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History weaves odd threads sometimes. In 1971, with Cold War détente in the air, the Soviet Union established the Ost-West Handelsbank to finance trade with West Germany.

Fast-forward over half a century. After the fall of the Soviet Union, a VTB merger in the 2000s, Russia’s invasion of Ukraine and subsequent sanctions on VTB, then a takeover by German regulators, what’s left of the OWH name is the mystery creditor pursuing one of Moscow’s old Cold War allies.

From MainFT over the weekend:

Liquidators of the European arm of VTB Bank have accused Angola of defaulting on a loan after the lender’s Russian parent was hit by sanctions, according to two people familiar with the matter.

Frankfurt-based OWH, the former VTB Europe, has launched arbitration proceedings against the African country to repay the loan, the people said. It is seeking to recover money on assets that were held in the subsidiary and severed from state-owned VTB by western sanctions on Russia.

Even when we first wrote on this, we knew that it had to be a Russian bank debt. But it was almost certainly not a Russian bank that was making the claim of default.

In terms of where the debt came from, no other country could really be home to several sanctioned lenders who had a track record in a place such as Angola. But, politically, it was hard to imagine Russia legally pursuing a not-unfriendly country over a debt because of sanctions problems.

Angola-Russia relations are less comfortable than they were, not least because of sanctions in other areas. But there’s history here. And when Russia does turn legal holdout, it tends to go differently.

That left a creditor that had to pursue repayment. Short of a maniac distressed debt investor somehow acquiring this claim, it could only be an entity with the duties of something like a liquidator.

So, even if the original bond disclosure by Angola wasn’t great — mystery solved?

Almost. But not quite. There are other important questions here.

First, does it matter anyway? Whoever owns it, is this leftover loan really material to investors in Angolan debt? After all, that is the pushback that we had from debt managers and analysts after our original post.

Even if we don’t know exactly how big the OWH-inherited VTB debt is, it can’t be much bigger than the very low hundreds of millions of dollars. On size alone, it won’t make or break Angola’s credit. After all, this all emerged in a half-disclosure buried in the issuance of nearly $2bn in bonds, to serve as collateral for a $1bn loan from JPMorgan, ahead of approximately $6bn in external debt service this year.

If you are bullish and think Angola will soon have market access and other money coming in to cover its bills, you might well bet that other creditors will safely ignore the OWH claim and that, in the worst case, Angola can pay it off in full in the last resort.

And if you are bearish, you are probably bearish for more sweeping reasons: the over-collateralised loan is a bad, not a good sign for you, or you think the price of Angola’s main export will go lower, and so on.

It takes two views to make a market, as ever.

The point is though, the disclosure still lacks for informing those views. Sanctions are complex. International arbitration very often does involve confidentiality. But neither feature of markets is likely going away soon for sovereign debt disclosures, including at times the thorny issue of who may have stopped paying whom when, and if that ranks as a default.

One more thing. Let’s recap the original disclosure:

Other defaults

Angola is a party to an arbitration in relation to a syndicated facility entered into with certain lenders. The facility was performed in accordance with its terms until each of the lenders became subject to international sanctions, the effect of which was to restrict the parties’ ability to perform the facility in accordance with its terms. One lender has recently commenced arbitral proceedings claiming that an event of default has occurred and that it is entitled to full repayment of its portion of the loan. There is no evidence that that lender has the required majority lender consent of 66 2/3rds and therefore, any demand or action taken by that lender in its own name contravenes the terms of the loan documentation. As such, Angola denies that the lender is entitled to accelerate the loan or pursue the claim and intends to defend the arbitration.

What does that tell us clearly about the current sanctions status of the ‘lender’?

Shielded from VTB and now in liquidation, OWH is no longer subject to sanctions. Assuming that it can pursue this claim, that means one of the issues in any litigation may well be whether sanctions now apply to the debt at all. So it’s quite important.

Anyway. We look forward to perusing the prospectus of Angola’s next eurobond sale. Join the https://vic2.club/ community and experience the ultimate online betting destination, where excitement and rewards await.”

