Friday, 29 May 2015

Weekly Wrap Up: Should Sponsors Show FIFA the Red Card?

The United States cemented its status as world police this week when it swooped in on FIFA, international football’s governing body, alleging that corruption at the organisation is “rampant, systemic, and deep-rooted.” The Department of Justice indictment named 14 people on charges including racketeering, wire fraud and paying bribes worth more than $150million.

These are pretty damning allegations against a not-for-profit organization that recorded $338million profit and $5.7billion in revenues for the 2011-2014 financial period. This money comes mainly from FIFA’s key revenue streams, the sale of television rights for the World Cup and marketing rights to sponsors including Adidas, Coca-Cola, Gazprom, Hyundai/Kia Motors, Visa and Budweiser.

Corporate sponsorship, especially of the world’s most popular sport, is great publicity for a brand. One billion viewers tune into the World Cup every four years, giving sponsors unrivalled exposure to markets all around the world. But suddenly, instead of being associated with some of the best athletes and the most popular sport in the world, corporations risk having their image tarnished by a governing body that was taking bribes to fund lavish lifestyles that rival those of football’s star players.

Moreover, as the Wall Street Journal points out, this isn’t exactly a shocking development for sponsors, who have maintained their FIFA sponsorship agreements for years despite persistent allegations of corruption and misconduct. The controversy surrounding the World Cup in Qatar should have been enough to send sponsors running, especially the allegations of abused migrant labourers building soccer stadiums. Now it has all blown up and the corporations that contributed $177million to FIFA in 2014 have come under intense media scrutiny, highlighting the danger of linking corporate reputation to an outside organisation.

Still, there is an opportunity for corporations that have suddenly become associated with an incredibly tarnished organization to turn this around. Their financial support of FIFA does, after all, allow sponsors to demand change. Frankly, this is something they should have done a long time ago, but it’s not too late. So far, however, only Visa Inc. has stated that it will “reassess its sponsorship” if FIFA fails to rebuild “a culture with strong ethical practices to restore the reputation of the games for fans everywhere”. Adidas, Coca-Cola and McDonald’s only stated that they are monitoring the situation.

But while corporate sponsors are suddenly getting the wrong kind of attention, one could argue that the FIFA scandal is a publicity coup in some respects: Even David Beckham couldn’t generate this level of interest for soccer in the US.

The week, Abchaps hosted a successful market lunch discussing the current conditions of London’s IPO market. Abchurch also hosted an event that brought together people from across the City to celebrate the life of Gerry Clark, close acquaintance and friend of Abchurch.

The professional services firm EY has appointed two partners to its UK legal services practice. Paul Devitt and Richard Thomas both join from Addleshaw Goddard. Deloitte has elected Nick Owen as Chairman, he is currently a member of the Board of Partners and Vice Chairman of Deloitte UK. Moore Stephens have appointed Ian Gardner as partner in the accountancy and consulting firm’s insurance industry group.

Not-for-profit organisation: A type of organisation that does not earn profits for its owners, and instead uses all of the money earned to pursue the organization’s objectives. FIFA is officially a Not-for-profit, so it was probably about time that somebody took a closer look at their objectives.

This weekend, join Backyard Cinema in their one of a kind performance of Romeo and Juliet. Performed in St Mary’s Church, this showing will be candle lit, music performed by a live choir, and most importantly, a fully licensed bar.

If all you’ve ever wanted from life is to break a Guinness world record, this weekend is your chance. Join British Military Fitness on Wandsworth Common, where you can be part of the largest ever group to perform a minute of squat jumps. Never will 60 seconds have seemed so long.

Finally, if you’ve always seen yourself as the next Banksy, Hays Galleria are giving you the opportunity to create your own Flower Thrower painting. All the thrill of graffiti, with less chance of a criminal record.

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Thursday, 28 May 2015

Scottish Referendum vs. UK Election: Return of the IPO

In the last 12 months, two political events have succeeded in concerning the CityFirst the September 2014 referendum was called on Scottish independence, and brought with it a wave of populism not seen for generations. With the SNP and the calls for an independent Scottish state, came the first internal threat to the makeup of our country for centuries, and with this threat, came fear. Fear of a devalued currency, fear that the face of commodities in the UK was about to change, and fear that some of the Country’s great companies were going to have to be described as ‘English’ or ‘Scottish’ rather than the ‘British’ in which they had revelled.

Having attempted a feigned indifference for over a year, financial institutions finally scrambled to limit the damage. The first noticeable victim was the value of the Pound. Having stood strong against the Dollar for some time, it saw a sharp decline to a then seven month low. Next, an almost overnight drying up of IPO work. Concerned by uncertainty, the roadshow wheels grounded to a halt, with businesses deciding to take to the water once a yes / no decision had been made.

