Oil hits $95 per barrel; CBI postpones annual meeting amid ‘cashflow challenges’ – as it happened

Time for a recap….

The price of crude oil has topped $95 a barrel for the first time this year.

The rise threatens to push up petrol prices at the pump, undermining efforts to bring down inflation.

The CBI has scrapped its annual meeting scheduled for tomorrow, as it battles a cashflow crisis, and replaced it with a fireside chat with members.

The move comes after the business lobby group tried to raise £3m from members, amid talks with manufacturers body Make UK over a possible merger.

The UK’s financial regulator has found no evidence showing banks have shut or denied accounts to customers based primarily on their political beliefs, according to a preliminary review launched in the wake of the Nigel Farage debanking row.

Inflation in the eurozone has dropped, bringing some relief in the cost of living squeeze. Consumer prices in the euro area rose by 5.2% in the year to August, down from 5.3% in July.

The OECD has raised its forecast for global growth this year. In its latest economic forecasts, the OECD also predicted Germany’s economy will shrink in 2023, and warned that the UK will have the highest inflation among G7 members this year.

BP has appointed its first female CFO, Kate Thomson, as it reshuffles its top executives following the departure of Bernard Looney last week.

The boss of Cboe Global Markets, which owns the Chicago Board Options Exchange and the stock exchange operator BATS Global Markets, has also resigned today after not disclosing personal relationships with colleagues.

In the UK corporate world, online retailer Naked Wines has warned of a “material uncertainty” that may cast “significant doubt” on the group’s ability to continue as a going concern….

…while Kingfisher has reported that British consumers are continuing to spend on improving their homes and gardens as an alternative to moving home amid soaring mortgage rates and a surge in household bills….

…and holiday operator TUI has extended the season for Greece and Turkey to November in response to increased demand, after extreme temperatures over the summer disrupted some holidaymakers’ plans.

And Avanti, one of Britain’s least reliable train operators, has been awarded a long-term contract to keep running intercity services on the west coast main line.

The CBI, the ailing business group, has acknowledged its financial travails for the first time as it postponed what was set to be a crucial annual meeting this week, says Sky News’s Mark Kleinman.

He adds:

The AGM postponement is the latest chaotic chapter in a dire year for what was once Britain’s most influential business group, which was brought to its knees in the spring by a wide-ranging sexual misconduct scandal.

Instead of holding their annual meeting, the CBI are instead offering members an audience with its president, Brian McBride and director general, Rain Newton-Smith, tomorrow morning.

In what looks to be a fireside chat with members, McBride and Newton-Smith will:

• Outline the work we’re doing to advocate on your behalf through the autumn.

• Share their thoughts on the current political and economic environment, and what it means for your business.

• Update you on the latest developments at the CBI.

Newsflash: The Confederation of British Industry has postponed its annual meeting which had been scheduled for tomorrow, as it battles cashflow problems.

The CBI has told its members that it has taken the decision to move the AGM, saying:

“At the CBI, we’re serious about our commitment to you, to be more accountable and transparent in our decision-making and work. As has been reported, the CBI has experienced some short term cashflow challenges.

To reassure members, we are in positive dialogue over finalising financing options and are confident that we will be able to resolve this short-term issue and secure the footing of an organisation that remains in a strong medium to long term position.

But given the significant interest in the CBI right now, we are opening-up and refocusing our previously planned AGM.”

Over the weekend, it was reported that the CBI was seeking £3m from its members to tide itself over.

It had been due to present its accounts at the annual meeting, meaning it was under pressure to come up with a plan to show that it can continue operating, following an exodus of members earlier this year.

The CBI, which is Britain’s largest corporate lobbying organisation, has been in discussions with manufacturing group Make UK about a tie-up, in an unexpected twist to its battle to recover from sexual misconduct allegations revealed by the Guardian.

But, the CBI’s pension scheme may be an obstacle to a deal.

19 Sept 202310.19 EDT

Sarah Butler

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Online specialist Naked Wines has warned of a “material uncertainty” that may cast “significant doubt” on the group’s ability to continue as a going concern.