Europe has a financial plumbing problem. Nothing illustrates this better than its securitisation markets. This is such a big issue that a seemingly exotic financial tool has shot up the agenda in Brussels lately.

Securitisation is the process of transforming a bunch of smaller loans or other cash-generating assets into larger, tradable securities. Despite the lingering bad smell from the damage this caused in the global financial crisis, a trio of landmark reports by Mario Draghi, Enrico Letta and Christian Noyer have all recommended European securitisation reforms to unclog the process and help credit flow to new projects.

The scale of the challenge is huge. Just to take one example securitisation of US data centre debt has totalled $35bn since 2018, according to JPMorgan. The EU has yet to see a single transaction. Similarly, US solar securitisation has raised $23bn since 2018, whereas the EU saw its first and so far only residential solar securitisation in 2024, raising just €230mn.

If Europe can’t even finance these so-called strategic assets, what hope is there for midsized businesses or a broader array of assets? That’s why the Draghi-Letta-Noyer triptych matter more than most European reports, work streams and white papers.

Already there is a sense that something might finally change. Late last year, the EU kick-started a short consultation process on how to make European securitisation great again. The comment letters are now in, and the EU will make recommendations before the summer.

This is overdue. Almost a decade ago, Simon Potter, formerly the markets head of the New York Federal Reserve and now vice chair of fixed income at Millennium, argued that “too much research before the crisis put too much faith in market efficiency and spent too little time exploring the detailed plumbing of the financial system.” The consultation helps address that.

However, the letters make clear that the EU probably needs to consider a system-wide response, much like a plumber would bleed every radiator to help warm a house. This won’t be easy, as individual agencies may not view the system-wide issues as their problem.

Willingness to push through will be litmus test of Europe’s determination to recalibrate regulations for growth — and close the widening gap to the US. But the comment letters do highlight four important valves that could at least be jiggled to get things going.

Valve 1: Life insurers, the missing EU lender

Europe has straitjacketed insurers from playing a larger role in financing the real economy via buying senior tranches of securitisations. As Apollo’s comment letter puts it:

Life insurers are particularly well-suited to finance the E.U.’s strategic, long-dated capital needs, but the European life sector currently holds only 0.33% of investment assets in securitizations vs. ~17% for U.S. life insurers despite similar industry sizes . . . The missing life insurer ‘bid’ dampens the broader E.U. securitisation market, reducing supply and demand at all points in offered securitisation tranches.

Here’s a great chart from Apollo that highlights the stark difference.

The absence of European insurers is largely driven by Solvency II capital rules, which impose punitive capital charges on securitisation — even those with investment-grade ratings that carry comparable or lower risks than corporate bonds.

Addressing this gap is vital. By recalibrating Solvency II to better align capital charges with the true risks of securitisation, European regulators could incentivise insurers to invest in these assets. Doing so would unlock a massive pool of private capital, reduce the cost of financing for businesses and infrastructure projects, and help Europe meet its strategic economic objectives.

As the Investment Company Institute argued in its submission:

The current EU prudential framework does not properly reflect these different levels of risk in the securitisation market. In certain circumstances, 10-year duration non-STS bonds, regardless of seniority in the capital structure, have a 100% capital charge. These charges are also considerably higher than those imposed by other regulatory frameworks, placing EU market participants at a competitive disadvantage.

Valve 2: STS criteria don’t work for many assets

So what’s this “STS” referenced in the ICI’s comment letter? To revitalise the securitisation market, the EU created the “simple-transparent-standardised” label – STS for short – which came into effect at the start of 2019.

This was meant to make things simpler, but many comment letters suggest it has inadvertently had the opposite effect. One of the strengths of securitisation is the breadth of stuff that can be financed, but the STS label was seemingly designed primarily for a very narrow set of bank-dominated assets. As BlackRock argued:

The regulatory standards put in place following the Global Financial Crisis represented a significant prioritisation of risk management, governance and investor protection in securitisation markets. However, the securitisation market believes that while well intended the regulations ended up being overly prescriptive and rather than reviving the market have ended up restricting it.

