Anthony Hilton: Why the City should be wary of banking too much on the Chinese

 

London earns a lot of kudos when foreign companies decide to list their shares on the Stock Exchange here rather than, say, New York or Hong Kong.

So it decided a few years ago to relax its rules so it would get even more of the business. Unfortunately it rather overdid it and things got a bit too lax. Companies were listed where it seemed that big shareholders in the background rather than the official board of directors were pulling the strings, deciding on company policy and pushing it into doing deals which seemed to benefit them rather than the company.

Several abuses later and after much staining of the Stock Exchange’s international reputation, the authorities have decided to tighten up again. We saw the results on Tuesday when the Financial Conduct Authority announced a string of measures to protect minority shareholders in the main, adding rules which should help prevent them being out-voted by the main shareholders who are often the original owners based offshore.

You might think that experience would put the City on warning about the danger inherent in dropping standards to attract overseas business. But apparently not. Just last month the Chancellor, George Osborne, announced in Beijing with something akin to glee that he had struck a deal whereby Chinese banks coming to London would get an easier ride than other foreign organisations. The idea was a good one – to help establish London as a centre for trading the Chinese currency, the renminbi – but it caused quiet fury among other foreign banks, notably the Japanese and the Americans who have received no such special treatment. Indeed such was the outrage at the blatant bending of the London rules that Andrew Bailey, the man in charge of bank regulation, felt obliged a few days later to deliver a speech in which he protested that the concession was absolutely in order and the Bank of England was absolutely immune to pressure from Westminster.

It is not recorded if anyone believed him.

Now China is clearly important but Chinese banks are notorious for being potentially among the most toxic in the world because a huge proportion of their loans have been made as political favours to state-owned enterprises and others whom party officials support. One might think this would mean the bar for these banks should be set higher rather than lower. But having embarked on this course we can only hope it turns out to be a happier experience for the Bank than it was for the Stock Exchange.

Are we all dead wrong about living longer?

 A couple of months ago the chief executive of one of the big insurance companies surprised me by saying that life expectancy was no longer increasing, so he expected to make far more money out of his book of annuities (which pay money to policyholders until they die) than he did when the business was written. It was startling because it was completely at odds with the generally accepted view – and the one still promoted by actuaries and pension consultants – that lifespans are increasing by about a month a year.

But maybe his was not just wishful thinking. Figures published on Wednesday by the Office of National Statistics showed that on the latest data people are indeed beginning to die slightly younger. Back in 2009 the ONS projected that on average a man aged 65 would live a further 19 years and a woman 21.3 years, to 84 and 87 respectively. Two years later after a cold winter the projection scaled back modestly and this week it came down again. The 2013 data suggests the man will have only 18.3 more years and the woman 20.6 – a change which may not seem much in terms of weeks and months, but which at a stroke knocks about 4 per cent off the cost of pensions.

The implications of this if it continues are profound. All those pension schemes said to be unaffordable might not have been after all. The expectation that the retirement age will have to increase further might no longer be valid. The projections for the amount that might have to be spent on care for the elderly look less certain.

So how is the financial and political world coping with this challenge to one of its most basic assumptions – increased life expectancy? Like all inconvenient truths it is being ignored. It is so much easier to regard it as a blip which will shortly be reversed than a trend which makes a nonsense of everything which has been done in the last few years. Only when the cumulative evidence is overwhelming – which by definition will take many more years of data – are attitudes likely to shift.

Exchange rate that made Wonga look good

 Popping over to Germany mid-week I forgot my euros so made the dreadful mistake of changing a few pounds as I waited at Heathrow. It would be less painful to have done a deal with Wonga, the payday lender whose film robustly defending itself against criticism from MPs about how much it charges I was invited to see on Monday.

The exchange rate was not just poor, it was extortionate. If the £100 I changed into euros on the way out had been reconverted back into sterling when I returned in the evening I would have been lucky to clear £70.

Even payday lenders don’t charge getting on for 30 per cent a day for no risk.

