The Palestinian Authority con-
demned the raid and accused Benjamin
Netanyahu’s hardline new government
— it took office in December, with ultra-
nationalists in key security posts pledg-
ing to take a tougher stance against the
Palestinians — of a “dangerous escala-
tion”. “[This] threatens to inflame the
situation and destroy all efforts aimed at
restoring stability,” said a PA spokes-
man.
The Jenin raid is the latest violence in
what has been one of the bloodiest peri-
ods for years in the West Bank, which
makes up the bulk of the Palestinian ter-
ritories but has been occupied by Israel
since 1967.
4 ★
Rival superpowers
China warns of potential conflict with US
Foreign minister hits out
at Washington’s assertive
stance towards Taiwan
KATHRIN HILLE — TAIPEI
China’s foreign minister has warned of a
clash with the US unless Washington
ceases its attempts to contain Beijing,
highlighting the Chinese Communist
party’s concerns over escalating tension
between the rival superpowers.
“If the US doesn’t hit the brakes and
continues to barrel down the wrong
track, no amount of guardrails can pre-
vent the carriage from derailing and
crashing, and there will surely be
El Salvador jail designed to cram in prisoners
Gang members given less
space than livestock at
populist’s high-density site
CHRISTINE MURRAY — MEXICO CITY
ALAN SMITH — LONDON
On the remote plains of the Las Chiches
volcano, El Salvador’s leader has built a
prison that is supposed to become the
world’s biggest by population and the
most overcrowded by design.
President Nayib Bukele proudly
opened the “new house” for 40,000 last
month, where gang members will “live
for decades” to pay for their crimes.
The experiment, if it reaches capacity,
will be unrivalled in its scale — a facility
that could hold two-thirds of Germany’s
prison population. If seen through, it
will also set records for deliberate over-
crowding, according to Financial Times
analysis using satellite imagery.
At 40,000 capacity, each inmate will
have 0.6 square metres in a shared cell,
FT calculations show, less than half the
minimum required under EU law to
transport midsized cattle by road.
“Forty thousand is too many to man-
age in one place, period. Under any cir-
cumstances,” said Martin Horn, who
ran New York City prisons, including
Rikers Island, one of the world’s largest.
The numbers raise the question of
whether Bukele’s plans are more for
show than implementation, but few
doubt his authoritarian tendencies.
Footage of the first transfers, shared by
Bukele on Twitter, showed hundreds of
chained, half-naked men crammed into
body-to-body formations.
Security forces have detained 60,000
people in a year-long crackdown on
gangs that rights groups say involved
widespread abuses. Even before that, El
Salvador had the world’s highest incar-
ceration rate. Now, experts estimate
that more than 2 per cent of adults in the
small Central American country of
6.3mn are probably behind bars.
Satellite images of the Terrorism Con-
finement Center show 23 hectares
inside the perimeter. Rikers Island and
Marmara in Turkey, which are larger
than 100ha, have smaller populations.
Eight prison buildings cover 4.3ha,
equivalent to six football pitches. Analy-
sis of video footage suggests two of those
are workspaces, leaving six accommo-
dation buildings. Guards have a sepa-
rate building with leisure facilities
including a gym and table tennis.
Excluding corridors, there remain six
acres for inmates, or 0.6 sq m each if the
prison holds 40,000. Bunk beds provide
IMF package
Sri Lanka debt bailout receives Beijing backing South African outages hit economic growth
BENJAMIN PARKIN — NEW DELHI
MAHENDRA RATNAWEERA — COLOMBO
China has agreed to support Sri Lanka’s
debt restructuring in a crucial step
towards securing a $2.9bn IMF rescue
package and pulling the country out of
an economic crisis.
Confirming Beijing’s move, the fund’s
Asia-Pacific director, Krishna Srini-
vasan, said yesterday it “paves the way”
for the IMF board to consider finalising
the assistance programme at a meeting
on March 20.
The IMF package has been pending
for months as Sri Lanka sought to con-
vince its creditors to agree a plan to
restructure the bankrupt country’s for-
eign debts, a precondition for unlocking
the funds.
“Sri Lanka has now received financ-
ing assurances from all major bilateral
creditors,” Srinivasan said. China’s
agreement follows similar commit-
ments from creditors including India
and Japan in January.
conflict and confrontation,” Qin Gang
said yesterday.
The foreign minister’s remarks, at a
press conference for the annual session
of China’s rubber-stamp legislature, fol-
lowed an unusual direct criticism of the
US by China’s leader Xi Jinping.
“Western countries, led by the US, are
implementing all-round containment,
encirclement and suppression against
us,” Xi told state media. While Xi fre-
quently uses nationalist rhetoric, he
rarely mentions the US directly in criti-
cising Washington’s policies.
The statements from Xi and his top
diplomat came after the US last month
shot down a Chinese high-altitude bal-
loon that had intruded into its airspace,
Central America. Incarceration
Close quarters: additional space but the total would be
a first group of unlikely to exceed an adult arm span.
2,000 detainees The government did not respond to a
is moved to request for comment.
the Terrorist Even at a lower occupancy rate, the
Confinement jail would fall short of established stand-
Center in ards. The Council of Europe, the human
Tecoluca late rights body, recommends a minimum of
last month 4 sq m per prisoner in shared cells.
Presidencia El Salvador/
Getty Images
Bukele accuses critics of his security
policies of siding with the gangs and says
his strategies have slashed the murder
rate, but penal experts say crowding
entrenches a culture of criminality.
El Salvador’s small mega prison
Tecoluca, Marmara,
El Salvador Turkey
23 hectares
c. 102
hectares
c. 11,000
prisoners
Up to 40,000
prisoners
Source: FT research
Sri Lanka president Ranil Wick-
remesinghe told parliament yesterday
his government had received a letter of
support from China’s Eximbank.
“Our part of the obligation is now
complete and we hope the IMF will do
their duty,” Wickremesinghe said, add-
ing that the IMF bailout would unlock
more financing from the World Bank
and Asian Development Bank.
Srinivasan said the IMF package
would “support the authorities’ pro-
gramme of ambitious reforms, that [the
country has] already embarked upon,
which will help Sri Lanka emerge from
its current crisis and set it on a trajec-
tory of strong and inclusive growth”.
Eximbank directed requests for com-
ment to past statements from China’s
foreign ministry. Beijing had previously
offered a two-year moratorium on debt
and interest repayments from Sri
Lanka, a condition that officials said the
IMF did not endorse.
Policymakers have been watching Sri
Lanka’s effort to secure approval from
FINANCIAL TIMES
INTERNATIONAL
an episode that foiled the latest bilateral
attempt to stabilise relations.
Speaker Kevin McCarthy to meet her in
the US, instead of hosting him in Taipei,
US and Chinese interests collide on a
wide range of issues including Taiwan,
over fears that such a visit could trigger
military retaliation from Beijing.
Russia’s assault on Ukraine and global
technology leadership.
Growing concerns in Washington that
Referring to Washington’s stated
desire to prevent a conflict, Qin said the
most important “guardrails” were for
Beijing could pose the biggest threat to Washington to recommit to the
US security have driven efforts to coun- “essence” of previous joint communi-
ter its influence, including export con- qués on Taiwan — a body of partly
trols and sanctions targeting Chinese ambiguous diplomatic language that
technology companies, strengthening the two sides have interpreted in differ-
ties with allies in the Indo-Pacific region ent ways for decades.
and stronger support for Taiwan. In a “Why talk big about respecting sover-
sign of how dangerous Beijing and eignty and territorial integrity on the
Washington’s conflicting positions have Ukraine question but then not respect
become for Taiwan, its president Tsai the sovereignty and territorial integrity
Ing-wen has convinced US House in the question of China’s Taiwan?” he
“What we’re going to have is a gigantic ‘It’s a
prison that will become a small city of
crime,” said Gustavo Fondevila of Mex- political
ico’s CIDE University. “It’s a political campaign
campaign project, the typical campaign
project of pure, hard penal populism.” project, the
Kavan Applegate, an architect who typical
chairs the design committee for the
International Corrections and Prisons campaign
Association, said the facility was simply project
“warehousing” people.
Though the plans assume crowding, of pure,
Bukele’s administration will provide hard penal
minimal supervision. Gustavo Villatoro,
security minister, said the prison would populism’
have 1,000 officers in the main build-
ings, 600 military personnel on the
Rikers Island, perimeter and 250 police in towers.
US At capacity, that would mean a ratio
of inmates to prison officers of about 40
to 1 before dividing them into shifts.
c. 165 hectares That compares with 4:1 in the UK and
8:1 in US federal prisons.
The explosion in the prison popula-
tion has come as Bukele has tried to
crush gang violence. The Mara Sal-
vatrucha (MS-13) and Barrio 18 gangs
c. 11,000 have their roots in the US and Central
prisoners America. Salvadoreans fled violence
during the civil war, mainly to Los Ange-
les, and some ended up in gangs. Once
the war ended in the 1990s, the US
deported many back to El Salvador.
GDP data
Beijing, whose importance as a global JOSEPH COTTERILL — JOHANNESBURG
lender has surged over the past decade.
South Africa’s economy shrank more
Sri Lanka last year became the first
than expected at the end of 2022 after
Asia-Pacific country to default in two
being battered by blackouts imposed
decades, with low foreign currency
by the Eskom electricity monopoly.
reserves leading to severe shortages of
imports such as food, fuel and medicine. Fourth-quarter activity in Africa’s most
The crisis has turned Sri Lanka into a industrialised nation fell 1.3 per cent,
cautionary tale of economic misman- from the previous three months, a
agement and the dangers that the period when breakdowns at Eskom coal
shocks of high inflation and commodity plants forced power cuts almost every
prices pose to developing countries. In day, statistics released yesterday
July, the island’s former president, revealed.
Gotabaya Rajapaksa, fled the country The outages, which have since inten-
and resigned after months of protests. sified, led President Cyril Ramaphosa to
Sri Lanka owes about $40bn in public declare a state of disaster and, on Mon-
debt to creditors including China, India day, appoint Kgosientsho Ramokgopa
and Japan, plus private bondholders. as electricity minister to tackle the
It reached a preliminary “staff level” crisis.
agreement with the IMF in September Ramaphosa’s governing African
and has imposed unpopular measures National Congress is preparing for elec-
to meet IMF requirements, including tions next year where its majority is at
raising taxes and utility prices and cut- risk from popular anger over the black-
ting subsidies. outs’ impact on the economy.
Additional reporting by Cheng Leng in The latest contraction means South
Hong Kong Africa’s gross domestic product has
said. “Why on the one hand demand
China not provide weapons to Russia,
but on the other hand sell weapons to
Taiwan in long-term violation of [joint
communiqués]?”
Beijing claims Taiwan as its territory,
though it has never ruled the country,
which it has threatened to take by force
if Taipei refuses to submit to its control.
In a snub of Washington’s warnings
not to provide weapons or munitions to
Moscow, Qin praised China’s close
partnership with Russia for blazing a
trail of trust between major powers and
creating a “model” for international
relations.
Additional reporting by Maiqi Ding in
Beijing
In 2015, El Salvador’s homicide rate
peaked at more than 100 per 100,000
people, then the highest in the world,
but in 2022 was 7.8 per 100,000, with
even critical media outlets reporting
that Bukele had broken up the gangs.
But the US imposed sanctions on sev-
eral Bukele officials, including the pris-
ons chief, accusing them of negotiating a
secret truce with the gangs.
Bukele, 41, who once styled himself
the “coolest dictator in the world”, has
won high approval ratings with his
hardline stance and has centralised
power since taking office four years ago,
upending a two-party system that had
dominated since the end of its civil war
in 1992. He controls a rubber-stamp leg-
islature, and has vowed to run for re-
election despite a constitutional ban.
“This is an autocracy in its truest
sense, it’s one guy able to do what-
ever . . . he wants in his country,” said
Steven Levitsky, David Rockefeller pro-
fessor of Latin American studies at Har-
vard University.
“It’s going to reinforce his basic mes-
sage to the Salvadoran people that El
Salvador’s democratic parties were part
of the problem and that his authoritar-
ian style is the solution,” he added.
Additional reporting by Christopher Cook
in London
been largely flat since the end of 2019,
even as the country’s population has
increased 3.5 per cent. The quarterly
drop was the largest since deadly riots in
2021 that wrecked critical infrastruc-
ture in the country’s two most economi-
cally important provinces.
The South African central
bank estimates blackouts
cost the economy
about $50mn a day
The economy grew just under 1 per
cent in the fourth quarter compared
with the same period in 2021, well below
the expectations of most economists.
Ramaphosa has pledged to give Ram-
okgopa, who previously served as his
infrastructure and investment adviser,
greater powers to co-ordinate a
response to the power crunch.
But Business Leadership South
Africa, an industry group, said that “this
Wednesday 8 March 2023
State apparatus
Xi tightens
grip with
reform of
financial
oversight
FT REPORTERS
China will overhaul supervision of its
financial system and bolster science
and technology to try to catch up with
the west, as Xi Jinping embarks on a
third term as president with one of the
biggest reforms of the state apparatus
in years.
The changes — part of a series of minis-
terial reforms to China’s state council,
the country’s cabinet — include estab-
lishing a new financial regulatory com-
mission, reorganising the science and
technology ministry and creating a
department to oversee China’s vast
trove of data.
The measures come as Xi seeks a
tighter grip over the government at the
annual meeting of China’s rubber-
stamp parliament this week as he
embarks on a third five-year term.
The reconstituted science ministry
will seek to combine education and
research with practical applications, as
well as establishing a “national technol-
ogy transfer system”, state media said.
The overhaul comes as Chinese lead-
ers focus on building up the country’s
semiconductor industry, which has
been battered by US curbs on the sale of
high-end chips and machinery to China.
“In critical areas we need to be self-
reliant and in control,” Xi told delegates
on Sunday. “First-rate tech which is
strong and self-controlled is essential
for our high-quality development.”
Rory Green, an economist at TS Lom-
bard, said the overhaul “looks like an
attempt to restructure the party-state to
align with Xi Jinping’s longer-term pol-
icy objectives”.
He said the changes were aimed at
creating a “common prosperity” politi-
cal economic model, using Xi’s phrase
for a system that more fairly distributed
wealth. “Xi’s core objectives are secu-
rity . . . technology upgrading [and]
risk avoidance,” Green said.
As part of the reforms, China will cre-
ate a State Financial Regulatory Com-
mission out of the current banking and
insurance watchdog to oversee all activ-
ities in those sectors other than the
securities industry.
This is to “resolve long-term prob-
lems in the financial area, and bring all
types of financial activities under super-
vision”, according to Xiao Jie, secretary-
general of the cabinet.
The new commission’s responsibili-
ties will include oversight of financial
conglomerates and consumer protec-
tion. These functions used to be partly
carried out by the People’s Bank of
China and the markets watchdog, the
China Securities Regulatory Commis-
sion.
The CSRC, however, will also be
strengthened under the overhaul. It will
report directly to the cabinet and take
over reviewing the issuance of bonds
including billions of dollars of debt
issued by local government financing
vehicles. At the moment, it shares this
responsibility with the National Devel-
opment and Reform Commission,
which oversees state-owned enter-
prises.
China will also establish a National
Data Bureau to oversee and protect the
country’s mountain of data, according
to the overhaul plan.
Beijing also said it would cut staffing
in state institutions by 5 per cent.
Reporting by Ryan McMorrow, Sun Yu, Joe
Leahy and Nian Liu in Beijing, and Cheng
Leng and Eleanor Olcott in Hong Kong
attempt to endow the new electricity
minister with overall responsibility may
lead to turf wars which may not be bene-
ficial to smooth progress”.
The South African Reserve Bank has
estimated the rolling blackouts cost the
economy about $50mn a day in shut-
tered factories, closed shops and mal-
functioning infrastructure. It has fore-
cast that growth this year will be only
about 0.3 per cent as a result.
The power crisis has also put pressure
on the public finances after the South
African National Treasury announced
last month it would backstop $14bn of
Eskom’s debts in the coming years to
prevent its financial collapse. This has
forced the Treasury to delay announc-
ing targets to stabilise public borrowing
as a share of GDP.
South Africa’s weak growth “is
unlikely to improve any time soon as
severe power cuts and fiscal consolida-
tion continue to weigh on the economy”,
said Virág Fórizs, emerging markets
economist at Capital Economics.
Wednesday 8 March 2023 ★ FINANCIAL TIMES 5
6 ★ FINANCIAL TIMES Wednesday 8 March 2023

‘There are many toys’ Venture capital firms cast sceptical eye on rush of enthusiasm for generative artificial intelligence y PAGE 8

N26 founders Deadlocked Abu Dhabi oil group’s talks with

trader Gunvor reach impasse over size of deal
KPMG and
PwC trail rivals
in big audits
were warned run by women
over ‘culture of STEPHEN FOLEY — NEW YORK

PwC and KPMG are falling behind

rivals EY and Deloitte in promoting

fear’ at fintech women to run the most prestigious

audits in corporate America, new data
shows.
Women still only account for 20 per cent
of the lead engagement partners on

3 Top staff railed against ‘lack of trust’ audits of S&P 500 companies, according
to a study published yesterday by the

3 Group claims improved governance
OLAF STORBECK — FRANKFURT
N26’s top executives accused the co-
founders of one of Europe’s most highly
valued fintechs of promoting a “culture
of fear” that threatened to drive the
group into a “downward spiral”.
In a memo sent last year, N26’s six
most senior staff warned Max Tayenthal
and Valentin Stalf their “relationship
and ways of working” with executives at
the German company were “quite dys-
functional in several dimensions”.
The internal “discussion document”
was sent in February 2022 by Thomas
Grosse, chief risk officer until he quit
last week. It was co-authored by Jan
Kemper, chief financial officer, Eva
Glanzer, interim HR head, Gilles Bian-
The co-founders had a
habit of ‘rewriting history’
and a tendency to
‘shoot the messenger’
Rosa, chief product officer, Gino Cordt,
chief technology officer, and Alex
Weber, chief growth officer.
Glanzer and Kemper have also since
left N26, which was founded in 2013 to
disrupt Germany’s banking industry.
The company, which counts Peter Thiel,
the Silicon Valley billionaire, and Li Ka-
shing, the Hong Kong tycoon, among its
backers, was valued at more than €7.7bn
in a fundraising in October 2021.
But N26, with 8mn retail customers in
Germany and more than 20 other coun-
tries, has suffered growing pains and
was ordered by Germany’s financial reg-
ulator to upgrade its internal controls.
In October 2021, BaFin imposed a
draconian cap on N26’s client growth
after the regulator became concerned
with organisational flaws.
The memo, sent months after N26’s
fundraising, warned Tayenthal and
Stalf the leadership team “is not func-
tioning in a productive (or even merely
adequate) way”. This had resulted in a
level of “churn as well as continuous
organisational dysfunctionalities”.
The co-founders were accused of a
“lack of trust in executives” that was
resulting in “confusion”. Tayenthal and
Stalf were also said to have a habit of
“rewriting history” and a tendency to
“shoot the messenger” if decisions
turned out wrong.
“Of particular concern is the estab-
lishment of a culture of ‘fear’ and blam-
ing, fostered by many of the behavioural
problems we want to address,” the
memo notes.
N26 declined to comment on “any
internal conversations, emails or other
internal information” but said it had
made “significant investments into gov-
ernance and leadership” over the past
18 months. “We take that seriously at all
levels of the company, including at sen-
ior leadership level. Feedback is an
essential part of this.”
The memo was first reported by Ger-
many’s Manager Magazin.
N26 overhauled its governance last
November when it established a super-
visory board that oversees and appoints
the executive board.
Tayenthal told the FT that building
N26 into a “leading digital bank” had
been a “steep learning curve”. Stalf said
an “open feedback culture is central to
this collaboration”.
However, the problems described in
the memo remain, according to people
familiar with discussions at N26.
Over the past 12 months N26 has lost
some of its top managers, Grosse most
recently. N26 attributed his departure
to his “personal circumstances”, but
Grosse told the FT the “reasons for my
decision are complex”. He declined to
comment further.
A Gunvor refinery in Rotterdam. The group’s founder is loath to cede control to Adnoc — Dean Mouhtaropoulos/Getty Images
TOM WILSON, DAVID SHEPPARD
AND LESLIE HOOK — LONDON
Abu Dhabi National Oil Company’s
potential acquisition of Gunvor, the
energy trading house, has reached an
impasse because of a disagreement
over the size of the deal.
While Adnoc had hoped to acquire all
of Gunvor, or a majority stake, the
trader’s chief executive Torbjörn
Törnqvist is not willing to give up con-
trol of the group he co-founded in
2000, two people involved in the dis-
cussions said.
Instead Törnqvist, who controls
almost 90 per cent of Gunvor, has told
Adnoc he is only willing to sell a
minority stake as a way to raise funds
to drive growth. Such a deal is of less
interest to state-owned Adnoc, which
was seeking control of the company as
a way to significantly boost its trading
ambitions, one of the people said.
Adnoc established its own trading
arm two years ago and chief executive
Sultan Ahmed al-Jaber has frequently
stated a desire to improve profit mar-
gins through investments in refining
and trading capacity.
The deal would have been the big-
gest move by a Middle Eastern com-
pany into commodity trading.
Although several Gulf states, includ-
ing Saudi Arabia, have large national
oil companies, unlike European rivals
Shell and BP they do not have big trad-
ing divisions.
Trading has been highly profitable
in recent years because of the volatil-
ity created in energy markets first by
the coronavirus pandemic then Rus-
sia’s invasion of Ukraine.
Adnoc and Gunvor have been in
talks since last summer and extended
an exclusivity clause until the end of
March in an attempt to get a deal over
the line. Adnoc and Gunvor declined
to comment.
People close to the talks gave differ-
ent accounts of whether further dis-
cussions were possible, with one sug-
gesting a smaller deal could still be
done. Others said Adnoc was effec-
tively withdrawing from the discus-
sions. But they agreed a larger deal for
a controlling stake in the company
was now highly unlikely.
Gunvor, headquartered in Geneva
and domiciled in Cyprus, is among the
world’s largest independent energy
traders, moving about 240mn tonnes
of commodities including oil, gas and
coal in 2021. Founded by Törnqvist
alongside Russian businessman Gen-
nady Timchenko, the company was
initially known for its close ties to
Russian energy producers.
In 2014, shortly before he came
under US sanctions for his ties to Rus-
sian president Vladimir Putin, Tim-
chenko sold his shares to Törnqvist.
The company has reduced its vol-
umes of Russian-originated commod-
ities in recent years.
CFA Institute, the professional body for
the investment industry.
The figure, covering audits from 2021,
represented an improvement from 15
per cent four years earlier but showed
the need for faster progress at some
firms in particular, said Sandy Peters,
head of global advocacy at the institute.
“Half of those entering the accounting
profession are women,” Peters wrote in
the study. “The issue in Big Four firms is
leakage from the pipeline. Within 10 to
15 years — the time it takes to become a
partner — the near-majority of women
in accounting turns into a minority.”
Women ran more big audits at each of
the firms than they did four years ear-
lier, and the number of S&P 500 compa-
nies with female lead engagement part-
ners rose from 73 to 102, the CFA Insti-
tute found.
Deloitte led the Big Four with women
making up 27 per cent of its S&P 500
lead engagement partners. Meanwhile,
EY showed the largest increase — from
13 per cent in 2017 to 22 per cent in 2021.
KPMG remained in fourth place with
13 per cent of its S&P 500 engagement
partners. The pace of growth was slow-
est at PwC, which slipped to third place
with 19 per cent.
KPMG said it had mentorship and
development programmes specifically
to help women advance to lead engage-
ment partner, and the CFA Institute
study ignored its broader progress.
“This one metric obscures our
progress in advancing women in leader-
ship across our business,” KPMG said.
PwC said it was working to increase
the diversity of partners running signifi-
cant client relationships, in audit and
elsewhere in the firm. “While we are not
where we want to be, we are proud of the
progress we’ve made,” the firm said.
Peters, herself a former audit partner
at KPMG, said the Big Four offered “a
good training ground” for future com-
pany chief financial officers, controllers
and audit committee members, so
improvements there could help gender
progress in the boardroom.

Singapore MP’s tech job puts spotlight on politicians’ interests

public policy for Grab. As chair of the
INSIDE BUSINESS Parliamentary Committee for Commu-
nications and Information, she is poten-
ASIA tially privy to information that may
benefit Grab as well as influence regula-
Mercedes tory affairs. Grab is facing regulation
that would affect its business, for
Ruehl instance around the rights of gig econ-
omy workers.
There is no suggestion that Tin or
Such an approach seems an anomaly
in transparency to some.
Michael Barr, an associate professor
in international relations at Flinders
University, says: “One of the most
extraordinary things about Singapore
politicians is how thoroughly they man-
age to keep their business interests
under wraps.”
Mak Yuen Teen at the National Uni-

