Latest news with #StefaniaSpezzati
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6 days ago
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BCG says some of its staff circumvented its controls in Gaza work
BCG says some of its staff circumvented its controls in Gaza work By Stefania Spezzati and Andrew MacAskill LONDON (Reuters) -An investigation commissioned by Boston Consulting Group has found that some of its U.S.-based staff sidestepped its risk controls to do work related to the Gaza Humanitarian Foundation and to "post-war reconstruction" for the Palestinian enclave, the consulting firm said. In a response to a British parliamentary committee inquiry published on Thursday, BCG detailed the role some of its staff played in establishing GHF during late 2024 and early this year, and then the efforts made by one of its managing directors to carry out further work in March. GHF is a U.S.- and Israeli-backed organisation that began delivering humanitarian supplies to Palestinian civilians in Gaza in May, bypassing traditional aid channels including the United Nations. Its operations have been beset by violence and chaos including deadly shootings of scores of Palestinians near its food distribution sites guarded by Israeli forces, Reuters has reported. The U.N. and other humanitarian groups have refused to work with GHF, questioning its neutrality and criticising the new distribution model as militarising aid and forcing displacement of Palestinians. "We deeply regret that, in connection with the work about which the committee has asked, we did not live up to our standards," BCG said in its July 22-dated response to the parliamentary committee inquiry. BCG's role in the setting up of GHF dragged the firm into controversy and raises questions over its internal risk processes and controls. Its decision not to publish the full investigation could lead to further questions about the level of that involvement. A "largely complete" review led by law firm WilmerHale had shown that "BCG's approval processes were circumvented" by now-former BCG staff, the Boston-based management consulting firm said, in relation to work carried out earlier this year. BCG said it "will not publish the findings of this investigation" by WilmerHale. BCG said a team led by two U.S.-based and now former employees "provided pro bono support" to establish GHF between October last year and January, including its subsidiary in Switzerland, and that such work was directed by a U.S.-based security contractor, Orbis Operations. BCG said the information provided by its staff related to the establishment of the foundation was "incomplete, inaccurate and/or untruthful". SECOND PROJECT Later in March, a BCG employee started "a second, for-fee, project related to the operational and logistical effort to deliver aid", and entered into a contract with U.S.-based private equity firm, McNally Capital. BCG said it cancelled the invoice for this project "as soon as we understood more about the scope and nature of the work." Representatives for McNally Capital did not immediately reply to requests for comment. A spokesperson for Orbis said that "Orbis's involvement was limited to feasibility work," without giving further details. Despite being told by BCG's risk officer not to engage in such a project, the same employee started a team to model "post-war reconstruction" scenarios, BCG said in its letter. He did not enter into a contract with any counterparty for this work, BCG said. "This unapproved work was shared and discussed on Signal" and "those communications were not maintained," the consulting firm said. BCG added that "the only UK-based organisation with which we understand the team interacted during this work was the Tony Blair Institute," referring to post-war scenario planning for Gaza. The Financial Times reported on July 4 that BCG had modelled the costs of "relocating" Palestinians from Gaza and that the Tony Blair Institute participated in a project to develop a post-war Gaza plan. A Tony Blair Institute representative said the firm "has had many calls with different groups on post-war reconstruction of Gaza but none have included the idea of forcible relocation of people from Gaza." Solve the daily Crossword
Yahoo
17-07-2025
- Business
- Yahoo
Exclusive-Bank of England scrutinizes lenders for dollar risk amid Trump worries, sources say
By Stefania Spezzati, Jesús Aguado and Lawrence White LONDON (Reuters) -The Bank of England has asked some lenders to test their resilience to potential U.S. dollar shocks, three sources said, the latest sign of how the Trump administration's policies are eroding trust in the U.S. as a bedrock of financial stability. As the leading currency for global trade and capital flows, the U.S. dollar is the lifeblood of global finance. However, President Donald Trump's break from long-standing U.S. policy in areas such as free trade and defence has forced policymakers to consider whether the emergency provision of dollars in times of financial stress can still be relied on. Following similar demands from European supervisors, the Bank of England, which oversees banks in the City of London financial hub, has requested that some lenders assess their dollar funding plans and the degree to which they depend on the U.S. currency, including for short term needs, one of the people told Reuters. In one instance, one global bank based in Britain was asked in recent weeks to run stress tests internally, including scenarios where the U.S.