Ex-HSBC chief Flint leads race to run £22bn UK Infrastructure Bank

Published

3 years ago

August 21, 2021

admin

John Flint, the former HSBC Holdings chief executive, is in talks with Whitehall officials about becoming the inaugural boss of the government’s new £22bn UK Infrastructure Bank (UKIB).

Sky News has learnt that Mr Flint, who left HSBC two years ago, is among the leading candidates to run the new lender.

The UKIB has been charged by Rishi Sunak, the chancellor, with aiding Britain’s 2050 net zero carbon emissions target by prioritising investment in projects that tackle climate change.

In his Budget in March, Mr Sunak said the bank would receive £12bn in initial state funding as well as a further £10bn in government loan guarantees.

That funding would enable it to “unlock more than £40bn of financing for key projects across the UK”, the Treasury said.

Mr Flint is not thought to have formally agreed to become the UKIB’s first chief executive, and it was unclear this weekend whether he had been offered the job.

Banking sources said, however, that he would be a “highly credible” contender for the post.

Landing the role would represent a comeback for Mr Flint, whose three-decade career at HSBC was brought to an abrupt halt in August 2019 by the board of Europe’s biggest lender.

He clashed with the bank’s chairman, Mark Tucker, over the pace of decision-making at HSBC, but was perceived by many to have been the victim of a brutal defenestration.

Mr Flint has spoken of his desire for a new challenge but has said little publicly about his departure from HSBC.

Since then, a number of top UK bank roles have become vacant, including the chief executive’s roles at Lloyds Banking Group and Santander UK, but Mr Flint is not thought to have featured significantly in either recruitment process.

He was named in February as a member of a Treasury panel reviewing the ring-fencing regime set up in the aftermath of the 2008 banking crisis.

That review, which is being chaired by the former Standard Life Aberdeen boss Keith Skeoch, is expected to conclude later this year.

In April, the former British Land chief executive Chris Grigg was named as the UKIB’s chairman, having helped to establish the institution during the preceding four months.

Its headquarters is in Leeds, one of several state-backed institutions that ministers have located outside London as part of the government’s ‘levelling-up’ agenda.

The new lender formally opened for business in June and said it would begin lending to local authorities “later in the summer”.

Labour has criticised ministers for failing to be sufficiently ambitious with the scope of the UK Infrastructure Bank, arguing that it will be far smaller than comparable institutions in countries such as Germany.

It is unclear how much the UKIB chief executive would be paid for the role.

The identities of other potential candidates for the role was also unclear this weekend.

Neither the Treasury nor Mr Flint could be reached for comment.

Business

Investment giant KKR wades into Thames Water survival battle

Published

2 hours ago

November 2, 2024

admin

One of the world’s largest investment firms has waded into the fight over the future of Thames Water, the water utility which is racing to stay afloat.

Sky News has learnt that KKR is in talks with Thames Water and its advisers about participating in a £3bn share sale which forms part of a wider recapitalisation plan.

City sources said this weekend that KKR, which has more than $550bn of assets under management, was among a handful of parties which had accessed a data room for potential investors.

Rothschild, the investment bank, is running a process to raise around £3bn from the sale of an equity stake in Thames Water, which is grappling with a debt mountain of as much as £19bn.

Other investors which have expressed interest in acquiring newly issued shares in the water company include Carlyle and Castle Water, the latter of which is controlled by Graham Edwards, the Conservative Party treasurer.

Global Infrastructure Partners, which is owned by BlackRock, Brookfield and Isquared are also reported to have lodged an interest, although sources said that the latter two were unlikely to play any further role in the process.

The crisis at Thames Water is presenting Sir Keir Starmer’s administration with a challenge as the debt-laden company attempts to avert temporary nationalisation.

Insiders said that KKR was “a serious player” in the equity process being run by Thames Water, although its outcome hinges on a final determination by Ofwat, the industry regulator, which is due by January at the latest.

Thames Water – and other suppliers across Britain – wants to hike bills and is demanding leniency from Ofwat on fines for past transgressions.

One obstacle to KKR buying a big stake in Thames Water, which has more than 15m customers, may be its 25% holding in Northumbrian Water.

Money blog: Should you give money directly to a homeless person?