T
hanks to Lee Kuan Yew,
Singapore was built on a
philosophy of cleanliness,
from the streets to politics.
For the latter, Lee
believed in paying politicians well. The
idea was to secure their commitment
while protecting MPs from influence-
peddling by the private sector.
Singapore’s prime minister, Lee Hsien
Loong — Lee’s son — receives S$2.2mn
($1.6mn) annually, four times the US
president’s salary. The benchmark level
of a minister’s annual income is
S$1.1mn, according to government
data, much higher than politicians earn
in countries such as the UK.
But their state salary is only part of
Singaporean MPs’ incomes. Many have
outside roles, including “full-time”
executive jobs at companies.
Fresh questions over the transpar-
ency of such roles have been raised after
one of the country’s biggest technology
companies appointed an MP to an influ-
ential position, before backtracking.
New York-listed Grab is a ride-hail-
ing, food delivery, and financial services
business that has grown rapidly to have
a dominant presence in the city-state
through its “super app”. Its signature
green-and-white logo is everywhere in
the Lion City.
Tin Pei Ling from the ruling People’s
Action party was appointed head of
Grab intended the company to reap
benefits it might not have had other-
wise. And taking a second job as an MP
is permitted under Singapore law. The
problem was the potential for conflicts
of interest.
The group acknowledges such risks.
“Much thought and care was given to
address any potential conflict of interest
that may arise when Pei Ling was hired,”
Grab said when, in response to a public
outcry, it moved
Tin to a different ‘One of the extraordinary
role at the tech
company in busi- things about Singapore
ness development. politicians is how
“The discourse
has led us to pause thoroughly they keep their
and reflect on how interests under wraps’
we can create an
environment where Pei Ling can serve
effectively in both her roles as an MP as
well as representing Grab.
“We acknowledge that this is difficult
if the intent behind every action or posi-
tion she takes in the future is doubted or
called into question.”
Tin’s salary was not disclosed. That is
not unusual in Singapore. Finding such
information — even the roles MPs hold
— can be challenging. Unlike in the UK
or US, there is no list of politicians’
financial interests. MPs are only
required to disclose to the prime minis-
ter in confidence their business and pro-
fessional interests and any other fees
they receive.
versity of Singapore believes there is an
unhealthy blurring of the lines between
government and business in the city-
state. As such, a public register of finan-
cial interests for MPs would be a “good
idea”.
Singapore has a strong reputation in
governance. While not immune to cor-
ruption or scandals, it ranks highly as a
clean place for business. Last year it
scored 83 out of 100 on a corruption
index by Transparency International,
beaten only by Denmark, Finland, New
Zealand, and Norway.
The next review of Singapore’s public
sector salaries, held every five years, is
set for this year. At a time of soaring
costs for citizens, the salaries of MPs and
their roles in the private sector may
draw more attention than they have in
the past.
New leadership and elections are also
on the horizon, and the PAP is facing
declining popularity, especially among
younger voters.
In such an environment, some argue
that more transparency on MPs and
their outside pay might build confi-
dence.
“I’m not sure that statements like
‘the ultimate safeguard is still MPs’ own
conscience and judgment’ really cut it
any more,” says David Black, the
founder of Blackbox, a Singapore
research firm.
mercedes.ruehl@ft.com
Wednesday 8 March 2023 ★ FINANCIAL TIMES 7
8 ★
Airlines
JetBlue deal for Spirit hit by lawsuit
US authorities say move
means higher prices and
fewer customer options
STEFANIA PALMA — WASHINGTON
PHILIP GEORGIADIS — LONDON
US authorities and states have sued to
block JetBlue Airways’ proposed $3.8bn
acquisition of Spirit Airlines on the basis
that it would reduce competition in the
passenger aviation industry.
The US Department of Justice, the
District of Columbia and the states of
New York and Massachusetts filed an
antitrust lawsuit yesterday arguing that
the deal would “eliminate” competition
from Spirit, the fast-growing low-cost
carrier, leading to higher prices and
fewer options for customers.
The lawsuit comes after JetBlue
prevailed in a bidding war with Frontier
Airlines to acquire Spirit last July.
Another brick
Lego tries to
bridge the
digital divide
Mind the gap: a Tube carriage
display at Lego’s London store.
The Danish toymaker aims to
extend its brand experience into
the digital world — Jason Alden/Bloomberg
Telecoms
Huawei tests Malaysian ties with China and west by lobbying for role after 5G tender review
MERCEDES RUEHL — SINGAPORE
Huawei is battling back in the competi-
tion to build 5G networks in south-east
Asia, one of the last regions where the
Chinese telecoms equipment maker
retains influence after being black-
listed by Washington.
The company is among those lobbying
for a role in Malaysia, according to three
people briefed on the matter, where the
new government announced a review of
its predecessor’s 5G plans, including a
decision to award Ericsson the tender to
build a state-owned network.
“It is a mixture of soft power and out-
right lobbying to try to get the adoption
of their systems somewhere in the roll-
out,” said one person.
The south-east Asian country’s 5G
plans have become a test of its relations
with China and the west, as well as a
challenge to Kuala Lumpur’s reputation
for respecting the sanctity of commer-
cial contracts.
Spirit and Frontier had previously
warned that a deal with JetBlue would
encounter pushback from competition
regulators.
“This acquisition would combine two
especially close and fierce head-to-head
competitors,” the plaintiffs said in a
court filing. “On dozens of routes serv-
ing tens of millions of passengers each
year, JetBlue and Spirit are two of the
most significant rivals today, and they
have such large combined market
shares that the transaction is presump-
tively illegal.”
JetBlue and Spirit said they would
“continue to advance” their merger
plans in spite of the lawsuit. “Customers
deserve a competitive airline market-
place and we will pursue this merger to
ensure they get it,” said Robin Hayes,
JetBlue chief executive.
The combined company would create
the fifth-largest US airline and the deal
represented the latest consolidation in
Lego is stepping up its investments in
digital play experiences, ecommerce
and sustainable packaging after
outpacing rivals and increasing its
market share again last year.
The world’s largest toymaker
posted revenues up 17 per cent to
DKr65bn ($9.3bn) in 2022, while net
profits rose 4 per cent to DKr13.8bn
despite headwinds from rising raw
material, energy and transport costs.
“We are doing a lot of things on the
digital side,” Niels Christiansen, chief
executive, told the Financial Times.
“That is where we are upping the
investment. We know very well how
to immerse consumers into the Lego
universe in stores. We’re working
very hard to create that feeling of
getting into the Lego brand universe
also digitally.”
Lego has enjoyed stellar growth
throughout the Covid-19 pandemic as
children and adults alike turned to its
bright plastic bricks. Its sales and net
profit have both increased two-thirds
in the past three years, leaving rivals
such as Mattel and Hasbro of the US
behind.
Dogged by political infighting, Malay-
sia has been one of the slowest in the
region to roll out 5G. The Ericsson con-
tract has enabled it to launch a sole gov-
ernment-owned network that most
mobile operators have agreed to use and
which experts say means lower costs
and a speedier rollout. In other coun-
tries, governments typically auction off
spectrum for operators to build their
own networks.
Sweden’s Ericsson beat Huawei and
Finland’s Nokia to secure the RM11bn
($2.5bn) 10-year deal. However, since
winning election in November, Prime
Minister Anwar Ibrahim has ordered a
review of the public tender process, cit-
ing transparency concerns.
One possible outcome is that the gov-
ernment allows another company to
build a rival network to Ericsson’s.
Another possible outcome is that it pri-
vatises Digital Nasional Berhad (DNB),
the 5G network operator that is owned
by the finance ministry. It may also
FINANCIAL TIMES
COMPANIES & MARKETS
an industry that has seen a series of
megamergers over the past 15 years.
Hayes argued the combination with
Spirit would create a new rival to the
industry’s traditional Big Four — Ameri-
can, United, Delta and Southwest — and
help cut fares by “disrupting” pricing.
The four main US carriers and their
regional affiliates control 80 per cent of
‘They have such large
combined market shares
that the transaction is
presumptively illegal’
routes in the US, while JetBlue esti-
mated that the combination with Spirit
would control about 9 per cent of the
market.
JetBlue is involved in a separate anti-
trust lawsuit in which US authorities
and states are seeking to block a set of
In 2022, Mattel had revenues of
$5.4bn and net profits of $400mn
while Hasbro had sales of $5.9bn and
net earnings of just $200mn.
The privately owned Danish group
is forecasting a “normalisation” of
growth this year with revenues
expected to increase by a single-digit
percentage but it still expects to grow
faster than the toy industry.
‘We’re working very hard
to create that feeling of
getting into the Lego
brand universe digitally’
“We expected that the growth
would normalise into this year, and it
has done so. We will continue to
invest behind our momentum.
Historically, the toy industry hasn’t
been too cyclical,” Christiansen said.
Lego is benefiting from a series of
investments made by Christiansen
after it had a small slowdown in
growth in 2017. He put money into its
brand by expanding its product
select a second vendor besides Ericsson
to assist the current rollout, the people
said.
Despite the uncertainty caused by the
review, Ericsson has continued deploy-
ing 5G and Malaysia claims it had
reached 50 per cent of populated areas
at the end of 2022. Anwar last week
brought forward by a year a target of
80 per cent coverage — to the end of
2023, making it one of the fastest 5G
rollouts globally.
In an indication of the stakes
involved, government envoys from the
EU, UK and US warned Malaysia against
reopening the tender process in Febru-
ary last year, when a revision was first
rumoured.
“If Malaysia reopens this following a
review, why would any investor or com-
pany in the future have trust and faith in
the sanctity of commercial contracts in
the Malaysian domain? It is important
to all that processes be fair, open and
transparent,” said Amit Mital, who sits
agreements with American that would
consolidate the companies’ operations
in Boston and New York. Merrick Gar-
land, US attorney-general, said the JetB-
lue-Spirit transaction would “exacer-
bate problems caused by that alliance,”
but the proposed acquisition would
have still violated US antitrust laws
without the agreement with American.
Analysts said that a tie-up between
Frontier and Spirit would have an
easier pathway to regulatory approval,
but saw greater potential benefits to a
JetBlue-Spirit deal.
The main US airlines were some of the
few to be consistently profitable in the
years leading up to the pandemic. Some
analysts and executives expect the
industry in Europe to follow the US with
mergers as the impact of coronavirus
fades. Ryanair chief executive Michael
O’Leary is among them, and has long
projected that the European industry
will shrink to a handful of big players.
range and opening hundreds of stores
as well as launching sets combining
its bricks with digital apps.
It is also preparing to announce
details of a collaboration in the
metaverse with Epic Games, known
for the Fortnite video game, and is
aiming to replace all fossil fuel-based
plastic in its sets and packaging by
2030.
Lego’s chief executive credited
product lines such as City, with its
police, fire and train stations, and
Icons, with its wildflowers and
models of the Titanic and Eiffel
Tower, for the toymaker’s strong
growth last year. Almost half of the
products it sold last year — 48 per
cent — were new in 2022.
Lego is preparing to open factories
in Vietnam and the US in 2024 and
2025 as it capitalises on growth
outside its home region of Europe. It
also opened 155 Lego stores last year,
taking the total to 904 as it tries to
overcome the weakness among toy
retailers that struggle to lure children
away from digital devices.
Richard Milne
on the board of several wireless technol-
ogy companies and is a former US
National Security Council official for
cyber security policy.
“You have to ask why after so long has
this review been started? What might be
at play? There are only a few possibili-
ties,” he said. The government said it
expected “some kind of finality” to the
review by the end of March.
Washington has imposed punishing
Huawei sets out its ambitions for 5G
at its headquarters in Shenzhen
Technology. Start-ups
Advances in AI
bring excitement
but the sceptics
are numerous
Eye-watering valuations and
scale of capital required deter
many venture capitalists
GEORGE HAMMOND — SAN FRANCISCO
Gordon Ritter, founder of San Francis-
co-based venture fund Emergence
Capital, believes developments in the
field of artificial intelligence represent a
significant technological advance; he
just can’t see a way of making money out
of them.
“Everyone has stars in their eyes
about what could happen,” says Ritter,
whose business was an early investor in
start-ups such as Zoom. “There’s a flow
[of opinion that AI] will do everything.
We’re going against that flow.”
The scepticism reflects a tension
among Silicon Valley venture capital-
ists, who are caught between excite-
ment over AI and a tech downturn that
has led investment in start-ups to fall
over the past year.
The launch of generative AI tools such
as OpenAI’s ChatGPT chatbot, which
can answer complex questions with text
in natural-sounding language, has
resulted in fresh excitement over the
potential emergence of a group of indus-
try-defining companies.
Last week, the Financial Times
revealed that Andreessen Horowitz led
an investment of more than $200mn in
Character.ai, valuing the chatbot maker
at about $1bn.
One-year-old start-up Inflection AI,
founded by DeepMind’s co-founder
Mustafa Suleyman and LinkedIn
creator Reid Hoffman, is in talks to raise
up to $675mn, having raised $225mn
last year.
In January, Microsoft confirmed a
“multibillion-dollar investment” in
OpenAI. People familiar with the talks
said OpenAI was seeking $10bn from
Microsoft at a $29bn valuation.
Yet many VCs express caution, put off
not only by eye-watering valuations
but the scale of capital AI groups
require as they build “foundation
models” — machine-learning systems
that require large amounts of data and
computing power.
One investor said that because of the
capital and resources required, leaps in
generative AI were comparable to land-
ing on the moon: an impressive techni-
cal achievement, only replicable by
those with nation-state-level wealth.
“Companies are extremely overval-
ued, and the only justifiable investment
thesis is to get in incredibly early,” said
another investor. “Otherwise you’re
only buying in because of fomo [fear of
missing out].”
Microsoft’s deal with OpenAI ensures
that the company can access the
tech group’s Azure cloud computing
platform.
Earlier this month, Google paid about
$300mn to take a 10 per cent stake in
Anthropic, at a time when the AI
Investor Sarah Guo: bright potential
but some valuations are ‘nonsense’
restrictions on exporting American
technology to Huawei as US security
officials believe that the company helps
Chinese authorities engage in espio-
nage. Huawei denies any involvement
in spying. The Shenzhen-based com-
pany has been shut out of markets
including the UK, parts of Europe, Aus-
tralia and Japan.
Another former US security official
said Washington was also engaged in
talks with Kuala Lumpur about the
review. “Some of the discussions are
focused on looking at the security impli-
cations of going down this road,” the
person said.
DNB, which awarded the contract,
has previously said Ericsson’s bid was
RM700mn lower than the next closest
bid.
Malaysia’s finance ministry said the
prime minister’s review of DNB would
“ensure that it is managed more trans-
parently and competitively”. “Discus-
sions with stakeholders are ongoing,” it
Wednesday 8 March 2023
start-up was buying substantial com-
puting resources from the search com-
pany’s cloud computing division.
Enthusiasm for AI comes after many
investors, such as Sequoia Capital, have
been burned after pouring cash into
crypto groups only for cryptocurrency
values to fall over the past year.
The value of deals struck by US ven-
ture funds halved between the first and
fourth quarters of last year, from $81bn
to $41bn, according to PitchBook. Crypto
deals fell further, down more than 80 per
cent over the same period.
AI’s potential has drawn in the likes of
Sarah Guo, who, a year ago, led invest-
ment in the crypto sector for venture
capital firm Greylock, having also been
an angel investor in cryptocurrency
exchange FTX.
FTX has collapsed into bankruptcy,
but Guo has raised more than
$100mn to invest in artificial intelli-
gence with her fund Conviction. She
argues that it is a good time to invest and
competition for AI deals is fierce,
though she admits that “some of these
valuations are nonsense”.
Priced out of companies building
foundation models, many investors are
‘If ChatGPT is the iPhone,
we’re seeing a lot of
calculator apps. We’re
looking for Uber’
turning to the applications that will be
built on top of them, just as large busi-
nesses have been built from the mobile
apps that operate on mobile devices.
That has led some to bide their time
until they sense the arrival of a “killer
app” with clear commercial potential.
“If ChatGPT is the iPhone, we’re
seeing a lot of calculator apps,” said
Christina Melas-Kyriazi, a partner at
Bain Capital Ventures. “We’re looking
for Uber.”
The buzz around generative AI has
increased as consumers have been able
to play with the tech, conversing with
ChatGPT to write speeches, or using
text-to-image programs such as Dall-E
to create fantastical drawings.
As more people begin using the pro-
grams, the prevalence of errors and
undesirable responses has grown. Inac-
curacies are deemed unacceptable in
sensitive sectors such as health and
defence, meaning a truly disruptive
application may be some way off.
“AI makes interesting mistakes that
humans don’t. You have to think very
carefully before using that in defence,”
said Yisroel Brumer, founder of venture
capital fund Red Cell Partners. “The
first time you enter a combat situation
you will see something you’ve never
seen before.”
Progress in generative AI, he said, was
“incredibly impressive, and well beyond
where we estimated we’d be today”, but
“life-and-death decisions make it very
difficult to delegate to a system that
makes mistakes that are hard to under-
stand and hard to predict”.
Other investors warn that those pivot-
ing from crypto to AI investments might
be swapping one flashy technology with
few real-world applications for another.
“Sometimes the bubble moves from
one place to the other. The money has to
go somewhere,” said a venture capital
investor who bet large on crypto. “Dur-
ing these hype cycles, there will be many
things which are overvalued. There are
many toys.”
added. Huawei and Ericsson declined to
comment.
Maxis, one of Malaysia’s biggest
mobile carriers, is one of the holdouts
yet to sign up with DNB for 5G access.
Huawei is Maxis’s long-term network
partner.
Proponents of the review say there is
no downside to appointing another ven-
dor. “Right now there is a single point of
failure,” said an executive at one of the
country’s biggest carriers, implying a
second network would provide back-up.
Chris Watson, a London-based part-
ner at CMS who advises telecoms, gov-
ernments and regulators, said there
were downsides to a second 5G network.
“A second provider inevitably dupli-
cates costs and eliminates scale efficien-
cies, both of which will have to be borne
by and recovered from users and ulti-
mately consumers through higher
prices,” he added.
Additional reporting by Richard Milne in
Oslo
Wednesday 8 March 2023 ★ FINANCIAL TIMES 9

COMPANIES & MARKETS

Sale of £250mn London ‘palace’ shows

Travel & leisure

pressures are growing on Saudi royals
Deals and loans over decades lie behind unusually public disposal of capital’s most expensive home
JOSHUA OLIVER, GEORGE HAMMOND,
SAMER AL-ATRUSH AND ROBERT SMITH
When Prince Khaled bin Sultan al-Saud
went shopping for a private jet in 2016,
his Swiss wealth advisers pulled
together a list of assets to secure financ-
ing that included the crown jewel of his
family fortune: a 40-room mansion
they dubbed the “London palace”.
The Holme, in Regent’s Park, is up
for sale for £250mn after a company
managed by London hedge fund
Attestor appointed receivers for the
property after the expiry of a loan
secured against it.
The sale, which would be London’s
most expensive residential deal, has
opened a window into the normally dis-
creet top end of the UK property mar-
ket. It shines a spotlight on the decades-
long love affair between Saudi money
and the UK capital, as well as the finan-
cial pressure on members of the Saudi
royal family as Crown Prince Moham-
med bin Salman has sought to rein in
lavish state spending on princes and
marginalise those not closest to him.
One London agent said the public
attention resulting from the sale vio-
lated the “first rule” of ultra-high-end
transactions. “There is practically a ‘for
sale’ sign in front of it. It’s not a good
start.” With a typical deal of this type,
“nobody knows that it’s sold, nobody
knows that it’s available, nobody knows
the price”.
A person familiar with Saudi royals’
finances said princes who had splashed
out on London residences in the past
faced tighter finances at home and
increasing UK scrutiny. “[There is] less
cash to go around. If you have assets in
London, yeah, they have to be sold.”
Described by the agent as a “mini-
Buckingham Palace”, The Holme sits on
a four-acre plot and is one of a handful of
residences within the boundary of
Regent’s Park. Prince Khaled spent
$43mn to acquire a long lease on the
mansion in 1991 via Guernsey-regis-
tered Quendon Limited.
A lawsuit brought by a second lender
sheds light on a series of deals and loans
stretching back decades that led to the
mansion being put up for sale. Court
records, along with people familiar with
the situation, reveal how banks, law
firms and hedge funds served the
prince’s financial needs and smoothed
his entry into the top of the London
housing market.
The case has been brought by
Yuntian 10 Leasing Company, an Irish
subsidiary of China Minsheng Bank that
leased Prince Khaled his private jet
via a Bermuda company. It claims that
the prince, who transferred Quendon
the cash to buy the house, has retained
a beneficial ownership interest in The
Holme, so that the property can be
used to collect unpaid lease payments
on the jet.
The lawsuit claims Quendon was used
to “conceal” Prince Khaled’s “ongoing
beneficial ownership and control of the
property”. The prince “has represented
to third parties . . . that he is the owner
of the property . . . whilst simultane-
ously asserting when convenient to him
that, as a result of the interposition of
the said offshore trust and corporate
The Holme, in structure, he has no interest whatsoever
Regent’s Park. in the property”, lawyers for Yuntian
Members of wrote. Yuntian declined to comment.
Saudi Arabia’s The use of overseas companies to own
royal family are London property has come under
under pressure intense scrutiny since Russia’s invasion
as the country’s of Ukraine triggered sanctions against
de facto ruler wealthy Russians’ UK assets. Politicians,
seeks to rein in including London mayor Sadiq Khan,
lavish state have called for tougher action to
spending on make ownership more transparent.
princes and The government has brought in meas-
marginalise ures to require foreign groups that
those not own UK property to declare their
closest to him beneficial owners.
Charlie Bibby/FT
Quendon lists five of Prince Khaled’s
children as beneficial owners in Compa-
nies House. In court papers, Quendon
denies that Prince Khaled himself has
an interest in the house or that Yuntian
can target the property to recover his
debts. It said law firm Linklaters drafted
a memo in 1991 specifying that the
money Prince Khaled sent to Quendon
to buy the house was a “gift” and gave
advice on how to acquire and hold the
house through a “lawful” and “tax-effi-
cient method by which [Prince Khaled]
and his family could enjoy the contin-
ued use and benefit of the property”.
The house was owned via a Guernsey
trust set up by the Royal Bank of Can-
ada’s Channel Islands trust arm, Quen-
don said in court filings. RBC and Lin-
klaters declined to comment.
Prince Khaled was Saudi Arabia’s dep-
uty defence minister for three years. He
has used The Holme as his London resi-
dence, Quendon acknowledged, and the
company has borrowed against the
value of the house and used the money
to fund loans to the prince and family
members. Some of the loans were
backed by a personal guarantee from
the prince. He guaranteed two loans,
totalling £68mn, made by Standard
Chartered to Quendon starting in 2016.
Quendon used the funds to repay a
£13.9mn loan from Citibank, make
investments including a £36mn portfo-
lio managed by Standard Chartered,
and provide a £15mn loan to Prince
Khaled. Standard Chartered and Citi
declined to comment.
The year 2017 marked a big change in
the finances of Saudi royals, as Prince
Mohammed became Saudi Arabia’s de
facto ruler and launched a purported
corruption crackdown on members of
the royal family, businessmen, state
officials and others. The crackdown led
to the detention of about 300 business-
men, former state officials, princes and
others, although Prince Khaled was not
among them. While the government
said it had retrieved $100bn in ill-gotten
gains, critics said it was partly a power
play aimed at sidelining an influential
elite that could pose a challenge to the
crown prince.
An adviser to Saudi royalty said
Prince Khaled “was in a very good posi-
tion” financially after the 2011 death of
his father Sultan bin Abdulaziz al-Saud,
a son of the kingdom’s founder Ibn Saud,
receiving the “lion’s share” of the inher-
itance. However, “his financial circum-
stances changed massively” around
2017. The prince had since sold two
yachts, according to people familiar
with the vessels’ sale, and an $87mn
Paris residence, according to the Wall
Street Journal.
Quendon has borrowed more and
more heavily against the house in recent
years. It repaid the Standard Chartered
loan with a new loan secured in 2019
from Trinity Investments, an Irish com-
The public pany managed by Attestor. While the
hedge fund is best known for betting on
attention the debt of distressed companies — for
is said to example, buying Wirecard bonds at
deep discounts after the payments com-
breach what pany’s collapse — it has also extended
estate agents financing to property investors who
would struggle to borrow from banks.
describe as Attestor previously sued Argentina as
the ‘first rule’ part of a wrangle between the country
and its bondholders, while it also pri-
of ultra- vately funds litigation claims on behalf
high-end of third parties.
The money from Trinity allowed
property Quendon to extend its lease on The
transactions Holme and make more loans to Prince
Khaled, Quendon said in court papers.
The loan was extended three times in
2020, Yuntian claims, and is worth
about £150mn, according to two people
with knowledge of the situation. Quen-
don said it was due to negotiate a refi-
nancing of the loan with Trinity but the
deal had been blocked because Yuntian
had secured an interim charging order
over the property from the High Court.
Trinity denies that Yuntian has a
claim over the property but said that
Quendon had “failed to repay” its
loans after they fell due. Attestor
declined to comment.
In August last year Trinity secured the
appointment of FRP Advisory as receiv-
ers for the property, which has triggered
a sale, and appointed Knight Frank and
Beauchamp Estates to market the man-
sion. FRP, Knight Frank and Beau-
champ declined to comment.
According to the royal adviser, the
sale process is just one public sign of the
pinch facing members of the Saudi rul-
ing family. “These are just iterations of
the situation,” the person said. “These
guys have serious problems.”
Gamblers in
Austria wait
to recoup cash
from overseas
betting sites
OLIVER BARNES — LONDON
Austrian gamblers are struggling to
recoup money they have lost betting on
websites owned by 888 and Flutter,
which the country’s supreme court has
ruled are illegal because they contra-
vene a federal gambling monopoly.
Since 2019, lawyers and litigation
financing firms have been bankrolling
thousands of cases on behalf of gam-
blers. Casinos Austria, the state-backed
gambling company, has held a monop-
oly on casino operations since 2016 and
Austria’s three highest courts have since
ruled that other betting companies are
operating illegally and should return
any losses.
As of the end of January, more than
2,500 gamblers have been repaid losses
totalling €75.8mn following court judg-
ments and out-of-court settlements,
according to data provided by the three
main legal groups backing cases:
AdvoFin, G&L Rechtsanwälte and law-
yer Oliver Peschel. The firms receive a
cut of the payouts.
But €34mn in payouts has been with-
held for longer than the fortnight grace
period set out by the court. Lawyers on
the cases say the main culprits have
been sites owned by Flutter and 888.
They are pursuing court action in Malta,
where both groups have offices.
PokerStars, a brand owned by Flutter,
has withheld about €17mn following
lost cases and has paid out only €1,795,
according to data compiled by the three
legal groups. 888-owned Mr Green has
refused to pay out €12.6mn, while Wil-
liam Hill, another 888 brand, has with-
held about two-thirds of cash from
€6.7mn in lost judgments.
Flutter’s legal team argues that
because most of PokerStars’ business is
focused on poker, where gamblers play
each other rather than the house, with
Flutter taking a commission only, the
company is not liable for players’ losses.
Brands owned by 888 had paid out
about €8mn but in recent months pay-
ments have stopped, according to all
three legal groups involved. 888 bought
William Hill and Mr Green as part of a
£1.95bn acquisition in July last year.
Ladbrokes owner Entain has paid out
for all judgments, totalling €41mn.
Cases against a number of gambling
groups, relating to €61mn worth of
claims, are yet to conclude.
Most groups continue to operate in
Austria despite the court decision, argu-
ing the gambling monopoly is against
rights guaranteed by EU law, including
the freedom to provide services.
PokerStars said it was operating
legally in Austria under a Maltese
licence “in accordance with the freedom
of services across member states under
EU law”. 888 said “the group continues
to contest the compatibility of the Aus-
trian licensing regime with EU law”.
Flutter and 888 said they would fight the
court enforcement proceedings filed in
Malta, where both are licensed.
Lawyers for the gamblers have also
alleged certain operators failed to follow
“know your customer” consumer pro-
tection and anti-money laundering
rules in Austria.