-dollar swap market could dry up entirely, another of the sources said. The BoE's supervisory arm, the Prudential Regulation Authority (PRA), made the requests individually to some of the banks, the person added. No bank could withstand such a shock for more than a few days, according to one of the sources, given the dominance of the dollar in the global financial system and lenders' dependence on it. Should dollar borrowing become harder to obtain and more expensive for banks, it could hamper their ability to carry on meeting demands for cash. Ultimately, a bank that struggles to gain access to dollars could fail to meet depositor requests, undermining confidence and triggering further outflows. While this scenario is seen as extreme and unlikely, regulators and banks are no longer taking dollar access for granted. A spokesperson for the Bank of England declined to comment for this article. Representatives for the biggest UK banks with international businesses including Barclays, HSBC and Standard Chartered also declined to comment. Global banks have significant dollar exposure in their balance sheets, making them vulnerable to potential funding shocks. While the U.S. Federal Reserve has said that it wants to continue to make dollars available in the financial system, Trump's policy shifts have prompted European allies to reexamine their dependence on Washington. Meanwhile, Trump's repeated criticism of Fed chair Jerome Powell and reports the central bank chief may get fired are raising concerns of a loss of independence at the Fed and the repercussions on the dollar. The multi-trillion-dollar swap market is a critical part of the international financial system used by firms including banks to exchange other currencies for dollars to manage liquidity needs across their global networks. According to a study by the Bank for International Settlements, at the end of 2024 the notional value of currency derivatives globally was $130 trillion, 90% of which involved the U.S. dollar. A typical day sees almost $4 trillion in new FX swap contracts, according to BIS. Global banks can tap U.S. dollar deposits to withstand temporary shortfalls, one of the sources said. But regulators worry that international banks remain exposed to dollar risk, one of the people said. One of the sources told Reuters that bank leaders are particularly concerned about whether the Fed would support a mid-sized non-U.S. bank if it were to run into dollar shortage issues, where, in the past, such backing was assumed as guaranteed. The Fed has lending facilities with the European Central Bank, Bank of England and other major counterparts to alleviate shortages of the global reserve currency and to keep financial stress from spilling over into the United European central banking and supervisory officials for months have been questioning whether they can still rely on the Fed, as Reuters has previously reported. ECB supervisors have since asked some of the region's lenders to assess their need for U.S. dollars in times of stress, as they game out scenarios in which they cannot rely on tapping the Federal Reserve under the Trump administration. Earlier in June, the Swiss National Bank warned that "some banks may also face the risk of liquidity shortfalls in foreign currencies" in their balance sheets. The BoE has in the past asked banks how they would ensure a supply of dollars during times of stress, as in a 2019 system-wide check on banks' liquidity during a crisis, but the renewed focus on the U.S. currency showed how Trump's actions have revived such concerns. Reuters couldn't establish whether dollar shocks would be part of the stress test for the industry which the BoE runs every other year and whose results are expected later in 2025. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
16-05-2025
- Business
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UBS in talks with clients over FX derivative losses on Trump volatility, sources say
By Stefania Spezzati, Oliver Hirt and Ariane Luthi LONDON/ZURICH (Reuters) -UBS is in talks to compensate some clients for losses after they were sold complex foreign-exchange derivatives that wiped out much of their investments when U.S. President Donald Trump's tariffs sparked wild moves in currencies, sources familiar with the matter said. Several hundred customers of the Swiss banking giant are affected, the sources said, some of whom have seen a significant hit to their investments. They include clients in Switzerland and their combined losses run into hundreds of millions of francs, one of the sources said. Among those asking for compensation from UBS for the losses incurred are wealthier retail customers who argue they were sold complex products that they did not understand, the second source said, adding that they were only suitable for sophisticated investors. In one example, a UBS client has lost more than 50% of an investment made in February into an FX derivative designed to bet on the direction of the dollar versus the Swiss francs, according to a document detailing the performance of the investment dated May 9 and seen by Reuters. That client, together with three others, have accumulated more than 4 million Swiss francs ($4.7 million) in losses from the derivatives, one of the sources with knowledge of their cases said, speaking on the condition of anonymity because of the sensitivity of the matter. Reuters could not ascertain the total amount of clients' losses and how much UBS is considering in compensation. "The extreme volatility in the markets of the last few weeks has impacted certain investments," UBS said in a statement in response to questions. "The vast majority of our clients hold diversified investment portfolios and have done relatively well in this volatile time. We are analyzing potential unexpected effects with our clients," it added. While the scale