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Home » Daily Briefing » Daily briefing - 20 June 2019

Daily briefing - 20 June 2019

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WeWork saves money by not putting ceilings in its offices.

Lloyds Bank's head of remuneration Stuart Sinclair has been writing his name in lights with a soon-to-be-immortal quote about chief executive Antonio Horta-Osorio. The boss, according to Sinclair, is a "winner", and when staff earning £22 thousand a year see him, they think to themselves 'good luck'. The background to the story is the collosal gap between pension contribution levels for workers and bosses. British MP Frank Field has accused the Lloyds boss of greed by maintaining the maximum contribution of 33 percent to his pension while all banks are cutting their contributions. Mr Horta-Osorio responded that it was "very difficult to accept the word greed, when my total fixed compensation of 2.8 million pounds is lower than the group CEO of HSBC." (Mr Horta-Osorio had accepted a cut from 46 percent to 33 percent earlier this year, while other staff are limited to a 13 percent maximum contribution.) The Investment Association, a group of fund managers, said it will issue warnings to companies that offer executives pension contributions of more than 25 percent of salary. According to Reuters, Lloyds has the starkest pay difference among big banks, with Horta-Osorio paid 169 times as much as the median paid employee on 37,058 pounds, the company's 2018 annual report showed. The bank's remuneration committee chair Stuart Sinclair said that no one at Lloyds had complained about the numbers, and that Mr Horta-Osorio was worth it. "People like a winner, when I meet our staff who are on 22, 33 or 40,000 pounds a year they look at Antonio and see a winner...there's a charisma around Antonio that people say 'good luck' to him." We expect to see Mr Sinclair departing the bank before long.

Ideas once cherished by communist and socialist thinkers are now shaping the agendas of big banks such as HSBC. Why own when you can share? With London property prices spectacularly distorted by the rivers of corrupt money coursing through the city, even banks are re-thinking their commitment to long and high-priced leases. Enter WeWork, which gives us lucky workers a chance to "share space". Now along with renting out one room in your apartment on Airbnb so you can pay the rent, you can now also "share space" with other workers during the day. But did you expect to rock up to your cool new shared workspace and find it full of bankers? "WeWork has struck one of its biggest European deals, with HSBC agreeing to lease more than a thousand desks in London at what the shared office provider says will be the world's largest co-working space. The UK bank is to take 1,135 desks on a multiyear agreement at the US group's Two Southbank Place development in Waterloo, WeWork said." Softbank has already invested $8 billion in WeWork and its Vision Fund, largely backed by money from Saudi Arabia, had looked at taking an additional stake of up to $16 billion. But with an IPO expected soon, WeWork is stressing that its new Softbank investments will come directly from Softbank and not its Saudi Arabian and Abu Dhabi-backed Vision Fund. Or, as Dealbreaker puts it: "Yeah, but that doesn't change the reality that a performatively WOKE operation like WeWork is about to execute an IPO that will benefit the Saudi regime; the same one that murders journalists, maintains a rather 19th-century stance on gender equality, is waging a morally dubious 'war' against its neighbor and almost certainly does not ascribe to the WeWork philosophy of 'Do what you love!'"

Poland's Idea Bank has come up with some dramatic ideas to attract new customers, including branches on intercity trains and pop-up riverside branches, but it's going to need more than new designs to survive. Following losses last year of close to 500 million euros, the bank is to cut 750 staff. Chief executive Jerzy Pruski said the losses were due to legacy issues. In a statement he said: "Despite the fact that the origins of 2018's high losses came from the past and the then-unstable business model, their size requires extraordinary actions today. They are necessary to heal the bank." Idea Bank is controlled by Leszek Czarnecki, who also owns Getin Noble bank. A mooted plan in 2018 to merge the two banks was rejected by the Polish regulator, forcing Idea to make go-it-alone cuts. Last year, Mr Czarnecki accused Marek Chrzanowski the head of KNF, the financial supervisor, of seeking a bribe in return for supporting the lossmaking Getin Noble bank. Mr Chrzanowksi said he was not guilty but resigned.

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