Financials. Takeover funding

Private credit groups set to thwart big banks in race for Carlyle deal
Blackstone and peers line up
landmark $5.5bn direct loan to
fund Cotiviti stake acquisition
ERIC PLATT — NEW YORK
Private credit groups including Apollo,
Ares and Blackstone are poised to write
the largest direct loan on record as they
continue to muscle in on a lucrative
business traditionally dominated by
Wall Street banks.
The lenders are confident that they
can edge out investment banks includ-
ing JPMorgan Chase and Goldman Sachs
in a deal to fund Carlyle’s acquisition of a
50 per cent stake in healthcare analytics
company Cotiviti, according to five peo-
ple briefed on the transaction.
The $5.5bn loan to help buyout group
Carlyle acquire the stake from rival Ver-
itas Capital would be the biggest of its
kind and could be announced in the
coming days or weeks, the people
added. The deal values Cotiviti at
roughly $15bn.
It underscores the growing power of
private credit providers in the wake of
the global financial crisis, which ush-
ered in a new era of tougher capital
requirements for banks that made it
harder for them to fund risky takeovers.
The trend has accelerated in recent
months after gyrating bond markets left
banks struggling to offload debt they
provided to fund big takeovers, includ-
ing Elon Musk’s buyout of Twitter.
“No longer is the large deal just the
provenance of the banks,” said Kipp
deVeer, head of credit at Ares.
The financing package for Cotiviti,
which would be accompanied by a $1bn
investment in preferred shares, is one of
several large private loans being dis-
cussed, according to executives in the
private capital industry.
The sizes of the potential deals are
much higher than they would have been
a few years ago, when private loans
tended to top out at $1bn to $2bn.
“Folks have dry powder,” deVeer said.
“If there is a high-quality company and
high-quality transaction, most folks
will . . . find plenty of capital and capac-
ity to do that.”
The amount of capital on offer is the
product of a wave of fundraising by pri-
vate credit funds, many of them oper-
ated by companies that started out as
pure-play buyout groups.
There has been an influx of retail
investors into funds such as Black-
stone’s private credit investment fund,
known as Bcred, over the past three
years, helping private capital groups
write ever-larger cheques. Even after a
wave of recent outflows, institutional
investors remain committed to the
market.
Last week, Oaktree Capital co-
founder Howard Marks told clients the
group was trying to raise $10bn to fund
loans for big buyouts. A few days earlier,
Ares chief executive Michael Arougheti
announced that the company would
“embark on a pretty significant fund-
‘No longer is the large deal
just the provenance of the
banks . . . Folks have dry
powder [and] capacity’
raising push”. The non-bank lenders
have been attracted by the high returns
on offer, with many loans yielding 6 or 7
percentage points over the floating rate
benchmark, or roughly 11 per cent or 12
per cent in total.
That number will rise further if the
Federal Reserve and other central
banks press ahead with their campaign
to raise interest rates.
“It has evolved into a consistent finan-
cial tool for borrowers and it has gone
more and more upmarket,” said Dan
Pietrzak, co-head of private credit at
KKR. “The market has the capacity to
do these multibillion-dollar deals.”
Banks have been powerless to prevent
the loss of the lucrative business to pri-
vate credit rivals because the market for
offloading debt to third-party investors
has dried up of late.
Lenders such as Bank of America and
Barclays have had to hold on to loans
made to fund large buyouts, including
the Twitter deal and the takeover of Cit-
rix, leaving them with big losses.
Alex Popov, head of illiquid credit at
Carlyle, said “2022 really stopped capi-
tal markets. In terms of dislocation, this
was as pronounced as it gets, where
underwriters for any new transactions
were essentially out of business.”
Private credit remains one of the few
sources of capital available at a time of
tighter financial conditions, even after
high-yield bond and leveraged loan
markets have started to recover.
Data from PitchBook LCD shows the
vast majority of deals in the syndicated
loan market — where banks underwrite
the debt before selling slices of it to
investors — have been done to refinance
existing borrowings rather than funding
takeovers.
Bankers say the trend could reverse if
markets become less volatile. “A lot of
underwriters are on the sidelines and so
to get a syndicated deal underwritten at
scale is challenging. But . . . people will
come back,” said Rob Fullerton, global
head of leveraged finance at Jefferies.
Legal Notices
There was strong demand for the
Cotiviti loan, the people briefed on the
transaction said, with groups including
HPS Investment jostling for a piece of
the action alongside Apollo, Ares and
Blackstone.
Given the high level of demand, Car-
lyle has managed to push down the yield
on the loan to about 6.25 percentage
points over the Sofr benchmark rate,
compared with the 6.5 percentage
points that had been previously dis-
cussed, according to the people briefed
on the talks.
The private capital groups are dis-
cussing a sweetener that would allow
Cotiviti to pay the interest on the loan by
raising more debt, which is a factor in
Carlyle preferring the funding package
over a competing one being pitched by
JPMorgan and Goldman Sachs.
The discussions over the so-called
payment-in-kind provision are still at
an early stage and may not pan out. Two
of the people said its inclusion in the
deal would allow Cotiviti to preserve
cash at a time when the US is flirting
with a recession.
10 ★ FINANCIAL TIMES Wednesday 8 March 2023
Wednesday 8 March 2023 ★ FINANCIAL TIMES 11
12 ★ FINANCIAL TIMES Wednesday 8 March 2023

COMPANIES & MARKETS

Currencies. Latin America Commodities

Mexican peso at five-year

Hedge funds
claim $500mn
peak on high interest rates from LME for
nickel debacle
HARRY DEMPSEY — LONDON

Hedge fund lawsuits are piling up

Disciplined fiscal policy and
proximity to US are added
attractions for investors
against the London Metal Exchange one
year after its controversial decision to
cancel nickel trades, with the venue now
facing legal claims in excess of $500mn.
Three further legal actions have been
filed by 10 hedge funds and one small
trading company in London courts this
week, deepening a crisis for the world’s
largest metals exchange.
The LME is battling to rebuild its rep-
utation after suspending and cancelling
nickel trades when prices more than tri-
pled in one day a year ago today. The
unprecedented move came after a bet
on falling prices backfired on Tsingshan,
the world’s largest nickel producer,
when they skyrocketed owing to inves-
tor fears of sanctions on Russia.
The exchange is already subject to an
enforcement investigation by the UK’s
top financial watchdog over the decision
to suspend trading, while traders say its
benchmark contract for the industrial
metal remains dysfunctional.
AQR Capital Management is among
claimants pursuing £80mn in damages,
according to the exchange’s parent com-
pany, Hong Kong Exchange and Clear-
Mexican peso hits five-year high ... and booms as investors are drawn The gap between Mexico’s ing, pushing total claims faced by the
LME to $567mn.
against the dollar ... to high interest rates benchmark interest rates and the US Claimants are suing for losses related
Pesos per $ Peso against other emerging market currencies equivalent is growing to the exchange’s decision to wipe out
18 Mexican peso Brazilian real Per cent

CHRISTINE MURRAY — MEXICO CITY 19

Mexico’s peso has touched its strongest
level in more than five years as the coun-
try’s relatively high interest rates, tight
fiscal policy and investment opportuni-
ties accruing from its proximity to the
US make it a favourite for investors.
The peso is the top performing major
currency this year, according to
Bloomberg, and has more than recov-
ered from its pandemic weakness. It has
risen 8.5 per cent this year to trade
above 18 to the dollar. That compares
with the South African rand weakening
7.1 per cent and the Brazilian real gain-
ing 2.4 per cent in the same period.
Moreover, the peso has increasingly
become the vehicle for emerging mar-
ket investors who want to borrow in a
currency with a low interest rate, like
the dollar, to buy assets offering higher
rates of return, known as the carry
trade. The trends that have propelled
Mexico’s currency are likely to have
some staying power, analysts said.
“In the medium term we see a strong
peso,” said Gabriel Casillas, head of
Latin America Economics at Barclays.
“Within Latin America, Mexico looks
very good in almost every way.”
Mexico’s currency is benefiting from a
confluence of domestic and interna-
tional factors. The country, which
shares a 2,000-mile border with the US,
is set to be a prime beneficiary of com-
panies focusing on supply chains nearer
key markets and away from China in a
phenomenon known as “nearshoring”.
Mexico is part of the USMCA free
trade agreement with the US and Can-
ada and was included in recent green
subsidies under Washington’s Inflation
Reduction Act. These have helped it
2018 19 20 21 22
Source: Refinitiv
attract investment in its traditionally
strong auto sector, which has lower
wages than its northern neighbour.
BMW said last month it would spend
€800mn to expand electric vehicle pro-
duction in Mexico while Tesla
announced last week it would build a
factory in northern Mexico that officials
said would start off as a $5bn invest-
ment, one of the country’s largest in
recent years. The news helped push up
the peso even further against the dollar.
Foreign direct investment in Mexico
hit $35.3bn last year, the highest level
since 2015, according to economy min-
istry data. Transport manufacturing
accounted for 12 per cent of that.
Another source of foreign income has
been resilient remittances from Mexi-
can migrants in the US.
The transfers from abroad now make
up 4 per cent of the country’s gross
domestic product. Even after growing to
record levels last year, in January remit-
tances were 12.5 per cent higher than
the same month a year earlier, accord-
ing to Bank of Mexico figures.
Mexico’s central bank, which has had
a new governor Victoria Rodríguez Ceja
since last year, has also proved more
hawkish than many expected. Its board
MSCI Emerging Markets Currency index
South African rand
20
21
22
23
24
25
23 Sep 2022 2023 Mar
began raising interest rates in June 2021,
nine months before the US Federal
Reserve, and has increased its bench-
mark rate at 14 consecutive meetings
from 4 per cent to 11 per cent.
The spread over the US fed funds tar-
get rate is up from 3.75 per cent to 6.25
per cent, adding to the peso’s allure.
The market is betting on further hikes
since inflation started rising again in
December after peaking in September
and falling in the following two months.
Mexican president Andrés Manuel
López Obrador’s fiscal austerity has also
helped prop up the peso. The populist
leader, who prides himself on being a
man of the people, has slashed govern-
ment spending and run small deficits.
He resisted pressure to implement
large pandemic support packages for
businesses and individuals.
His stance has won him favour with
currency investors relative to other
leaders in Latin America, such as Gus-
tavo Petro in Colombia and Brazil’s new
president, Luiz Inácio Lula da Silva.
“We have a lot of new presi-
dents . . . and it’s not clear whether they
are going to be fiscally responsible,”
Casillas said. Despite investor confi-
dence in the peso and healthy levels of
12
10
Mexico 2-year interest rate
10
5
0
-5
US Fed funds target rate
-10
2021 22 23
Mexico City’s foreign investment, Mexico’s economic
Palace of Fine growth has fallen short of potential for
Arts. The peso is decades, economists said.
also attracting Since López Obrador took office in
admirers — Nicolas 2018 the economy has barely grown and
Asfouri/AFP via Getty Images
lagged behind regional peers in recover-
ing from the pandemic. This year ana-
lysts expect growth of just 1.2 per cent,
according to a central bank poll.
Banco Base analyst Gabriela Siller
said it was no coincidence the peso was
back close to levels seen in 2018, just
before López Obrador won the presi-
dency. Early fears that he would try to
end the central bank’s autonomy or stay
in power beyond the strict six-year term
limit had dissipated, she said.
However, structural problems
remain, such as the fragile rule of law,
‘Within with little expectation of improvement
in the medium term. Moves by López
Latin Obrador to weaken autonomous bodies
America, and change rules in the electricity mar-
ket have also raised investor concerns.
Mexico Those challenges will continue to hold
looks very back investment, JPMorgan economist
Gabriel Lozano said in a recent note.
good in “Had a long-term strategy to boost
almost investment been in place, we think
Mexico could have been ready to boost
every way’ nearshoring earlier,” he said.
AQR’s joint case claims the
cancellation of trades was
8 an unlawful interference
6 with their human rights
4
almost $4bn worth of nickel trades, a
2 move the LME argues was necessary to
0 maintain the orderly functioning of the
market. AQR’s case, which also includes
DRW Commodities, Flow Traders, Cap-
stone Investment Advisors and Winton
Capital Management, claims the cancel-
lation of trades was an unlawful inter-
ference with their human rights.
Two further claims — by another set
of hedge funds including Commodity
Asset Management and Sunrise Capital
Partners, and small trading company
Double Eight — were filed yesterday,
although it is not clear how much the
claimants are pursuing in damages.
The new claims come a week after the
LME became the target of the Financial
Conduct Authority’s first enforcement
investigation, which could result in cen-
sure and fines for the exchange.
They add to pressure on the LME,
which has been sued in judicial review
claims by hedge fund Elliott Manage-
ment and market maker Jane Street for
a total of $476mn. The AQR claim comes
from a group of five investors that previ-
ously had a disclosure request against
the LME thrown out by the courts, and
will in effect be on hold until the out-
come of the judicial review.
Our global The LME said the AQR case was
team gives you “based on a fundamental misunder-
market-moving standing of the situation” and it
news and views, “remains confident that it will success-
24 hours a day fully defend the claims brought against
ft.com/markets it”. It declined to comment on the other
two cases.

Equities Crypto

Ashtead vows to stick with London
listing despite success of its US business
LEKE OSO ALABI AND AKILA QUINIO
LONDON
Construction equipment rental group
Ashtead has pledged to keep its stock
market listing in London even as its
booming US business prompted the
FTSE 100 company to lift its full-year
profit forecast.
Fears that London could lose the listings
of UK companies with large US opera-
tions were heightened last week after
CRH, the world’s largest building mate-
rials group, said it would move its shares
to New York.
Like CRH, Ashtead generates the bulk
of its revenues in the US and expects to
benefit from President Joe Biden’s plans
for infrastructure investment. But yes-
terday Ashtead, which has a market
capitalisation of £25bn, said it had no
plans to shift its listing to Wall Street.
Chief executive Brendan Horgan said
its stock market listing was “a topic that
the board periodically takes under
review and our position remains to be a
FTSE constituent”.
“In the meantime, I prefer to focus on
growing the business and as a result of
that, growing our earnings — that is the
only sure-fire way to add value for all of
our stakeholders, that is what gets me
up in the morning and that is our moti-
vation,” he added.
Shares in the group, which have
climbed almost 30 per cent during the
past 12 months, were up 2.2 per cent
yesterday in London.
Ashtead joins a growing list of compa-
nies that are in line to benefit from the
Inflation Reduction Act, which offers
Ashtead has access to an ‘outsized
portion of equipment’ in the US
companies in the US almost $370bn in
clean energy incentives.
Horgan said the company was win-
ning business tied to so-called mega-
projects, including “new electric vehicle
manufacturing plants, the battery giga-
factories to support that [and] liquid
natural gas plants that are being built”.
James Rose, analyst at Barclays, said
that US mega-projects were “backed by
$2tn of legislative actions taken in the
US over the past 12 months” and would
“underpin market growth for multiple
years”.
Ashtead had access to “an outsized
portion of equipment, helping drive
market share gains”, he added.
Even before the Inflation Reduction
Act was signed into law by Biden last
August, Ashtead had already emerged
as a winner from the pandemic-driven
disruptions to supply chains that
encouraged companies to hire, rather
than buy, equipment.
However, Marc Van’t Sant, analyst at
Citigroup, said Ashtead’s position could
come under threat if booming demand
encouraged “small and medium-sized
contractors to return to a more owned-
asset model”.
FTX trading subsidiary Alameda sues
Grayscale over digital coin trusts
NIKOU ASGARI — LONDON
JOE MILLER AND STEPHEN GANDEL
NEW YORK
FTX trading affiliate Alameda has sued
crypto investment company Grayscale
and its owner Digital Currency Group
over the structure of their large bitcoin
and Ethereum trusts, dealing a further
blow to the SoftBank-backed crypto
conglomerate.
Alameda, which is being run by restruc-
turing expert John Ray alongside other
FTX affiliates, accused Grayscale and
DCG’s management of being “possessed
by self-interest” and enriching them-
selves “at the expense of trust share-
holders”, by refusing to allow redemp-
tions and charging exorbitant fees.
Grayscale, DCG’s asset management
business, operates several cryptocur-
rency trusts from which it earns lucra-
tive fees for managing bitcoin, ether and
other tokens for customers. Investors
can buy shares in the trusts through
their brokerage accounts, rather than
holding direct exposure to the coins.
Alameda owns more than 22mn
shares in Grayscale’s flagship bitcoin
trust, the complaint said, and a further
6mn shares of the company’s Ethereum
trust, which equate to more than 3 per
cent and 2 per cent of the overall shares
outstanding, respectively.
Those holdings were worth $290mn
on the secondary markets as of the end
of last week, the complaint went on to
point out, and could be worth almost
double that if Grayscale reduced its fees
and allowed investors to redeem
‘The only way for
shareholders to exit . . . is
selling shares in the trusts
in the secondary market’
their shares for the equivalent value
in the underlying crypto assets. Since
the collapse last year of FTX, shares in
the trusts have fallen to substantial dis-
counts compared with the underlying
crypto they hold. Grayscale’s bitcoin
trust is trading at a 45 per cent discount
to the price of bitcoin.
Grayscale does not allow investors to
redeem their shares for the coins held in
the trusts, which would help close the
significant net asset value gaps.
“Due to [Grayscale and DCG’s] mal-
feasance . . . the only way for share-
holders to exit their investments is by
selling their shares in the trusts in the
secondary market, where shares are
trading at a fraction of their proportion-
ate interest in trust assets,” FTX said in
its filing to a Delaware court on Monday.
Ray said: “We will continue to use
every tool we can to maximise recover-
ies for FTX customers and creditors.”
DCG has been battling the fallout
from plunging crypto prices and the col-
lapse of FTX since last year.
The lending unit of its crypto broker,
Genesis, filed for bankruptcy this year.
The group is seeking to sell news site
CoinDesk to help pay creditors.
Grayscale’s flagship bitcoin trust
holds about 3 per cent of all bitcoin,
worth $14.7bn, from which the asset
manager earns a 2 per cent fee. It earns a
2.5 per cent fee for the 3mn of ether in its
Ethereum trust.
Grayscale called he lawsuit “mis-
guided”. It has long argued the trusts
should be converted to exchange traded
funds and is suing the US Securities and
Exchange Commission over blocking
the creation of a spot bitcoin ETF.
Wednesday 8 March 2023 ★ FINANCIAL TIMES 13

COMPANIES & MARKETS

The day in the markets A period of very

What you need to know
slow activity still
3 Powell rates warning hits Wall Street
seems likely
The US dollar strengthened on Powell’s comments
3 Fears that only a recession will beat
US inflation Dollar index
3 China equities slip on poor trade data

Stocks in New York declined and the

105.4
Karen Ward
105.2
dollar rallied yesterday after Federal
Reserve chair Jay Powell warned the
central bank could more aggressively 105.0
Markets Insight

L
raise interest rates if the US economy
grew too quickly.
104.8
In testimony to lawmakers in ots of economic data has more secure. The price of wholesale gas country is feeling some of the inflation-
Washington, Powell warned that if recently surprised to the has tumbled and, as a result, businesses ary backwash of China’s reopening, as
economic data indicated “that faster 104.6 upside. According to the pur- and consumers are feeling more upbeat gasoline prices served to raise headline
tightening is warranted, we would be chasing managers’ index for — consumer confidence rose to minus inflation again.
prepared to increase the pace of rate 104.4 the eurozone, the bloc’s econ- 19 in February, its highest level in a year. In the UK, there is unfortunately less
hikes”. omy is growing again. The US had a What about the US and UK? Here, the convincing evidence that inflationary
Wall Street’s benchmark S&P 500 fell bumper jobs and retail spending report question should be reframed from “is a pressures have peaked. Wage growth
0.5 per cent and the tech-heavy Nasdaq 104.2 for January. Investors are now wonder- recession still likely?” to “is a recession continues to push north. Business confi-
Composite dropped 0.3 per cent following ing whether the recession they thought still necessary?” The answer to this dence has been boosted by the fall in gas
his comments. 104.0 inevitable is likely after all. question relies on the trajectory of infla- prices but UK policymakers still have
The Fed lifted borrowing costs by a The causes of the potential recession tion. If there are sufficient signs that the work to do, as this may add to underly-
quarter of a percentage point at the start 08:00 09:00 10:00 11:00 12:00 13:00 14:00 15:00 16:00 17:00 differed around the world. In the US and tightening delivered to date is slowing ing inflationary pressures. The Bank of
of February, looking to slow the pace of Times are GMT UK, central banks had openly stated inflationary pressures, the central England will probably have to raise
Source: Bloomberg
rate rises after aggressive increases last that a recession would be necessary to banks could pause or even ease policy to interest rates further to keep activity
year designed to curb surging inflation. drive away inflation. In the eurozone, try to secure a soft landing. weak until inflation subsides.
Strong economic data since the start of The dollar strengthened on the “is going to have to cause a recession to the risk centred on gas shortages and There is some, albeit tentative, evi- Overall, the tail risks of a deep global
February suggested inflation may prove prospect of more tightening, gaining 1 per bring inflation under control,” said Lyn energy rationing. And China looked set recession have been reduced. China has
stickier than expected. Investors have cent against a basket of six peers. Graham-Taylor at Rabobank. for a long journey out of Covid. reopened, Europe is not running out of
responded by upping their expectations Futures markets now expect US rates to European stocks mostly declined, with A few months on and the picture has We should work on the energy and the US is not stuck in a 1970s
for where interest rates might peak. peak at about 5.57 per cent in September, the region-wide Stoxx 600 down 0.8 per changed. China has reopened rapidly basis that earnings will inflation spiral.
Powell’s comments constitute “a rare up from 5.47 per cent in the same month cent. London’s FTSE 100 fell 0.1 per cent. and, it seems, successfully. It is now But a period of very slow activity, if
admission that the Fed made a mistake” before Powell’s remarks. Chinese equities slipped as poor trade experiencing the boom of pent-up con- contract about 10 per cent not a moderate recession, still seems
by slowing the pace at which it raised Short-term US government bonds sank data added to investors’ concerns that sumer demand that other big econo- in the developed world likely and indeed necessary, in my view.
rates over the winter, said Steven Blitz, on the day, with the yield on the interest the post zero-Covid recovery might prove mies experienced early last year. With Market talk of “no landing” — that the
chief US economist at TS Lombard. The rate-sensitive two-year Treasury rising less explosive than expected. little sign of inflationary pressures in global economy can power on at its cur-
Fed will probably revert to raising rates 0.08 percentage points to 4.97 per cent. China’s CSI 300 fell 1.4 per cent and China, the authorities can let the recov- dence that inflationary pressures are rent growth rate — misses the funda-
by 0.5 percentage points when it next In contrast, the yield on the benchmark Hong Kong’s Hang Seng lost 0.3 per cent ery run, and they are likely to announce easing in the US. Inflation in housing mental point that demand is beyond
meets if February’s jobs numbers, out on 10-year Treasury fell 0.04 percentage after imports in January and February additional stimulus. and rental costs could soon start to turn, available supply, which is why there is
Friday, confirm the US economy remains points to 3.94 per cent. The diverging declined 10.2 per cent compared with the The landscape has also changed dra- according to some of the data provided still too much inflation.
in relatively rude health, Blitz added. moves signal that markets expect the Fed same period a year earlier. George Steer matically in continental Europe. Europe by property renting companies. Despite We should work on the basis that
came into the winter with its gas storage a strong jobs report and near-record low earnings will contract about 10 per cent
tanks almost full, having replaced Rus- unemployment, there is some evidence in the developed world as slowing
Markets update sian gas with American liquefied natu- that wage pressures have also peaked. demand reduces operating leverage —
ral gas. Since then, the drawdown Earlier in February, the markets got a the levels of returns on fixed assets —
through the peak winter months has little over excited about the potential and profit margins are eroded as com-
been limited, thanks to a combination return of “Goldilocks” — the “just right” panies lose their pricing power.
US Eurozone Japan UK China Brazil of consumers and businesses being a bit conditions of robust growth and low If demand continues to reaccelerate,
Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa more careful with their energy needs inflation. Bond and stock prices rallied. this will most likely be met with higher
Level 4003.02 1816.00 28309.16 7919.48 3285.10 103898.41 and a remarkably mild winter. Since then, the US consumer price interest rates. For now, both stock and
% change on day -1.12 -0.77 0.25 -0.13 -1.11 -0.77 As a result, the energy crisis that we index report has provided a reality bond investors should expect good eco-
Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $ had feared has not materialised. The check. Monthly core inflation ticked nomic news to be bad news for markets.
Level 104.495 1.059 136.795 1.187 6.928 5.198 storage tanks are still 63 per cent full, back up to 0.4 per cent, which corre-
% change on day 0.139 -0.843 0.633 -1.330 0.111 0.439 which compares with only 30 per cent sponds to an annualised rate of nearly 5 Karen Ward is chief market strategist for
Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond this time last year. This strong position per cent — hardly consistent with a 2 per Europe, Middle East and Africa at JPMor-
Yield 3.964 2.685 0.500 3.968 2.885 13.155 means that even next winter is looking cent inflation target. In addition, the gan Asset Management
Basis point change on day 0.210 -5.700 0.170 -3.700 -0.600 1.200
World index, Commods FTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 418.47 83.76 77.87 1849.05 21.09 4015.80
% change on day -1.14 -2.81 -3.22 0.43 -0.02 -0.84
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.

Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index
4320 1840 8160

4160 8000
1800
4000 7840

| | | | | | | | |
3840 | | | | | | | | | | | | | | | | | | | |
1760 | | | | | | | | | | | | | | | | | | | | 7680 | | | | | | | | | | |

Jan 2023 Mar Jan 2023 Mar Jan 2023 Mar

Biggest movers
% US Eurozone UK
Dish Network 6.24 Ageas 1.77 Melrose Industries 3.86
United Airlines Holdings 3.86 Coloplast 1.37 Ashtead 2.23
Ups

Advanced Micro Devices 2.59 Porsche 1.19 Beazley 2.05

Delta Air Lines 2.21 Danone 1.18 Flutter Entertainment 1.97
Alaska Air 2.00 Thales 1.10 Rentokil Initial 1.68
%
Lumen Technologies -5.75 Saipem -3.38 Fresnillo -6.84
Dxc Technology -5.33 Fresen.med.care -3.22 Ocado -4.68
Downs

Freeport-mcmoron -4.80 A.p. Moller - Maersk B -3.07 Glencore -4.58

Zions Bancorporation -4.73 Henkel -2.76 Endeavour Mining -3.33
Fifth Third -4.54 B. Sabadell -2.56 Antofagasta -2.90
Prices taken at 17:00 GMT Based on the constituents of the FTSE Eurofirst 300 Eurozone
All data provided by Morningstar unless otherwise noted.

Wall Street Europe London

A vote of confidence by its co-founder Norway’s Nel fell sharply following a An upgrade by Bank of America helped to
sent Dish to the top of the S&P 500 discounted share sale. The send Melrose Industries to the top of the
index. A regulatory filing revealed Jim renewable energy group sold 108mn new FTSE 100 index, with the broker lifting its
DeFranco bought 1.45mn shares at $10.84 shares at NKr14.90 each, 8.9 per cent rating for the manufacturing group from
each, appearing to capitalise on a chunky lower than Monday’s closing price. “neutral” to “buy”.
slide this year in the satellite TV group. Net proceeds, from NKr1.61bn Underpinning the revision was a rosier
Dish started 2023 at $14, before a ($153.4mn) gross, would be used to outlook for the aerospace business, said
double downgrade by Bank of America partially finance Nel’s expansion BofA, citing “wide-body production
and a cyber security incident put programme as it had recently secured increases at Airbus, alongside improving
pressure on the stock. “attractive large-scale contracts”, it said. engine production rates and after-market
WW International, formerly known as An underwhelming outlook weighed on momentum”.
Weight Watchers, surged on news it was Germany’s HelloFresh, with the meal-kit At the opposite end of the blue-chip
buying Sequence, a telehealth platform delivery group forecasting adjusted core benchmark was precious metals miner
that helps subscribers access weight-loss earnings of €460mn to €540mn in 2023, Fresnillo, which posted a 38 per cent drop
medications. missing estimates by 6 per cent. in core profit to $751.1mn last year.
The $132mn cash-and-equity deal Customer numbers also fell short of Octavio Alvídrez, chief executive, said
represented a “significant change in the expectations, with active consumers the group’s performance had been
business”, said UBS, bringing “access to reaching 7.11mn in the fourth quarter, “impacted by industry pressures
prescription drug solutions for weight 4 per cent below Bank of America’s including volatile precious metal prices
loss” against WW’s usual focus on dieters projections and down 5 per cent quarter and higher cost inflation, while our
changing their behaviour. on quarter. workforce continued to feel the impact of
The risk of a dilution of investors’ Volkswagen’s truck division Traton the pandemic”.
shares sent Rivian diving, with the rallied after increasing its revenue by Heading the FTSE 250 index was
electric truck and van maker announcing almost a third in 2022 to more than takeover target Wood Group. The energy
a proposed offering of $1.3bn in green €40bn for the first time. services business said it was “minded to
convertible bonds due in 2029. The Munich-based group said it was reject” a fourth offer from Apollo, the US
Owners of such notes often have the “optimistic” about this year, forecasting a private equity group.
option of converting the debt into equity rise in unit and sales revenue of 5 to 15 The sweetened £2.37 per share bid was
in the future, thereby diluting the per cent, aided by a “high order backlog”. 3 per cent higher than a previous offer.
holdings of existing shareholders. Forecast-beating results lifted Dufry of Joining Wood near the top of the mid-
Rivian has had a tough start to 2023, Switzerland, with the travel retailer cap index was Kipling cakes maker
down more than 15 per cent this year posting full-year sales and core profits of Premier Foods, which lifted its full-year
after its annual production target fell well 2 and 3 per cent, respectively, ahead of outlook, forecasting adjusted pre-tax
short of analysts’ estimates. Ray Douglas RBC Europe’s estimates. Ray Douglas profit of £135mn. Ray Douglas
14 ★ FINANCIAL TIMES Wednesday 8 March 2023

MARKET DATA

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous day’s trading (%)
S&P 500 Nasdaq Composite Dow Jones Ind FTSE 100 FTSE Eurofirst 300 Nikkei Hang Seng FTSE All World $ $ per € $ per £ ¥ per $ £ per € Oil Brent $ Sep Gold $

-1.12% -0.78% -1.19% -0.13% -0.77% -0.33% -1.14% -0.843% -1.330% -0.65%
0.25% 0.633% 0.450% 0.43%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Feb 08 - - Index All World Feb 08 - Mar 07 Index All World Feb 08 - Mar 07 Index All World Feb 08 - Mar 07 Index All World Feb 08 - Mar 07 Index All World Feb 08 - - Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
2,395.26
20,758.34 15,559.53 28,309.16
4,136.48 20,467.19 7,919.48 15,345.91
7,836.71 27,509.46
4,003.02

Day -1.12% Month -3.87% Year -4.72% Day -0.75% Month -1.74% Year -4.41% Day -0.13% Month 0.66% Year 13.75% Day -0.60% Month 1.16% Year NaN% Day 0.25% Month 2.31% Year 9.03% Day NaN% Month NaN% Year NaN%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
12,006.96 54,049.05 53,690.90 1,816.00 9,411.10 21,222.16 3,385.93
1,802.44 20,534.48
9,159.20
11,584.53 3,245.27
Day -0.78% Month -4.36% Year -9.71% Day -0.90% Month 0.26% Year 2.22% Day -0.77% Month 0.53% Year 11.05% Day -1.05% Month 2.75% Year 21.89% Day -0.33% Month -3.30% Year -6.31% Day 0.18% Month -4.05% Year 0.68%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
33,926.01 108,721.58 7,339.27 27,761.57 60,841.88 60,224.46
3,285.10
33,033.28 27,022.33 3,238.70
104,709.25 7,137.10

Day -1.19% Month -3.29% Year 0.66% Day -0.77% Month -3.64% Year -6.89% Day -0.46% Month 2.83% Year 21.08% Day -0.67% Month 2.75% Year 23.60% Day -1.11% Month 1.43% Year -4.71% Day 0.69% Month 0.93% Year 10.92%

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16 ★ FINANCIAL TIMES Wednesday 8 March 2023