of the client losses reported by sources so far is a small fraction of the $5.9 trillion overseen by UBS, the world's No. 2 wealth manager, it is rare for banks to consider compensation. Banks are required to ensure financial products are suitable for the clients to which they sell them. Discussions over client losses come at a sensitive time for UBS, with the Swiss bank awaiting a government proposal on how much additional capital it might have to hold to reflect its bigger size following its rescue of Credit Suisse in March 2023. A spokesperson for Swiss Financial Markets regulator FINMA said it does not comment on its supervisory activities or individual cases and that it closely monitors developments at the supervised institutions, including with partner authorities, without further elaborating. Trump's announcement of tariffs in early April sparked a sharp drop in the dollar and the biggest monthly gain for the safe-haven Swiss franc since 2015. UBS sold clients 'conditional target redemption forwards', a February prospectus of the product seen by Reuters and sources said. These are exotic derivative FX products that allow clients to buy dollars and sell Swiss francs at a more favourable rate than the prevailing market rate, but can cause big losses if the rate moves past certain levels over a set period of time, according to the prospectus. Losses accumulate and can exceed an initial investment. In the disclaimer accompanying the prospectus, UBS said that "the instruments are not suitable for all investors, and trading in these instruments is considered risky and is only suitable for experienced investors". It also added that "these instruments may involve a high degree of risk and be highly volatile in response to fluctuations in interest rates, exchange rates, and other market conditions." SUITABILITY The Swiss Association for the Protection of Investors, a non-profit organization, told Reuters that more than 30 people had come forward including via a platform launched on Thursday to report damages suffered from structured currency derivative products marketed by UBS. Most of the clients who had got in touch were wealthy private individuals with assets of more than 1 million francs, but who lacked the relevant knowledge of the products such as those sold by UBS, the association said. Swiss media including NZZ, SonntagsZeitung and blog Inside Paradeplatz previously reported that several hundred clients were affected by the losses. Target redemption forwards are typically sold to corporate clients and well-heeled and sophisticated investors. In the example of the product that caused more than 50% losses, the investor agreed to buy dollars and sell francs in $300,000 chunks if the market rate moved above or below certain thresholds, according to a prospectus for the investment dated February 10 and seen by Reuters. But below a 'kick-in level' defined in the terms of the investment, the customer is forced to buy dollars at an exchange rate that locks in a loss, the term sheet showed. Asked on an earnings call with journalists at the end of April about clients facing FX losses, CFO Todd Tuckner said that "when there's volatility, there's going to be clients that generate gains from that volatility and clients who generate losses." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
16-05-2025
- Business
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UBS in talks with clients over FX derivative losses on Trump volatility, sources say
By Stefania Spezzati, Oliver Hirt and Ariane Luthi LONDON/ZURICH (Reuters) -UBS is in talks to compensate some clients for losses after they were sold complex foreign-exchange derivatives that wiped out much of their investments when U.S. President Donald Trump's tariffs sparked wild moves in currencies, sources familiar with the matter said. Several hundred customers of the Swiss banking giant are affected, the sources said, some of whom have seen a significant hit to their investments. They include clients in Switzerland and their combined losses run into hundreds of millions of francs, one of the sources said. Among those asking for compensation from UBS for the losses incurred are wealthier retail customers who argue they were sold complex products that they did not understand, the second source said, adding that they were only suitable for sophisticated investors. In one example, a UBS client has lost more than 50% of an investment made in February into an FX derivative designed to bet on the direction of the dollar versus the Swiss francs, according to a document detailing the performance of the investment dated May 9 and seen by Reuters. That client, together with three others, have accumulated more than 4 million Swiss francs ($4.7 million) in losses from the derivatives, one of the sources with knowledge of their cases said, speaking on the condition of anonymity because of the sensitivity of the matter. Reuters could not ascertain the total amount of clients' losses and how much UBS is considering in compensation. "The extreme volatility in the markets of the last few weeks has impacted certain investments," UBS said in a statement in response to questions. "The vast majority of our clients hold diversified investment portfolios and have done relatively well in this volatile time. We are analyzing potential unexpected effects with our clients," it added. While the scale of the client losses reported by sources so far is a small fraction of the $5.9 trillion overseen by UBS, the world's No. 2 wealth manager, it is rare for banks to consider compensation. Banks are required to ensure financial products are suitable for the clients to which they sell them. Discussions