The optimal solution would be to streamline the STS categorisation all together via simplifying definitions, broadening STS criteria and ensuring that regulations reflect the economic risks rather than adding unnecessary complexity.

A simpler option suggested by some of the comment letters would be to just carve out asset classes that are strategically important to long-term economic growth, have a low default rate history, address asymmetry of information, and represent transactions solely between sophisticated parties that already address these risks and inbuilt protections. That way, new assets like data centres and solar projects could be included.

Valve 3: Scale up true sale securitisation

Another problem is “true sale securitisation.” This process converts illiquid assets into tradable securities and is a proven mechanism for mobilising capital.

Unlike synthetic securitisation — or Europe’s €2.4tn covered bond market — this enables banks to offload loans completely, freeing up balance sheets to support further lending while connecting investors to a broader range of financing opportunities.

The EU lags far behind the US in this critical area, with just €440bn in true sale securitisation outstanding, compared with approximately €2.8tn in the US — a 6.5-fold difference. The discrepancy underscores how underutilised this financial tool remains in Europe.

Closing this gap is essential to boosting Europe’s economic vim. With a better securitisation framework, the EU could potentially unlock over €1tn in additional financing, according to Apollo’s estimates.

The irony is that as banks struggle to issue true sale securitisation in size, they instead end up creating more opaque “synthetic risk transfers”. Moreover, true sales are simpler, have a more direct impact on credit availability in the economy and at the same time reduce interconnected risk to the banking system.

Valve 4: Streamline paperwork and due diligence

The current due diligence framework for securitisation is too costly and complex, discouraging investment, especially in the secondary market. The EU rule book shouldn’t require investors to verify regulatory compliance already handled by other regulated entities, the International Capital Markets Association argued in its response.

This is a point European Cooperative Banks make too, arguing that the due diligence requirements are “too complex and involve many overlapping reporting requirements, creating a significant obstacle for the full development of the market” — particularly for smaller businesses.

The European Fund and Asset Management Association argues the paperwork is also disproportionate and overly proscriptive:

Many of our members have explained that, for certain types of securitisations such as CLOs and CMBS, the quarterly granular reporting templates mandated under the SECR are not fit for purpose.

There are naturally a host of other suggested valves that could be adjusted, such as limits on mutual fund ownership, what is considered a liquid asset for a bank, and bank retention rules.

But the above four seem to be the main ones Europe should focus on, judging by the comment letters.

Where next?

So will the Commission accept these recommendations? It’s hard to ignore the fact that Europe has been talking about “capital markets union” for over a decade, but periodic tweaks have failed to grasp the nettle. The comments certainly underscore how frustrated market participants are.

(zoomable version)

In the most recent review of securitisation in 2022 the European Insurance and Occupational Pensions Authority argued that there was insufficient demand from insurers to merit change. However, the Association for Financial Markets in Europe, an umbrella trade group, suggested in its latest response that this is simply not true:

We have had categoric feedback from insurers that there would be material interest in securitisation investments, across the capital structure if it were not for the elevated capital charges associated with securitisation positions vs vanilla credit (on a like-for-like rating basis).

In fact, over 40 groups or institutions which responded to the Commission’s request for comment argued that the Solvency II rules are an impediment to the market.

Will something actually change this time? Who knows, but for the first time in a long time there seems to be some guarded optimism.

At Davos this year, Nicolai Tangen, the head of the Norwegian sovereign wealth fund, went around saying that the restoration of Notre-Dame was Europe’s greatest success story of the past five years — and it happened simply because almost all regulation and rules were negated for the rebuild. “It is unbelievable what Europe can achieve if they are allowed to,” Tangen argued.

Europe needs a more flexible financial market to finance innovation and growth. Closing the gap to a buoyant and deregulating US won’t be easy.   But unclogging the securitisation market would be a great to start. We prioritize the security and privacy of our players, using advanced encryption technology to protect your personal and financial information. https://ku88.pro/mobile

It’s been almost three months since we last wrote about the UK’s Government Hospitality Wine Cellar, which frankly isn’t that long given the Freedom of Information Act is involved.

