Last Sunday morning, the cynic in me went on alert. Two media stories about Tesco and the accounts manipulation were so pro-Tesco’s new management, so similar in detail, that I could not help but smell spinners at work.
The ousted chief executive Philip Clarke set targets that were too demanding; a whistleblower tried to raise the alarm but was ignored; the Tesco board is considering asking for Mr Clarke to return some of his £10m pay-off.
Blame Clarke: it was the PR equivalent of conveying the message with a baseball bat.
Unfortunately, later in the week, the PRs could not prevent Mr Clarke’s successor, Dave Lewis, from getting off to the worst possible start with investors. The shareholders were prepared to forgive him Tesco’s dismal interims – after all, they were not his responsibility. They were reassured by the details offered on the accounting scandal. But what they also wanted was an indication as to future strategy – and on that, Mr Lewis was completely silent.
It was very much a case of “trust me, there will be jam tomorrow”. This is starting to become a habit where under-pressure British retailers are concerned. Mr Lewis has a mountain to climb if Tesco is not going to become another Marks & Spencer.
The taxman needs to see the big picture
T0 a screening of Mr Turner, the new movie on the life of the artist JMW Turner, starring Timothy Spall.
The host is the film’s backer, Ingenious, and its head, Patrick McKenna. Mr Turner is the second film (after Pride) to be financed by Ingenious’s Pathé film fund.
These are awkward days for McKenna as early next month a tribunal will hear an appeal against the claim that three other Ingenious funds were tax-avoidance schemes. If Mr McKenna loses, the participants in the film financing partnerships, who include many celebrities and well-known wealthy people, may have to pay back thousands of pounds in tax.
HMRC maintains the trio were used to make losses that their backers could offset against their other income. Mr McKenna says this is nonsense.
What little I know is that some films that are expected to succeed crash at the box office, and others prove surprise winners; that the effort that goes into making a movie is often extraordinary; and that the whole exercise is inevitably something of a gamble.
It’s not as if Ingenious has never produced a hit – far from it. Introducing Mr Turner, McKenna makes the point that in the recently published list of the 100 biggest- grossing movies ever, Ingenious – a small British operation, don’t forget, compared with the global titans – has no less than four, including Avatar and Life of Pi.
The chat beforehand is of how the level of detail in Mr Turner is said to be incredible – several scenes that Turner painted, including the light that he so made his own, are faithfully recreated on the big screen.
Afterwards, the audience appears to be in agreement that director Mike Leigh, aided by a brilliant Spall, more than succeeds. It is a superb, arresting film.
However, it won’t be to everyone’s taste. A 19th-century period piece about an artist is not exactly surefire, popular mainstream. It should be a hit – Spall’s performance alone merits viewing – but there’s no guarantee that it will.
Would the tax authorities see it as something more sinister? I’ve no idea. But I do know that if their crackdown means that the likes of Mr Turner simply cease to be made, we will all be the loser.
Stress test results should only be the start
While the rest of us enjoy a lazy Sunday, bankers across Europe, and bank investors, will be having a nerve-jangling day.
Tomorrow at noon in Frankfurt, they will receive the results of the European Central Bank’s examination of their financial strength. Of the 130 banks scrutinised in the stress tests, some smaller names from those countries worst affected by the eurozone debt crisis – Ireland, Italy, Greece, Spain and Portugal – and a bank from Austria are predicted to have failed.
They will have until 10 November to produce a plan to raise more capital, and nine months to actually obtain the cash.
The vast majority will be given the all-clear and they can look forward to a lift in their share prices when the markets open again on Monday morning; for months now, the whole sector has been cloaked in uncertainty, with rumours circulating as to likely failures. But while there will be sighs of relief, and a feeling of wishing to move on, much hinges on the outcome.
We have to hope this is third time lucky; we’ve had two rounds of tests so far, both of which neglected to reveal problems at banks that later required bailouts. If the system of checks and balances is to have any credibility at all, if the eurozone is to regain any optimism, the ECB must get it right.
Those previous tests were conducted under the auspices of the European Banking Authority. This third batch, led by the weightier ECB, is intended to restore confidence.
For that to occur, there must have been consistency of treatment. If there are glaring country differences then ridicule will follow.
While attention will be heaped on the banks that fail, it’s not clear how those that only just pass will be affected. If they’ve only scraped through, they will be in no better shape than those that fell short.
The main outcome, however, will not be seen on Sunday afternoon or on Monday morning. The tests have forced banks to clean up their balance sheets; if there’s more of the same in subsequent months, then the exercise will have proved its worth.
If, too, it goes some way towards unblocking bank lending in Europe, to providing a glimmer of life in a region beset by stagnant economic growth and terrified by the prospect of deflation, then that can only be beneficial.
It should not only be bankers and their investors who are watching tomorrow.Reuse content