over client losses come at a sensitive time for UBS, with the Swiss bank awaiting a government proposal on how much additional capital it might have to hold to reflect its bigger size following its rescue of Credit Suisse in March 2023. A spokesperson for Swiss Financial Markets regulator FINMA said it does not comment on its supervisory activities or individual cases and that it closely monitors developments at the supervised institutions, including with partner authorities, without further elaborating. Trump's announcement of tariffs in early April sparked a sharp drop in the dollar and the biggest monthly gain for the safe-haven Swiss franc since 2015. UBS sold clients 'conditional target redemption forwards', a February prospectus of the product seen by Reuters and sources said. These are exotic derivative FX products that allow clients to buy dollars and sell Swiss francs at a more favourable rate than the prevailing market rate, but can cause big losses if the rate moves past certain levels over a set period of time, according to the prospectus. Losses accumulate and can exceed an initial investment. In the disclaimer accompanying the prospectus, UBS said that "the instruments are not suitable for all investors, and trading in these instruments is considered risky and is only suitable for experienced investors". It also added that "these instruments may involve a high degree of risk and be highly volatile in response to fluctuations in interest rates, exchange rates, and other market conditions." SUITABILITY The Swiss Association for the Protection of Investors, a non-profit organization, told Reuters that more than 30 people had come forward including via a platform launched on Thursday to report damages suffered from structured currency derivative products marketed by UBS. Most of the clients who had got in touch were wealthy private individuals with assets of more than 1 million francs, but who lacked the relevant knowledge of the products such as those sold by UBS, the association said. Swiss media including NZZ, SonntagsZeitung and blog Inside Paradeplatz previously reported that several hundred clients were affected by the losses. Target redemption forwards are typically sold to corporate clients and well-heeled and sophisticated investors. In the example of the product that caused more than 50% losses, the investor agreed to buy dollars and sell francs in $300,000 chunks if the market rate moved above or below certain thresholds, according to a prospectus for the investment dated February 10 and seen by Reuters. But below a 'kick-in level' defined in the terms of the investment, the customer is forced to buy dollars at an exchange rate that locks in a loss, the term sheet showed. Asked on an earnings call with journalists at the end of April about clients facing FX losses, CFO Todd Tuckner said that "when there's volatility, there's going to be clients that generate gains from that volatility and clients who generate losses." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
06-05-2025
- Business
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From rebound to rescue: how Argentex collapsed on untested currency swings
By Charlie Conchie, Stefania Spezzati and Nell Mackenzie LONDON (Reuters) -In early April, Argentex's chief executive Jim Ormonde and chief financial officer Guy Rudolph were buying shares in the London-listed foreign exchange broker as the stock rebounded from a March slump. Ormonde, installed 18 months earlier amid a flagging stock performance, said in an April 2 statement on the company's annual results that Argentex had "reset" in 2024 and was now "well placed to return to profitable growth." In the year to date, its shares had rallied more than 50%. What followed was a dramatic swing in financial markets and a dizzying decline in the company's liquidity position. Within weeks, Argentex would become one of the first high profile corporate victims of market volatility set off by the global trade war. IFX Payments took over Argentex in a rescue deal for just a fraction of what it had been worth, and the CEO and CFO have gone. Argentex declined to comment. UK-based IFX did not respond to requests for comment. April 2 was also "Liberation Day," when U.S. President Donald Trump unveiled sweeping reciprocal tariffs against numerous countries, triggering heightened volatility for trading firms as currency markets moved widely. The safe-haven Swiss franc surged roughly 7% against the U.S. dollar during April, while Deutsche Bank's currencies volatility index, a measure of currency swings, rose as much as 28%, to its highest level in two years. Argentex had navigated previous big market routs such as the fall of sterling against the dollar in 2022, Brexit and the COVID-19 pandemic. But while it had done scenario modelling and stress testing, it hadn't planned for the dollar's rapid devaluation against many major currencies, according to two people familiar with the company. They spoke on condition of anonymity because the information was private. Argentex was most exposed to a sudden strengthening of the pound, Swiss franc and the euro against the greenback, one of the people said. ZERO-ZERO LINES In its 2024 annual report, Argentex said that "regular stress testing is performed to ensure the group has sufficient collateral pledged and other unencumbered resources to cover its current and potential obligations in the event of a significant market movement." Yet when the market moved against it, Argentex was left exposed to cash calls from its liquidity providers and unable to call margin from many of its clients due to its use of zero-zero lines, according to the person.
