Business investment by private companies was lower in the UK than any other G7 country in 2022, lagging behind the US, Canada, France, Germany, Italy and Japan according to research by the Institute for Public Policy Research (IPPR).

The analysis, which used the latest datasets provided by the Organisation for Economic Co-operation and Development (OECD), showed that the UK was at the bottom of the group of seven for the third year in a row. It suggests that the country is attracting less business investment, as a percentage of gross domestic product (GDP), than its international peers.

Dr Dibb said the onus is on the government to take the lead and “show businesses that the UK is the secure, sensible and stable place to invest”.
 

BNY Mellon keeps its title short in rebranding

BNY Mellon, the oldest bank in the US, announced updates to its corporate identity. The institution, which was founded in 1781 by Alexander Hamilton and had Benjamin Franklin and Thomas Jefferson among its original shareholders, will now be known as BNY. Despite this change, its legal parent name remains The Bank of New York Mellon Corp.

The decision to rebrand, according to the bank’s statement, reflects its adaptation to evolving global financial markets. “To enhance recognition of our identity and mission, we are modernising our logo and streamlining our corporate umbrella brand to BNY,” the bank stated.

BNY currently manages nearly US$50 trillion in assets and operates primarily as a custodian bank, serving other financial institutions.

“These changes complement the company’s evolution as a leading global financial services company,” said BNY Global Head of Marketing and Communications Natalie Sunderland.

“The updated brand conveys trust, resilience and innovation, and helps us align the full breadth of our offerings and capabilities under one brand, to improve familiarity with who we are and all that we do for our clients.”

Mellon ʺjoins other Gilded Age names in New York’s dustbinʺ in adopting a new identity, commented the Financial Times

The paper noted that Mellon was founded in 1869 and emerged as one of the prominent brands in finance during the waning years of the 19th century, marked by massive expansion on the back of US industrialisation. A scion of the family, Andrew Mellon, also served as US Treasury secretary in the run-up to the Great Depression.

“The Gilded Age names, they’ve been fading since the ‘60s,” Gary Richardson, the former official historian of the Federal Reserve system, told the FT.

The period gave rise to several families whose names are still prominent on Wall Street today: John Pierpont Morgan, whose surname is the foundation for both JPMorgan and Morgan Stanley.

 

Canada, ADB launch C$360 million fund for Asia climate and nature projects

The government of Canada and the Asian Development Bank (ADB) announced a partnership to create a new CS360 million (U$255 million) trust fund.

ADB said that the Canadian Climate and Nature Fund for Private Sector in Asia (CANPA) will support private-sector projects in Asia and the Pacific, focused on climate and nature-based solutions while accelerating gender equity.

Canada is providing the funding of C$350 million for project investments and C$10 million for technical assistance. ADB will administer CANPA on behalf of Canada to help private sector companies lower their greenhouse emissions, transition from carbon-based operations, and improve their climate resilience.

The fund will lower risks to bring viable projects to market that would be unlikely to proceed solely on a commercial basis, while empowering women and girls by supporting their engagement in a just transition.

It will also finance nature-based solutions such as sustainable agriculture and aquaculture to protect, manage, and restore ecosystems.

“This fund continues and deepens our decade-long partnership with Canada to help Asia and the Pacific mobilize private capital to advance the fight against climate change,

“CANPA will help accelerate the region’s transition to low carbon and climate-resilient growth by lowering financing risks and making projects more commercially bankable, with a specific emphasis on empowering women and girls,” said Vice-President for Market Solutions Bhargav Dasgupta.

The Asia and the Pacific region is reportedly responsible for more than half of global greenhouse gas emissions. The region is susceptible to the most destructive effects of climate change, including damage from extreme weather, prolonged droughts, and flooding. More than 60% of its population works in sectors most at risk from climate change.

The fund will encourage opportunistic investments, leveraging ADB’s private sector platform and capabilities. It follows the successful deployment of the Canadian Climate Fund for the Private Sector in Asia (CFPS) in 2013 and CFPS II in 2017.

 

Yale economists address supply chain efficiency and resilience

Researchers at the US’s Ivy League university Yale are engaging with business leaders on policy-relevant research to make supply chains more efficient and resilient.

Announcing the initiative, they note than in recent years, the words “supply chain issues” have emerged as a familiar explanation for the inability of families and businesses in the United States and elsewhere to access certain goods, from toilet paper to computer chips.

The Covid-19 pandemic and its related shortages were likely the first time many American consumers had really considered supply chains — the complex networks through which products are created and distributed. They weren’t alone, says Yale economist Aleh Tsyvinski. Historically, outside of business schools, supply chains have generated little general interest even from academic economists,

During a recent conference hosted by Yale’s Tobin Center for Economic Policy and the Cowles Foundation for Research in Economics – which was organised by Tsyvinski and Princeton economist Ernest Liu – experts from academia and the business world discussed how research can support efforts to predict, avoid, and manage supply chain disruptions. The conference featured a keynote by Benjamin Gordon, managing partner and CEO of Cambridge Capital and a leading advisor to, and investor in, supply chain companies.  

Tsyvinski and Liu, with support from the Tobin Center, are developing a novel platform that offers highly detailed information on supply chain disruptions in near-real time across a range of products, industries, and localities.

The project offers first-of-its-kind insight into the granular functioning of supply chains that can benefit policymakers and the private sector, said Tsyvinski, the Arthur M. Okun Professor of Economics in Yale’s Faculty of Arts and Sciences and professor of global affairs in the Yale Jackson School of Global Affairs.

The Tobin Center also supports The Supply Chain Research Alliance, a project by economists at Yale, the London School of Economics (LSE), and the Massachusetts Institute of Technology (MIT) to identify management practices that make supply chains more efficient and resilient.