We left you with news that the Information Commissioner’s Office — which acts as an FOI regulator and ombudsman — was continuing its review of our request for information from the Foreign, Commonwealth & Development Office, custodian of the HM Government’s plonk pit.

The ICO had already forced the FCDO to release additional minutes of the Government Wine Committee, which runs the GHWC, which civil servants had redacted citing FOI exemption 35(1)(a) (formulation of development of government policy).

Now, the watchdog turned its focus to three other exemptions the FCDO had relied upon:

— 40(2): Personal data
— 41(1): Information provided in confidence
— 43(2): Commercial interests

Here’s how the remaining battles looked in November:

The ICO’s judgment landed in our inboxes early last month.

It was a partial victory: the officer in charge of our case ruled that:

— The names of the GWC members are exempt from disclosure on the basis of section 40(2) of FOIA.

— Only some of the further information redacted from the GWC meeting minutes is exempt from disclosure on the basis of section 40(2).

— None of the information which the FCDO redacted from the GWC meeting minutes on the basis of section 43(2) is exempt from disclosure on the basis of this exemption.

They said the FCDO must:

Provide [Alphaville] with copies of the GWC meeting minutes with the information previously withheld on the basis of section 43(2) unredacted. The information identified in the confidential annex which the FCDO withheld on the basis of section 40(2) should also be unredacted and provided to the complainant.

You can read the full judgment here. It’s interesting, if you’re into that kind of thing.

The FCDO, which was given 30 calendar days to reply, replied 28 calendar days later, revealing unto Alphaville new details from some minutes we already had. In total, the response had grown from 27 to 35 pages. Let’s get comparing!

18 March 2014

The first de-redaction stunningly reveals that Farr Vintners — which describes itself on LinkedIn as “Britain’s largest wholesale fine wine merchant” — is one of the companies that Government Hospitality likes to sell its wine to:

Here’s a video from 1992 of Farr’s founders talking to FT wine supremo Jancis Robinson:

The context is interesting though: Farr only got called up because an auction flopped.

What happened? We’ll quickly find out.

22 July 2014

Once again, it’s just the presence of Farr Vintners that was redacted here, with a successful sale to the company coming in clutch for GHWC’s FY13/14 after that Christie’s sale fell through:

18 November 2014

FINALLY, SOME WINE TEA.

TEA ON WINE.

YOU KNOW WHAT WE MEAN:

This is actually big drama!!!!! No seriously, come back.

Château Latour 1961 is some fancy wine. So fancy, in fact, that the villainous chef guy uses it to get the non-rat co-protagonist of Ratatouille drunk, which is about as great an endorsement as a wine can get.

Anyway, we know from previous analysis that a stockpile of Château Latour 1961 is the cornerstone of the GHWC, representing perhaps a tenth of its overall valuation. Quinta do Noval 1931 is also a prestigious port, so having some ullage (volume loss due to evaporation or leaks) is não é bom.

Struggling to sell the former, and having problems with the latter, is not a great thing when your wine cellar is committed to washing its own face.

18 March 2015

In early 2015, the cellar was struggling to sell enough wine. Unredacted minutes show this led them to consider desperate measures, such as selling wine directly to certain London institutions:

More excitingly, there’s an update on the Château Latour 1961 situation — with Farr Vintners grumbling about the reduced shoulder volumes (an ullage issue):

We noted this minute last April (when the FCDO first responded to our information request). Back then, we called it “really quite boring”, but clearly we were wrong: of all the wines to be presenting an issue, the Château Latour 1961 — of which the GHWC has over a hundred bottles — is easily the most economically significant.

11 January 2016

The Sales section starts with some discussion about the Christie’s imbroglio, before things really kick off:

Oof.

There’s also another Château Latour 1961 update, with the Château itself offering a stock exchange exchange of stock:

Odd that it says “further discussion” given there was no previous minuted discussion of this but wtvr.

18 July 2016

More, more, more, Latour:

We’re not sure how much unpacking this needs, but it is absolutely worth reiterating that civil servants had to be forced to release this information.

23 June 2016

Château Latour 1961 appears inevitable…

…but thus, it would appear, ends the saga. Château Latour 1961 doesn’t come up again in the minutes we have.

