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Markets in the UK were largely unmoved by the results of the country’s general election on Friday morning, with the Labour party’s victory in the polls widely priced in ahead of time.
The FTSE 100 opened just 0.4 per cent higher before dropping back shortly thereafter, trading 0.15 per cent higher mid-morning. The pound was up by around 0.2 per cent against the dollar at $1.2785.
While Labour’s election victory is second only to its landmark win in 1997 in terms of seats won, giving it a majority of around 170 seats in the House of Commons, there is little anticipation of rapid economic changes under Sir Keir Starmer’s incoming government.
“The economy won’t be vastly different under Labour as the fiscal constraints are the same,” said Paul Bluth, chief UK economist at Capital Economics.
“Labour has pledged to follow very similar fiscal rules to the Conservatives. And the combination of low economic growth and high interest rates means that fiscal policy needs to be tightened broadly in line with existing plans to meet those rules”
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Goldman Sachs is unlikely to persuade the Federal Reserve to alter its disappointing grade in this year’s stress tests should it launch a formal appeal, said regulatory experts.
Despite passing the annual test, Goldman was predicted to incur over $40bn in losses in a severe downturn, a poorer outcome than any of its major rivals. As reported by the Financial Times, the Fed’s assessment could force Goldman to hold an extra $6bn in capital, potentially limiting its lending and trading activities, squeezing profits and reducing its capacity for share buybacks and dividends.
Commenting on the Fed’s appeal process, Francisco Covas, head of research at the Bank Policy Institute, said: “The chances of success are close to zero.” He previously has called the appeals process “inadequate” and “largely ineffective”.
If successful in persuading the Fed to reduce the amount, Goldman would be the first bank in four years to overturn such a decision.
Goldman CEO David Solomon criticised the results of the Fed’s stress test, arguing they do not reflect the firm’s recent strategic changes. “We will engage with our regulator to better understand their determinations,” Solomon said in a statement at the time.
Banks have two weeks to appeal their stress test results, which were released on June 26. Goldman has not yet confirmed whether it will make a formal appeal. Since the Fed rolled out its latest version of its stress test, banks have appealed their stress test results eight times, all of which have been rejected.
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Danish police will begin court proceedings against Finland-based Nordea in connection with previously disclosed anti-money-laundering allegations, Nordea said on Friday.
The case involves transactions totalling over DKr26bn ($3.77bn). Nordea had expected legal action relating to the allegations and had set aside a €95mn provision in 2019 to cover potential fines.
Denmark’s Special Crime Unit claims Nordea breached the country’s anti-money-laundering act between 2012 and 2015 by inadequately investigating transactions made by its Russian clients and ignoring warnings about the transactions made to Copenhagen currency exchange offices.
In a statement the bank said: “Nordea does not agree with the legal assessment made by the authorities, a position supported by three separate external legal assessments, and maintains that the bank is adequately provisioned based on current circumstances.”
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DBS Group has been fined HK$10mn ($1.28mn) by Hong Kong’s regulator for lapses in anti-money-laundering and counter-terrorist-financing compliance.
The Hong Kong Monetary Authority’s investigation found deficiencies in DBS Hong Kong’s systems between April 2012 and April 2019, citing failures in monitoring business relationships, conducting due diligence in high-risk situations and maintaining proper customer records.
“The HKMA requires banks to put in place effective customer due diligence measures to combat money laundering and terrorist financing,” said Raymond Chan, executive director of the HKMA.
As reported by Bloomberg News, the fine adds to the troubles of Singapore’s largest bank, which is already embroiled in a significant money laundering scandal at home, involving over S$3bn ($2.2bn) in frozen or seized assets.
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UniCredit is open to mergers and acquisition opportunities if the financial conditions are favourable, but such moves are not a must, CEO Andrea Orcel told Italian newspaper La Sicilia in an interview published on Friday.
“If there are shareholders willing to sell at favourable economic conditions, we will evaluate the opportunities. Conversely, if we do not find targets in line with our strategic objectives, we will continue to buy back our shares,” Orcel said.
UniCredit has been linked to several potential bank mergers in Italy and Europe, including Banco BPM and Germany’s Commerzbank. In 2021, Orcel halted negotiations with Italy’s Treasury to take over Banca Monte dei Paschi di Siena.
