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Republican-led efforts to penalise BlackRock for its stance on climate change have resulted in approximately $13.3bn being withdrawn from the asset manager by investment funds in Republican-leaning states. As reported by the Financial Times, the withdrawals include last week’s announcement by the Texas Permanent School Fund that it would divest $8.5bn at the end of April, the largest divestment to date by Republican-run pension funds.
According to the FT, BlackRock has responded to the pressure by employing various strategies, such as hiring a senior lobbyist with Republican ties and co-hosting events such as a power grid investment summit with Texas’s lieutenant-governor Dan Patrick, who has previously voiced concerns about the company’s use of environmental and social governance factors in investing.
Republican-led criticism regarding climate change has coincided with increased caution among US asset managers and banks about their involvement in climate change initiatives.
BlackRock recently scaled back its commitments to Climate Action 100+, a voluntary investor engagement initiative focused on climate change. Meanwhile, State Street, JPMorgan Asset Management, Pimco and Invesco have withdrawn entirely.
However, the FT notes that BlackRock has pushed back against the Texas Fund’s decision. In a letter to Aaron Kinsey, chair of the Texas State Board of Education, asking for its divestment to be reconsidered, BlackRock’s vice-chair, Mark McCombe, wrote: “Ending a long, successful partnership that has been a positive force for thousands of Texas schools and families in such a reckless manner is irresponsible.”
Despite conservative attacks and withdrawals from industry alliances addressing climate change, the Republican divestment campaign has met obstacles in Kentucky, where pension officials argued that relocating billions of dollars from BlackRock and other ESG-focused firms would breach their fiduciary duty to maximise returns.
Meanwhile in Texas concerns arose among local businesses regarding the state’s “Fair Access” laws, mandating divestment from financial firms perceived as hostile to fossil fuels or firearms. As quoted by the FT, a study by a Texas Chamber of Commerce-affiliated non-profit suggested potential drawbacks, estimating a $37.1mn loss in tax revenue and warning against government imposition on business values.
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OakNorth Bank has announced a 23 per cent increase in its pre-tax profits for 2023, driven by increased lending activities and its expansion into US markets.
The UK challenger bank, which focuses on lending to small and medium-sized enterprises, disclosed today that its annual pre-tax profit surged to £187.3mn, accompanied by a 22 per cent expansion in its loan book, which now stands at £3.8bn.
Since its US debut in the latter part of 2023, OakNorth said it has extended loans amounting to $200mn to US businesses. In a statement emailed to Bloomberg, the bank said it is also “actively exploring” mergers and acquisition opportunities to further its expansion in US markets.
Citing political and economic uncertainties in the UK, CEO Rishi Khosla underscored the significance of the bank’s US expansion strategy. He told Bloomberg that the failure of several US banks last year “has left an institutional void in terms of supporting the entrepreneurial client base”.
OakNorth has also been reportedly involved in providing software solutions to US banks while keeping an eye on strategic deals within the banking and fintech sectors.
In January, OakNorth appointed Lord Adair Turner, former head of the UK banking regulator, the Financial Services Authority, as its chair in preparation for a potential public listing. The SoftBank-backed lender, valued at $2.8bn in 2019, has said it intends to explore listing on multiple exchanges to broaden its investor base.
OakNorth has reported sustained profitability since its founding in 2015, a rare occurrence among UK challenger banks.
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Australia’s ANZ Group announced today that it has reached a settlement of A$57.5mn ($37.6mn) regarding a class action lawsuit concerning interest charges on personal credit cards. Filed by law firm Phi Finney McDonald in 2021, the lawsuit accused the bank of engaging in “unfair contract terms and unconscionable conduct”.
The lawsuit specifically targeted interest charges imposed by ANZ between July 2010 and January 2019 on credit card purchases that were claimed to be interest free. It further alleged that ANZ failed to provide clear guidelines to its interest-free credit card holders regarding the application of retroactive interest charges, leaving customers unable to determine the amounts they would be charged.
ANZ clarified in a statement that the settlement does not constitute an admission of liability and is still subject to court approval.
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Swiss financial regulator Finma has announced that Banque Audi (Suisse) SA, headquartered in Geneva and owned by Lebanese banking group Bank Audi SAL, failed to fulfil its obligations in preventing money laundering and committed serious violations of financial market laws.
As a consequence, Finma has mandated the repayment of the bank’s profits, amounting to SFr3.9mn ($4.34mn), along with the imposition of a capital surcharge of SFr19mn.
“In the course of the proceedings, the bank has co-operated with Finma and implemented measures to rectify its compliance with the law,” stated the regulator in a press release.