PROMOTED VIDEO
News
Johnny Handle, Northumberland, Ted Relph, President of Lakeland Dialect Society, and Sid Calderbank, Lancashire, founder of the National Dialect Day
newsMeet the enthusiasts determined to stop them dying out
News
The data shows that the number of “unlawfully” large infant classes has doubled in the last 12 months alone
i100Mike Stuchbery, a teacher in Great Yarmouth, said he received abuse
Arts and Entertainment
The starship in Star Wars: The Force Awakens
filmsThe first glimpse of JJ Abrams' new film has been released online
Sport
Rio Ferdinand returns for QPR
sportRio Ferdinand returns from his three-game suspension today
News
The Speaker of the House will takes his turn as guest editor of the Today programme
arts + ents
News
ebooksNow available in paperback
Arts and Entertainment
St Peter’s Seminary in Cardross. Argyll, has remained derelict for more than 25 years
arts + ents
News
people

Watch the spoof Thanksgiving segment filmed for Live!
Sport
Billy Twelvetrees will start for England against Australia tomorrow with Owen Farrell dropping to the bench
rugbyEngland need a victory against Australia today
Arts and Entertainment
The cover of The Guest Cat – expect to see it everywhere
books
Sport
Tyson Fury poses outside the Imperial War Museum in south London ahead of his fight against Dereck Chisora
boxingAll British heavyweight clash gets underway on Saturday night
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Austen Lloyd: Company Secretary

Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...

Citifocus Ltd: German Speaking Client Specialist

£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...

Citifocus Ltd: Performance & Risk Oversight

£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...

h2 Recruit Ltd: Sales Director - SaaS (SME/Channel) - £140,000 OTE

£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...

Day In a Page

Homeless Veterans Christmas Appeal: ‘We give them hope. They come to us when no one else can help’

Christmas Appeal

Meet the charity giving homeless veterans hope – and who they turn to when no one else can help
Should doctors and patients learn to plan humane, happier endings rather than trying to prolong life?

Is it always right to try to prolong life?

Most of us would prefer to die in our own beds, with our families beside us. But, as a GP, Margaret McCartney sees too many end their days in a medicalised battle
Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night - is that what it takes for women to get to the top?

What does it take for women to get to the top?

Thomas Cook's outgoing boss Harriet Green got by on four hours sleep a night and told women they had to do more if they wanted to get on
Christmas jumper craze: Inside the UK factory behind this year's multicultural must-have

Knitting pretty: British Christmas Jumpers

Simmy Richman visits Jack Masters, the company behind this year's multicultural must-have
French chefs have launched a campaign to end violence in kitchens - should British restaurants follow suit?

French chefs campaign against bullying

A group of top chefs signed a manifesto against violence in kitchens following the sacking of a chef at a Paris restaurant for scalding his kitchen assistant with a white-hot spoon
Radio 4 to broadcast 10-hour War and Peace on New Year's Day as Controller warns of cuts

Just what you need on a New Year hangover...

Radio 4 to broadcast 10-hour adaptation of War and Peace on first day of 2015
Cuba set to stage its first US musical in 50 years

Cuba to stage first US musical in 50 years

Claire Allfree finds out if the new production of Rent will hit the right note in Havana
Christmas 2014: 10 best educational toys

Learn and play: 10 best educational toys

Of course you want them to have fun, but even better if they can learn at the same time
Paul Scholes column: I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season

Paul Scholes column

I like Brendan Rodgers as a manager but Liverpool seem to be going backwards not forwards this season
Lewis Moody column: Stuart Lancaster has made all the right calls – now England must deliver

Lewis Moody: Lancaster has made all the right calls – now England must deliver

So what must the red-rose do differently? They have to take the points on offer 
Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

Cameron, Miliband and Clegg join forces for Homeless Veterans campaign

It's in all our interests to look after servicemen and women who fall on hard times, say party leaders
Millionaire Sol Campbell wades into wealthy backlash against Labour's mansion tax

Sol Campbell cries foul at Labour's mansion tax

The former England defender joins Myleene Klass, Griff Rhys Jones and Melvyn Bragg in criticising proposals
Nicolas Sarkozy returns: The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?

Sarkozy returns

The ex-President is preparing to fight for the leadership of France's main opposition party – but will he win big enough?
Is the criticism of Ed Miliband a coded form of anti-Semitism?

Is the criticism of Miliband anti-Semitic?

Attacks on the Labour leader have coalesced around a sense that he is different, weird, a man apart. But is the criticism more sinister?
Ouija boards are the must-have gift this Christmas, fuelled by a schlock horror film

Ouija boards are the must-have festive gift

Simon Usborne explores the appeal - and mysteries - of a century-old parlour game