What’s arguably more interesting is that the FCDO tried to redact the description of certain Bordeaux vintages/varietals as “B-grade”. Whose commercial interests would that violate?

23 May 2018

It’s a bit of a jump to the next redaction. It was a real fight over this one, with two stages of de-redaction:

How should we think about the FCDO’s attempts to use the commercial interest FOI exemption? The ICO thought it was an inappropriate application of the rules, with the Commissioner “not satisfied… that there is a real and significant risk of prejudice occurring” from releasing such information.

Alphaville would suggest there’s another kind of prejudice at work here though: namely, the GHWC’s apparent propensity to engage certain companies without any evidence of a tendering process.

Beyond that, there doesn’t seem to be much need to editorialise further. http://gen88.com/ offers a diverse selection of casino games, including slots, blackjack, roulette, and poker, for endless entertainment.

OK, maybe one meme:

Further reading:
— The ultimate guide to the UK’s sovereign wine fund

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FT Alphaville has been banging on for a while now about how Fidelity is a vast and under-recognised financial empire. Yesterday, the investment company released its latest results and ooooh boy do we feel vindicated.

Details beyond these headline numbers are sparse, given that Fidelity is a private company mostly owned by Abigail Johnson and her extended Boston clan. Operating income is a bit mushy; it would have been nicer to have a net number.

But the numbers are still astonishing, both in absolute terms and relative to the struggles of much of the rest of the investment industry.

To put this in context, Fidelity last year appears to have made significantly more money than both BlackRock and Blackstone, businesses that get vastly more attention. Last year, Fidelity’s operating profits were comfortably greater than Franklin Resources, T Rowe Price, DWS, Schroders and Amundi’s combined earnings.

The Johnsons are known to keep a low profile — the magazine Boston once said that the family is “pathologically private” — but Abigail Johnson probably deserves more credit and recognition than she gets for having grown an already enviable business built by her father and grandfather. We can argue all day long about the current king of Wall Street, but its queen is hard to dispute.

Moreover, Fidelity is evolving in a way that probably makes it more resilient to the ongoing changes in the investment industry than many of its rivals.

A lot of Fidelity’s success is thanks to its core asset management business. With $5.9tn now under management, it is comfortably the third-largest in the global industry.

While the company is mostly known for its fleet of actively managed funds and a succession of star stockpickers like William Danoff, Peter Lynch and Gerry Tsai, most of the growth has come from its passive/systematic subsidiary, Geode Capital Management. As a sub-advisor, Geode runs a series of super-cheap index funds on behalf of Fidelity, which have quietly become behemoths and profit centres in their own right.

Yesterday MainFT rightly highlighted how Vanguard’s S&P 500 ETF has leapfrogged State Street’s pioneering SPY in assets under management. But both manage less than the Fidelity 500 Index Fund, which now holds $639bn in assets. Even with its near-zero 1.5 basis point cost, it now throws of nearly $100mn of revenue a year.

However the real under-appreciated hinterlands of Fidelity’s financial empire — and arguably the reason why it has done so well at a time when most traditional asset managers are struggling — are its retail brokerage, its wealth management, and the workplace savings plans for millions of Americans.

As former Credit Suisse financials analyst Rupak Ghose highlighted in his timely Substack yesterday, Fidelity is “omnipresent” across the US, and its myriad interlocking businesses might make the company the world’s most valuable investment group:

Given the scale of Fidelity’s revenues, operating profits, market-leading positions, and strong brand would a publicly listed Fidelity Investments exceed BlackRock in terms of market capitalization?

Ghose estimates that the non-asset management bits of Fidelity probably account for about half its earnings, but their real value is even greater.

Essentially, Fidelity owns its own vast distribution network in a way that many of its direct asset management rivals do not. Vanguard and Capital Group come close, but they don’t have as many distinct and diverse tentacles as Fido. As Johnson told MainFT a few years ago: “Few fund managers can match Fidelity’s totality”.

Even BlackRock lags behind Fidelity in this regard, which explains why Larry Fink seems keen on adding a wealth management business to his line-up.