ARTS

Prizewinner
everything else around you be rubbish.
I’ve always tried to build a commercially
viable office. It isn’t easy.”
Does he still have confidence that
architecture can change things? “All

with a purpose
architects believe that architecture can
play a role in improving our lives,” he
says. “We have to believe that. I think
we’re at a pivotal moment where, as a
profession, we claim a level of impo-
tence, that by the time we are called in, a
lot of the big questions have already
been asked. But with the two big issues
we are confronting now, climate change
David Chipperfield, recipient of this year’s Pritzker Architecture and social inequality, we can’t deny
responsibility any more.
Prize, talks to Edwin Heathcote about culture and responsibility

I
was a little surprised when it was
announced that David Chipperfield
had been awarded the Pritzker
Prize. Mostly because, even though
I’ve been covering the announce-
ments for almost a quarter of a century,
I assumed that one of the most interna-
tionally admired, articulate and urbane
of architects had already won it.
Chipperfield has constructed an oeu-
vre of incredible coherence, elegance
and often self-effacing unshowiness. He
has defied contemporary expectations
of self-conscious shape-making and
flashy gestures, attempting to stitch
pieces of cities back together, working
with historic buildings not to overwhelm
them but to allow them to work and to
breathe. He has been a consistent critic
of the dumbing down of architecture
and a proponent of culture in its broad-
est understanding. He is also, perhaps,
the last in a line of great British archi-
tects beginning with Norman Foster and
Richard Rogers (both of whom he
worked for early in his career) to have
had a major impact on global design.
Although he is based in London, I
spoke to him from his other home in
Corrubedo, Galicia, where he has
become a big figure on a rather small
local scene (he has even opened a café
bar there and is working on building his
foundation in nearby Santiago de Com-
postela). I asked him what impact his
winning the Pritzker would have. “The
village will go crazy,” he remarked,
wryly. “Though they won’t know what
the Pritzker Prize is.”
With a long career embracing major
cultural projects from Anchorage to
Kyoto via Berlin and Margate, I ask
Chipperfield (who is dressed, as he
always is, in white jeans and a black
polo-neck) what he has tried to do with
his architecture. He thinks quite hard.
“Hmmm. It’s an important question,”
he says. “Because over the last, say, 30
years, there has been a tendency for
architecture to become much more
about itself. For the generation before
us, architecture was understood as
something with a sense of social pur-
pose, with planning, housing and a pub-
lic programme. But there has been a
shift away, towards investment as a way
of building our cities. Architecture has
been commodified. I’ve always tried to
‘When you are designing
a new building, you have
to become a salesman and
make people trust you’
question what contribution each project
can make. With museums it is easier —
they have a social and cultural purpose
embedded. It gets much harder with
commercial buildings.”
Throughout our conversation, and in
a chat I had with him the previous week
in Athens (where he is designing a major
extension to the neoclassical National
Archaeological Museum), he keeps
coming back to his work on Berlin’s
complex of museums, the Museum
Island, and in particular to the city’s
Neues Museum. This 30-year project
saw the rebuilding and restoration of
the German capital’s war-scarred
museum quarter, including the
bombed-out shell of the 19th-century
Neues Museum. Is this the project he is
most proud of? “I don’t know about
most proud,” he hesitates, “but it was
the epitome of the collaborative proc-
ess. It might sound a little strange for an
architect to admit that the pinnacle of
their career was the restoration of an old
ruin. But the process is more important
than the product and the Neues
Museum was a symphony of process
which gave it a robustness and an idea
of meaning.
“We could have just done a straight-
forward copy of the original building
and we would have fulfilled our brief,
most people would have been perfectly
happy. But it wouldn’t have meant that
much, or it would have meant the wrong
thing.” Instead, they meticulously
restored some elements and left the
scars viscerally visible, revealing its
history through surface and damage.
So working with existing buildings
makes a better outcome? “Not quite,” he
replies. “But when you are designing a
new building, you have to become a
salesman. We become politicians prom-
ising something without evidence. You
have to make people trust you, but it is
tiring and can be fragile. If you’re asked
to renovate or expand an existing build-
ing, it is because it is already cherished,
there is a shared emotional commit-
ment with a common object.”
If Chipperfield is now best known for
museums and galleries (including Lon-
don’s Royal Academy, The Hepworth
Wakefield, the Saint Louis Art Museum
and Museo Jumex, Mexico City), he also
heads a surprisingly commercial prac-
tice that designs offices and upscale resi-
dential and retail. There have been
some misfires. And fires — he was
unceremoniously dropped from a years-
long process of trying to reimagine the
Metropolitan Museum of Art in New
York, while some buildings, such as Bar-
celona’s vast City of Justice, have been
criticised for an alienating iciness.
“I don’t believe in a purely artistic
practice,” he says. “You can’t design
three buildings in a career and let
“We know social inequality can be
addressed by giving people a decent
place to live,” he says, “and we know the
construction industry is a huge contrib-
utor to climate change. We need to deal
with this collectively.”
This has been one of Chipperfield’s
enduring preoccupations. “Our profes-
sion has organised itself in a competitive
manner,” he says. “We have to be care-
ful. In recent years we have emphasised
our individual identities and not our
collective responsibilities. We need to
encourage common purpose and collab-
oration, participation and engagement,
with society and the profession.”
Above: David But doesn’t a prize like the Pritzker
Chipperfield. reinforce individual identity? “Hmm,”
Left: Inagawa he mumbles. “It is an uncomfortable
Cemetery, moment for us. I wonder if in the future
Japan, designed they might see my generation as dino-
by David
Chipperfield
saurs. It will be less about a moment of
genius to the individual creator, more
Architects about collaboration. I gave a lecture the
The Hyatt Foundation/
The Pritzker Architecture
other day and said, ‘Don’t copy us, don’t
Prize; Keiko Sasaoka do what we did, but always think about
new ways of practice.’”
pritzkerprize.com
Chipperfield’s The Hepworth Wakefield — Iwan Baan

Orwell’s animals shriek a fresh warning

O PE RA
Animal Farm
Dutch National Opera, Amsterdam
aaaae
Shirley Apthorp
Who would have thought that Stalin,
Lenin, Marx, Trotsky and their pals
would become so fashionable again that
George Orwell’s Animal Farm could seem
like contemporary fiction?
After the immense success of Alexan-
der Raskatov’s 2010 A Dog’s Heart in
Amsterdam, the composer’s Animal
Farm was eagerly awaited. The Russian
invasion of Ukraine has rendered the
piece more topical than its makers could
ever have imagined.
Raskatov’s opera is everything that
characterises Orwell’s dystopia — brash,
in-your-face, didactic, strident, horribly
uncomfortable. His animals howl and
shriek, snort and bray, whinny and
croak, their voices becoming gradually
more human as the evening progresses.
It’s a violent, compelling sound-world,
percussive and angular, full of unpleas-
ant truths.
Stage director Damiano Michieletto
was involved from the moment of con-
ception, though the libretto was penned
by the composer himself (with Ian Bur-
ton), much of it taken directly from
Orwell’s prose. Michieletto’s vision is
clear to the point of being overly simple. evolve as characters as the opera devel-
Much of the magic of A Dog’s Heart lay in ops, while Misha Kiria’s Napoleon holds
director Simon McBurney’s staging, full the stage with dark charisma. The cho-
to the brink with dark magic and ambi- rus is outstanding and the smaller roles
guity. Michieletto is ever so much more are sung with equal commitment.
literalistic. His images — a vast refriger- Animal Farm is raucous and jarring,
ation unit door, brutal cages, a meat dark and unsettling, brazen and virtu-
grinder, a printing press (sets: Paolo osic. It deserves a life beyond this pro-
Fantin) and animal masks (costumes: duction, not least because its themes,
Klaus Bruns) — are eloquent but devoid sadly, show no signs of ageing. A co-pro-
of ambivalence. Slogans are sung, pro- duction with Vienna, Palermo and Hel-
jected as surtitles, painted on the walls sinki, it opens this year’s Opera Forward
and finally hung up in neon lights. Some Festival, nine days of experimental per-
animals are more equal than others. formances, labs, talks and installations
We get it. in Amsterdam.
Bassem Akiki conducts an aug-
mented Netherlands Chamber Orches- To March 16, operaballet.nl
tra with verve and vehemence; the
whole is meticulously rehearsed and
impressively polished. But it is the cast’s
exemplary mastery of the outrageous
vocal lines that leaves the biggest
impact. As Molly the opportunistic
mare, Holly Flack gurgles and squeaks
out notes that really should not exist,
frequently floating around A above high
C — so high that listening almost gives
you a nose bleed. Yes, she can do it — but
should she?
By contrast, the raven Blacky rasps
and wheezes, emitting guttural sounds
that hurt like fingernails on a black-
board (the stentorian Elena Vassilieva,
wife of the composer). Gennady Bez-
zubenkov’s sonorous bass as Old Major,
James Kryshak’s squeaky-toy Squealer
and Germán Olvera’s dignified Boxer all Costumes designed by Klaus Bruns

O PE RA
Il viaggio a Reims
Hackney Empire, London/touring
aaaae
Richard Fairman
Four months after Arts Council Eng-
land’s bombshell on funding for the arts,
the dust is still settling. The opera sector
was the worst hit and one of the few
organisations to get a modest uplift in its
grant is English Touring Opera. Setting
out on its spring tour, the company can
look to marginally rosier times ahead.
The three operas it is taking round the
country are Donizetti’s Lucrezia Borgia,
Handel’s Giulio Cesare and — an inspired
choice — Rossini’s Il viaggio a Reims.
Over the centuries a handful of operas
have been written to celebrate corona-
tions, but Rossini’s is the most glitzy.
Commissioned for the coronation of the
French King Charles X in 1825, it
includes paeans to peace and prosperity
and culminates in a grand gathering of
aristocrats from across Europe, each of
whom entertains the party with a song
from their native land. The English Lord
chooses “God Save the King”, though to
new, poetic Italian words. The opera will
be performed in Cheltenham on May 6,
the coronation day of Charles III.
An updating might have seemed
tempting (imagine the fun that could
Richard Dowling and Luci
Briginshaw in ‘Il viaggio a Reims’
have been had with visiting EU dignitar-
ies), but English Touring Opera has
gone for safe and traditional. This pro-
duction by Valentina Ceschi is a touch
flat, but catches the celebratory spirit at
the end and is positively lavish as ETO
productions go. The stage is festooned
with flowers and a painted vista of
bucolic countryside forms the backdrop
until a delightful coup de théâtre flies it
away just before the interval.
There is minimal sign of character or
dramatic involvement, though the
sketchy plot hardly allows for much.
This is not laugh-out-loud Rossini, but
the sparkle of the music compensates.
With 14 principal roles and chorus,
the opera calls for a big cast and ETO has
done well to assemble an able company
of singers. None is obviously outstand-
ing, but Lucy Hall and Luci Briginshaw
vie with each other on top notes, Rich-
ard Dowling displays a youthful, lyrical
tenor of note and Esme Bronwen-Smith
shows off her agility. Jonathan Peter
Kenny conducts a lively performance.
englishtouringopera.org.uk
Wednesday 8 March 2023
Critical raw metals inside the disposable e-cigarettes enticing Gen Z are more likely to be dumped than
recycled. The products are a big money-spinner, but companies in the field are rarely acting responsibly.
I
t was the sickly sweet scent linger-
ing outside the school toilets that
first alerted headteacher Dan
Cleary to an emerging trend when
pupils returned after the summer
holiday last year. Since then, rarely does
a fortnight go by when he does not have
to discipline a student for stashing a
“vape”, or electronic cigarette, in their
backpack or blazer pocket.
Over the past decade, sales of e-ciga-
rettes have grown as vaping has
cemented its status as a less harmful
way to consume nicotine than trad-
itional cigarettes. But in recent years,
a new generation of brightly coloured
single-use devices with flavours like
“cotton candy” and “green gummy
bear” have become incredibly popular
among young people, including those
not old enough to legally buy them.
Enticed by Chinese-owned disposable
vape brands such as Geek Bar, Elf Bar
and Lost Mary, 18 per cent of 15-year-
olds in England and Wales were using
e-cigarettes in February last year, an all-
time high, says the NHS. The number of
11- to 17-year-olds who were vaping
in Britain more than doubled last year
from 3.3 per cent in 2021 to 7 per cent.
The latest vaping craze is hardening
fears that the devices could get under-
age users hooked on nicotine. But it
has also created a whole new problem:
tonnes of electronic waste.
Unlike Juul, the previous market
leader blamed for sparking a “vaping
epidemic” among US teenagers, these
e-cigarettes cannot be reused or
recharged. The devices are often dis-
carded like cigarettes outside the school
gates, says Cleary, principal at Robert
Smyth Academy in Leicestershire.
The materials in single-use vapes
could have a valuable second life if re-
cycled properly. Each device contains
about 0.15g of lithium in its battery, a
metal classified as a “critical” raw mate-
rial by the US and EU. The International
Energy Agency has warned it could be
in short supply within two years as man-
ufacturers race to scale up electric car
production.
More than 90 tonnes of lithium were
used in the production of the $5bn
worth of single-use vapes sold globally
last year, according to Financial Times
estimates based on data from the
research group Euromonitor, the con-
sultancy ECigIntelligence and the elec-
tricals recycling non-profit Material
Focus. That is enough lithium to supply
more than 11,000 electric vehicle bat-
teries. They also contained roughly
1,160 tonnes of copper, enough for
1.6mn home electric vehicle chargers.
“If you wanted to invent a product to
expose what’s rotten with the vaping
industry, disposable vapes would be it,”
says Shane MacGuill, head of nicotine
research at Euromonitor.
The products are a major money-
spinner, especially for companies based
in Shenzhen, the heartland of China’s
$28bn vapour industry. They have
made entrepreneur Zhang Shengwei,
49, a fortune off the back of his majority
stakes in Shenzhen iMiracle Technology
and Heaven Gifts International, the
companies behind both Elf Bar and
Lost Mary.
Yet manufacturers globally have
made little effort to enable the recycling
of their products and prevent a precious
resource from ending up in landfills. In
the UK, the vast majority of smaller
vape manufacturers and distributors
are not registered to comply with legal
obligations to fund recycling, according
to new analysis by Material Focus
shared with the FT.
Green Fun Alliance, a UK-based dis-
tributor owned by the company behind
Elf Bar and Lost Mary, only registered
late last year despite selling the prod-
ucts in the UK for about two years. Its
£600mn of sales accounted for more
than 70 per cent of the UK disposable
vape market in 2022. An Elf Bar repre-
sentative says the brand is “dedicated to
environmental protection”.
Policymakers are becoming increas-
ingly agitated about the waste assoc-
iated with the product on top of con-
cerns over underage uptake. MacGuill
believes regulation already approaching
in Europe and parts of the US will
become “kryptonite” for the industry.
For countries, such as the UK, which
have historically adopted a laissez faire
approach to regulating vaping because
of their focus on reducing cigarette use,
single-use vapes pose an awkward ques-
tion: do they now create more problems
than they solve?
Throwaway trend
The surge in popularity of disposable
vapes came about by accident. In an
attempt to quell outrage from con-
cerned parents and public health
experts over Juul’s popularity among US
teenagers, President Donald Trump
placed restrictions on some flavoured
e-cigarettes in 2020.
Manufacturers and users in the US
swiftly migrated to disposable vapes as
★ FINANCIAL TIMES
FT BIG READ. CONSUMER GOODS
By Oliver Barnes and Alexandra Heal
The environmental cost
of single-use vapes
Above: a Crave an alternative to prohibited flavoured
bar from the nicotine products. With better batteries
exterior, with a powering them, an improved atomiser
3D scan of its to heat and disperse the vapour, and
interior; scan twice the flavour concentration of older
of a Luto bar, vapes, disposable vapes quickly caught
showing the coil on in Europe. Even tobacco giants
which turns the Philip Morris International and British
liquid to vapour; American Tobacco have hopped on the
the battery and trend, launching their own versions.
LED in a Luto “Love them or hate them . . . they
bar; and the have pushed vaping into the main-
exterior of the stream,” says Liam Humberstone, tech-
vape. Right: nical director at Totally Wicked, a vape
some discarded distributor which supplies major UK
vape pens supermarkets Sainsbury’s and Asda.
Scans by Lumafield.
Photograph: Amit Lennon/
But he acknowledges the industry has
Material Focus/Recycle Your been “slow to act” to address the envi-
Electricals ronmental fallout from the products.
In the UK alone, 138mn disposable
vapes were sold last year, according to
FT calculations based on NielsenIQ
data. The vast majority are unlikely to
have been recycled. Sweeep Kuusako-
ski, one of the UK’s biggest electronics
recycling plants, processes just 700
vapes a week.
Recycling vapes is “very labour inten-
sive”, says Peter Moody, managing
director of Gap Group, a recycling busi-
ness. Each vape has to be dismantled by
hand because of the flammable batter-
ies, and nicotine liquid necessitates
extra health and safety considerations.
‘If you In the UK and EU, producers of elec-
tronics are legally obliged to fund the
wanted to recycling of a tonnage equivalent to
invent a what they put on the market. But only
product 16 of 150 vape producers and importers
in the UK analysed by Material Focus
to expose are registered to do so. BAT subsidiary
Nicoventures and PMI are among the 16.
what’s rotten Scott Butler, executive director of
with the Material Focus, says it is “shocking” that
industry, other manufacturers had skirted the
regulations. “As sales and profits have
disposable boomed, the environmental impacts of
vapes would vapes have been disregarded,” he says.
The Scottish and Irish governments
be it’ are considering an outright ban on the
Disposable vapes have eaten into the
global market share of other
e-cigarettes ...
Global e-cigarette sales ($bn)
Disposable Rest of market
20
15
10
5 among young adults in the UK, accord-
0 0
2018 19 20 21 22
Sources: ECigIntelligence; MHRA data provided by Vape-Click.com
products, while EU regulations set to be
passed this year will make replaceable
or rechargeable batteries in all con-
sumer products mandatory by 2027.
“The funeral date for the product is
effectively already set” in the EU, adds
Umberto Roccatti, president of Italy’s
vaping industry association.
But the same is not the case for the
UK, where a review of similar battery
legislation has been delayed twice.
Retailers selling more than £100,000
worth of vapes must offer take-back
services for recycling, but when the FT
visited a cross-section of supermarket
brands in London, none of the staff
spoken to were aware of the schemes.
Tesco, Sainsbury’s and the Co-op are
introducing more training for staff.
A recycling scheme introduced by dis-
posable vape manufacturer Riot Labs in
800 vape shops across the UK had less
than a 1 per cent take-back rate.
Ben Johnson, the company’s chief
executive, describes disposables as the
“fast fashion” of e-cigarettes. “We
should be getting a lot more scrutiny on
our environmental credentials as we’re
a very wasteful industry,” he says.
The health question
Many believe there should be more
scrutiny of the industry’s health risks,
too. Ever since a landmark 2015 report
by England’s public health body con-
cluded that vaping was 95 per cent less
harmful than smoking, UK health offi-
cials have supported the use of vapes as
a smoking cessation aid.
Even the explosion in popularity of
flavoured vapes, such as Elf Bar, among
underage users has not shaken that
stance. A UK government-commis-
sioned review published last year dou-
bled down on the position, saying the
authorities “must embrace” vaping to
help cut smoking rates.
The UK’s “permissive” approach has
allowed disposable vapes to “run riot”
as a consumer good, says Jonathan
... as they have also boomed in the past
year
Number of regulator-approved disposable vape
products in the UK, cumulative
10,000
8,000
6,000
4,000
2,000
2016 17 18 19 20 21 22
Grigg, chair of the European Respira-
tory Society’s tobacco control commit-
tee. “We were winning the battle against
smoking, but at a stroke breathing stuff
into your lungs has become attractive
again. It’s very disheartening.”
If youth vaping is allowed to increase
unchecked, underage vapers could pick
up smoking later in life, anti-smoking
advocates warn. A 2020 study by non-
profit tobacco control group Truth Initi-
ative found that 15- to-27-year-old
vapers were seven times more likely to
smoke than those who had never vaped.
“Unless something is done, at best
we’ll end up with a generation of chil-
dren with [nicotine-related] mood
problems and attention disorders . . . at
worst, they will all become smokers
again,” says Sarah Brown, a consultant
in paediatric respiratory medicine at a
London hospital.
Increasingly, the UK looks like a glo-
bal outlier on the issue. In November
2022, California voted to join four other
states by imposing a ban on all flavoured
vapes. In October, flavoured heated
tobacco products will be banned across
the EU, while the Dutch government
will ban almost all flavoured vaping
devices. The EU plans to introduce a
bloc-wide vaping tax.
But Javed Khan, the former head of
children’s charity Barnardo’s who led
the UK government review, warns that a
“knee-jerk” ban on flavoured vapes
could “lose some people back to smok-
ing”. Banning the sale of all vapes, as
some 40 countries globally have done,
“could easily put you back to square
one”, adds Khan. The UK health depart-
ment is exploring an excise tax on
vapes, according to officials, but it has
yet to win the approval of the Treasury.
There is evidence to support Khan’s
argument. Smoking rates have declined
ing to a study published in the scientific
journal Addiction. Between January
2021 and April last year, while vaping
rates soared among 18-year-olds, smok-
ing rates fell from 24.5 per cent to 19.5
17
per cent in that age category. Overall,
inhaled nicotine use was stable.
“If you’re looking to eliminate nico-
tine, disposables are a disaster,” says
Harry Tattan-Birch, a researcher in
behavioural science at University Col-
lege London who was behind the Addic-
tion study. “But if the aim is solely to
crush smoking rates then they seem to
be helping.” These different ambitions
“explain the rift” between certain coun-
tries on vaping laws, he adds.
The vaping economy
The companies cashing in on the dispos-
able vape trend are mainly based in
China. Elf Bar and Lost Mary account
for more than half of all vape sales in the
UK, the brands’ second biggest market
behind the US.
Elf Bar last year sparked controversy
for allegedly working with influencers
to court younger users on TikTok. Last
month, supermarkets including Tesco
and Sainsbury’s removed Elf Bar prod-
ucts from stores, after it emerged that
some contained above the legal limit
of nicotine e-liquid. The company says
some batches destined for other mar-
kets were inadvertently sold in the UK.
Through a sprawling web of invest-
ments, Shenzhen-based businessman
Shengwei, a vaping industry veteran,
has at least a 70 per cent shareholding
in the company behind Elf Bar and Lost
Mary, and also a stake in the company
behind Geek Bar, according to filings
seen by the FT.
Two people briefed on company
financials say Elf Bar and Lost Mary
generated more than $1.7bn (Rmb12bn)
in sales last year. A company represent-
ative says this figure is “significantly
exaggerated” but did not disclose an
alternative number.
Shengwei is publicity shy in part to
avoid unwelcome attention from Presi-
dent Xi Jinping’s rolling campaign to
reform China’s business landscape,
according to four people who know him.
The Chinese state tobacco monopoly
has clashed with the vape industry and
last year the Chinese government
banned the sale, but not the export, of
flavoured vapes.
When Trump’s flavoured vape ban
came into effect, Shengwei seized on the
opportunity, investing in single-use
vape manufacturers and the brands he
backed quickly made a mark. A rival
businessperson calls Shengwei China’s
“vape king.”
Big tobacco is trying to catch up. BAT
and PMI, which launched their single-
use vape offerings Vuse Go and Veeba
last year, “are definitely panicked about
being late to the party with the dispos-
able category,” says Tim Philips, ECigIn-
telligence founder.
The large tobacco brands are hoping
that the controversies surrounding
Chinese-owned brands will allow them
to make up ground in the flavoured dis-
posables market. In order to distinguish
itself further, big tobacco presents itself
$5bn as an ally of regulators.
Value of the “If you want to be with the regulators
single-use vapes and discuss and have a seat at the
industry globally table, you need [a disposable vape
product] . . . I am for regulation,” says
Jack Bowles, BAT’s chief executive,
11,000 justifying his decision to launch Vuse Go
Number of EV in 24 countries.
batteries that could “We are in the path of slowly but
be manufactured surely building some trust between the
from the lithium
used in disposable regulators and the industry, and every
vapes last year time you hear something bad, it sends
you back,” says Jacek Olczak, PMI’s chief
executive.
1.6mn Last month, BAT’s US subsidiary
Number of home EV Reynolds wrote to the FDA pressing
chargers that could them to ban Elf Bar, among other single-
be made using the
copper contained in
use competitors. Following a trademark
infringement lawsuit, Elf Bar is set to
the disposable vapes
rebrand as EB Design in the US.
Conscious of encroaching regulators
18% concerned by underage usage and envi-
Proportion of ronment damage, Heaven Gifts Inter-
15-year-olds in national, one of the companies behind
Elf Bar, has been trying to hire lobbyists
England and Wales
who use e-cigarettes in the UK and the EU, according to three
people approached by the company.
Those who have been in the fast-moving
vaping industry for a while believe dis-
posables will end up “mirroring” the
“fast ascent and descent” of e-cigarettes
like Juul, whose valuation has gone from
$38bn to just above $700mn.
“Already regulators are growing less
fond of [Elf Bar] and that will start cut-
ting into its bottom line as the negative
publicity grows,” says Peter Beckett, a
former Juul public policy director and
co-founder of forum Vaping.com. “But
history says it won’t just be regulators
that pose an existential threat. It will be
the next big thing.”
Until then, back in Leicestershire, it is
left to educators like Cleary to clean up
the mess as more pupils pick up vaping
habits. “I’d be really intrigued to know
how people who produced these things
are sleeping at the moment,” he says.
“I suspect the wealth that they’re
attracting might make that easier.”
Additional reporting by Yuan Yang,
George Parker and Jim Pickard in London
18 ★ FINANCIAL TIMES Wednesday 8 March 2023

The FT View
Biden’s ESG rule is sound risk management
Presidential veto will allow
pension funds to take
sustainability into account
A US presidential veto of congressional
legislation is a big moment. Joe Biden is
expected to issue the first veto of his
presidency to preserve a White House
rule allowing fiduciaries of private com-
panies’ pension funds to include envi-
ronmental, social and governance con-
siderations in their investment decisions.
Cue brickbats from opponents of ESG
over Biden supposedly imposing “woke
capitalism”. But the rule only permits,
but does not compel, managers to take
ESG into account — and the president is
defending sound investment principles.
The battle over the investment rule is
emblematic of a broader backlash
against ESG investing. Republicans and
other opponents charge that applying
ESG principles may put retirement
ft.com/opinion savings on a sub-par footing. They say
fiduciaries could use investments to
promote a liberal agenda. Joe Manchin,
one of two Democratic senators who
sided with Republicans in opposing the
White House rule, said it “prioritises
politics over getting the best returns”.
The regulation has become a game of
ping-pong. The Trump administration
in 2020 made it harder for workplace
retirement plans to explicitly consider
factors such as climate risks. Biden
replaced that rule with one easing the
way for fiduciaries to consider ESG
factors that might affect investment
performance. Republican lawmakers
used a congressional power of review to
strike down the White House rule.
The federal stand-off comes as many
Republican-run states are pulling
money from big asset managers that
have supported sustainable investment
policies. Ron DeSantis, the Florida
governor, has moved to bar state-run
fund managers from taking ESG factors
into consideration in investments. In
some states, anti-ESG laws have been
motivated by claims that asset manag-
ers are discriminating against powerful
local industries, from oil and gas to coal
or firearm makers.
The ESG industry remains flawed. It
lacks clearly defined standards of meas-
urement and performance, opening the
door to “greenwashing” and other
cynical practices. Compelling money
managers to be bound by its dictates
would be misguided. The White House
rule contains no compulsion, however.
It merely allows fiduciaries to take ESG
considerations into account as part of a
prudent strategy. And asset managers
increasingly realise that earning the
best returns, and avoiding losses, means
considering all risks and externalities
related to any investment. Company
values can be affected by more than just
financial performance.
Companies are under pressure from
sections of society to adopt climate-
friendly policies, pursue social goals and
promote diversity and inclusion in the
workplace. They face constant scrutiny
The Trump from social media, activists and proxy
administration groups. But there are already safeguards
against pension managers using ESG as
in 2020 made
cover to pursue political agendas. The
it harder for legislation underlying the new rule
workplace explicitly requires fiduciaries to act
retirement prudently and in the financial interests
plans to of pension plan participants.
explicitly A Biden veto will ensure company
pension plans can take ESG into
consider factors account. Republican-run states will still
such as climate have the right to bar public pension
funds from doing so. But they should be
wary of how they exercise that power.
An Indiana fiscal watchdog last month
estimated that, by restricting fund
managers’ options, a proposed state
law limiting their use of sustainable
investment factors could reduce returns
of the public pension system by $6.7bn
over a decade. Blocking some invest-
ment considerations not only amounts
to interference in the market of a kind
Republicans have long claimed to
oppose. It could also result in the
opposite of what is intended.

Opinion Science Email: letters.editor@ft.com

Letters Include daytime telephone number and full address

Corrections: corrections@ft.com
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the genome-editing genie Electric car revolution is great news for engineers and designers
Andy Carter I think the changes in the auto
industry, outlined in Peter Campbell’s
Top Line column “Electric switch will
deliver a shock to car jobs in Europe”
(February 25), have been overblown.
First, while electric cars replace the
complicated combustion engine with
far simpler electric motors and battery
packs, there are many systems which
continue unchanged: chassis, braking,
interiors, suspension and electric-
mechanical systems such as HVAC,
window and door mechanisms, wipers,
windshield washers, lights, etc. Many
jobs in these domains will not be in the
headline figures because they have
already been outsourced to suppliers.
Another thing about engines is the
kind of skills required to design and
build them. Some specific engineering
skills will be redundant, but modern
engines are made up of metal castings,
machined parts and plastic mouldings,
and the knowledge to build those
kinds of parts are still required in EV
components.
Second is the amount of new EV
models required. Not only do all makes
have to revamp their entire line-ups in
the next seven years but there are also
all of the new start-ups who, if they
survive, will need to expand and
refresh their line-ups. It will be a great
opportunity for experienced engineers
and designers.
Lastly, I think some people assume
the four-six year model cycle is coming
to an end because of software updates
and the reliability of EV components.
However, why should that be when
our mobile phones are completely
redesigned annually? I expect model
cycles to continue to change and the
pressure to integrate new technology in
model refreshes to speed up.
Of course, that doesn’t mean things
won’t change. There will be suppliers
and manufacturers that evolve and
succeed, others that will wither and
new ones rising (such as Panasonic and
LG as battery suppliers). Also, and
most importantly, manufacturers seem
to be taking this opportunity to
relocate factories to lower-cost areas.
Raymond Jepson
Roxboro, QC, Canada

involves making changes to human
Anjana DNA using chemicals that can add,
delete or alter genetic material. There
Ahuja are broadly two types of editing:
somatic and germline. Somatic
genome editing involves applying the
Prigozhin gas bill story Modi is right to be wary of Just Eat Takeaway’s travails
misreads laundering laws China as a trade partner recall that Hovis ad
The furore following your revelation
that Yevgeny Prigozhin was accepted as
Alan Beattie suggests that India’s
aversion to “jumbo” trade deals like
Your article entitled “Rough ride: Just
Eat Takeaway suffers €5bn
a client by Discreet Law solicitors after
providing a gas bill addressed to his
the Regional Comprehensive Economic
Partnership (RCEP) is stymying its
impairment from pandemic-led
acquisitions” (Report, March 2),
mother (“Russian warlord passed UK emergence as a counterweight to describing the immense financial

E
very emerging technology
has its dreamers and
schemers. That is certainly
true of human genome edit-
ing, the focus of a high-pro-
file global summit held this week at
the Francis Crick Institute in London.
Among the dreamers is Harvard
University biochemist David Liu,
whose talk on Monday featured news
of Alyssa, a British teenager now in
remission from leukaemia after
receiving donated T-cells edited using
a technique developed in his lab.
The most notorious schemer is He
Jiankui. In November 2018, he
revealed he had altered the DNA of
early embryos which were implanted
in women, leading to the world’s first
three genome edited babies. His
secret, technically premature project
— intended to make the infants
immune to HIV but now thought to
One challenge is the lack of
a global legal framework
for DNA tinkering and, by
implication, evolution
have failed, leaving them facing
unknown health consequences —
shocked the world, horrified his peers
and landed him a three-year spell
in prison.
More than four years later, the spec-
tre of He hangs over the summit as a
symbol of scientific over-reach. The
intervening period has, however, seen
cautious optimism when it comes to
treating disease: multiple clinical tri-
als show genome editing can seem-
ingly correct single-gene disorders,
including sickle-cell anaemia. “Tech-
nically, we’re seeing a nice progression
from the first fairly crude ways of
doing things to much more sophisti-
cated, accurate and, in some cases,
more efficient methods,” says Profes-
sor Robin Lovell-Badge, a develop-
mental biologist at the Crick and chair
of the summit’s organising committee.
He estimates about 70 patients have
been successfully treated using the
most modern genome editing meth-
ods such as Crispr. That makes regula-
tory approval a matter of time — and
means society will have to grapple
with the profound question of how
and when to let the genome-editing
genie out of the bottle. Issues include
legality, cost and equitable access;
the potential erasure of some diseases
and disabilities; and human enhance-
ment. Human genome editing
technology to a subset of a patient’s
non-reproductive cells, for example
blood cells.
Germline genome editing is more
controversial: it is performed on early
embryos and affects all cells, including
egg and sperm cells. This means that,
if the embryo is brought to term, all
its descendants inherit a modified
genome. This approach, sometimes
called heritable human genome edit-
ing, is what He attempted. The World
Health Organization regards somatic
genome-editing as acceptable in coun-
tries with regulatory safeguards but
germline-editing as posing “greater
safety and ethical issues”.
One challenge is the lack of a global
legal framework for DNA tinkering
and, by implication, human evolution.
Instead, there is a country-by-country
patchwork of laws, norms, regulations
and scientific moratoriums. China has
tightened both its laws and regulatory
oversight since He’s exploits, though
summit delegates fretted that new
restrictions focus too much on univer-
sities and research institutes and not
enough on private clinics.
Lovell-Badge, though, mostly wor-
ries that genome editing will become
the preserve of the wealthy, given that
current therapies are estimated to cost
upwards of six figures per patient.
“The question of equitable access is a
huge one,” Lovell-Badge tells me.
“How do we get costs down? It’s a chal-
lenge for scientists, for economists
and for everyone.”
Another question is whether
genome editing could foster a lower
tolerance of disability or a resurgence
of eugenics. Tom Shakespeare, profes-
sor of disability research at the Lon-
don School of Hygiene and Tropical
Medicine, who has the genetic condi-
tion achondroplasia, said he was “not
worried about eliminating disability
but . . . I worry about human genome
editing because of safety, questions
over who can access it and the
resources it might eat up.” Disability,
he added, does not just have biological
solutions but also social ones, such as
assistive devices.
Perhaps the hardest boundary to
navigate will be that between disease
correction and enhancement. It is not
hard to imagine a world where parents
routinely design their babies for per-
fect health, where soldiers acquire
infrared vision or humans are biologi-
cally modified to adapt to a sweltering
environment. But it is easy to forget
that, unlike competitive parenting,
conflict and climate change have
social solutions too.
The writer is a science commentator
checks for dirty money with mother’s
utility bill”, Report, February 24)
unfortunately arises from ignorance of
English anti-money laundering rules.
Solicitors are not in fact required to
carry out anti-money laundering
checks when taking on clients for
litigation work, which is the work
Discreet Law did for Prigozhin. In the
words of the Law Society, which
regulates solicitors, “the [Money
Laundering Regulations] 2017 [do] not
apply to participation in litigation”.
This is because there is normally a
very low risk of money laundering
taking place in litigation, where
money only passes hands either
when a client pays bills or pays
damages to an opponent; neither of
which is a particularly effective way
to launder money.
But in any event, solicitors ask for a
document such as a utility bill to verify
the client’s identity to ensure that they
are who they say they are. There is no
suggestion that Discreet Law’s lawyers
were duped into thinking they were
acting for Prigozhin’s mother by the gas
bill — they issued a claim in Prigozhin’s
name in the High Court.
This case is not therefore, as some
seem to be suggesting, evidence that
the rules about verifying client identity
need to be tightened. Had Discreet Law
been required to check even more
carefully that the man trying to
instruct them was really Yevgeny
Prigozhin, matters would hardly have
turned out differently.
Shimon Goldwater,
Partner, Asserson Law Offices
London WC2, UK
English devolution is key
to the productivity puzzle
Chris Giles (“Britain’s London problem
is not what you think”, Opinion, March
3) is right to highlight how a slump in
productivity growth in London affects
the whole country.
London has been a catalyst for
growth for the whole of the UK for
centuries. But the capital now has the
highest housing costs in the country by
far, as well as the highest poverty rates
— including those in work, children
and the elderly.
The streets are not paved with
gold for most Londoners because the
one-size-fits-all systems imposed by
Whitehall often do not work efficiently.
And that is one big reason why the UK
is not as productive as we should be.
The chancellor has the opportunity
to reverse this story of gradual decline
in his Budget on March 15. Alongside
some nationwide measures to support
business, jobs and growth — urgent
support for businesses faced with
turning off their lights in the face of a
cost of living crisis; reform of the
apprenticeship levy to boost uptake;
and effective childcare provision to get
more people into work — he should let
London and other city regions choose
how they invest their resources.
Freeing local leaders from the iron grip
of Whitehall would enable them to
invest where it will best deliver growth.
Devolution is the first big step to
solve the UK’s productivity puzzle.
John Dickie
Chief Executive, BusinessLDN
London EC1, UK
Wall Street is late adopter
of sustainable investing
It is ironic that, as you report, the
pushback against environmental,
social and governance investing is now
considered a threat to Wall Street
profits (Report, March 2).
As late adopters of the idea that
businesses should consider their
wider impact on people and the planet
in carrying out their operations,
financial institutions were forced to
reconsider their approach following the
2007-2008 financial crisis. Since then,
a combination of increased business
risk from climate change, social
inequity and poor governance, as well
as significant financial opportunity
from the growing demand for
ESG-related products and services, has
massively accelerated this trend.
Now, financial institutions are
having to worry that parts of society —
notably the Republican right in the US
and elsewhere — haven’t made the
same shift, which is a potential threat
to profits.
It all comes back to the same initial
question — should business consider its
wider impact beyond delivering profit
for shareholders, and is this in fact
good for business? Not everyone is an
adopter of this idea yet.
Katarina Wallin Bureau
Managing Partner, Rise Corporate
Purpose Advisory, Brussels, Belgium
China’s vast industrial base (“Insular
India’s exporters will struggle to fill
Chinese shoes”, Trade Secrets, FT.com,
March 2). A less cursory analysis would
reveal that is not the case.
India already has separate free trade
agreements with most of the RCEP
signatories including Japan, South
Korea and, more recently, Australia.
India is also a party to multilateral
trade blocs like the Association of
Southeast Asian Nations.
The decision to not join the RCEP
was primarily a choice about China and
its reputation for flouting global
trading norms. Indian prime minister
Narendra Modi made the correct
decision to not sign on to the RCEP.
Pursuing free trade — or external
liberalisation — without domestic
economic liberalisation is a recipe for a
country to be swamped by Chinese
imports while losing all export
competitiveness.
Ultimately, what is hobbling India’s
integration into global supply chains
is its own cumbersome labour,
agriculture and land acquisition rules.
Nathan Punwani
Secretary, US-India Relationship Council
Scottsdale, AZ, US
Reparation is for states to
make, not just individuals
Stephen Bush’s claim that it is easier for
individuals to allocate resources
towards reparations than states is a cop
out (“Problems with the argument for
reparations”, Opinion, February 21).
First, to use the example of British
colonial rule in India, will Bush
acknowledge that the decline of the
Indian economy was due to the ensuing
exploitation by the British state?
That India was one of the richest
states at the start of British rule and
one of the poorest at the end of it.
Surely if that was the case then the
state remains responsible. Is he
suggesting that no amends ought to be
made for this?
Bush should be aware that
redistributing money on account of
reparations is not a reallocation to the
poor. Reparations is “the action of
making amends for a wrong one has
done, by providing payment or other
assistance to those who have been
wronged” — to use a dictionary
definition. It is the quality of the
arguments made by the likes of Bush
that have diverted the moral
arguments on reparations.
Can the FT acknowledge that
reparations are owed to the states that
have been wronged?
Amit Kothari
Dubai, United Arab Emirates
challenges facing Just Eat Takeaway,
includes a photo of a young man on a
bike making a food delivery.
It brings to mind the famous 1973
TV advertisement for Hovis, directed
by Sir Ridley Scott and set to swelling
Dvorak music. Here a boy, on a similar
mode of transport, also makes a home
delivery and has a bumpy ride down
the hill — all set in the town of
Shaftesbury, Dorset, accompanied by a
voiceover in a thick no-nonsense West
Country accent.
The great difference today is that JET
thought it clever to buy Grubhub
(more kids on bikes making deliveries)
for $7.3bn and now has to write down
almost €5bn on that deal and other
recent acquisitions — equivalent to the
entirety of JET’s current valuation.
Investors gave JET astronomical
valuations of multiple billions, despite
its earnings only now touching €19mn
and despite the fact that its core
business offering is literally as old as
the push bike.
The Hovis advertisement ends with
the slogan that “it’s as good for you
today as it’s always been”.
I would suggest that the same should
be said for investment logic, if only
people today had a bit more of that
“no-nonsense” West Country wisdom.
Charlie Metcalfe
Lisbon, Portugal
And finally, a piece of
Beach Boys etymology
I was delighted to learn (“The Life of a
Song”, Life & Arts, February 11) of
other versions of “Sloop John B” in
David Cheal’s history of the song, but
was perplexed by his question: “Why
would a British colony have a sheriff?”
As any modern-day sheriff would
know, the term itself is an adaptation
of the Anglo-Saxon “shire-reeve”, used
in the reign of England’s King Alfred
the Great, meaning the chief of a shire,
or county. The role has had many law
enforcement-related functions over a
long history.
Unsurprisingly then, there are also
documented cases of “sheriffs” in
former British Caribbean colonies, if
perhaps no “Sheriff Johnstone”. His
name is probably chosen simply to
make the line rhyme more easily.
Steve Hess
Calgary, AB, Canada
Correction
cReal estate investor Bluestar Group
emerged as a potential buyer for Home
Reit, not for Triple Point as wrongly
stated in a Lex note on March 7.
Wednesday 8 March 2023
POLITICS
Janan
Ganesh
T
he number of American
troops in Vietnam peaked
in 1969. Twenty years later,
Born On the Fourth of July,
which dramatised the
maiming and political awakening of one
soldier, came out. Even after Platoon,
The Deer Hunter, Full Metal Jacket and
Apocalypse Now, even after the protest
songs of Edwin Starr and Creedence
Clearwater Revival, artists weren’t done
with the subject.
Now consider the Iraq war. Twenty
years on, its cultural footprint consists
of . . . what? The Hurt Locker? A
Future of EU
in a world of
deep disorder
Martin Wolf Economics
In adjusting to today’s crises, the bloc
needs to decide whether it wishes
to be an ally, a bridge or a power
T
he Law of Nations Shall be
Founded on a Federation of
Free States.” Thus did the
great German philosopher
Immanuel Kant lay down
the foundations of his plan for a “per-
petual peace”. No part of the world has
embraced his idealism more completely
than post-second world war Europe. Yet
is this great dream now dead?
The British diplomat Robert Cooper
argued brilliantly that we can divide the
world into the “pre-modern”, by which
he meant the parts where anarchy
reigns, the “modern”, by which he
meant the world of nation “states”, and
the “post-modern”, by which he meant
Europe’s effort to create a federation of
states, as Kant had called for. Cooper
argues that “what came to an end in
1989 was not just the cold war or even, in
a formal sense, the second world war . . .
What came to an end in Europe (but
perhaps only in Europe) were the politi-
cal systems of three centuries: the bal-
ance of power and the imperial urge.”
Nobody acquainted with the history
of Europe should be in the least
surprised by the desire for a different
way for states to behave and relate to
one another. Indeed, one would have to
be an imbecile not to understand it.
Yet how does this idealistic EU adjust
to our new world, in which the imperial
urge is horrifyingly visible on its fron-
tiers? How does it adjust to a world no
longer characterised by anything that
could plausibly be called a “rules-based
international order”, but rather one of
BUSINESS
Brooke
Masters
F
or most overseas lenders, US
retail banking has been a
graveyard of failed dreams.
Drawn by America’s size,
wealth and economic growth,
UK-listed HSBC and RBS (now Nat-
West) and Spain’s BBVA all gave it a go
before throwing in the towel. French
lender BNP Paribas formally joined
their ranks in calling it quits last month.
Yet some foreign banks remain con-
vinced that they can make money from
mass market American consumers.
Bank of Montreal nearly doubled its US
retail banking franchise to 4mn custom-
The Iraq war left western societies unchanged
sub-theme in some passable novels?
Yes, US casualties were far higher in
Vietnam. Yes, a conscript war scars a
society in a way that an all-volunteer
one can’t. But Iraq was easily the most
controversial war fought by a western
state in the past half-century. It set
citizen against citizen in Britain
and Germany as much as in the US
(no European nation participated in
Vietnam). Those who lived through it
might have assumed it would mark our
culture for a generation: that pro and
antiwar would become signifiers of one’s
wider worldview, even one’s tastes, as
Leave and Remain now are in the UK.
Instead, it is often an ordeal to persuade
the young what a saga it all was.
And that, I think, is what makes
this 20th anniversary so eerie. At least
within the western world, the Iraq war
has left little trace.
It didn’t shake politics. Some
leaders fell (José María Aznar of Spain).
economic crises, pandemics, deglobali-
sation and great power conflict?
Theoretically, perhaps, the “post-
modern” EU might survive in this new
world, with its frightening impulses
towards destruction. But the post-1989
dream of a very different world order
made it far easier for the EU to be the
prosperous and pacific continent it
wanted to be. The US exploited the “uni-
polar moment” by throwing its military
weight around the world. That was not
what Europe wanted, as its reaction to
the war in Iraq demonstrated.
Some of the problems the EU faces
derive from the fact that it is a confeder-
ation of states, not a state. The difficul-
ties of managing divergent economies
within a monetary union are an inevita-
ble result. The European Central Bank
plays an essentially political role in
keeping the economies together. Again,
the single market is not integrated in the
way the US market is. The lack of
dynamism in information and commu-
nications technology must be partly
explained by this reality: after all, only
one European company, ASML, a
producer of chipmaking equipment, is
among the 10 most valuable technology
firms in the world. (See charts.)
Such difficulties are only likely to
grow in this more nationalist and more
fragmented world economy. The open
world markets on which Germany, in
particular, depended are becoming less
so. That is bound to be costly. Moreover,
the US is moving towards an interven-
tionist and protectionist industrial
Can any foreign adventurer make it in US retail banking?
ers last month by taking Bank of the
West off BNP’s hands for $16.5bn. And
Spain’s Santander made strengthening
its US bank, which has 4.5mn custom-
ers, an important part of its pitch at last
week’s investor day.
In general, outsiders have struggled to
compete in US retail banking. Without a
developed branch network, it is hard to
make an impression on potential cus-
tomers. And even decent-sized regional
banks struggle to keep up with the cost
of regulatory demands and the need for
new technology.
The foreign adventurers have often
had global scale, but that helps less on
the retail side than it does with invest-
ment and institutional banking and
even wealth management. Retail prod-
ucts vary widely from country to coun-
try, limiting the ability to share costs.
Even when lenders do attract deposits,
finding ways to employ them profitably
are complicated by US rules aimed at
★ FINANCIAL TIMES
Opinion
Others were re-elected long after the
occupation soured (George W Bush and
Tony Blair). But there was no systemic
change. How a politician acted over the
war soon faded as a test of their patriot-
ism, or judgment, or anything. The
current US president voted for it. So did
each UK prime minister since 2003 bar
the last two, who weren’t MPs at
How our leaders acted over
the conflict soon faded as a
test of their patriotism, or
judgment, or anything
the time. Had these leaders voted the
other way, it wouldn’t have stopped
their ascent.
At the margins, Donald Trump’s
pledge to end the “forever wars” might
have helped him in 2016. But it is
The ECB now holds a significant share
of eurozone public debt
Net public debt as a % of GDP, 2022
Held by ECB Other
0 20 40 60 80 100 120
Italy
Portugal
France
Spain
Belgium
Austria
Germany
Ireland
Netherlands
Sources: ECB, IMF
policy. For the EU, such a shift creates
existential problems. Similar efforts
there are bound to be more national
than European. This would threaten the
single market and give the whip hand to
the member countries with the most
resources. Germany will be the best
positioned. At the same time, the higher
costs of energy in Europe than in the US
are a threat to its own heavy industry.
Meanwhile, there have emerged two
huge threats to EU security. One is the
confrontation with Russia, which, many
Its difficulties are only
likely to grow in this more
nationalist and more
fragmented global economy
keeping capital local. Why do Santander
and BMO think it is worth trying to beat
the odds? Partly a lack of options and
partly a belief that technology has
changed the equation. Each bank needs
to find new sources of growth and each
Some institutions remain
convinced they can make
money from mass market
American consumers
thinks that digital banking can help
muster the scale to make a go of the US.
But regulatory hurdles and economic
challenges await.
BMO, the fourth largest Canadian
lender, has been making US acquisi-
tions for four decades but is only now
aiming for national scope. Though the
return on equity in US banking is gener-
hopeless to attribute the populism
of recent times to some post-Iraq
disenchantment with elites. Populists
do well in France, which stayed out of
the war. The Tea Party loathed Barack
Obama, who opposed it. If anything
soiled the good name of the governing
class, it was the 2008 financial crash.
Did the war at least bring a lasting
change in foreign policy, if not to
personnel? It is hard to identify one.
There has been no Iraq version of Viet-
nam syndrome: no reluctance to use or
threaten hard power. By 2011, the west
was engaged in Libya. France spent nine
years in the Sahel. Vast troop deploy-
ments are harder to imagine, true. But
the idea isn’t unspeakable in the public
square. Joe Biden suggests, again and
again, that America would defend Tai-
wan, which it doesn’t recognise as a state
and isn’t formally obliged to protect.
It is possible, I suppose, to string
together a case that its agonies in Iraq
The EU is at best an ‘also ran’
in the technology stakes
Latest market value of tech stocks ($bn)
0 0.5
Apple
Microsoft
Alphabet
Nvidia
Meta
Tencent
Taiwan Semicon
Samsung
Broadcom
ASML
Source: Refinitiv
fear, might soon be backed militarily by
China. This, however, is just one
aspect of splitting the world into rival
blocs, with incalculable longer-term
consequences for everybody, but espe-
cially for the bloc that wants peace
above all. The other threat is from the
global environment. While the EU has
been in the lead on climate policy, this is
a problem it cannot solve on its own,
since it produces only 9 per cent of
global emissions and is responsible for
none of their growth.
So, how might the EU, liberated from
the internal obstacles created by a sover-
eignty-obsessed UK, respond to a global
environment so different from the one it
hoped for some three decades ago?
Globally, it needs to decide whether it
wishes to be an ally, a bridge or a power.
So long as the US remains a liberal
ally lower than at home, BMO argues
that the market is a logical target. The
Bank of the West purchase now allows
BMO to push forward with a conven-
tional growth plan. The deal doubles its
network to more than 1,000 branches
and gives it a foothold in the huge Cali-
fornia market and 31 other states. In a
further effort to boost name recogni-
tion, BMO has agreed to pay $100mn to
name Los Angeles’ soccer stadium.
Santander is opting for a narrower
strategy built around online banking and
auto loans. It plans to strip down its retail
product offerings from 314 to less than 20
and use the digital app developed for
Europe to cut costs. It has stopped new
mortgage lending and bought out the
minority investors in its US consumer
unit. These moves allow it to channel
deposits into car loans and compete prof-
itably not just for borrowers with poor
credit but also those who are much less
likely to default but also command lower
unnerved and abashed the US, which
made it underreact to Russia’s actions in
Georgia, Crimea and Syria, which
emboldened the Kremlin and which led
to the present war in Ukraine. But we
are piling assumption on heroic
assumption here, in a chain of causation
stretching two decades.
Even in the narrow field of military
doctrine, the change wrought by the
Iraq experience (and the Afghanistan
one) turned out to be fleeting. Who
now, as Ukraine fights for its life, and the
US and China tool up, thinks that
conventional interstate wars are passé?
Who will pen an op-ed to the effect that
counter-insurgency and “asymmetry”
are all?
There is an intellectual lesson here, on
the impossibility of knowing the signifi-
cance of an event at the time. The Cov-
id-19 outbreak was going to transform
cities, air travel, even personal man-
ners. I now keep having to be reminded
A more united EU could be more militarily
powerful than it now is
Military expenditure, 2021 ($bn)
1.0 1.5 2.0 2.5 0 200
US
China
US Russia
China
Taiwan EU
S Korea
EU
France Germany Other EU
Source: Sipri
democracy and committed to the
western alliance, the EU is bound to be
closer to it than to other great powers. In
this world, then, that makes it most
likely to be a subservient ally. A role as a
bridge would come naturally to an
entity committed to the ideal of a rules-
governed order. The question, though,
is how to be a bridge in a deeply divided
world in which the EU is far closer to one
side than the other. The third alterna-
tive is to seek to become a power of the
old kind in its own right, with resources
devoted to foreign and security policy
commensurate with its scale. But for
this to happen the EU would need a far
deeper political and also fiscal union.
The obstacles to that are legion, includ-
ing deep mutual distrust.
Internal reforms must depend in
substantial part on what role the EU
interest rates. “We are not going to put
capital in places where we are not com-
petitive,” says Ana Botín, executive chair.
She adds that rising US interest rates are
helping to make retail banking more
profitable than it has been in decades,
and Santander can beat the odds because
“we have something no one else has, glo-
bal scale in auto lending”.
But it might not be the best time to
bulk up. The US Federal Reserve, con-
cerned that large regional banks could
threaten financial stability, is consider-
ing rules that would raise costs for those
that grow too big. BMO now has more
than $250bn in US assets, putting it
squarely in the Fed’s sights. Canadian
rival TD Waterhouse has already felt the
pressure: its $13.4bn acquisition of
Memphis-based First Horizon ran into
regulatory hurdles, delaying the deal’s
closing date indefinitely.
Santander had trouble with the US
stress tests before smaller overseas
19
that it happened. The Iraq war, another
life and death matter, isn’t so forgetta-
ble, if only because it was a choice: an act
of commission. But were we to rank the
discrete events of the century so far by
their effect on the west, it comes well
below the crash. And the elevation of
Xi Jinping. And, though the point is that
we can’t yet know, the Ukraine war.
For Iraq itself, the consequences of
the war haven’t stopped playing out. For
the wider region, the secondary effects
include the rise of Isis and a stronger
hand for Iran. In the countries that
nominally started it, though, the war
has left a fainter mark — politically,
culturally — than was conceivable at the
time. It is an event that now seems at
once profound and ethereal. As a
reminder that it happened at all, we
have these neat, round-number anni-
versaries, and the graves.
janan.ganesh@ft.com
400 600 800
wishes to play in this new world. The
more active and independent it wishes
to be, the more crucial it will be to
deepen its federalism. Such a deepening
would be risky, no doubt, since it will
awaken nationalist reactions. It may
also be impossible to agree. But a degree
of deepening may be inescapable, given
the need for a more robust security
posture and the fragility visible in
divergence across the eurozone.
The Kantian dream has not proved
exportable. We live in a world charac-
terised by disorder, nationalism and
great power conflict. This is not the
world of which the EU dreamed. But if
its leaders wish to preserve their great
experiment in peaceful relations, they
need to strengthen it for the storms.
martin.wolf@ft.com
banks were exempted and further
growth could trigger more scrutiny. It
also is relying on auto loans at a time
when more borrowers are struggling.
The share of US auto loans that were
severely delinquent in January hit the
highest level since 2006 and defaults are
rising as well. The risks of recession are
already showing up in Santander’s
results: the US accounted for 11 per cent
of loans but 17 per cent of money set
aside to cover losses as of December.
Botín remains firmly committed to a
global retail strategy to fund her plan to
woo sceptical investors with €3.8bn in
share buybacks and dividends. “We
can’t just be Europe,” she says. The bank
has made big strides in the UK and Latin
America, and drew 15 per cent of its
profit from the US last year, second only
to Brazil. So the siren call of the Ameri-
can market continues to sound.
brooke.masters@ft.com
20 ★ FINANCIAL TIMES Wednesday 8 March 2023

Bank of Ireland: no passes

Ireland’s strong economic growth is expected to moderate during the next few years. Until recently, Irish
mortgage rates were above the European average. Interest rate rises are expected to continue lifting net
interest margins at Bank of Ireland in the nearer term.

Ireland’s economic performance Mortgage rates

Twitter: @FTLex
LVMH:
a good look
Two years ago, LVMH toppled Nestlé to
become Europe’s biggest company.
Since then its shares have surged by a
half, fuelled most recently by China’s
reopening. The scale of the French
group is a source of strength, powering
a formidable marketing machine. But
it also raises questions about how it can
maintain an aura of exclusivity, crucial
to selling luxury goods.
An obsession with control
characteristic of chair and chief
executive Bernard Arnault is one
answer. Witness LVMH’s beauty
division, which this week acquired a
new boss in Stephane Rinderknech.
Most luxury brands license the
cosmetics and fragrance side of their
businesses to specialists such as Coty.
But LVMH has insisted on managing
the business in-house.
LVMH also maintains strict controls
over distribution, relying heavily on its
own retail network. Unlike some of its
peers, the group did not permit the sale
of stock at a discount in the pandemic.
That hit profitability last year. The
perfume and cosmetics division, which
accounts for about a tenth of sales, had
an operating profit margin of 9 per
cent, a third of LVMH’s average.
Rinderknech, a former L’Oréal
executive, takes charge of the division
at a time of growing competition.
Luxury brands are increasingly
extending into beauty. That takes them
into closer rivalry with pure-play
companies such as L’Oréal, Estée
Lauder and Coty. They are attracted by
strong demand trends and the role of
beauty in recruiting customers.
LVMH’s share price performance
over the past decade has been
exceptional. Over the past 10 years,
investors have received total returns,
with dividends invested, of 700 per
cent. Now the shares trade on a
forward price/earnings ratio of 26.
That is about 15 per cent higher than
the 10-year average and implies a
forward PEG ratio (price/earnings
divided by earnings growth) of more
than two times, which investors tend to
consider expensive.
There are risks. LVMH would suffer
if Chinese consumers turned against
foreign brands. It would be hard hit if
Louis Vuitton, its key profit driver, fell
out of vogue. However, the luxury
market is a secular growth story. Rich
consumers appear to have shrugged off
inflationary pressures. LVMH stands
out among its peers. Its pricing power,
marketing prowess and distribution
model merit a premium valuation.
Mitsubishi/rockets:
space cadet
Japan’s attempt to keep up in a space
race featuring US companies such as
Elon Musk’s SpaceX is the H3 rocket
programme. This suffered a setback
yesterday when the Japan Aerospace
Exploration Agency was forced to blow
up an H3 rocket during a failed launch.
Japan hopes to cut its costs for
sending satellites into space. Investors
in Mitsubishi Heavy Industries should,
meanwhile, question the costs
shouldered by this key contractor.
An aborted launch last month had
already deepened concerns over the
viability of the H3. The explosion
comes weeks after the industrial
conglomerate announced it was
shutting development of a domestic
jetliner that cost it Y1tn ($7.4bn).
The parallels with H3 are
uncomfortable. The jetliner would
have been Mitsubishi’s first locally
made passenger plane since a model
launched in 1962. It worked on the
project for more than a decade.
The $1.5bn H3 programme is Japan’s
first new rocket series in more than 20
years and has been in development for
over eight years. Bears point to
Mitsubishi’s penchant for sticking too
long with unsuccessful projects even
after booking significant impairments.
Mitsubishi shares have risen 45 per
cent in the past year on hopes for the
space business. But the stock dropped a
similar amount in 2020. The shares are
trading at 11 times forward earnings, a
third that of local peer Toshiba. This
reflects concerns about weak operating
profit margins, which were less than
3 per cent in the year to last March.
This fiscal year, sales benefited from
the yen’s depreciation and growth in an
energy systems unit. But there is little
room to lift market share or prices in
the domestic market, where Mitsubishi
makes more than 40 per cent of sales.
Free cash flow is negative and has
worsened in the past three quarters.
The H3 project will continue to drain
resources. Launch failures are common
Annual % change (unless otherwise specified)
2021 2022* 2023* 2024*
GDP Modified Modified Personal Unemployment
capital domestic consumption rate (%)
*Estimate
investment demand** spending
**Modified domestic demand eliminates net exports and large transactions of foreign
corporations from GDP, neither of which has a strong statistical association
with the underlying domestic economy
FT graphic Source: Central Bank of Ireland, Q4 2022 review
Belying its temperate climate,
Ireland’s economy is prone to
extremes. It had a terrible
financial crisis and a bad pandemic.
But it recovered strongly in 2022, a
trend reflected in the fortunes of its
banks. Higher interest rates,
diminished competition and the
activities of locally based
multinationals have driven a
strong run.
Irish banks outperformed
European peers in 2022. Bank of
Ireland, which reported results
yesterday, has done best of all. Its
shares rose 80 per cent while rival
AIB registered a 70 per cent increase.
Both have added a further 15 per cent
since the start of 2023.
Bank of Ireland produced
in rocketry. But it may be better for
Mitsubishi to focus on sectors where it
has clearer competitive advantage.
Social media start-ups:
all out of ideas
Facebook is for boomers, Twitter keeps
breaking and YouTube revenues are
falling. National security concerns
mean TikTok is threatened with a US
ban. That leaves the field open for new
entrants. Yet social media start-ups are
failing to supplant incumbents.
Venture capital-backed social
networks are losing traction at record
speed. French app BeReal, which asks
users to send a selfie to their contacts
every day, reached the top of Apple’s
Average interest rate on new mortgage lending (%)
14
Ireland
12
10
8 1.5
6 2013 15 16
Bank of Ireland
4 Net interest margin (%)
2 Estimate
0 1.5
H1/ H2/ H1/ H2/ H1/ H2/ H1/ H2/ H1/ H2/
21 21 22 22 23 23 24 24 25 25
Sources: company; Visible Alpha
underlying profits before tax of
€1.2bn last year. Stronger net
interest income played a part, rising
12 per cent. The bank’s net interest
margin in the second half was 2.2 per
cent, some 47 basis points higher
than in the first six months.
Negative rates on €83bn of customer
deposits still made a positive, if
shrinking, contribution to NII during
the second half.
Limited “pass through” of higher
rates to savers is one reason strong
performance may continue. Irish
banks have not been disclosing what
proportion they have been handing on.
Analysts estimate the number at 5 per
cent, or about a third of the eurozone
average. Limited competition in Irish
banking should keep a lid on that
App Store in July. Since then, active
users have dropped nearly 50 per cent
in four months, according to data from
Business of Apps.
BeReal is following the same
accelerated life cycle as Clubhouse. The
invitation-only audio app, which offers
the chance to hear insiders swap
stories, was valued at $4bn in April
2021 by VCs including Andreessen
Horowitz. Demand had already
peaked. That month, downloads fell
below 1mn, according to Sensor Tower
data, from close to 10mn in February.
Group video chat app Houseparty
reported a jump in sign-ups in early
2020 as lockdowns drove online
socialising. Eighteen months later,
owner Epic Games shut the app down.
Some new ideas sound stale. NGL,
which lets users send messages
Italy
Spain
Eurozone
17 18 19 20 21 22
Sources: ECB; Refinitiv
figure as income from lending follows
rates higher.
The bank is targeting a return on
tangible equity of 15 per cent from
now until 2025. The common
equity tier one ratio ended last year
at 15.4 per cent, which included
€350mn of distributions. A target
ratio of 14 per cent highlights
€660mn of spare capital, equivalent
to 6 per cent of the current market
worth. Dividends will push the yield
higher still.
Shares in Bank of Ireland were at a
discount to book value of a half a
year ago. Unusually for a European
bank, they are now at a premium of a
10th. The rally may have further to
run but watch out for economic
weakening in the current half year.
anonymously, is reminiscent of Q&A
app Askfm. Texting app Honk does not
save messages, a gimmick Snapchat
promoted a decade ago.
Potential users are increasingly
weary of signing up to yet another new
app. Despite gripes, many find it easier
to remain on networks full of existing
contacts. Non-profit Mastodon was
hailed as an alternative to Twitter after
Elon Musk’s controversial acquisition.
But its estimated 2.5mn peak user base
is a fraction of Twitter’s daily active
users, last reported as 238mn.
Social media giants are moving to
absorb rival ideas quickly. BeReal’s rise
led Instagram and Snapchat to add a
similar feature so users can take
pictures from front and back cameras
of their phone. Challengers need to do
more if they are going to stand out.
4.0
3.5
3.0
2.5 Obesity drugs:
2.0 shifting the scale
1.0 Obesity drugs are generating a buzz to
23 rival chatbots and quantum
computers. Wegovy, an injectable drug,
Ozempic and several other diabetic
3.0
2.5
treatments have gone viral on social
media. Hollywood celebrities say they
2.0 have used the drugs to shed weight.
One side-effect of the treatments,
1.0 which use a hormone to regulate
0.5 appetite, should be scepticism. Wonder
0 drugs, from Valium to Zantac, have a
history of unintended consequences.
But at least one slimming institution is
giving obesity treatments an apparent
vote of confidence: WeightWatchers.
Now called WW International, it is
buying Sequence, a telehealth operator
that can prescribe drugs, including
Wegovy and Ozempic. The $106mn
deal is small. But a jump of up to 48 per
cent in WW’s share price yesterday
suggests the market thinks the deal can
tip the scale in the company’s favour.
Investors are rightly excited. Obesity
affects about 650mn people worldwide.
Almost half of Americans will be obese
by 2030, a Harvard study found. About
18 per cent of healthcare spending
would then go on related conditions.
Morgan Stanley thinks the market
for weight-management medicines
could reach $54bn over seven years —
with $31.5bn of this from the US alone.
Companies behind new obesity
treatments are flying. Novo Nordisk,
the Danish group that makes Wegovy
and Ozempic, generated DKr$16.9bn
($2.4bn) in sales from obesity
treatments last year. Its shares are up
40 per cent over the past year. Eli Lilly,
whose diabetes drug tirzepatide should
get regulatory approval to treat weight
loss this year, has risen 19 per cent.
Both are trading at steep premiums
to Pfizer, whose shares have dropped
16 per cent as the Covid-19 vaccine
sales boom faded.
Demand for the drugs is high. In the
US, the challenge will be convincing
insurers and government to pay for
them. At $1,349 for four weekly shots a
month, Wegovy is beyond the reach of
most Americans — particularly low-
income groups, where obesity is rife.
Lex on the web
For notes on today’s stories
go to www.ft.com/lex

CROSSWORD
No 17,352 Set by BASILISK
        ACROSS

 1 King’s dodgy licence for boxing ring (8)

5 Author smothers lead character in
 
horrible twist (6)
10 Dismiss person with financial
responsibility (7)
11 Cause offence with unfashionable
display of anger (7)
  12 Impervious academic accepts nothing
(5)
13 Cockney’s moralising talk suppresses
common sense in sinister way (9)
  14 Sore point about including worthless
material in formal statement (12)
  18 Wrongdoing is encapsulated by male
attitude (12)
 21 He gets around number 10 to secure
Gunners victory (9)
  23 Hill in Arizona spread to the west of
river (5)
   24 Praise overworked British university
dons (7)
25 Part of franchise awarded to offshore
region (7)
26 Move round work schedule with three
 
on vacation (6)
27 He does perhaps start off from goal
lines (8)
  DOWN

1 Flight executives cap expenses to some

extent (6)
2 Fashion introduction to Central
American Queen’s partner (6)
JOTTER PAD 3 Form of religion popular because of
church support (9)
4 Toilet paper that man tears out of
Solution 17,351 middle of sordid book (4,2,3,5)
6 Row involving sex upset relationship (5)
3 5 ( 6 $ * ( ' 5 2 7 7 ( 1 7 Run through supporter’s pranks for
( 0 $ $ ( 2 6 Spooner (8)
$ ) ) $ , 5 9 $ 3 2 5 , 6 ( 8 All and sundry cast an eye over missing
( 7 ' , ( ( article (8)
) 5 ( 7 ( 1 ' ( $ 5 0 ( 1 7
9 He is almost borne off just after course
founders (8,6)
( 1 $ / , 7
15 Outline foolish artist’s worried about (9)
6 & 2 5 3 , 2 1 6 / , 3 16 I omit art which could be seen as
8 , $ ' : & $ impressionist (8)
: 5 ( 1 * $ 5 * 2 < / ( 17 Person contributing to anthologies, say,
9 * ' 2 ( 1 is thought-provoking (8)
& $ 6 6 ( 5 2 / ( 6 6 ( 7 7 19 Abandon resistance having been
7 < , 7 7 $ overwhelmed by support (6)
% 8 / * $ 5 , $ / $ 5 < 1 ; 20 Person who forms strong bond with
You can now solve our crosswords father? (6)
5 $ 8 7 ( 8 * in the new FT crossword app at 22 Belch out smoke with rising temperature
' ( ( 3 ( 1 + ( ' * ( 5 2 : ft.com/crosswordapp (5)

Wednesday March 8 2023
Female founders
seek remedy to
lack of backers
New businesses set up
by women meet old
biases when raising
funds. Some investors
are trying to change
that, says Kate Bassett
A
mid higher inflation and
macroeconomic uncer-
tainty, women continue to
set up and expand busi-
nesses. Yet female found-
ers’ share of funds from backers
remains stubbornly low.
“There is still a big issue of uncon-
scious bias against women founders,”
says Sutin Yang, head of scale-ups at
Virgin StartUp, a UK not-for-profit
organisation, which has pledged to fund
an equal number of male and female
entrepreneurs.
“Investors tend to be more likely to
interrogate a female founder’s business
projections and ask questions around
downside risk,” Yang adds. As a result,
female founders lower their business
projections, their valuation, and are
“less ambitious in their pitch”.
The percentage of venture capital
funding that went to female-led start-
ups in the US fell from 2.4 per cent in
2021 to 1.9 per cent last year, according
FT SPECIAL REPORT
Women in Business
www.ft.com/reports
Inside
‘I had to do what
had to be done’
Lessons in leadership
from ex-IBM chief
Ginni Rometty
Page 2
A greener vintage
How a new generation
of female bosses is
to data provider PitchBook. But it rose
to 17.2 per cent if the management team
making Italy’s wineries
included at least one man. more sustainable
It is not for lack of investment oppor- Page 3
tunity. A recent report by Global Entre-
preneurship Monitor found the number
Up or out in China
of women in upper-middle-income
countries starting a business rose by 11 Why women are
per cent from 2019 to 2021 — the height climbing high — or
of the pandemic. And the number of
quitting work altogether
women intending to start a business also
rose, by 4 per cent, in that time. Page 4
In the UK alone, women started more
than 150,000 companies in 2022, more
than twice the level in 2018, according
Out of harm’s way
to the latest Rose Review Progress Ukrainian refugees find
Report, an independent study of female new opportunities
entrepreneurship, last month. in Poland’s
Abhilasha Dafria, chief executive of
Angels Den Funding, which matches labour
early-stage businesses with investors, market
Ayesha Kazim, for the FT
has seen biases play out, too. “Early bets Page 4
are taken on showmanship and confid-
‘Investors ence. We see female entrepreneurs
tend to pitching in a way that they almost want
to under-promise and over-perform,”
be more
she says. “I think that comes, largely, Why it pays to learn
likely to from being intimidated as the only
Like mother, like daughter? Not necessarily about money
woman in the room.”
interrogate Although research studies suggest Financial literacy
a female that businesses founded by women ulti- “I saw her work ethic and I thought, ‘wow, I want They compare notes, along with other working start-ups promise
mately deliver higher revenue, they are that’, but I also saw the hardships she faced,” women, on how different generations have to help close the
founder’s generally regarded as high risk. says Persephone Quarme, about her mother, experienced working life, and what they learn from
business’ “Right at the outset, I was told I Margaret Casely-Hayford. each other. Page 7 gender finance gap
Continued on page 3 Page 6
2 ★
Would sneakers and T-shirts lure workers back to the office?
OPINION
Brooke
Masters
After three years of working from
home, most industries have resumed
in-person meetings and events. But
there’s a twist: in many cases, the dress
code has significantly changed.
Take a hedge fund event I attended
recently in New York. Advertised as an
industry outlook followed by cocktails,
the early-evening gathering featured a
panel of four in which the three men
were not wearing ties, and the senior
woman wore sneakers. The audience
was even more casually dressed. High
heels were few and far between and
suits were almost nonexistent.
Style experts say that this is not an
anomaly. Consultancy McKinsey
identified a shift to more “casual”
styles — for both office wear and work
events — as a key trend in its report on
the state of fashion for 2023. And terms
such as “power casual” and
Interview US tech giant’s former chief executive
calls for businesses to rethink workforce skills.
By Anjli Raval
Ginni Rometty
reflects on
leadership and
life after IBM
H
ow do you define your
legacy when the numbers
stack up against you? Ginni
Rometty, former chief
executive and chair of IBM,
is confronted by this conundrum every
day.
Rometty and some who worked
closely with her say she was pivotal in
transforming the century-old US
company: reinventing half its portfolio
of businesses; building its cloud
computing division; and establishing its
leadership in artificial intelligence and
quantum computing.
But critics counter that she was too
slow at taking decisive action to move
an old-world tech company into AI, the
cloud, and data analytics. IBM’s
business customers were moving from
in-house products managed by the
company to outsourced services in the
cloud, where rivals Amazon Web
Services, Microsoft and Google parent
Alphabet were ahead.
Additionally, IBM struggled to turn
breakthroughs with Watson — the
company’s Jeopardy-playing computer
— into profitable ventures.
At one point, the company achieved a
Tough work choices? Here’s how to make your mind up
Decision-making
Weigh the possibilities and
seek advice — but ultimately
you have to learn to trust
your judgment. By Amy Bell
Faced with a tough decision, have you
ever been told to “just trust your gut”?
And, if you have, how did you respond?
Did you go ahead and trust your gut — or
did you try to get a steer on whether that
would be the right thing to do?
According to behaviour experts, inde-
cisiveness can afflict women more than
men, who are often less concerned with
seeking consensus.
“Women are conditioned to play nice
and be likeable in order to succeed,”
says Melody Wilding, executive coach
and author of Trust Yourself: Stop Over-
thinking and Channel Your Emotions for
Success at Work. “As a result, we tend to
be less assertive.”
But this does not mean you cannot
learn how to be more decisive. There are
several habits of mind that can speed up
decision-making — even if none can
guarantee the correct answer. One of
them is, indeed, to trust your instinct —
“workleisure” have gained traction on
fashion websites. There is also growing
interest in gender fluid clothing that
blurs the line between menswear and
womenswear, by eschewing
exaggerated silhouettes in favour of
comfort and simple lines.
Office workers have spent three
years discovering the joys of working in
slippers, T-shirts and sweatpants, and
it seems they are balking at giving
them up. Why, many ask, should
constricting pencil skirts, little black
dresses, and 3-inch heels be
synonymous with “professional” at
banks, ad agencies and law firms —
when clothes that feel a lot more
comfortable are not?
The dichotomy has been underscored
by the slow return to in-person work.
Many companies are still having to
coax staff to come in as many as three
or four days a week. On any given day,
some workers will be donning relaxed
clothing and logging in from home,
even as others dress up to make the trip
to work. Meanwhile, bosses are doing
all they can to foster the idea that
coming together in real life is a treat.
Some offices are merely tolerant of
deviation from pre-pandemic norms,
stretch of 22 consecutive quarters of
falling revenue. Unadjusted for
dividends, IBM’s share price fell 25 per
cent over Rometty’s eight years at the
helm, when the broader US stock
market rose more than 150 per cent.
“Do I wish it would have been higher?
Of course I do,” she says, in an interview
by video call. When companies have to
adjust to shifts in tech, there is usually
one change — and “we had four or five”,
she argues. “We could have ceased to
exist if we did not do something. It was a
big job and it took time.”
How much is Rometty’s story linked
to IBM’s own? For a lifer who spent 40
years at IBM, the two are intrinsically
linked. But, in her new book, Good
Power, she tries not to dissect every
business decision. Instead, she offers
part memoir, part lessons in leadership,
and part big ideas for business from one
of the world’s most prominent female
chief executives.
For a long time, Rometty revealed
little about her personal life and
distanced herself from those who drew
attention to the challenges of being a
female leader in a tough business
environment. The book now sheds
so long as you have experience in the
area you are trying to decide about.
“Intuition is only as good as our
brain’s ability to recognise previous
experience,” says Steve Peters, a con-
sultant psychiatrist and author of A Path
Through the Jungle and other books on
mind management.
He says it comes from a part of the
brain that manages emotional memo-
ries — the medial prefrontal cortex —
which “spots patterns unconsciously
and warns us it has spotted something”.
Wilding concurs. “Trusting your gut is
shorthand for ‘listen to the pool of data
you’ve gathered over time’,” she says.
“Your mind is running through it at a
fraction of a second when you’re pre-
sented with a new scenario. That’s your
intuition at work.”
Intuition can be particularly useful in
situations when there is no clear-cut yes
or no answer, only a decision that is right
for you, she says. Many career decisions
— “Do I take this promotion, or is it time
to move on from this organisation?” —
fall into this category.
She warns, however, that intuition
can be biased. “We all develop stereo-
types that help us make decisions
quickly but not always more accu-
rately,” she says. “We may have had one
FINANCIAL TIMES
Women in Business
New dress code: ‘power casual’ and ‘workleisure’ have taken off — Getty Images
while others positively encourage
workers to use clothing and jewellery
to express their personality.
“It has taken a lot of pressure off over
having the perfect outfit,” says Nancy
Mahon, chief sustainability officer at
Estée Lauder, the US-based cosmetics
group. “We’re less ‘judgy’ than we were
before the pandemic . . . There’s a lot
more leeway on what is professional.”
For her, that means “having an outfit
some light on her background, her
working life, how to leverage her
“power” for good and the need for
business to embrace a skills-based
workforce.
Rometty was the oldest of four
children and had a middle-class
upbringing in Chicago. But her family
life “imploded” when her father walked
out, forcing her mother to work
multiple jobs, while also going to night
school. Rometty looked after her
siblings. “Even before my dad left, I
believed that self-reliance, self-
sufficiency, and independence were
traits women needed so we never had to
rely on someone else,” she writes.
Her personal story is compelling. It is
one of hard work, resilience and
perseverance. It may have helped her
withstand the critics who focused on
high executive pay (Rometty earned
more than $130mn over her tenure)
while IBM was making huge lay-offs,
outsourcing work and experiencing
falling sales.
After graduating from
Northwestern University with a
degree in computer science, she joined
carmaker General Motors, which had
negative experience and that colours all
experiences going forward.”
Peters, too, points out that gut instinct
has limitations. To maximise the likeli-
hood of a good outcome, “it’s best to add
rational thinking to intuition”.
The chimp model
Steve Peters uses a mind
management system called the
“chimp model”, which puts
neuroscience into simple terms to
help people understand how they
think and feel. In this model, there are
three main parts of the mind: human,
chimp and computer.
Human (in the frontal lobe) — the
real person; this is you. A conscious
thinking part of the brain, which is
based on facts and logic.
Inner chimp (in the limbic area) — a
primitive part of the brain, with
thinking based on emotions.
Computer (many areas, especially
the parietal lobe) — a reference
source, which stores beliefs,
memories and past experiences and
can spot patterns.
‘We’re less “judgy” than we
were before the pandemic.
There’s a lot more leeway
on what is professional’
helped pay for her tuition and earned
her loyalty. It was in Detroit that she
met her husband, Mark Rometty, who
has helped her to “handle setbacks
and challenges”.
In 1981, she started as a systems
engineer at IBM. She worked her way
up, to head global sales, marketing and
strategy, and was known as a good
salesperson, storyteller and
communicator. These are skills that she
calls “a science” in her book — and that
she had to learn. She set out to portray
herself as someone “in control”, from
how she spoke to how she dressed.
In 2012, she became chief executive
T
and chair of IBM.
hose more generous to
Rometty would say she was
dealt a tough hand by her
predecessor Sam
Palmisano: being forced to
orchestrate an improbable turnround,
yet hampered by the financial road map
he had drawn up. In 2010, Palmisano
said IBM would deliver earnings of at
least $20 a share five years later, while
generating $100bn in cash flow. In 2014,
Rometty abandoned his plan, which she
But deliberation, especially when it
involves others, can sap decision-mak-
ing momentum. In Wilding’s work as an
executive coach, she has noticed that
women, in particular, will try to get eve-
ryone on board before they move for-
ward with a decision. She advises people
to develop their own point of view
before bringing in others, and to keep
this to a maximum of three to five indi-
viduals. “Decide whose opinion really
matters to you,” she says.
If you are getting stuck evaluating
your options, it may also be that you are
not following through far enough, Peters
says. “When we are trying to make a
decision, multiple areas of the brain are
offering advice and information,” he
explains. “What tends to happen is that
we don’t address each possibility and
the potential con sequence and,
therefore, keep returning to the same
choices.”
Even if we do work through each
choice and its possible outcome, our
minds often will not accept that every-
thing is about probabilities, and that
there could be several viable choices, he
adds.
Acknowledging this can offer a way
forward. “We have to make a decision
based on the fact that our decision will
that more represents who I am as a
person”. She wears a knit jacket with a
subtle red, orange and cream design
when we speak, and adds: “I’ve leaned
a lot more into colour; into comfort.”
In many ways, this is all to the good.
Fewer days in the office means workers
need fewer work outfits. They can
recycle the ones they like best more
often, perhaps with new accessories.
That is a blessing to anyone squeezed
by inflation or trying to cut their
carbon footprint by buying less.
A recent survey for a cotton industry
group found that 41 per cent of
consumers plan to be more purposeful
about clothing purchases, and almost
half will pay more for better quality.
But there are risks for employees
who opt to push the boundaries. It can
be a fine line between comfortable and
slobby, and between expressing
yourself and looking out of place. Even
worse, if managers are already inclined
to favour people who make them feel
comfortable, unconventional office
wear can reinforce that bias. There
have already been several lawsuits
alleging that dress codes can be racially
discriminatory, and more are likely to
arise if employers change their minds
describes as “an inhibitor”, even as IBM
stayed committed to increasing and
paying out shareholder dividends.
“Our challenge was to find that
balance between being in service of our
existing clients and surviving as a
business,” Rometty writes in the book,
acknowledging the ensuing identity
crisis: “Who is IBM now? What should
we become?”
In her eight years at the top, IBM
divested assets that were bringing in
$9bn in annual revenue, which
included semiconductor
manufacturing and some lower-profit
services and software businesses. “I did
all this knowing that it meant no growth
for the company at a time when the
investment world was clamouring for
it,” she writes. IBM also acquired 68
companies, including open-source
software pioneer Red Hat — spending a
total of $133bn on deals, R&D, and
capital expenditure. She says in the
book these were the “right long-term
choices”. However, revenues never
recovered in the way she had hoped.
While Rometty believes she initiated
a strategy that will prove beneficial for
IBM’s future, even under new chief
be our best choice at that moment,”
Peters says, and then have a plan to
manage any outcomes.
Wilding advises finding the “good
enough” solution to avoid becoming
hung up on perfectionism. She points to
studies which show that people who
look for the “good enough” option are
often happier than people who are
“maximisers” — those who minutely
study every option in the belief that
there is a definitive best.
It does not help that, in today’s world,
there are “more options, more choices,
more data to pull from than ever
before”, Wilding says. “There’s always
more research you can do.”
Overthinking expands to fill the time
you allow it, she notes. It may therefore
be sensible to put a limit on how many
sources you consult about a decision
and how much time you spend on it.
“Remember, if you try to do every-
thing, you’ll end up doing nothing,”
Wilding says. “Ask yourself: ‘what are
my priorities here?’”
Gaining some psychological distance
can help clarify choices, she advises.
One way to do this is to identify and
name your “inner critic”.
“Sometimes, it is our internal dia-
logue that blocks us from making
Wednesday 8 March 2023
on what is work appropriate clothing.
There are practical issues, too. UK
stylist Anna Berkeley says she is
frustrated by how many high-end
designers are failing to keep pace with
the changes in consumer sentiment.
“Brands don’t think enough about
what women want and need,” she
explains. Her clients have cut back on
new purchases and those they do buy
tend to be made of flowing, forgiving
fabrics, such as crepe or viscose.
Berkeley is convinced this change
will last longer than the “casual Friday”
policies that some financial services
companies adopted when they needed
to woo younger workers from tech
companies — and then scrapped. “It is
a permanent shift. It’s not just the
people in the office, it is the clients
coming in to see them. [The pandemic]
has changed the way people think
about dressing,” she says.
Mahon agrees: “The days of
everybody wearing a specific suit with
a tie or a dress are over.”
Given that I am typing this while
wearing black yoga pants and hiking
shoes, I sincerely hope they are right.
The writer is the FT’s US financial editor
IBM lifer: until
now, Ginni
Rometty has
distanced herself
from discussion
of the challenges
of being a female
leader in a tough
business
environment
David Becker/Bloomberg
‘If you don’t
define who
you are,
someone
else will’
Arvind Krishna IBM has yet to regain its
previous status. “My job was to
transition [IBM] and reposition for
growth . . . I had to do what had to be
done,” she comments in her interview.
But, while her tenure at the top of IBM
may prompt criticism, less
controversial is her stance on building a
skills-based workforce. She campaigns
for employers to hire recruits on wider
criteria than just university degrees and
higher education credentials — an
approach that would also help to boost
employee diversity.
Bosses, she argues, should encourage
staff to build skills that keep them and
their employers relevant in the
marketplace. Employers should say: “I
can’t promise you employment but I can
promise you employability.”
This advocacy for skills has become a
mission in Rometty’s life beyond IBM.
Ultimately, she uses the book to tell her
story in her own words: what
motivated her; how she aimed to
employ the “power” she had as a force
for good; and her plans to continue
doing so.
As she tells the FT: “If you don’t define
who you are, someone else will.”
Melody Wilding: ‘Women are
conditioned to play nice’
decisions,” Wilding says. “If you give
that voice a name, it allows you to step
back, pause and evaluate better.”
Another technique she recommends
is simply to build some “unstructured
time” into your schedule. Otherwise,
the pressures of everyday life, with
numerous competing demands, can
lead to mental fatigue that makes even
tiny decisions hard.
“We can’t hear our intuition or come
up with our judgment on something if
we’re constantly in reactive mode,” she
says. “Being intentional about setting
boundaries to protect that thinking
time is crucial. Hold that as something
that’s sacred.”
Wednesday 8 March 2023 ★ FINANCIAL TIMES 3

Women in Business

Italian women cultivating a life in winemaking

Viticulture all operations by the end of this year.
“We want a balance between agriculture
A former male preserve and the environment,” says Elvira Bor-
in Italy is under tolomiol, vice-president. “Today, sus-
tainability is a fact in the vineyard and
pressure to adopt in the winery.”
sustainable practices, Arianna Occhipinti, founder of an
eponymous wine label, is one of Italy’s
writes Amy Kazmin

I
n 1385, when Florence was emerg-
ing as a Renaissance centre of bank-
ing, commerce and art, Giovanni di
Piero Antinori was admitted to the
city’s winemaking guild — laying
the foundation of what is, today, one of
Italy’s oldest and biggest family-owned
wine businesses.
For 25 generations, the Antinori wine-
making operations passed from father-
to-son in the family’s stronghold of Tus-
cany — terrain of the Sangiovese grape
that produces Chianti Classico, one of
Italy’s best-known wines.
But, these days, the family business,
Marchesi Antinori — which has more
than 3,000 hectares of vineyards on 26
estates in Italy and overseas — is run not
by a male dynastic scion, but by the
three Antinori sisters, led by the eldest,
Albiera, the company’s president.
She is among a growing contingent of
women in leadership roles in Italy’s
€13bn wine industry. “My father did not
have a son — that made things much
easier,” says Antinori, who started
working in the winery just out of school
in 1986. “Coming from a very traditional
family with a long history, it could have
been an issue to think about a girl or
woman working in, and possibly in the
future even leading, the company. But
life is such.”
Traditionally, Italian winemaking,
like most Italian agriculture, had been a
male preserve. In the 1990s, though,
women began making inroads, as young
men from rural landowning families
chose to pursue careers in cities.
“The countryside was not on the pri-
ority list of first male children, who were
going to work in finance or other situa-
tions,” says Antinori. “The countryside
was given to daughters [who] showed
interest. Nobody else wanted to look
after it.”
Now, Le Donne del Vino, or Women of
Wine — founded in 1988 for the handful
A growing contingent of women in leadership roles, clockwise, from left: Albiera Antinori; Chiara Lungarotti; Arianna Occhipinti
of women then in the wine business —
has more than 1,000 members. They
range from the inheritors of established
family estates to critics and sommeliers,
and entrepreneurs who founded their
own wineries.
Women’s growing influence comes as
the industry confronts the impact of cli-
mate change, demands for more sus-
tainable practices, and concerns over
the next generation’s willingness to take
charge of family-owned wineries.
“It’s a poetic business, but it’s tough,”
Antinori says. Yet she sees women
bringing a greater sense “of steward-
ship” to the wine world.
Marchesi Antinori currently pro-
duces more than 20mn bottles of wine a
year, under 100 or so labels. But Anti-
nori, whose 84-year-old father Piero
remains active as honorary president,
says “the priority is not to get maximum
turnover, or maximum earnings but
rather to ensure sustainability — wheth-
er that means planting trees, controlling
erosion or avoiding overproduction.
“For us, the priority is to pass the land
that we are taking care of in a better con-
dition to the generation after,” she says.
Chiara Lungarotti, chief executive of
Umbria-based Lungarotti, was left in
charge of the family winery in 1999,
aged 27, after the death of her father.
She felt great pressure to ensure the
survival of an estate that her father had
transformed from a traditional, multi-
crop farm into a dedicated winery.
“The responsibility went from his
shoulders to mine,” she says. “My first
fear was for all the people working for
us, to enable them to go on with their
jobs and their lives.”
Despite her degree in viticulture, Lun-
garotti faced resistance to her attempts
to introduce modern agricultural meth-
ods to a farm that was still following tra-
ditional practices.
Her insistence on removing some
grape clusters from vines to allow the
best to grow bigger and healthier caused
an uproar among the older, male work-
force, she recalls. “They were saying ‘she
is crazy — she is throwing away the fruit.
This estate can’t have a future’.”
Today, with a new generation more
receptive to modern techniques, Lunga-
rotti continues to explore more sustain-
able methods of cultivating her family’s
250 hectares of vineyards, which pro-
duce around 2.5mn bottles a year in
— Mattia Zoppellaro; Claudia Ioan; Tahnee Drago
total. Some 20 hectares of the vineyards
are cultivated entirely organically.
“We need profit at the end of the year
because, without profit, there is no
future,” says Lungarotti. “But the profit
has to be reinvested in the estate.”
Reducing ecological impact is also a
preoccupation for the four sisters run-
ning Bortolomiol winery, founded by
their father, in Valdobbiadene in the
hills of Treviso — the heart of Italy’s
prosecco-producing region.
The family cultivate their own 6 hec-
tares organically, while the 60 other viti-
culturalists that supply grapes to the
winery must follow strict green proto-
cols limiting use of chemicals. Carbon
emissions are being tracked in collabo-
ration with a university, and the estate
aims to reach net zero emissions from
few self-made women winemakers,
having started her own winery in 2004,
aged 21, on a single hectare in Sicily.
The daughter of an architect and a
schoolteacher, Occhipinti encountered
the wine business at 17, while helping
her uncle — who founded his own wine-
making business — at an event. “People
were working and doing business — but
smiling,” she recalls.
She went on to study viticulture and
oenology, which she says, “opened the
door to the world of production — the
world where men predominated”.
Initially, she expected to work for her
uncle, or another estate. Instead, her
passion for artisanal, natural winemak-
ing based on organic agriculture, and a
desire to return to her native Sicily —
where many were abandoning older
vineyards — led Occhipinti to go it alone.
“My goal is never the wine at the end,
but why I am making wine — to do
something for my territory, with wine
that has come from very sustain -
able . . . agriculture made by artisans,”
she explains.
For €1,000 a year, she rented her first
hectare, while her parents guaranteed
her first €50,000 loan to invest in pro-
duction. She also received funds from
an EU programme designed to help
Italy’s less developed regions.
Today, she grows wine, olives, fruit
and vegetables on 30 hectares, employs
around 25 people, and produces
between 140,000 and 150,000 bottles
following her cherished principles of
organic, natural production.
She also mentors women who are
thinking about entering the world of
wine, with advice that “the best thing is
to start from a small project and grow
with it step by step”.
But she remains frustrated by the
paucity of women following her entre-
preneurial path. “It’s too slow,” she says.
“We are in a moment where more and
more women can do this. But they are
not arriving.”

Female founders seek

remedy to lack of backers
Continued from page 1
wouldn’t raise capital without a male co-
founder,” says Michelle Kennedy, who
quit her job as deputy chief executive of
dating site Badoo in 2016 to start Pea-
nut, a networking app for women to
meet up and find support.
Yet Kennedy has raised more than
$23mn in funds, and Peanut is used by
more than 3mn women a month. She
has now set up Peanut StartHER, a
micro fund investing in women and
under-represented founders.
It has put more than £500,000 into 16
companies, plus around £1mn into
funds such as BBG Ventures and Female
Founders Fund. “We have to stop refer-
ring to that first fundraising step as a
‘friends and family’ round,” she says.
“[At Peanut’s StartHER] we want to be
the family these founders can turn to.”
Trinny Woodall, the former UK tele-
vision presenter, started beauty and
skincare brand Trinny London in her
fifties. “I was constantly asked how old I
was. Two VCs in Silicon Valley told me
they would have invested in me if I was
30,” she recalls. “Ageism is hellish.”
She pitched to 23 investment firms
before Unilever Ventures, venture capi-
tal arm of global consumer goods giant
Unilever, invested £2.2mn in 2018.
Today, her UK-based business employs
173 people with revenues topping
£50mn in 2022.
Another suggested barrier is the lack
of women among investors. Venture
capital is still largely dominated by male
investors betting on start-ups led by
men.
A recent report in Harvard Business
Review says female founders should try
to recruit a diverse team of VCs in the
first round — but it warns against fund-
raising exclusively from female VCs as
this can make it harder to raise addi-
tional rounds.
In Europe, only 15 per cent of venture
capital firm general partners are
women, according to a 2022 report by
European Women in VC, a community
of female senior venture capitalist
investors across Europe.
Tong Gu, Reem Mobassaleh Wynd-
ham and Monik Pham are among this
rare club. They run London firm Pact,
which recently launched a £30mn seed
fund backed by Oscar-winning actress
Anne Hathaway and Jeff Dean, head of
AI at Google, among others. Pact claims
to be the first venture capital firm in the
UK founded by three female partners.
‘Pushing for gender
equality in funding
shouldn’t be a
momentous thing to do’
“While we found lots of support, we
were also met with a lot of scepticism,”
says Mobassaleh Wyndham. “If we want
to see a change in the types of compa-
nies and founders that get funded, we
have to bring diversity to the [general
partner] investors in charge of that capi-
tal allocation.”
When Michelle You, co-founder of
concert-finder service Songkick, started
fundraising for another business, Super-
critical, a software company helping
tech businesses to achieve net zero, she
made sure half her investors were
Michelle You: 50 per cent target
women. “The world of investing is
opaque and driven by relationships,”
she says. “I wanted to help put an end to
the vicious cycle: men asking other men
to invest and then making the massive
financial gains at exit that enable these
men to invest again.”
She asked everyone she knew for
introductions to any women who might
invest. The funding round took longer
to close and she turned down money
from some experienced male investors
to make space for women.
“We were able to get to the point
where 50 per cent of our investors were
female, and we successfully raised
£2mn in pre-seed funding,” she says.
“Pushing for gender equality in funding
shouldn’t be a momentous thing to do,
it’s just the first step towards building
better companies and a better industry
for us all.”
More online: video
Watch an FT explainer on why
UK childcare isn’t working
ft.com/reports/women-in-
business

Contributors
Brooke Masters Sun Yu Harriet Arnold, Neville Hawcock
US financial editor China economics reporter Commissioning editors

Anjli Raval Claer Barrett Steven Bird

Management editor Consumer editor Designer
Chris Campbell
Amy Bell Laura Noonan Charts
Commissioning editor Financial regulation editor Esan Swan
Picture editor
Amy Kazmin Nikou Asgari
Rome correspondent Digital markets correspondent For advertising details, contact: Sophy
Pierre, +331 5376 8255, sophy.pierre@
Raphael Minder Elizabeth Pears ft.com, or your usual FT representative.
Central Europe correspondent Longform editor All editorial content in this report is
produced by the FT. Our advertisers have
Kana Inagaki Kate Bassett, Miriam Rozen no influence over or prior sight of the
Tokyo bureau chief Freelance journalists articles.
4 ★
Ukraine’s refugees bolster Poland’s workforce
Migration Employers
have welcomed the
influx, although suitable
jobs can be hard to find,
Raphael Minder writes
I
ryna Bilokolodskykh and her young
son Rodion were among the cohort
of Ukrainians who fled to Poland
shortly after Russia’s all-out attack
on their country, one year ago.
In Dnipro, the Ukrainian city in which
she lived, she left behind not only her
home and relatives, but also a good job
as an executive producer of
commercials, having previously worked
for a decade as a banking analyst. She
has struggled to find anything similar in
Poland, and now works for a foundation
that organises Polish language classes
for Ukrainian refugees.
However, she feels grateful for the job
and the opportunity to help other
refugees. She is on a renewable six-
month contract, which in normal
circumstances might not be ideal, but
fits her mindset during a war that has
“taught me to live in the here and now”,
she explains. “Do I have a long-term
plan? Yes, but for six months.”
And Bilokolodskykh’s experience
typifies both the successes — and the
frustrations — of Ukrainian women
seeking to work and support themselves
during the war.
Poland was the EU’s main gateway for
Ukrainian refugees last year, with about
1.5mn registering for temporary
protection in the country, according to
the government, and more than double
that number crossing its territory on
their way to other states.
Even before Russia’s invasion, Poland
already hosted about 1.3mn Ukrainians
and they have helped to integrate the
refugees.
Of the new refugees of working age,
the overwhelming majority have been
women, and between 60 and 70 per cent
had found a regular job in Poland by the
end of last year, according to
government figures. Poland collected
about 4bn zlotys (€840mn) in taxes
and social security payments from
Ukrainian refugees last year and
expects that amount to climb to 6bn
zlotys in 2023, according to Bartosz
Marczuk, deputy head of the state-run
Polish Development Fund.
On a mission for the appliance
of science to Japanese family life
Interview
After stints at Google and
Apple, Yoky Matsuoka is
turning her tech focus on the
home, says Kana Inagaki
Growing up in Japan as a female only
child held challenges, says Yoky
Matsuoka.
At that time — the mid-1980s — fewer
than 8 per cent of Japanese scientists
were women. “I realised how hard it was
to be a girl,” recalls Matsuoka, speaking
during a recent visit to Tokyo from
Silicon Valley, where she is now based. “I
felt like I was discouraged from being
good with maths and science, and there
were a lot of ceilings presented.”
Yet her subsequent career in robotics
and neuroscience includes co-founding
Google’s experimental X lab and her
current role as an executive at
Panasonic, the Japanese technology
conglomerate.
Matsuoka left Tokyo at 16, initially to
become a professional tennis player. An
injury ended the dream, but she pursued
her studies in the US, where she was
awarded a PhD in electrical engineering
and computer science by Massachusetts
Institute of Technology. Her career then
took her even further from her
upbringing as she left academia for
Silicon Valley, with stints at Nest Labs,
the smart-home company that is now
part of Alphabet, and — briefly — Apple.
Nearly four decades later, however,
Matsuoka has reconnected with her
Japanese roots by bringing her personal
concierge service, Yohana, aimed at
busy families, to Tokyo. Set up in Seattle
in 2021, the launch of Yohana in the
Japanese capital last month is intended
to address the country’s continuing
struggle to keep women in the
workforce as they raise children.
Despite a government-led push for
female empowerment under the
“womenomics” programme of 2013,
only 9.1 per cent of executives at listed
Japanese companies are women. And,
last year, the country was ranked 116th
out of 146 countries for gender parity by
the World Economic Forum.
It has led prime minister Fumio
Kishida to promise — and prioritise —
“unprecedented” childcare support,
In transit: a woman and child from Ukraine wait at a Polish railway station. Most working-age refugees from Ukraine are women — Wojtek Radwanski/AFP via Getty Images
As such, Poland is a standout example
of the rapid integration of refugees into
the workforce — achieving a far higher
employment rate for Ukrainians than
Germany, notes Paweł Kaczmarczyk,
head of the Centre of Migration
Research at the University of Warsaw.
Kaczmarczyk says this success is
also due to the fact that “the Polish
labour market now needs foreign
workers”, and has seen their numbers
growing even during the pandemic. But
he also highlights a mismatch between
the high level of education of many
Ukrainian women and the jobs they
have found.
His research shows that between 50
and 60 per cent of working-age refugees
hold a university degree, but only one-
third of refugees who found work in
and to warn that Japan may be “on the
brink of whether it can maintain its
social functions”.
Against this background, “it is getting
to the point that families are willing to
get a little bit of help”, Matsuoka argues.
Her Yohana service, which has
roughly 200 employees in the US and
Japan, matches families with human
assistants to help with a wide range of
tasks — from online shopping, to
sending flowers, or organising holidays.
The idea for the venture came from
her experiences as a mother of four,
especially in the pandemic when schools
‘It is getting to the point
that families [in Japan]
are willing to get a little
bit of help’
shifted to online learning and Matsuoka
to online-only meetings: “I felt like I was
failing in everything. That was really a
turning point,” she says.
She feels that parents — women in
particular, but men, too — now find it
easier to admit they are overwhelmed.
Also, she thinks they are more aware of
the challenges involved in taking care of
both their families and of themselves.
Although the pandemic helped
Matsuoka crystallise the idea behind
Yoky Matsuoka: extra time
FINANCIAL TIMES
Women in Business
Poland landed top-tier jobs. For the
others, he says, there are multiple
challenges: Polish demand is mostly for
low-paid foreign workers; some
Ukrainians cannot transfer their skills,
notably to jobs that require fluency in
Polish; and some refugees settled in
regions that offered them access to
social services but poorer job choices.
Among those who are struggling is an
accountant from Odesa who left last
March with her three-year-old daughter
and now works in the kitchen of a fast-
food restaurant in Warsaw. She is on a
temporary contract that expires in
August and prefers not to give her name
because she is “actively looking for
another job”.
But she has not been able to gather
sufficient proof of her past diplomas and
Yohana, she had also made a pivotal
career change just before Covid struck.
She left Google in 2019 to work with
Panasonic — whose founder Konosuke
Matsushita believed, a century ago, that
appliances could free women from the
burden of household labour.
The move proved to be a good fit for
her vision of developing tech to enhance
families’ wellbeing, and led to the
development of Yohana, now a fully-
owned Panasonic subsidiary.
For the tech group, Matsuoka’s
appointment was designed to inject new
thinking into an organisation urgently
seeking to move away from its hardware
focus and embrace the digital era.
After living outside Japan for so long,
Matsuoka describes herself as “a hybrid
person”, who still possesses “a bit of
Japanese character” — and an insight
into the country’s culture and the
challenges working women face.
One of those is to relinquish at least
some domestic responsibilities.
Matsuoka has felt the weight of them, in
two ways. First, as a single child, she was
used to tackling tasks on her own and,
for a long time, she could not delegate to
other people. Then, later, “raising my
four kids, my parents assumed I would
do everything. Even hiring a nanny
service was a big barrier,” she says.
The first time she used a cleaning
service, she cleaned the entire house
beforehand. It took three months to let
the habit go: “I realised that, if I were to
worry about the judgment of delegation
and keep cleaning the bathroom while
also needing to be with my kids, I would
never be able to contribute to society.”
Matsuoka admits that removing the
psychological barrier to delegation will
be difficult. And, at a monthly cost of
$249 per month in the US and ¥18,000
($134) in Japan, the Yohana service is a
luxury for many households.
However, Matsuoka argues that it will
create much needed extra time for
families. She also signals longer-term
ambitions to work with Panasonic to
tackle the challenge of caring for the
elderly in a country that has one of the
world’s fastest ageing societies.
“I’m a stereotypical sandwich
generation that has four kids and two
parents, and all of them need me,”
Matsuoka says. “So I want something
selfishly to help me care for them in the
best way possible.”
‘It hasn’t been easy
emotionally but there were
a lot of volunteers to help
us and I felt welcomed’
Up or out Why women in China are climbing high — or quitting work
In China, more women are becoming
business leaders . . .
Number of listed companies
With female directors
3,000
2,000
1,000
0 0
2012 14 16 18 20
. . . but the female labour participation rate has
been falling . . .
% of women aged 15-55 who are economically active
75
70
65
60
55
2000 2005 2010
FT graphic Sources: Wind; World Bank
China’s once male-dominated
workplace is rapidly embracing female
leadership, just as a growing proportion
of women exit the job market.
Data from the country’s listed
companies shows that the number of
women presidents more than tripled, to
241, in the decade ending in 2021.
However, China’s overall female labour
participation rate fell to a record low of
61.6 per cent from 63.8 per cent.
This contradiction underscores the
precarious situation faced by female
professionals in the world’s second-
largest economy, as they struggle to
balance career and family.
“We have come to a point where
women leaders, both in the middle and
at the top, are taking off,” says Zhao
Ying, co-founder and publisher of
WhichMBA.net, a management
education platform based in Shanghai.
“But a lack of supporting networks in
areas such as childcare has forced
many female professionals to reduce, if
not give up, their career ambitions.”
Chinese women’s leadership
opportunities have been due, in part, to
their academic achievements. The
number of female undergraduate
students grew by almost half in the
decade ending 2020.
Meanwhile, a plunge in the birth rate
work experience to apply for better jobs.
“In Odesa, they don’t answer my
emails,” she points out. For now, she
manages somehow to pay the
equivalent of almost $450 a month for a
rental apartment, plus $200 for
kindergarten and related costs for her
daughter, on a monthly salary of $600.
Employers have been keen to
welcome Ukrainian women. “Many are
better educated, digitally connected,
and used to work remotely, especially
during the Covid pandemic,” says
Franek Hutten-Czapski, chair of Boston
Consulting Group’s Polish office.
But labour experts also acknowledge
that working in Poland is still an uphill
struggle for those on a temporary
contract, or employed in the
underground economy.
. . . and more women are attending
With female presidents
university . . .
Number of female university students (mn)
Undergraduate
250 15
200
10
150
100
5 0.5
50
0 0
2012 14 16 18 20 2010 12 14 16 18 20
. . . and women’s wages have not increased
in line with men’s
Average monthly urban wage by gender (Rmb)
6,000 7,000
2021
Women
2020
2019
2018
2015 2020
has alleviated the burden of childcare.
Births in China fell to a record low of
9.6mn last year from 16.4mn a decade
ago, and newly registered marriages fell
by two-fifths over the same period.
For many Chinese women, especially
those in big cities, marriage and
children, once top priorities in life, are
giving way to economic independence
and career success. He Dan, a 32-year-
old manager of a wine bar chain in the
central city of Changsha, says she has
no plans to marry or have children
because freedom matters more —
along with the wealth that can buy it.
“I may never make enough money,”
says He, whose annual income has
increased tenfold over the past decade.
Other women, however, are choosing
to abandon work. The decline in female
labour participation, say scholars,
reflects the pressure on Chinese
women to prioritise childcare so that
their husbands can focus on their
careers. This is especially the case in
the current era of intensive parenting,
with extracurricular activities and
tutoring arranged mostly by mothers.
The government’s introduction of a
two-child policy in 2016 — replacing
the one child per couple policy imposed
in 1979 — has put extra pressure on
working mothers. Recent data shows a
Wednesday 8 March 2023
“There was a first wave of migration
but we don’t really know much
about what happened after that,”
says Iga Magda, a labour economist
at the IBS research institute and
professor at the Warsaw School of
Economics. “Probably, those who
came later were much less likely to have
skills, languages and money to invest in
an apartment.”
Magda estimates that 40 per cent of
the Ukrainians who now have a steady
job in Poland are women, while 60 per
cent are men — often working in sectors
such as construction where Ukrainians
had a strong presence before 2022.
“Women are much more likely to
work unregistered because many are
in the care sector, which is still mostly
part of our shadow economy,” she says.
The government’s official labour
registration numbers are also
unreliable, she adds, because they do
not always take into account what
happened next: “Women could register
but it doesn’t mean that it wasn’t
just with temporary work [or mean]
that they still held a job one or two
months later.”
Still, some Ukrainian women have
managed a relatively smooth job
transfer to Poland, and now work
remotely for their Ukrainian employers
in businesses ranging from technology
to advertising and marketing.
“We relocated part of the company to
Warsaw because it was the closest big
city [outside Ukraine],” says Dariia
Maslennikova, a manager at Ukrainian
IT company Nextiva, which moved 20
of its staff to the Polish capital a year ago.
“The arrival was chaotic, it hasn’t been
easy emotionally, but there were also a
lot of volunteers everywhere to help us
and I felt welcomed.”
Maslennikova now rents a flat in
Warsaw with a fellow Ukrainian, having
previously lived in the flat that she
owns in Kyiv. She is also facing a higher
tax bill than in Ukraine, where she says
the IT sector benefits from more tax
exemptions than in Poland. “The cost of
living is higher here, but I also know
that prices in Ukraine have gone up
now,” she says.
Like many others, she expects to live
in Warsaw longer than anticipated and
is taking Polish language classes to help
her integrate. “I thought that I would be
here for a few months, but I think that
it’s now going to be for quite a long
time,” she says.
Masters
1.5
1.0
2010 12 2014 16 18 20
8,000 9,000
Men
growing number of newborns with
older siblings. The difficulty of juggling
work and children is exacerbated by a
lack of government investment in
affordable day care facilities.
The upshot is that, while the falling
birthrate has freed some women to
scale the corporate heights, many
mothers of young children take long-
term breaks from work even though
they still wish for a career.
In Nanjing, Zhao Lei, a former auditor,
says she had to quit her job to care for
her child, born in 2021. “I’d never
thought about being a stay-at-home
mom,” says Zhao, 33, “but I couldn’t find
anyone to look after my baby.”
Chinese women’s disproportionate
responsibility for childcare has
contributed to a wide gender pay gap.
According to Boss Zhipin, a Beijing-
based job search portal, the average
urban wage for male workers between
2018 and 2021 was about 28 per cent
higher than that for female workers.
“There is no way women can balance
work and family until men do so,” says
Zhao Lei.
Sun Yu
For a fuller version of this article, with
more charts, visit ft.com/reports/
women-in-business
6 ★
The first lesson for female financial education? Money is power
OPINION
Claer
Barrett
International Women’s Day should be a
day of celebration — but there’s
nothing like the gender finance gap to
kill the party.
The gender pay gap has torn a
depressingly large hole in women’s
long-term financial prospects. The
average pension pot for a 65-year-old
woman in the UK is around one-fifth of
the average pot of a man of the
same age.
Women are not only less likely to
invest, they also have less money to put
to work in the markets. Persistent bias
against mothers, part-time working,
and childcare costs are all big problems
that are unavoidable. So, how could
better financial education help?
Much more than you might think,
judging by the growing success of
Interview Stephanie Cohen One of the most powerful executives at Goldman Sachs talks to Laura Noonan about ambition, career choices and family
Zigzag steps to the
top on Wall Street
T
he day before Stephanie
Cohen — one of Goldman
Sachs’s most senior execu-
tives — speaks to the Finan-
cial Times, her boss, David
Solomon, hangs a “for sale” sign over
part of the business she runs.
“For my entire career, I’ve embraced
challenges and focused on the impact of
a business rather than an arbitrary
notion of its size,” the head of Goldman’s
Platform Solutions business says, refer-
ring to Solomon’s announcement that
the bank was exploring “strategic alter-
natives” for some of her division.
Platform Solutions, home to Gold-
man’s credit card, transaction banking
and fintech businesses, was born of a
desire to wean Goldman off the volatile
trading and investment banking reve-
nues it is best known for.
But the diversification play has lost
$3bn in the past three years, making it
an obvious target for refinement when
Solomon unveiled his plans for Gold-
man’s next era at the 154-year-old
bank’s second-ever investor day.
Cohen — a bubbly 45-year-old who
wears trainers and tilts back on her
chair during an interview as though she
is about to bounce right out of it — was
appointed to lead Platform Solutions
last year. That puts her in the eye of the
storm now, as Goldman tries to con-
vince Wall Street it can get its mojo back.
It is an unlikely situation for the Chi-
cago native. Plan A was to be a figure
skater, Plan B was to join a bank on the
way to becoming a lawyer. Instead, she
has hopped around almost every corner
of Goldman — and repeatedly taken on
roles that at least some of her mentors
advised her against.
Cohen’s route into banking was Gold-
man’s mergers and acquisitions (M&A)
team in New York, where she started as
an analyst in 1999. She recalls how she
US lawmakers set out to close gender salary gaps
Pay transparency
More jurisdictions are trying
to ensure that women earn
the same as men for the
same job, says Miriam Rozen
When a woman interviewed for a job at
OrCam Technologies in New York City
last year, a company official inquired
about her salary history. Then, the com-
pany rejected her. But the story did not
end there.
The NYC Commission on Human
Rights found that OrCam, which makes
reading assistive technology for the vis-
ually impaired, had violated a two-year-
old city labour law that bars employers
from asking about a job applicant’s prior
pay, or using salary history as “a factor”
in calculating the offers they make.
OrCam, which also has offices in Jeru-
salem, London and Cologne, agreed to
settle, paying the rejected job candidate,
who had reported the company to the
Commission, $5,000 in emotional dis-
tress damages and $10,000 in civil penal-
ties. It also agreed to retrain employees
about the salary history ban — which is
intended to break the cycle of inequitable
membership communities that aim to
get women closer to their cash.
Money is power, so educating
yourself about it is an essential
prerequisite for gender equality, argue
Anna-Sophie Hartvigsen, Emma Due
Bitz and Camilla Falkenberg, whose
feminist take on financial literacy is
shaking up the world of money.
They founded Female Invest, a
financial education platform for
women, in Denmark in 2017. It now
claims members in 95 countries.
“The narrative is shifting — more
and more women understand that
money is not about buying more stuff,
it’s about buying freedom and living
life on your terms,” says Hartvigsen.
And female financial education —
“fin-ed” — is fast becoming an exciting
space in the fintech world.
In common with start-ups Vestpod
and YourJuno, an app for young
women dubbed “the Duolingo of
money”, Female Invest does not sell
investments to its online community
members (yet). This adds a layer of
trust that women seem to appreciate.
Getting all your financial information
from the companies you buy financial
Milestone dates
1999 Joins Goldman Sachs as M&A
analyst
2008 Switches from M&A to conflicts
and business selection
2009 Returns to M&A as a newly
minted managing director
2011 Appointed global head of
general industries and global co-head
of industrials M&A
2014 Joins Goldman’s partnership
2015 Becomes head of global financial
sponsor M&A, appointed to “build a
new business”
2017 Appointed to chief strategy
officer, at a critical time for the
investment bank. A year later, joins
Goldman’s executive committee as an
ex officio member
2020 Becomes co-head of the
consumer and wealth management
division and a full member of the
group management committee
2022 Switches to head platform
solutions division, following a
significant reshuffle
conformed to the dress code of her male
peers by chance, because she preferred
muted colours anyway. And, while it
was more usual then to be a lone female
voice on a call, that was not always a bad
outcome. “If you were doing a good job,
you were memorable,” she says.
She began to think of making partner
at Goldman as the career equivalent of
her one-time dream of skating at the
Olympics.
Her first big career pivot was nine
years in, when a job came up in the
division that scrutinises bankers fac-
ing potential legal and ethical issues
with their deals. Cohen consulted the
advisers that she calls her own “board
pay for women and people of colour —
and to take other steps to reduce the like-
lihood of violations.
Since November, NYC law in this area
has become still tighter. If any company
with more than four employees wants to
hire staff, it is now required not only to
refrain from inquiring about applicants’
prior pay but also to share “good faith”
ranges of the expected salary in its job
adverts.
These two rules are part of a broad
package of initiatives, mostly centred on
pay transparency, that are winning
acceptance in cities and states across the
US, as well as in the UK and globally.
Their aim is to narrow a well-docu-
mented gender-based pay gap: accord-
ing to the International Labour Organi-
zation, women globally earn 20 per cent
less than men, and US Census data
shows a similar disparity among US
employees.
Some 21 municipalities and 21 states
in the US have enacted salary history
bans, according to HR Drive, a website
covering the human resources industry.
And, worldwide, at least 18 types of pay
transparency policies now exist in 32
countries, including 71 per cent of OECD
members, says Zoë Cullen, a Harvard
Business School professor.
FINANCIAL TIMES
Women in Business
products from is never wise. Just look
at how the investment platforms pump
pricier actively managed funds, when
the majority rarely outperform
cheaper index trackers.
All three of the fin-ed platforms
emphasise the community aspect, and
the educational content on offer falls
into the category of “guidance” rather
than more expensive and strictly
regulated financial advice. This helps
to resolve another obstacle for millions
of women and men: traversing the
advice gap.
Female Invest’s emphasis on bite-size
content with no jargon has won it a
quarter of a million social media
followers (not all of them female) with
more than 35,000 paying a monthly
subscription to access online content
and interactive webinars.
The Danish trio’s debut book, Girls
Just Wanna Have Funds, delivers punchy
personal finance lessons about
resetting your finances, investing for
the future, and maximising your
earning power. Finance can be
overwhelming, so pulling together the
whole financial picture is something
that women value.
of directors”, asking them whether
she should leave a client-facing job.
She found they were split 50/50.
“I did what I advise lots of people to
do, which is get all the information you
can possibly get, [and] write out the
pros and cons,” she says. “And
then . . . for a couple of days in a row,
the minute you wake up in the morning,
[ask yourself] what is your first thought
on whether or not you should do it?”
Cohen decided to take the job, and
returned to M&A a year later, as a man-
aging director. By 2015, she headed the
global financial sponsor M&A group.
Then, in 2017, “happily” running that
business, she changed course again
when she was asked to become chief
strategy officer.
At that time, the bank was struggling
with falling and volatile revenues from
its traditional businesses. “That was
another instance where a bunch of peo-
ple told me . . . ‘no, no, no’,” Cohen says.
But she took the job anyway, at least in
part because she was allowed a blank
sheet to define the role. She also set a
time limit of two-and-a-half years.
“I didn’t say yes all the time,” she says,
reflecting on her career decisions. “You
have to believe you have a skillset that’s
going to be transferable [to that
job] . . . and that you’re going to enjoy
it. It’s hard to be great at things that you
don’t enjoy.”
That is why she argues that people
should regularly ask themselves
whether they like the job, or are learning
‘You have to believe you
have a skillset that’s going
to be transferable . . . and
that you’re going to enjoy it’
The most common such policy —
implemented in 14 countries, including
the UK — requires employers to report
on their internal gender-based wage
gaps; others go only as far as barring
organisations from punishing workers
who share their salary information,
Cullen says.
Multiple studies show that the poli-
cies have helped narrow gender-based
pay gaps. In Denmark, for example, leg-
islation was adopted in 2006 that
obliges employers with more than 35
employees to provide them with annual
gender-based wage data. Researchers
found that the pay gap closed by about
two more percentage points in compa-
While the rules flatten
salaries across a workforce,
they also often increase
differences in other benefits
nies covered by the law than in
exempted businesses.
After California enacted the first
statewide salary history ban in the US
in 2018, the earnings ratio — the amount
I was alerted to the group by a
neighbour, who started her maternity
leave by attending a Female Invest
event in London. “Finally, I feel like
money makes sense to me,” she told
me. For her, finding time to learn about
money had been the biggest barrier.
Despite its success, Female Invest
struggled to attract interest from
venture capital funds. “They didn’t
believe women were interested in
investing,” says Hartvigsen.
She lost count of the times she was
told women would never pay for a
subscription service if they could just
google information about investing, or
read the free resources on fund
platform websites.
“We wanted to create a safe space
where women feel confident to be
themselves, and ask stupid questions —
not that there are any stupid questions
when it comes to money and
investing,” explains Due Bitz. “I mean,
if you don’t know what to google, how
should you ever find this information?”
Women face plenty of specific issues
with their personal finances where
learning from others’ experiences can
be really empowering. I attended a
Stephanie Cohen: now in the eye of the storm, as Goldman sets out to show it can get back on track — Melanie Landsman, for the FT
something new: “If you decide to be
here, and decide to do what you’re
doing, you own it.”
In her own case, she says, “I decided to
be at Goldman Sachs many, many, many
times.”
Cohen credits Goldman’s early female
partners, including Alison Mass and
Gwen Libstag, as blazing the trail for
women like her, and says she has felt
“very responsible” for helping other
women to advance. In strategy, she says,
“we made it clear that diversity was a
strategic imperative” that should be
talked about “in the same room as reve-
nue and market share and growth”.
After her stint as chief strategy officer,
w o m e n e a r n re l a t i ve t o m e n —
increased by about 1 percentage point,
according to a study published by the
National Bureau of Economic Research,
with older women and mothers of chil-
dren over the age of five gaining still
more. The co-authors predicted that the
ban “could close the gender earnings
gap by over 20 per cent for those switch-
ing jobs”.
These policies, however, remain a
work in progress worldwide and have
been enacted inconsistently. “We’re sort
of in a period of experimentation with
trying different things,” says Stephanie
Bornstein, professor of law at the Uni-
versity of Florida.
Although the UK has yet to follow US
jurisdictions in instituting a salary his-
tory ban, its requirement that compa-
nies with more than 250 employees
publish pay gap metrics far exceeds the
US government’s stumbling data collec-
tion efforts.
The Trump administration halted the
implementation of an Obama-era regu-
lation that demanded comprehensive
data collection, before a court order
forced it to backtrack. Data for 2017 and
2018 were accordingly gathered but the
initiative was then discontinued and has
yet to be restarted.
FT webinar
Love and money
Join a free webinar and put your
questions to Claer Barrett, Tobi
Asare, Davinia Tomlinson, and
Nicola Sharp-Jeffs on financial
empowerment for women in
money and relationships. Hosted
by the FT’s Financial Literacy &
Inclusion Campaign charity,
March 8 1300-1400 GMT
To register: ft.com/flicevent
Vestpod event a while ago where
women compared notes on parental
leave policies at different companies —
valuable information that is often
super-hard to find out in real life.
she became co-head of Goldman’s con-
sumer and wealth business, a fast-grow-
ing area that was central to plans to
diversify Goldman’s streams of revenue.
She was a managing director when
her son was born in 2012, and a partner
when she had her daughter, who is now
six. When she and her husband planned
to have children, he asked: “Which one
of us is going to quit?” Cohen’s answer
was: “Why is one of us going to quit?”
Her husband’s question was one
many people ask when it comes to fami-
lies and work, she says.
“People tend to proactively solve for a
problem that’s not actually there,” she
argues. She persuaded her husband that
Some employers’ advocates argue
that market forces plus cultural shifts
will be more effective than government
action at closing pay gaps. “It really is
going to be organisations looking inter-
nally and doing something about mak-
ing sure that they’re promoting people
fairly,” says Denise Visconti, a lawyer
with Littler, who defends employers
against job discrimination claims.
Concerns also persist about the unin-
tended consequences of pay transpar-
ency mandates — including the poten-
tial for lower wage growth in the long
run. Employers have responded to the
requirements “by bargaining aggres-
sively, lowering average wages”,
although unions’ collective bargaining
counters that compression, Cullen says.
Another problem is that pay transpar-
ency laws address only salaries and fail
to account for other forms of remunera-
tion such as bonuses, according to Peter
Bamberger, a professor at Tel Aviv Uni-
versity’s Coller School of Management
and author of a new book on pay trans-
parency, Exposing Pay. While the regula-
tions flatten salaries across a workforce,
they also often increase differences in
other benefits, and US women have his-
torically been short-changed in this
area, Bamberger says.
Wednesday 8 March 2023
The YourJuno app offers modules on
finance for freelancers. I have so many
female friends who have ended up
going freelance after having children to
control their work-life balance better,
but did not know how to price their
services or simply how to set up
a pension.
Making it easier to learn about the
financial essentials in a way that can fit
into modern life addresses a crucial
part of the issue. But there are much
bigger educational lessons for the
financial industry, and society as a
whole, to learn.
We need to start a bigger
conversation about why women of all
ages have less money. Unpaid work and
childcare are part of the problem but
what are the solutions for splitting
earned wealth more evenly
between couples?
The more we educate ourselves
about how the financial odds are
stacked against women, the louder all
our voices should become.
The writer is the FT’s consumer editor and
author of ‘What They Don’t Teach You
About Money’.
they could both keep their careers. He
has since left Goldman to run his own
fund.
Cohen is pragmatic about the dynam-
ics of combining career and family life.
She has not done her own laundry “since
I was an analyst”. And she does not have
“the most exciting social life”, prioritis-
ing athletic weekends with her kids over
evenings at fancy restaurants. When she
helps out at their schools, it is when the
children are also involved.
“One thing someone told me, which I
thought was awesome advice, was that
when you leave the house in the morn-
ing, your kids don’t feel bad about it —
you feel bad about it,” she says.
But such concerns rank as “outliers”
and miss “the point of these laws”, Born-
stein insists. When women, particularly
mothers, no longer remain underpaid,
the economic outlook for all people will
improve, she says.
Without transparency laws, insight
into pay gaps is often lacking. A study
carried out by Cullen and a colleague
found that less than one-third of a big
bank’s employees guessed within 5 per
cent accuracy the average salary of co-
workers in the same post and location —
even when they stood to win two weeks’
salary for a correct answer.
Wednesday 8 March 2023
How mothers shape their daughters’ careers
Family
Two generations reflect
on differences and
similarities in their
attitudes to work.
By Elizabeth Pears
T
he main lesson Persephone
Quarme took from her
mother’s formidable legal
career was that she did not
want to emulate it. She was
determined to replicate the level of suc-
cess, certainly. But the demands of being
a corporate lawyer? Not so much.
“I saw her work ethic and I thought,
‘wow, I want that’, but I [also] saw the
hardships she faced,” says Persephone,
28. Her mother, Margaret Casely-Hay-
ford, was the first black woman to
become a partner at a City law firm and
was director of legal services for the
John Lewis Partnership for nine years.
Margaret, from a long line of lawyers
that includes J E Casely-Hayford, a poli-
tician and influential figure in the move-
ment towards Ghana’s independence,
would love her daughter to have fol-
lowed her into the profession. “Not just
because of the family tradition, but also
because I love the law,” she explains.
But there is another side to a legal
career: long hours, heavy responsibili-
ties and, in the early years, intense com-
petition irrespective of gender. In that
respect, the City could appear equitable.
A superhuman work rate was a badge of
pride. But that “go! go! go!” culture, she
says, worked against women with child-
care responsibilities.
Margaret recalls one colleague going
into labour on her way to a meeting she
felt compelled to attend. “We were still
very much the main carers [of house
and children],” she says. “We still are,
but at least society has slightly pivoted
now to recognise that.”
She was fortunate to have had a strong
support system: her family — including
a husband who worked from home — a
nanny, and a PA to manage her diary.
Many of her peers succumbed to burn-
out. In one devastating case, a colleague
took their own life.
Persephone, an events manager at
Ireland finds a female
antidote to banking
leader groupthink
OPINION
Laura
Noonan
Ireland’s foremost claim to fame in
global finance is a banking crisis that
resulted in a 2010 government bailout
and a decade of austerity. Now, though,
the country is attracting attention in the
same circles for a very different reason:
the outsize representation of women in
its international finance sector.
Globally, studies show women
typically make up less than a fifth of
senior finance executives. But, in
Ireland, if you sought out the chief
executive of an international bank in
recent years, you are more likely to have
met a woman than a man.
“It’s an area that we’ve focused on,”
says Sharon Donnery, Ireland’s financial
regulator and a deputy governor of its
central bank. After the crash, “one of
the key criticisms of both the industry
and the central bank was groupthink”.
She finds diversity can be a “very
important mitigant” to this damaging
phenomenon in which an industry’s
leaders all think the same way. “We see
it as an important part of our
expectations on how [financial firms]
are managing risk and how they are
making sure that things like groupthink
aren’t happening in the future.”
Ireland’s international financial
sector seems to have got the memo.
Citigroup’s 2,500-strong Dublin
operation is led by an Irish woman, as
was JPMorgan Chase’s Dublin campus
until recently. Wells Fargo’s Irish
business is female-led, as is HSBC’s,
along with those of several smaller
banks. Credit Suisse had a female Irish
country head until last month.
Then there are the asset managers.
The Irish offshoots of Abrdn, Northern
Trust, and LGIM are all led by women.
Victoria Brown, head of Abrdn’s Ireland
arm, who had worked in Luxembourg
and London, says she was “very
surprised” by the number of senior
women in Dublin’s international finance
sector when she arrived in 2018.
Across Ireland’s broader financial
London’s Southbank Centre who also
chairs the arts venue’s wellbeing com-
mittee, says hearing these experiences
made her an advocate for work-life bal-
ance. “Even 10 to 12 years ago, those
structures and pathways to support
weren’t there,” she says. “What I have
learned is, regardless of sector, I want to
embed those values wherever I work.”
Both were influenced by Margaret’s
mother Lena, who worked for cultural
organisation the British Council, while
raising four children. “One of the things
she said was that if you give the child
‘We were still very much the
main carers . . . We still are,
but at least society has
slightly pivoted now’
industry, Irish Central Bank data show
that 31 per cent of applicants for
regulated roles in finance firms are now
women, up from 22 per cent in 2017.
Some, like Brown, are returning
emigrants attracted by post-Brexit
opportunities to build big careers in a
market that is more family- and
lifestyle-friendly than bigger cities.
Others have forged their careers in
Ireland, nurtured by initiatives such as
the 30% Club, and the Women in
Finance Charter — a government-
backed project to improve female
representation across finance.
Fiona Gallagher, Dublin-based head
of Wells Fargo International, is among
the most visible, through her role as
chair of the Federation of International
Banks in Ireland, an industry group.
She says the women running Ireland’s
international finance sector have forged
deep and productive relationships, in
part through joining forces for initiatives
outside finance, including fundraising
for a homeless charity by sleeping rough.
“[They] are really good at giving their
perspective” on the non-commercially
sensitive business issues they all face,
‘The industry does feel
very different to the one
I remember from 15
years ago’
says Gallagher. She adds that, while her
“first phone calls” might be to women
because they know each other better, “in
the last number of years, guys have been
really great at getting to the table”.
“Having a group of peer senior
women helps reduce the imposter
syndrome that all of us feel from time to
time,” argues Carin Bryans, who led
JPMorgan’s Irish business until 2022.
“The first time I went to New York in my
twenties, I saw women in their fifties in
business suits and it struck me I’d never
seen that before,” she adds.
Eve Finn, head of LGIM in Ireland,
who returned to the country in 2017,
says: “I was welcomed by a great group
of senior women across the financial
sector. There’s real power in a
network . . . to get advice, to be
★ FINANCIAL TIMES
Women in Business
your values, then you’ve got a friend for
life,” says Margaret. “And the only way
you can give a child your values is if you
spend enough time with them.”
Persephone says there is no doubt
that her forebears faced gender- and
race-based discrimination, which she
has experienced, too. Her mother, she
says, “has taught me that you will have
to face these things in life, even though
she has tried to protect me. Now, we can
sort of face these things together.”
This chimes with the experience of
Brooke Hailey, an executive recruiter at
New York-based Madison-Davis, whose
mother Susan Hailey is vice-president
of global talent acquisition, at Open-
Text, the Canadian software company.
And Brooke had not just a working
mother in her life, but also a formidable
grandmother: Roberta Lyon, a single
mother, had held a senior vice-presi-
dent role at US bank Wells Fargo in the
mentored, to talk about [issues such as]
coming in and out of maternity leave.”
Laura Trimble, who moved to Dublin
last year to head HSBC’s office there,
says a female chief executive in finance
is now so common that the gender of an
individual appointment is no longer
remarked on. A former HSBC colleague,
Francesca McDonagh, became the first
female chief executive of an Irish bank,
Bank of Ireland, in 2017 (she is now
chief operating officer of Credit Suisse).
That “normalisation”, Trimble says,
which is “not typical in other markets”,
has helped make it “far easier” to recruit
women.
Having more women at the top means
they can share the load of being “women
at the top”. When senior women are
scarce, they “end up sitting on every
committee”, says Ylva Baeckström, of
King’s Business School at King’s College
London, and author of a book, Gender
and Finance. That affects their day job
and puts them at an added
disadvantage, she argues.
“Female skills are exactly what the
industry needs,” Baeckström adds,
because finance “suffers greatly from
overconfidence and concentrated risk
taking” — characteristics that women
are less inclined to display.
It is too early, of course, to say if the
gender shift in Ireland’s banking and
asset management sectors will help save
the country from another financial
crisis. Calamities such as the one that hit
in 2010 are long in the making. And an
avalanche of regulation means much
else has changed in Ireland’s financial
sector since 2010.
Still, the industry does feel very
different to the one I remember from 15
years ago, as a reporter in Dublin. And,
having seen the catastrophic fallout
from the pre-2010 status quo, any
difference seems like a good thing.
The writer is the FT financial regulation
editor
1980s, when very few women were
working in finance at any level.
This background, Brooke says, has
prepared her to be ready if singled out or
underestimated because of her age and
gender. “If you go in knowing there are
generations of women who have stood
the test of time against those expecta-
tions, you can fight back a little bit,” she
says.
Susan, whose first job was at IBM in
the early days of the tech boom, feels
lucky that she carved out a career in an
industry that often felt ahead of its time,
in terms of working culture.
“Growing up with a working mother in
a professional level role with a lot of
responsibility gave me a language . . . and
a pathway to build a career,” she says.
Now, she is inspired by the “bolder”
young people she works with: “As millen-
nials and Gen Z become leaders, it’s going
to lead to a step change in business.”
‘The first million I raised for my
start-up was way more difficult’
Entrepreneurs
Is a career in finance useful
preparation for switching to
run your own business?
Nikou Asgari hears about the
pluses — and the surprises
Corporate office life in the financial sec-
tor, however intense, is a different world
to the particular grind of entrepreneur-
ship. Yet some who have made the leap
say they can draw on the skills and net-
works gained from a career in finance.
“After eight years in . . . I felt like I
definitely earned my stripes as an
investment banker and I was dying to
build something tangible,” says Joanna
Dai, of her time working for JPMorgan in
New York and London.
The idea for her clothing venture, Dai,
came out of a business trip when her
work clothes were too uncomfortable
on a flight from Stockholm to London. “I
was sitting on the flight thinking ‘I wish I
wore my yoga pants’,” she says. That led
to a sabbatical of several months, a
course at the London College of Fashion
and an internship with luxury womens-
wear designer Emilia Wickstead.
Eventually, she quit the Wall Street
bank in 2016 to launch Dai in London,
designing and selling women’s office
wear made from the kind of comfort-
able materials that are typically used in
clothes for athletes.
Ditching a finance job for the fragile
world of start-ups was a big risk. How-
ever, Dai found her investment banking
experience made her more sanguine
about quitting. “I felt confident enough
in terms of the business side, [expertise
such as] negotiating, analytical model-
ling,” she says. The skills she lacked, in
product development and fashion, she
picked up at the London College of Fash-
ion and during the internship.
“If it was going to fail, then it would
fail fast and I felt really confident about
my transferable skills,” Dai says. She
took £30,000 from her savings and
bootstrapped the business — it more or
less funded its own growth — for the first
18 months.
The company now has 12 employees
and exports its sustainable office wear
worldwide.
Eshita Kabra-Davies swapped analysing
Clockwise, from left: Persephone
Quarme with Margaret Casely-
Hayford; Susan and Brooke Hailey;
Alma-Constance and Dana
Denis-Smith Ayesha Kazim, for the FT;
Kathleen McGinn, a professor at Har-
vard Business School, has long studied
the effects of being raised by a working
mother. Her 2018 research, Learning
From Mum, found that daughters — but
not sons — were more likely to be
employed, hold more senior positions
and earn more than peers whose moth-
ers did not work, largely by gaining
more egalitarian gender attitudes.
If children who are raised by working
mothers perceive certain gender roles
playing out at home — for instance,
observing their mothers doing most of
the caregiving in addition to their jobs —
then they will develop ideas based on
what they have seen, she says.
And, if they come to the conclusion
that what they have observed is not
acceptable, “it can lead to the desire to
create change and the impetus to reduce
inequality, to the extent that you can
through your own actions”.
corporate bonds for poring over the
accounts of her fashion rental app, By
Rotation, which she founded in 2019. She
worked in trading and asset management
for Mizuho, Axa and Standard Life, now
Abrdn, in London, before committing to
her side-hustle full time.
“The analytical side of [my finance
job], evaluating the company — that
helped me prepare my business plan,”
she says. And “ knowing the
lingo . . . what kind of investment deck
to prepare, how a financial model
works” were also crucial skills.
“My background in finance is integral
to what I’m doing now and I think a lot of
founders in the fashion tech space prob-
ably miss this,” says Kabra-Davies.
“They’re good on the creative side, but
they don’t think about how they can
monetise the business.” She believes her
investment firm experience helps her
communicate with investors, and even
guided her on not giving up too much
equity in her company too soon.
By Rotation has raised $3.8mn so far
from investors including venture capi-
tal firm Redrice Ventures and Magnus
Rausing, heir of food packaging group
Tetra Pak. Users list their typically
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7
This rings true for Dana Denis-Smith,
who left a career at top City law firm
Linklaters in 2007, and went on to start
legal services provider Obelisk Support.
It was a logical solution to a problem,
she says. Law firms were outsourcing
work to overseas companies while, in
the UK, highly skilled women were
struggling to combine tough hours with
raising a family.
The challenge, as Dana sees it, is that
working mothers “want to be present”.
“They want to be in their children’s lives
and there is a lot of emotional involve-
ment at home,” she says. “And being a
leader also requires a lot of emotional
energy.”
Dana, who grew up in Romania under
dictator Nicolae Ceausescu’s commu-
nist regime, had seen her mother, Mar-
gareta Armean, surviving on barely any
sleep. Life was a loop of night shifts at a
“horrendous” factory job, getting three
daughters ready for school, preparing
meals, and hours spent farming.
Dana’s daughter, 12-year-old Alma-
Constance, has already developed an
interest in the law that began when she
learnt that the age of criminal responsi-
bility in England is 10. She now hosts a
podcast, Kids Law.
“I am really proud of my mother,
especially because she’s so unique in
what she’s doing,” says Alma-
Constance. “I can tell everyone about
not only the law, but also about women
in general.”
Dana, who also set up a project cele-
brating 100 years of women being
able to practise law, says she tries to
inform, but not burden, her daughter
with the challenges women faced in the
past. She does worry, though, about
dangers facing her generation, such as
misogynist influencers and artificial
intelligence.
They recently decided to learn about
chatbots together and started by asking
one to name some great world leaders. It
listed only men. “Why did you only tell
us men’s names?” they asked.
The chatbot apologised and named
female leaders such as former German
chancellor Angela Merkel. They repeat-
ed the question, and then the chatbot of-
fered women and men. Dana points out
with glee: “We educated the chatbots
around equality and leadership.”
high-end clothes and offer them for
rental at a daily price. Kabra-Davies
charges a fee to both lender and renter.
Building brand awareness and user
numbers began with friends and former
co-workers. She also approached City of
London colleagues to invest, like a typi-
cal “friends and family” investment
round.
Dai, similarly, used her contact book
when raising £1.6mn through crowd-
funding in summer 2022, which valued
her fashion business at £8.6mn. Its lead-
ing investors include sustainability-
focused investment group Closed Loop
Partners, based in New York.
But experience in the financial sector
goes only so far in preparing for the
complications of life as an entrepreneur.
Dai, for example, says sourcing materi-
als was hard until she was able to lean on
mentors for guidance.
Mariam Jimoh says her time as a
banker specialising in mergers and
acquisitions at Rothschild meant that
working on a business model and pre-
paring a pitch for her grocery delivery
company, Oja, came naturally. But other
differences are striking: “When you’re
working on deals, you see the fully pre-
sented picture of the company — as op-
posed to the firefighting that can go on.”
Using her networks to find the right
advisers was crucial in shaping her busi-
ness — and in changing its model.
Oja began as an app to connect users
to different ethnic food stores, but the
market is fragmented and Jimoh piv-
oted it to a digital supermarket, which
currently focuses on African and Carib-
bean groceries. Oja delivers goods to
customers in London from its ware-
house in the capital and has raised about
£3.5mn from investors led by UK ven-
ture firm LocalGlobe.
Despite their contacts in the world of
finance, all three say raising funds is a
struggle without the backing of recog-
nised financial names.
“Writing an $80mn cheque, when I
was investing in bonds myself, [was]
taken so lightly,” says Kabra-Davies.
“The first million that I raised for my
start-up was way more difficult than
any money I’ve [previously] deployed.”
However, Dai says she appreciates
having more control over her working
life, and creating a socially conscious
business is easier when you are your
own boss. “When you’re at a large bank,
you are a small cog in a huge machine.”*