Chairman Rowan Gormley said:

“Make no mistake, trading conditions are tough.”

Gormley said high inflation, higher taxes on alcohol and falling disposable incomes had put pressure on sales, costs and cash flow while the number of new customers signing up had fallen as shoppers return to high streets and supermarkets after the pandemic lockdowns.

Naked said trading in the three months from April 2023 was below expectations, with total sales 18% lower than the same period a year before, sales to new customers 41% down and repeat customers falling 15%. The company said that if trading worsened it may not be able to generate sufficient cash to meet the conditions on some of its debts.

The listed wine merchant had a $60m lending facility – half of which was provided by the failed Silicon Valley Bank - which has now been taken on by First Citizens Bank - which requires it to have a minimum cash balance of $20m.

Naked said if could foresee a potential “severe but plausible downside” of not enough customers making repeat orders so that it would not have enough cash to meet its lenders’ requirements. It said the scale of the asset-backed lending facility could also be limited because it is partly based on the value of its US-based wine stocks.

19 Sept 202310.04 EDT

Julia Kollewe

Henry Boot has become the latest construction, land promotion and housebuilding company to feel the hit from a slowing housing market and economy.

It has reported a 38% slump in profits for the six months to the end of June. Its construction division is “trading below management’s expectations” as projects have been delayed.

All new construction work fell by 2.1%, including a 6.7% drop in private housing. However, revenues rose by a quarter to nearly £180m as the company sold more land and built more houses. Its Stonebridge Homes division builds upmarket five-bedroom homes priced at £500,000, on average, in Yorkshire, although some cost over £800,000.

It is on track to build 250 homes this year, up from 180 last year, and wants to ramp this up to 600 homes a year, eventually. Tim Roberts, the chief executive, said its customers tend to be partners of accountancy firms, lawyers and successful businesspeople.

Since the Covid pandemic, which led to more people working from home, the builder has been installing pitched roofs on detached garages to create an office space – although one customer chose to turn this into a James Bond-themed room.

19 Sept 202310.01 EDT

Alex Lawson

Kemi Badenoch, secretary of state for business and trade, is up in front of MPs on the business and trade committee.

She has been discussing the £500m UK government support package agreed last week, which will secure the future of the huge Port Talbot steelworks in south Wales, but could lead to up to 3,000 workers losing their jobs.

The deal will also see owner Tata also put in about £725m to help it transition to greener production methods.

Badenoch said:

“The problem we are trying to solve is how do we make sure we don’t create a catastrophe in Port Talbot where everybody loses their jobs, that includes not just the 8,000 people that work for Tata but the rest of the supply chain, how do we regenerate the area, how do we make sure that we’re hitting carbon emissions. And this deal was the one that ticked all those boxes.”

David Bickerton, director general of the business group at the department for business and trade, said Tata expected to close the plant, so UK officials worked to create a “model which an economically rational investor would remain invested in for the long term”.

Tata bosses are due to meet with unions in London tomorrow (as we flagged earlier)

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In New York, shares have opened a little lower as investors await tomorrow’s interest rate decision from the US Federal Reserve.

The Dow Jones industrial average, which tracks 30 large US companies, has slipped by 48 points or 0.14% to 34,576.

The broader S&P 500 is 0.15% lower.

But shares in energy producers are getting a boost from the rising oil price, with Exxon up 0.5% and Chevron gaining 0.8%.

Newsflash: Another chief executive has fallen on his sword for not disclosing personal relationships with colleagues.

Cboe Global Markets, which owns the Chicago Board Options Exchange and the stock exchange operator BATS Global Markets, has announced that chairman and CEO Edward Tilly has resigned.

The company’s Board of Directors determined that Tilly did not disclose personal relationships with colleagues, which “violated Cboe’s policies” and was “in stark contrast to the company’s values”.

The conduct was “not related to and does not impact the company’s strategy, financial performance, technology and market operations, reporting, or internal controls,” Cboe adds.