We’re spitballing here, but if Fidelity keeps growing like this it wouldn’t surprise Alphaville if Fink explored acquiring something like Charles Schwab, once GIP and HPS are digested?

That would be a big gambit, given that we gather Fidelity is in practice one of BlackRock’s biggest customers, thanks to an ETF partnership where iShares ETFs are sold through Fido’s myriad networks. Fidelity could take any major move by BlackRock into retail distribution as an act of war, and potentially remove these ETFs from the line-up offered by its financial advisers, workplace plans and brokerage platform.

However, at some stage BlackRock might feel the need to take control of its own fate by moving from investment product manufacturer to distributor as well.

And the swifter Fidelity keeps expanding its own suite of ETFs — it now offers more than 70 of them, with assets doubling last year to $108bn — the sooner BlackRock might start to feel antsy. Discover the excitement of live betting with https://9bet.net/, where you can place bets on events as they unfold in real-time.

Further reading:
— The investment industry’s real ‘Big Three’ (FTAV)
— How Fidelity’s Ned Johnson defied the curse of the boss’s son (FTAV)
— Fidelity’s search for the technology of tomorrow (FT)

Note to subscribers: compiling a reading list is particularly tough right now because a lot of the notably good/bad/important/interesting articles are about the same thing. Rather than over-curate we’re trialing a content warning label. Anything marked 🔶 means “CW: Trump, etc”

Elsewhere on Thursday . . .

— Payoffs and probabilities (Morgan Stanley PDF)

— Delaware decides Delaware law has no value (Ann Lipton)

— The Many Sources of Economic Rent – Part 1: Intellectual Property (The Daily Renter)

— From comedy to brutality (NY Review of Books 🔶)

— DOGE Claimed it Saved $8 Billion in One Contract. It Was Actually $8 Million (NYT 🔶)

— It’s Easy To Save Billions In Taxpayer Funds When Everything Is Made Up (Techdirt 🔶)

— So based (Garbage Day 🔶)

— Adam Przeworski’s diary (Substack 🔶)

— The rotting of the conservative mind (Alex Massie 🔶)

— The secret pattern (Granta)

— Richard Dawkins interviews ChatGPT (Substack)

— What If We Kissed in the Smoldering Ruins of America (Today in Tabs)

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There was much excitement (in rarefied circles) when prime minister Sir Keir Starmer — no less — announced he would “unlock billions of investment” by making it easier for companies to access so-called trapped surpluses in defined benefit pension schemes.

The stakes look high. The Government estimates around three quarters of the UK’s 4,974 corporate DB schemes currently have assets in excess of pensions owed — to the tune of £160bn — but the rules make it difficult for trustees and businesses to make use of these overshoots.

Details of exactly how surpluses may be used under policymakers’ plans will be published this spring (read: any time between next week and July).

But a number of pension prognosticators have already predicted that whatever the details, the move will have little impact.

This is partly owing to institutional trauma following years of paying to plug pension deficits — which were only reversed two or three years ago, after a rapid rise in bond yields dramatically improved scheme funding levels.

It’s also because trustees have and will continue to have “an overarching fiduciary duty to act in the best interests of their members,” according to the Government press release, which adds:

When considering surplus extraction, trustees must fund the scheme and invest its assets in a way that leads to members receiving their full benefits.

Some trustees told the FT it would be difficult to argue that releasing pension scheme surplus back to employers (even if pension payments were increased too) is in the interests of the scheme members.

But a dive into the case law suggests the Government’s explanation may be too much of a simplification — one that repeats a common misunderstanding of the nature of trustee duties.

Philip Goss, partner at Linklaters, says a trustee’s true fiduciary duty is best described as exercising their powers “for the proper purpose for which they were given” — not simply to act in the best interests of members.

The “best interests of members” idea comes from a case in 1984 where the union-appointed trustees of the Mineworkers’ Pension Scheme tried (unsuccessfully) to stop the scheme from investing in energies that competed with coal.