Under Ofwat’s mergers regime, the Competition and Markets Authority would need to review the deal, although there would not be an automatic prohibition.

The share sale process is being run in parallel to an attempt to raise up to £3bn in debt financing from hedge funds and other investors.

A battle has broken out between the holders of Thames Water’s class A bonds, which account for the bulk of its borrowings, and its riskier class B debt.

Both sets of bondholders have submitted proposals to the company, with the class A’s arguing that theirs is more certain and the class B’s arguing that theirs will save the company £380m or more in fees and interest over a 12-month period.

Thames Water has already endorsed the class A group’s offer, with an initial £1.5bn of funding to be delivered immediately.

The class A bondholders are now trying to secure backing for their proposal within the next fortnight.

Their group, which includes the American hedge funds Elliott Advisers and Silverpoint, would earn in the region of £650m during the first year of the financing.

One area of controversy is likely to be any incentive plan for Thames Water bosses, led by chief executive Chris Weston, as part of a deal to give the company a stay of execution.

Last month, the environment secretary, Steve Reed, established an independent review of the industry that will look at far-reaching reforms.

It was unclear this weekend which of KKR’s funds was participating in the Thames Water equity-raise.

The firm owns John Laing, an infrastructure investor, which it took private in 2021.

It has also owned South Staffordshire, another water company, selling its 75% interest in 2018.

KKR declined to comment.

Business

Reynolds to hold talks with bosses amid business budget backlash

Published

24 hours ago

November 1, 2024

admin

Reynolds to hold talks with bosses amid business budget backlash

The business secretary will next week hold talks with dozens of private sector bosses as the government contends with a significant corporate backlash to Labour’s first fiscal event in nearly 15 years.

Sky News has learnt that executives have been invited to join a conference call on Monday with Jonathan Reynolds, in what will represent his first meaningful engagement with employers since Wednesday’s budget statement.

Rachel Reeves, the chancellor, unsettled financial markets with plans for billions of pounds in extra borrowing, and unnerved business leaders by saying she would raise an additional £25bn annually by hiking their national insurance contributions.

An increase in employer NICs had been trailed by officials in advance of the budget, but the lowering of the threshold to just £5,000 has triggered forecasts of a wave of redundancies and even insolvencies across labour-intensive industries.

Sectors such as retail and hospitality, which employ substantial numbers of part-time workers, have been particularly vocal in their condemnation of the move.

On Friday, the Financial Times published comments made by the chief executive of Barclays in which he defended Ms Reeves.

“I think they’ve done an admirable job of balancing spending, borrowing and taxation in order to drive the fundamental objective of growth,” CS Venkatakrishnan said.

His was a rare voice among prominent business figures in backing the chancellor, however, with many questioning whether the government had a meaningful plan to grow the economy.

Mr Reynolds held a similar call with business leaders within days of general election victory, and over 100 bosses are understood to have been invited to Monday’s discussion.

A spokesman for the Department for Business and Trade declined to comment ahead of Monday’s call.

Business

Markets react on second open after budget – as traders concerned over some announcements

Published

1 day ago

November 1, 2024

admin

Markets react on second open after budget - as traders concerned over some announcements

The cost of government borrowing has jumped, while UK stocks and the pound are up, as markets digest the news of billions in borrowing and tax rises announced in the budget.

While there was no panic, there had been concern about the scale of borrowing and changes to Chancellor Rachel Reeves’s fiscal rules.

At the market open on Friday, the interest rate on government borrowing stood at 4.476% on its 10-year bonds – the benchmark for state borrowing costs.

It’s down from the high of yesterday afternoon – 4.525% – but a solid upward tick.

The pound also rose to buy $1.29 or €1.1873 after yesterday experiencing the biggest two-day fall in trade-weighted sterling in 18 months.

On the stock market front, the benchmark index, the Financial Times Stock Exchange (FTSE) 100 list of most valuable companies was up 0.36%.

The larger and more UK-focused FTSE 250 also went up by 0.1%.

While there was a definite reaction to the budget, uniquely impacting UK borrowing costs, the response is far smaller than after the UK mini-budget.

Many forces are affecting markets with the upcoming US election on a knife edge and interest rate decisions in both the UK and the US coming on Thursday.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the fullest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow @SkyNews on X or subscribe to our YouTube channel to keep up with the latest news.