William M. Farrow, III, who has been named non-executive Chairman, says:

“Cboe strives to uphold the highest ethical standards across the organization, and fully investigates and takes appropriate action when it determines that any of its policies have been violated.”

Canada has just bucked the trend of lower inflation, reporting its second monthly rise in the cost of living in a row.

Canada’s annual consumer prices index has risen to 4% in August, up from 3.3% in July.

This was largely the result of a 0.8% increase in gasoline prices, year-on-year, in August, after they fell 12.9% in the year to July.

Statistics Canada adds:

In addition to facing higher energy prices, Canadians paid more for rent and mortgage interest in August.

Moderating the all-items CPI were declines in prices for travel-related services and a smaller increase in food prices compared with the previous month.

Over in the US, housebuilding stumbled last month.

The number of new house-building projects, or ‘housing starts’, fell by 11.3% in August compared to July, to an annualised rate of 1.283 million homes.

That’s the lowest level since June 2020, implying a weakening in the US housebuilding sector last month.

But the number of building permits, giving permission to kick off a new build, rose 6.9%, suggesting the housing market is absorbing the impact of higher interest rates.

In a boost to consumers, the corn price has dropped to a three-year low today.

The most-active corn contract on the Chicago Board of Trade has dipped by 0.7% today to around $4.68 a bushel this morning, after touching a near three-year low for a second straight session.

Reuters has the details:

Chicago corn slipped on Tuesday to remain at its lowest levels since December 2020 as an advancing U.S. harvest kept attention on ample international supply following a record Brazilian crop.

Wheat futures extended losses from Monday as competitive Russian prices and moves to load grain from war-torn Ukraine underscored ongoing competition from Black Sea supplies.

Soybeans slipped to a one-month low, pressured by the early stages of the U.S. harvest as well as monthly crushing data that disappointed traders.

Consultancy Agritel said.

“Corn and soybeans are slipping back as harvest pressure begins in the United States.”

Just hours after publishing its scoop on the FCA’s inquiry into debanking, the Financial Times now have a column on the issue from the regulator’s CEO himself.

Nikhil Rathi, chief executive of the Financial Conduct Authority, writes that the regulator “decided to revisit the issue” of debanking after a flurry of reports that banks were closing accounts based on their customers’ political beliefs.

Rathi says the FCA will carry out more work, having its initial review found politicians were not being denied accounts because of their views.

He writes:

So far, data from 34 banks, building societies and payment companies does not point to a systemic problem of people being de-banked because of their political views. According to that information it has not been the primary driver for any personal account closures.

We will undertake further checks to be doubly sure and to understand more about what are described as “reputational” factors behind a number of closures.

Rathi says banks need to get the balance right, when considering concerns about financial crime and their tolerance for risk.

He warns:

In the face of rising financial crime, the FCA is working with the government and others to clamp down on the misuse of financial services. There is a risk, however, that as parliament introduces measures such as a new offence of failing to prevent fraud, banks err on the side of caution.

19 Sept 202307.26 EDT

Kalyeena Makortoff

It’s official: The UK’s financial regulator has found no evidence showing banks have shut or denied accounts to customers based primarily on their political beliefs.

That’s according to a preliminary review launched in the wake of the Nigel Farage debanking row, which has just been published.

As flagged this morning… despite growing concerns that customers have been quietly discriminated against due to their political views, the Financial Conduct Authority’s (FCA) said initial findings showed the primary reason for accounts being closed, suspended, or denied was either that the account was inactive, or that they had concerns that the customer was involved in financial crime.

The FCA’s chief executive Nikhil Rathi said.

“While no bank, building society or payment firm reported to us that they had closed accounts primarily due to someone’s political views, further work is needed for us to be sure.

That will involve verifying the initial data gathered from 34 banks, building societies and payment companies, covering the year to June, including cases where accounts were closed because the customers posed a “reputational risk”.

Conservative MP Danny Kruger, though, isn’t impressed with the FCA’s work: