John Charcol appoints Luke Somerset as COO
Somerset (pictured) will be responsible for leading the John Charcol sales, operations and commercial teams based in Southampton.
Somerset began his career at Lehman Brothers and then joined Contractor Financials as head of administration. Following the acquisition by Contractor Mortgages Made Easy in 2015, Luke was appointed as a board member of the Niche Finance Group to merge businesses and cultures.
As business development and commercial director, he led mortgage lender relations to provide a regular flow of exclusive and semi-exclusive deals and the delivery of dedicated teams of underwriters with high-street and specialist lenders.
Somerset said: “John Charcol has real potential for significant growth so I am very much looking forward to making my contribution to its continued success. We have a leading proposition, a great team and exciting plans which is a massive attraction to joining the business.”
Mark Fleet, CEO of John Charcol said: “Luke is a great signing for John Charcol and his appointment reflects our growth strategy and our status as the premier mortgage broker within the UK marketplace. His appointment also reinforces our commitment to actively invest in growing our business”.
Ex-CEO Simon Knight stepped down from John Charcol in June after completing the management buyout from Towergate and acquisition of Simply Finance Group.
John Charcol executive chairman, Ian Darby confirmed Mark Fleet as CEO in early October.
Ernst & Young fined $10m over Lehman audits
The settlement marks the end of a four-year legal fight and is the first successful action by a law enforcement authority in connection with Lehman’s bankruptcy according to a report on the Telegraph, quoting the New York attorney general.
Central to the investigation was Lehman’s use of Repo 105, an accounting device within the firm that allowed it to temporarily sell securities to shift risk off its balance sheet.
The transactions lasted no longer than a few days, enabling Lehman to remove tens of billions of dollars from its balance sheet without triggering a reporting requirement.
EY failed to object to Lehman using this technique to mislead investors about its liquidity and financial health, the attorney general said.
Lehman filed for bankruptcy on September 15, 2008, marking the beginning of the international financial crisis.
The money from the $10m fine will be used to reimburse investors as well as paying back the state of New York for the cost of the investigation.
It follows an agreement from EY in 2013 to pay $99m to settle a class action brought by investors over the same issue.
Watchdog fears fresh Lehman’s crisis from global debt surge
Jaime Caruana, head of the Swiss-based financial watchdog, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield, the Telegraph reports.
“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,” he said.
Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis.
Debt ratios in the developed economies have risen by 20 percentage points to 275% of GDP since then.
Credit spreads have fallen to to wafer-thin levels.
Companies are borrowing heavily to buy back their own shares.
The BIS said 40% of syndicated loans are to sub-investment grade borrowers, a higher ratio than in 2007, with ever fewer protection covenants for creditors.
The disturbing twist in this cycle is that China, Brazil, Turkey and other emerging economies have succumbed to private credit booms of their own, partly as a spill-over from quantitative easing in the West.
Their debt ratios have risen 20% to 175%. Average borrowing rates for five-years is 1% in real terms. This is extemely low, and could reverse suddenly.
“We are watching this closely. If we were concerned by excessive leverage in 2007, we cannot be more relaxed today,” he said.
“It may be the case that the debt is better distributed because some highly-indebted countries have deleveraged, like the private sector in the US or Spain, and banks are better capitalized. But there is also now more sensitivity to interest rate movements.”
The BIS warned it is annual report two weeks ago that equity markets had become “euphoric”.
Ex-Platform boss Tweedy joins Target
Tweedy also joins the executive committee and has been tasked with shaping strategy in close association with the sales team and the firm’s clientele.
For the past year he has been working in Dublin for Ulster Bank as head of mortgage arrears, and before that he was the managing director of Platform Home Loans for 13 years.
He has also worked in a number of board level roles at Britannia Building Society, Western Mortgage Services, The Money Store and, during the 1990s, Lehman Brothers.
Tweedy said: “This is an exciting move for me to an ambitious and expanding business. I’m looking forward to rejoining the UK financial services market at a key time and helping to shape Target’s business growth over the coming years.”
Target’s chief executive officer Paddy Byrne said: “I’m delighted to welcome David on board. He will provide valuable input to support our customers and the further development of our business.”
RBS clashes with Sants over rights issue lawsuit
The 81% state-owned bank is fighting a claim from individuals and institutions who say directors gave a false impression of the lender’s financial position in the prospectus for its £12bn rights issue, the Daily Mail reports.
Part of the case hinges on whether City regulators were already concerned about RBS’s capital position in the run-up to the publication of the prospectus in April 2008.
‘Contrary to the allegation, the rights issue was not forced on RBS by the FSA,’ according to law firm Herbert Smith.
But in 2012 Sants (pictured), said the FSA had raised concerns about the bank’s capital position some time between November 2007 and April 2008 – instructing former boss Fred Goodwin to raise cash.
‘We realised that RBS was short of capital,’ said Sants at a Treasury committee hearing in January 2012.
‘It was me personally in a meeting with Fred Goodwin that pressed him to have a rights issue. I have no doubt that he would not have had a rights issue of that size without my personal intervention.’