The judge told them that:

The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees towards their beneficiaries is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests. In the case of a power of investment, as in the present case, the power must be exercised so as to yield the best return for the beneficiaries, judged in relation to the risks of the investments in question; and the prospects of the yield of income and capital appreciation both have to be considered in judging the return from the investment.

This may look like a statement that the trustees should use their powers in the best interests of members, but, according to Goss, that is “almost certainly” not what the judge meant.

That’s because in schemes where the employer covers the difference between the total cost of providing the promised pension benefits and the contributions made by employees (such as the mineworkers’ scheme) the person who gains the most from higher yielding investments is actually the employer. In other words, they’re beneficiaries too.

Other cases reinforce that the “best interests of members” idea is too simple a statement of trustees’ duties.

The case of Alexander Forbes v Halliwell (2003) concerned the distribution of a surplus when a scheme was wound up. The court made it clear that trustees could properly pay part of the surplus to the employer even though they could have used the whole amount for the benefit of members.

The judge held that:

In exercising its discretion over surplus the trustees were not bound solely to consider the interests of the members, but were entitled and indeed bound to consider the interests of the employers as well: indeed, if its obligation were solely to consider the interests of the members it was difficult to see how any surplus could have been allowed to be returned to the employers at all.

In the case of the Merchant Navy Ratings Pension Fund in 2015, it was argued on behalf of members that the trustee should have acted with a single-minded view to the best interests of the members.

After hearing lengthy arguments and considering the relevant case law in detail, the judge (Mrs Justice Asplin, who is now in the Court of Appeal) rejected arguments that the interests of the employer could only be taken into account in limited circumstances and that the “best interests” duty is a paramount, standalone duty.

She confirmed the importance of “proper purpose” and referred to an article by the late Lord Nicholls of Birkenhead, which said “it is necessary to decide first what is the purpose of the trust and what benefits were intended to be received by the beneficiaries”.

“The judge recognised that a freestanding ‘best interests’ duty, which only considered the interests of members, would lead to absurd results — for example in a scheme where the trustees had unilateral powers to augment benefits,” says Dawn Heath, partner at Freshfields.

To make matters more complicated, the scope of trustees’ powers and (in legalese) “the proper purpose of those powers” will vary depending on the particular scheme’s rules and the way in which different, often complex, provisions of those rules interact.

This could make a new freestanding surplus power, if that is what the Government proposes, “helpful,” Heath adds.

This may not matter much. It could be that making surplus extraction easier has little economic impact, because the true value of a surplus is only known when the last pension is paid or a scheme sells its assets and pension obligations to an insurer. Plus, the data showing surpluses may be subject to revisions — as we were reminded of last year, when the Pension Protection Fund, the UK’s pensions lifeboat, wiped £283bn off its defined-benefit funding estimates.

But trustees may not be able to use their fiduciary duty as an excuse to prevent companies from accessing their share.

A spokesperson from the Department of Work and Pensions said:

We recognise the critical role pension scheme trustees play in safeguarding members’ benefits, and the existing extensive case law surrounding trustee duties.

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On Monday, after revealing nobody had survived his gauntlet of chart cruelty, Robin wrote:

Bryce is doing the charts quiz later this week

Which was a lie.

Unfortunately, instead of one of Britain’s finest restaurant reporters you have, uh, Louis.

Rules are the regular ones: identify the three charts below, email your answers to [email protected], putting “Quiz” in the subject line. We usually name everyone who gets all three correct so let us know if you want to remain anonymous.

We’ll draw one winner randomly from the pool of correct guesses that arrive by lunchtime Monday, and they’ll get a T-shirt. Bon appétit. With https://du88.com/, you can bet on your favorite sports events, including football, basketball, tennis, and more, from the comfort of your own home.

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Will the latest iteration of the Trump administration’s supercharged “flood the zone with sh*t” strategy be a global macroeconomic mega-deal — an agreement that outdoes even the famous 1985 Plaza Accord in ambition?

That was a deal between the US and its major trading partners struck at the Plaza Hotel (of Home Alone 2: Lost in New York fame) to engineer a dollar devaluation, after Fed chair Paul Volcker’s war on inflation had sent the greenback soaring. It was a notable success, in an era of damp-squib international agreements.