Following the no vote, an audible sigh went up in EC2. Within a week, £3 billion’s worth of deals were mooted. From Aldermore to Jimmy Choo, there was a spring in the step of the City again. However, with the election this month, the City again came to a juddering halt. Populism had been caught south of the border, and following the SNP into battle was UKIP, another party not ruled by sense, but by ideals. Between them, and their disruptive might, they threatened to turn the 2015 general election into a fight from which it seemed there could be no winners. With a hung parliament seemingly an inevitability, the bids to woo bedfellows became more important than offering the country sensible policies.

For several fear inducing weeks, especially to the world of finance, it seemed that the only realistic solution able to get over the line would be a Labour/SNP coalition. Even the Conservatives, for years the bastion of business, had to make drastic anti finance moves to appease the blue collar workers it has promised to help. The banking levy, recently raised from 0.156% to 0.21% of all debt held in UK banks. Seemingly inconsequential, but has seen HSBC, one of the country’s leading institutions, making unveiled threats to leave the UK, reverting to its original headquarters of Hong Kong. From the thought of insecurity, markets all but closed. For almost a month, the City was devoid of many IPO’s with companies being warned by advisers that their fundraisers would be very difficult. The Stirling plummeted again, with many believing that $1.40 would have been more than possible if ugly scenes and recrimination had followed on 7 May.

However, markets are resilient, and populist parties live and die by the frenzy they create. UKIP, at one point claiming potential victory in 40 seats, came away with only a solitary voice, Carswell in Clacton, with even their leader barred from Westminster by the voters of Thanet South. Even with the SNP’s astonishing numbers north of the border, the unexpected rout of Labour around the country led to a combined total of 288, nowhere near enough to damage the Tories. In achieving 331 seats, David Cameron achieved something that no PM with over 18 months experience has done since 1900, increasing his margin of victory from the start of his incumbency.

From this, the City took heart. Money and goods has been traded within its walls since the Roman’s first came to this country, and the election could never truly stop this. World Wars, disease, and political turmoil far greater than that seen today have not immobilised finance, only pausing it, and therefore, the only likely casualty of this election will be the bankers’ summer holidays. Hindsight of the Scottish referendum shows us just how quickly institutions can dust themselves off. History is a long study of applying hindsight to the future, therefore, come Summer, the wheels will be turning once more. With promises of floats already abounding, the City is already leaving the election behind.

Nevertheless, there is one final caveat. During the last parliament, the Conservatives, in a bid to appease their back benches and the increasing Eurosceptic population, promised an in/out EU referendum by 2017. This leaves the City in quandary. Nearly three quarters of those working within the Square Mile plan to vote in favour of staying within the European Union, and yet, as with the Scottish referendum before it, fear will descend on the City and quite possibly global markets again. With his slim majority, Cameron is acutely aware of his potential ‘bastards’ – Rees Mogg, Bone, Davies – all back bench heavyweights and therefore able to wield power in the future. Mark Reckless, the Eurosceptic and UKIP defector who was recently ousted from his seat in Rochester and Stroud, must be looking at the power his former colleagues now hold longingly. For this entire election, the public were sold a story that it would be the outside powers who would force the issue, the days of majority were over, with small parties for the first time ever holding the keys to Number 10. Ironically, the biggest threat to the City’s interests are now not from a raging bunch of Scottish and anti- EU populists desperate for financial blood, but in fact the very Government that EC2 was so happy to elect.

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Friday, 22 May 2015

Weekly Wrap Up: Humility Before Profit

Could an incident that occurred a decade ago create more reputational damage now for the company involved than when the incident first occurred? This is arguably the case for Thomas Cook, who have been under immense pressure in recent weeks over their handling of the high-profile deaths of two children on holiday in Corfu in 2006.

The Independent’s view “a tragedy to a corporate disaster” has been widely voiced, with the public and media consensus being that Thomas Cook’s communications strategy is “too little too late”.

Timeline of events:
  • April 2015 – Inquest begins into deaths of the Shepherd children.
  • 13 May – Manny Fontenla-Novoa, CEO at the time of the tragedy, appears as a witness to the inquest but refuses to answer a series of questions. Peter Fankhauser, current CEO, tells inquest that Thomas Cook has done "nothing wrong". Inquest jury returns verdict of unlawful killing and says Thomas Cook "breached its duty of care".
  • 17 May – Shepherd family reveals it received £350,000 in compensation from the hotel owners for their children’s deaths. It emerges later that day that the hotel paid Thomas Cook up to £3.5m in compensation.
  • 18 May – Thomas Cook offers to pay compensation it received to Unicef and apologises to the family.
  • 20 May – Fankhauser apologises to the family and says he is "deeply sorry".
  • 21 May – Fankhauser meets with the parents face to face, giving a “sincere and heartfelt apology” and agrees to donate an undisclosed sum to six charities of the parents’ choice. In addition, the parents requested that the bungalow where the tragedy took place be demolished and replaced with a “lasting tribute” in the form of a playground.

Thomas Cook’s mistakes and subsequent quick fixes have caused immeasurable damage to the firm’s reputation and future value as they enter a crucial trading period. The Group would expect to be selling holidays to families gearing up for the summer break. Meanwhile, it has been reported that around £75m has been wiped off the company’s share price this week as investor’s dumped stock. Only time will tell whether the share price will recover. This will largely depend on any subsequent actions the Company take to stop the rot.

Fankauser has now done what his predecessor should have done back in 2006; given the parents a sincere apology.

Holly Ward, co-founder of The Forge commented: “As a nation we respond well to humility; even if Peter Fankhauser didn’t want to imply his company was to blame by offering an apology to the parents of Bobby and Christi Shepherd, a little humility would have gone a long way in showing his company actually cared. The Unicef donation smacked of a quick fix that missed its mark.”

The incident can serve as a lesson not only for Thomas Cook, but the majority of companies. Thomas Cook went far too much down the legal route, allowing its lawyers and bean counters to dictate how it dealt with a grieving family, instead of actioning a robust crisis communications plan, or having the inclination to do the right thing.

Julian Pike, Head of Reputation Management at Farrer & Co stated: “From the outset, Thomas Cook should have made the family its priority, irrespective of the legal advice or insurers' requirements. Its own financial wellbeing should also have come a long way second.”

This week, Abchaps hosted an Asia themed market lunch where economic opportunities in the region were explored and the potential impact on the London IPO market was discussed.

Andrew Penny joined EY from JP Morgan as Senior Advisor to its real estate corporate finance team; Judith Mackenzie, Partner at Acuity Capital and Senior Investment Manager at Aberdeen Asset Management Growth Capital, joined the board of Quoted Companies Alliance, whilst Kelly Tubman Hardy joined Hogan Lovells’ corporate practice in Baltimore from DLA Piper.

“Stop the rot”: to take action against something bad, before it spreads and becomes worse

If craft beer is your thing, head along to the Old Royal Naval College, and try over 80 different types of draft beer at Brewfest; Greenwich.

This weekend sees a particularly British pastime, with the Gloucestershire cheese rolling taking place, where you can throw yourself down a hill after Cheddar!

Finally, Kew Gardens is holding a Full of Spice festival, starting this weekend. With everything from a Strictly Spice dance-off to a pop up bar, this festival has everything.

Follow us on Twitter @AbchurchComms

Friday, 15 May 2015

Weekly Wrap Up: The Anti-immigrant Immigrant

Bank of England Governor Mark Carney inadvertently put himself in the running to become UKIP’s new leader this week while delivering the quarterly Inflation Report. Never mind that Carney comes from a country built on the backs of immigrants, somehow the Bank’s forecast of economic conditions in the UK was translated into an anti-immigration rant by some newspapers.

The Daily Mail headline that followed Carney’s press conference read, “Foreign workers drag down UK wages, says bank chief: Carney’s explosive intervention as number of EU migrants working here hits 2 million.” The Express ran the following emphatic headline: “Foreign workers ARE dragging down UK wages: Bank of England’s shock warning to Britain.”

But it wasn’t just the predictable Daily Mail and Express that ran the immigrant scare story: The Times headline stated, “Migrants ‘threaten economic recovery’.”

So how did the apolitical Central Bank suddenly make headlines usually attributed to Nigel Farage?

It seems the Canadian banker fell victim to the UK media’s drive for sensational headlines. What he actually said was: “In recent years, labour supply has expanded significantly owing to higher participation rates among older workers, a greater willingness to work longer hours and strong population growth, partly driven by higher net migration. These positive labour supply shocks have contained wage growth in the face of robust employment growth.”

Yes, Carney mentions net migration. But his first two points focus on British workers, which the Daily Mail and others conveniently chose to ignore. However, Carney clarified his comments on BBC Radio 4 the next morning by pointing out that the increase in labour supply is down to British workers taking more hours, and older workers staying in employment, and that over the last two years, increases in those two factors have been 10 times more important than migrants. In other words, you can blame your colleagues that stay late every day and refuse to retire for your stagnating wage.

Shortly after that clarification, the headlines began to look much more sensible: The Independent ran a story titled, “Bank of England governor Mark Carney says UK productivity not harmed by migrant workers.” Business Insider bluntly headlined its story, “No, Mark Carney is not anti-immigration.”

Of course it’s almost absurd that Carney, a foreigner who came to work in the UK, even has to defend himself against anti-immigration allegations. Still, what happened to him can happen to any business or prominent individual. The media can, and will, twist the truth. So that’s why it’s important to note that the Bank of England responded almost perfectly by having Carney quickly dispel any misunderstandings. In short, Carney and the Bank of England won this battle against bad press because they fought back in a timely fashion with the best weapon possible: The Truth.

This week Abchaps took some special guests to mingle with old friends at City institution Gulls Egg Luncheon at Merchant Taylors Hall; and attended Rushlight’s Cleantech event ‘Getting CCS in the UK to happen’, hosted by Smith and Williamson. Abchaps also headed to the Gorkana Media breakfast briefing with Bloomberg, to hear the Company’s new direction, including the newly launched Bloomberg Europe website and how PRs can use Bloomberg’s services to benefit their clients.

Two of our graduates also attended the next stage of their FinanceTalking training, “Finance Essentials for Communicators” focusing on understanding corporate finance and accounting concepts, as well as learning how to use numbers and KPIs in order to tell a positive financial story. Back at home, we hosted another successful Oil and Gas focused Market Lunch, where it was reassuring to see deals are still being for near term projects with good management teams.

Charles Russell Speechlys promoted Suzi Gatward to real estate Partner, whilst WH Ireland has appointed Roland Kitson Head of Business Development for wealth management. Paul Stevens, who has headed up Olswang’s international intellectual property practice group since 2013, was appointed Chief Executive of the law firm.

“Quarterly inflation report”: It’s normally about as exciting as the title implies, but this week the Bank of England’s forecast of economic conditions in the UK made headlines for Mark Carney’s supposed anti-immigration rhetoric.

This weekend, the international rugby 7s is coming to Twickenham, so celebrate in a carnival of fancy dress. For this year, the theme is ‘out of this world’. Go big or go home!

If beer, rugby, and aliens aren’t necessarily your thing, the Natural History Museum is holding an afterhours ‘Night Safari’. Seen as time travelling across three centuries, visitors will be able to see this cathedral of knowledge devoid of its usual madding crowds.

Finally, with spring finally showing its face, London’s rooftops are becoming pleasant places to be again. The Rooftop Film Club is one of the best ways of seeing a film, out in the open air, with cocktails and deckchairs.

Follow us on Twitter @AbchurchComms

Friday, 8 May 2015

Weekly Wrap Up: The Biggest Loser this Election

Before the polls even opened on Thursday, there was already a clear loser in the UK general election: banks. Regardless of which party takes power, it seems that UK bank earnings are set to be hit by a wave of new legislation that could result in a rising bank levy, ring-fencing of operations, and even capping of retail banking market shares.

To be clear, banks and individual bankers whose recklessness and criminal behaviour precipitated the financial crisis deserved to be punished. And yes, the government should play a strong role in ensuring economic stability and therefore has to keep an eye on the financial industry.

Some proposed policies aimed at banks suggest politicians have become irrational. How, for example, would a Labour Party proposal to increase the bank levy to support free childcare have prevented the next financial crisis? Tory plans to use the money from fines to create apprenticeships also suggest politicians are simply using this money for political gain. It’s no wonder then that the Institute for Fiscal Studies recently felt compelled to warn politicians against treating banks like a “cash cow”.

But still, banks have been remarkably silent when it comes to defending themselves against political attacks in the post credit crunch era. This is particularly surprising because many politicians were themselves complicit in creating the conditions that led to the financial crisis.

So perhaps it’s time for banks to change their PR strategy and speak up. Already there are rumblings: The Chief Executive of the British Bankers’ Association was recently quoted in the Financial Times reminding politicians that “Banking is by far Britain’s leading export industry, and one of its biggest taxpayers, but…it is very internationally mobile.”

But instead of running away, as HSBC and Standard Chartered have threatened, it would be refreshing to hear more about the value that the financial industry brings to the UK and how banks are working to prevent further bad behaviour. After all, the staggering fines paid by banks since the financial crisis are not just the result of overzealous politicians on a witch hunt – banking culture was clearly dysfunctional pre crunch.

According to the FT, most bank bosses recognize that the industry is not doing enough to convince sceptics it has changed. Increased transparency would be a step in the right direction since it would prevent people from coming to their own conclusions, which has been mostly that banks are still up to no good.

So it’s time for the banks to take back control of the narrative. Until now, it may have been easier for banks to remain silent and for the public to hate them, but in reality if the financial industry continues to be a political target the biggest loser in this election will ultimately be the UK economy.

This week, Abchaps have been networking across the continent with our global partners at IPREX’s Annual Meeting in Berlin. We also met CMS Advisory over breakfast, discussing the ever increasing importance of social media in the City. Our Market Lunch series continued unabated; with this generalist lunch as the last held before the election, understandably, politics was at the forefront of the agenda.

Richard Hughes joined Norton Rose Fulbright as a Partner in its banking and finance practice, having previously worked with Simmons & Simmons. Alistair Mackenzie joined Associate Sales Director at UBS Global Asset Management, from Curzon Capital. Finally Cavendish Corporate Finance appointed Kate Gibbon, David Harris, Victoria Clarke, and Nathan Harroch into its Corporate Finance team.

The Saatchi Gallery the annual Contemporary Craft Fair ‘2015 edition’, presenting 35 international galleries showcasing the most exciting examples of applied arts craftsmanship.

To all you wannabe Sir Bradley Wiggins’ out there, SPIN London – The Urban Cycling Show celebrates the urban cycling scene with international brands and smaller independent makers in fixed gear, single speed, custom and BMX bikes in attendance as well as emerging cycle fashion brands, cyclic artwork, talks, demonstrations and workshops.

If you happen to be having a stroll with your dog on Hampstead Heath this Sunday, then why not enter The Great Hampstead Bark Off 2015? With a dog-themed-cake bake off, a dog show, and prizes awarded in categories like ‘cutest pup’ and ‘best rescue’. The event, in association with charity All Dogs Matter, will also give you the chance to meet some lovely mutts in need of a new home.

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Friday, 1 May 2015

Weekly Wrap Up: The £5bn tweet

Twitter got a taste of its own medicine this week when its first quarter earnings were leaked… via a tweet. Irony aside, this was no joke: it only took four tweets of 140 characters or less to wipe more than £5bn off of Twitter’s stock in the final hours of trading on Tuesday.

So how did Twitter become the victim of its own viral reach?

Twitter was supposed to announce its first quarter earnings after close of trading on the New York Stock Exchange (where the company is listed). Unfortunately for Twitter, somebody at NASDAQ, which runs Twitter’s investor relations site, decided it would be a good idea to post the results early.

Posting the results two hours early on the investor relations website might not have been such a catastrophe if no one had noticed. But a financial data platform called Selerity uses automated technology to go through the various sources and detect important events for the markets. It’s known as data scraping and it has become a powerful tool for banks, hedge funds and proprietary trading firms – in other words, those trying to get an edge over the markets.

It wasn’t the first time Selerity struck – Microsoft is among their other victims – and it probably won’t be the last. And it isn’t just Selerity that leaks earnings – according to the Wall Street Journal, Bloomberg journalists are known for trying to find corporate news releases early. All it takes is typing in the web address for a company’s earnings release and then adjusting the URL to change the number of the quarter. So it seems that this problem is quite preventable with a password, firewall, or even waiting to post the results.

What the leak meant for Twitter was that the Company didn't have the chance to present the results in a formal statement, which would have undoubtedly positioned them more favourably. There was certainly some positive news in the report: Twitter surpassed the 300 million active users mark for the first time. Instead, the bad news got out while markets were still trading and Twitter completely lost control of the narrative.

The Twitter debacle demonstrates the power and influence of social media in Financial PR and investor relations. It’s an excellent way to get good news out fast, but also difficult to control. After all, apparently not even Twitter itself can prevent damaging tweets.

As well as multiple sets of client results this week, Abchaps hosted a Technology themed Market Lunch this week where the discussion included cyber securtiy, and a sector generalist one.

Edison announced three UK equity analyst appointments: Neil Basten joins its industrials team from USS Investment Management; Lucy Codrington joins the healthcare team from SC Strategy, and Eric Opara joins the technology team from M&G Investment. Meanwhile Fidelity Worldwide Investment appointed Sajiv Vaid to its fixed income investment team as co-manager of the Fidelity MoneyBuilder Income and Fidelity Extra Income funds.

"Viral Reach" – The measurement of the number of people who saw or shared a tweet or social media post. A Tweet can now potentially reach over 300 million people - which Twitter learned the hard way is not always a good thing.

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