In its defence document, RBS claims Sants only urged Goodwin to raise cash after the bank had already made plans to do so.
But Sants’s testimony indicated the FSA’s concerns stretched back to November 2007, while the bank’s claim it was not told to raise cash directly contradicts the former regulator’s version of events.
RBS also says the key factor in its demise was the collapse of Wall Street bank Lehman Brothers in September 2008, months after the rights issue.
The case is expected to see Fred ‘the Shred’ Goodwin appear in the dock for the first time to answer for his disastrous stewardship of the bank.
Taxpayers, currently sitting on a £16bn loss, had to inject £45.5bn to save RBS from outright collapse.
FSA relaxes non-exec recruitment scrutiny
The FT said firms had complained the process was making it harder for them to make non-exec appointments.
It said the industry had noted a share drop-off in the number of applications for board posts at financial groups that have been called for interview by the FSA.
The report said the change in approach was a “marked shift” from the line taken after the collapse of Lehmans and the government rescue of RBS in 2008, after which the FSA examined all board room candidates.
These candidates were subject to interviews by a panel of financial industry grandees. The report added many people withdrew their applications to become non-executive directors at some of the UK’s largest financial services companies.
Lehman execs ‘ignored early warning signs’ of crisis
Papers released by law firm Jenner & Block LLP show the reckless attitude of the bank’s management in the period leading up to its failure in September 2008, which sent shockwaves through the market and triggered a financial crisis.
According to Bloomberg’s analysis of the documents, a presentation given in a Lehmans board meeting in September 2007 included a clear summary of the brewing crisis.
“The initial tremors were felt at the end of 2006,” the board was told, “when the poor loan performance of sub-prime borrowers began to be a cause for concern in the marketplace. This was evidenced by a gradual spread widening in the asset backed index.”
The presentation continued: “The market continued to widen as it became apparent that the performance problems in mortgage loads was not going to abate.”
By August 2007, the commercial paper market was “facing challenging conditions, with very little liquidity” and “funding for almost any type of mortgage or ABS” – asset-backed security– “product dried up.”
Goldman Sachs also recognised these “initial tremors” and placed a huge proprietary bet – referred to internally as the ‘Big Short’ – that paid off in 2007 and helped put the firm in a position to weather the financial crisis a year later, Bloomberg reported.
Treasury ‘unprepared’ for 2008 crisis
At the time the financial crisis hit the market in September 2008, the Treasury had only three staff working on the UK’s financial stability, with an average age of 32, the Telegraph reported.
It has admitted it was “stretched” and “did not see the crisis coming” in a indictment of its own operations at the time.
When the crisis hit, the body upped staff numbers from three to 30, but this was still insufficient, the Treasury admitted.
“We should have had five teams and 100 people,” a senior official is quoted as saying in the review.
Sir Nicholas Macpherson, permanent secretary to the Treasury, welcomed the report led by Sharon White, a civil servant at the ministry.
White recommended the Treasury should reduce staff turnover by 28%, by increasing salaries. According to report, the average age of staff in the department is 32 with most leaving within three years for higher pay elsewhere.
The Treasury now has 50 officials working on financial stability, according to a spokesperson.
Lehmans emerges from bankruptcy
The one-time financial behemoth will start distributing what it expects to be a total of around $65bn to creditors on 17 April, it said in a statement.
Lehmans has previously stated that first group of payments to creditors will be at least $10bn.
The collapse of Lehmans in 2008 is regarded by many as the height of the 2008 financial crisis.
Then, almost 1,300 days ago, Lehman Brothers Holdings Inc filed its record $639m bankruptcy, its businesses around the world collapsed, and investors from the smallest towns to the largest pension funds lost money.
Recovery far off but FTB jump on way
When first-time buyer Stamp Duty relief finishes in March 2012, buyers are expected to rush to complete before the tax rises to 1% again for properties worth between £125 and £250,000.
Rightmove spokesman, Miles Shipside, said: “A further and more financially significant deadline is the ending of first-time buyer stamp duty relief on the 25 of March next year. The nil-rate threshold will fall from £250,000 to £125,000, so first-time buyers should be aware that they must have completed their purchase by that date to avoid paying stamp duty of 1% of their purchase price.”
New sellers increased asking prices by 0.7% across the UK in September, making up some of the ground lost over the Summer. Sellers lost 3% of asking prices or £7,255 over the three months of the summer downturn, weakened further by stagnant market conditions.
This month is the third anniversary of the collapse of Lehman Brothers, which triggered the freeze in credit markets and wholesale mortgage funding. Rightmove said it is worrying that Rightmove’s key metrics have not changed since, indicating the recovery still remains on hold until the lending squeeze eases.
Homes are on the market for an average of 94 days, so with Christmas 98 days away buyers will have to take action to be in a new home before Christmas day.
Prospective buyers do not feel any urgency to make an offer and conclude a purchase.
Forced sales remain low and new sellers’ average asking prices are also little changed compared to September 2008, when the average price of a property coming to market was £227,438.