Friday, May 08, 2015 at 2pm

Business News Weekly Roundup: May 8 2015

UK business’ immediate reaction to election results and other news.

Where next for UK business? Early gains follow election results

By all accounts, research into voting intentions suggested that yesterday’s UK general election would be one of the closest on record and certainly not one that could result in a majority for any single party.

It now seems that these predictions were grossly inaccurate and that the Conservative Party under David Cameron will continue to govern the world’s fifth largest economy and second-favorite MBA destination - this time without the need for a coalition with another party (at least for the time being – the expected majority appears slim at the time of writing).

In the economic heart of London, UK business and City traders responded positively to the news as soon as voting came to an end last night and an ‘exit poll’ heralded this morning’s results.

Most notably, the UK’s pound sterling registered its biggest jump against the US dollar in more than five years, as an analyst quoted in a Guardian report explained:

“The pound had a difficult day yesterday, without losing too much ground but surged on last night’s early exit poll.” In addition, the FTSE 100 rose an initial 150 points before later falling back to a rise of over 100. The FTSE 250, meanwhile, reached an all-time high.

Avoiding a highly anticipated stalemate, which would have led to lengthy negotiations over potential government coalitions and another election towards the end of the year a distinct possibility, is something that offers greater short-term stability for UK business – regardless of individuals’ political preferences.

Yet, the main opposition – Labour – had promised to enact policies that would have made life more difficult for a number of UK business sectors, including banks and energy companies. Such companies have already enjoyed gains in shares – Lloyds Banking Group (state-owned) and British Gas (under Centrica) were up 5% and 7% respectively.

However, the sense of relief felt by many will undoubtedly give way to debates over the UK’s future in Europe (with a potential in-out referendum on the EU in the offing under a Conservative government) and of Scotland’s place in the UK (after the huge gains made by the Scottish National Party) – both of which will have huge implications for UK business and any who hold interests there.

Banking industry dissatisfaction over pay

Is it a surprise that those working in the banking industry aren’t making as much money as they would like, or even expect, to? There is a certainly a reasonable case to suggest that this might always be a pressing concern, as this video report focused on Wall Street indicates.   

Even so, following the recent revelation - from a poll of Bloomberg’s international clientele - that 48% of bankers are earning salaries that are less than they had hoped for, comes research into the dissatisfaction felt by employees at multinational organizations in London’s banking industry over their latest annual bonus.

Across the board of roles from analyst and associate to managing director, dissatisfaction with bonus amounts in the banking industry registered with more than 40% of those surveyed by salary benchmarking site, Emolument.com. The proportion of those who were satisfied, meanwhile, hovered around a third, with a high of 35% among the most junior analysts and a low of 28% for those at the top, managing director, level. Everybody else was simply unsure, or perhaps unwilling to commit either way.

The highest level of satisfaction in London’s banking industry was recorded among those at Morgan Stanley (47%), the lowest at BNP Paribas (15%). Conversely, the biggest proportion of dissatisfaction also emanated from BNP Paribas (58%), while JP Morgan’s 28% was the lowest in this instance – although JP Morgan employees were also the most non-committal in their responses - 40% of those polled there said they were unsure about their latest bonus. 

Moldova’s missing US$1 billion

A suspect has been placed under temporary house arrest in association with Moldova’s missing US$1 billion – an eighth of the European nation’s GDP.

Illan Shor, who owns local football (soccer) team, FC Milsami Orhei, and is married to the Russian pop star, Jasmin, has described the allegations against him as ‘groundless’. Shor’s business interests include insurance, media and even duty-free sales at the airport of Moldova’s capital city of Chisinau. 

The money in question disappeared from three Moldovan banks (one of which was chaired by Shor) at the end of last year and is now the subject of an investigation involving US risk and security firm, Kroll. Indeed, it is leaked documents from Kroll which suggest that companies tied to the 28-year-old businessman may have been involved in gradually taking control of these three banks before doling out huge loans to other companies to which Shor may be connected.

Last weekend saw a huge protest in Moldova, as 10,000 took to the streets to voice their anger at something seen as symptomatic of wider levels of corruption within a country in which the question of moving closer to the EU is a key debate, as it has been for neighbors, Ukraine.

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Tim is a writer with a background in consumer journalism and charity communications. He trained as a journalist in the UK and holds degrees in history (BA) and Latin American studies (MA).

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