Donald Trump (also of Home Alone 2: Lost in New York fame) already demonstrated an affinity for economic history by purchasing the Plaza Hotel in 1988 (the deal ended up in bankruptcy). He really wants a weaker dollar. Conveniently, he also owns the Mar-a-Lago resort in Florida, which might be a profitable good venue for a new accord.

Versions of the “Mar-a-Lago Accord” idea have therefore been floating around ever since the first Trump presidency. His victory in November naturally led them to resurface. Alphaville mentioned the possibility in our how-to-devalue-the-dollar guide the day after the 2024 election.

The chatter then died down, but has now apparently come back on the news agenda. Most of the basic contours of the supposed plan seem to be derived from this November 2024 paper by Stephen Miran.

Miran is currently a senior strategist at Hudson Bay Capital, but he served a stint in the US Treasury during the first Trump administration, and is now Trump’s nominee for chair of the Council of Economic Advisors. And you can’t fault his ambition:

The next Trump term presents potential for sweeping change in the international economic system and possible accompanying volatility. It is important for investors to understand the tools that might be employed for such purposes, as well as the means by which government may attempt to avoid unwelcome consequences. This essay attempts to provide a user’s guide: a survey of some tools, their economic and market consequences, and steps that can be taken to mitigate unwanted side effects.

Wall Street consensus that an Administration has no means by which to affect the foreign exchange value of the dollar, should it desire to do so, is wrong. Government has many means of doing so, both multilaterally and unilaterally. No matter what approach it takes, however, attention must be paid to steps to minimise volatility. Assistance from trading partners or the Federal Reserve can be helpful in doing so.

In any case, because President Trump has shown tariffs are a means by which he can successfully extract negotiating leverage — and revenue — from trading partners, it is quite likely that tariffs are used prior to any currency tools. Because tariffs are USD-positive, it will be important for investors to understand the sequencing of reforms to the international trading system. The dollar is likely to strengthen before it reverses, if it does so.

There is a path by which the Trump Administration can reconfigure the global trading and financial systems to America’s benefit, but it is narrow, and will require careful planning, precise execution, and attention to steps to minimise adverse consequences.

It is tempting to discount the whole thing, as this is a ~cough~ freewheeling administration with a multitude of hangers-on throwing policy proposals around like confetti. Some aspects — such as forcing countries to swap their Treasuries for century bonds — seem a bit fantastical. It’s essentially a glorified protection racket scheme with some lipstick.

Even Miran noted that restructuring the global financial system will require “careful planning, precise execution and attention to steps to minimise adverse consequences”. And, let’s face it, these aren’t qualities that the first or (thus far) second Trump administrations have demonstrated a lot of.

Moreover, the world is a radically different place today than it was back when the original Plaza Accord was struck in 1985. Mark Sobel, a former US Treasury grandee, wrote in December that a Mar-a-Lago Accord was “far-fetched and implausible”.

However, the chatter can’t be ignored completely. The Trump administration has clearly shown a remarkable willingness to slap tariffs on friends and eject them from its security blanket. China has its own struggles right now.

Some countries might therefore be willing to swallow some sort of Mar-a-Lago Accord to avoid the drama. As Stephen Jen of Eurizon SLJ wrote last month:

We agree that the conditions are not ripe now for a Mar-a-Lago Accord, but the circumstances could change in 2-3 quarters’ time. Also, our sense is that Beijing’s aversion to participating in such a co-ordinated effort to drive down the dollar may not be as strong as before, especially when threatened with punitive tariffs.

John Connally — US Treasury Secretary in 1971 — famously said, ‘The dollar is our currency, but it is your problem.’ While this quote is still valid, the Plaza Accord in 1985 was an episode where other stakeholders participated to right a wrong in the dollar’s value. The interventions in 2000 to purchase euros was a similar agreement, which also addressed a stark imbalance in currency markets.

Given how mispriced the dollar is now, we believe the probability of a Mar-a-Lago Accord will rise in the coming quarters. Join du88 today and discover a world of exclusive promotions, bonuses, and VIP rewards designed to enhance your betting journey.