 

Moody's: Pakistan’s weak debt affordability drives high debt sustainability risks

Global rating agency Moody’s has warned that the country’s weak debt affordability drives high debt sustainability risks as it noted that the government spends more than half its revenue on interest payments.

Commenting on the country’s recently released finance bill for the fiscal year (FY) 2025, it said: “The budget estimated debt servicing payments to have increased by about 18% for fiscal 2025 compared with a year ago.”

ʺThe government spends more than half its revenue on interest payments, indicating very weak debt affordability which drives high debt sustainability risks” it added, and “about 55%of fiscal year 2025 revenue of rupees (PKR) 9.8 trillion (US$350 billion) is earmarked for interest payments on the government’s debt.

Noting the increase in expenditure, Moody’s said it reflected “lack of significant cost-containment measures and Pakistan’s very high interest payments.ʺ It added that a 27% increase in subsidies to PKR1.4 trillion was “mainly driven by large increases in subsidies to the power sector” which reflected little progress in energy sector reforms

Overall, the rating agency said that budget reflected “quicker fiscal consolidation, but ability to sustain reforms will be key to easing liquidity risks”.

Moody’s also commented that the finance bill “will likely support Pakistan’s ongoing negotiations with the International Monetary Fund (IMF) for a new Extended Fund Facility (EFF) programme that will be crucial for the government to unlock financing from IMF and other bilateral and multilateral partners to meet its external financing needs”.

However, it cautioned that the government’s ability to “sustain reform implementation” will be key to meeting the budget targets and unlocking external financing, which is necessary for easing of liquidity risks.

It highlighted that “a resurgence of social tensions on the back of high cost of living — which may increase because of higher taxes and future adjustments to energy tariffs — could weigh on reform implementation.

“Moreover, risks that the coalition government may not have a sufficiently strong electoral mandate to continually implement difficult reforms remain,” it commented

In last week’s budget, the government announced a consolidated budget deficit of 5.9% of gross domestic product (GDP) for the fiscal year 2025 — from the previous year’s estimated 7.4% — with the primary balance set at a surplus of 2% of GDP for the upcoming year.

Additionally, the government has projected real GDP growth at 3.6% and headline inflation at 12%. It also sought to increase federal government revenue to an ambitious PK17.8trillion — 46% higher than the previous year— through a “combination of new taxes and stronger nominal growth

According to Moody’s, this showed that “the government seeks to achieve quicker fiscal consolidation mainly through increases in revenue, with little spending-containment measures”.

 

Australia keeps interest rates on hold for fifth month

The Reserve Bank Australia has kept its key interest rate on hold for a fifth consecutive board meeting but retained the option of a further rate hike if needed.

As expected by economists, the RBA held its cash rate unchanged at its 12-year high of 4.35% at the conclusion of a two-day meeting that concluded on Tuesday afternoon.

The bank’s communique, though, warned that “inflation remains above target and is proving persistent”.

“Inflation is easing but has been doing so more slowly than previously expected and it remains high,” it said in a statement.

“The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe remains uncertain and the Board is not ruling anything in or out,” the RBA said, emphasising that leaves it the option of another rate rise if needed.

The central bank started its cycle of 13 rate rises in May 2022, with the most recent last November.

 

More central banks are exploring a CBDC, reports BIS

More central banks than ever before are exploring the possible issue of a central bank digital currency (CBDC), according to the latest Bank for International Settlements (BIS) survey.

Among the 86 banks that participated, 94% said they were looking at a digital version of their national currencies, compared with 90% of 81 respondents in a 2021 survey conducted by the BIS, an umbrella organiation for the world's central banks.

Respondents also said they’re more likely to issue a wholesale CBDC than a retail version within the next six years. A wholesale version would be accessible only to banks and financial institutions, while a retail version could be used by the public for day-to-day life.

Countries worldwide have been exploring whether or not to produce a digital currency for years, with China among one of the earliest.  Nigeria and the Bahamas were among the first countries to issue their own CBDCs.

ʺFor retail CBDCs, more than half of central banks are considering holding limits, interoperability, offline options and zero remuneration,ʺ the BIS said.

The survey, conducted between October 2023 and January 2024, also found that stablecoins, cryptocurrencies whose value is pegged to a specific asset such as the dollar or gold, are rarely used for payments outside the crypto ecosystem.

 

Malaysia plans to build its first smart AI container port

Malaysia is bidding to capture logistics demand caused by changes in global supply chains, with plans to build a new container port along the west coast of the Malay Peninsula facing the Strait of Malacca, which was one of the world’s busiest sea routes.

With an estimated value of US$425 million, the new port will use artificial intelligence (AI) to enhance operational efficiency and become the first port in Malaysia to apply this technology.

Earlier this month, Tanco Holdings Bhd (THB), through subsidiary Midports Holdings Sdn Bhd (MHSB), signed a memorandum of understanding (MoU) with CCCC Dredging, a subgroup of China Communications Construction Company (CCCC), to develop Malaysia’s first smart AI container port in Port Dickson, Malaysia’s Negeri Sembilan state.

According to the MoU, the port will be developed in an area of about 809,300 sq metres in the city of Port Dickson, in the state of Negeri Sembilan. Close to Kuala Lumpur and the midpoint of the Malacca Strait, it could benefit from high traffic and connectivity to key industrial regions in Malaysia. There will be a wharf, a terminal and a 1.8km long container operating area. AI technology is expected to improve port operational efficiency, minimise human errors and reduce accident rates. The AI system will analyse traffic data, schedule ship movements, monitor maritime activities around the port and manage logistics automatically.

Tanco Group Managing Director Andrew Tan Juan Suan said that construction of the port will contribute to Malaysia's goal of establishing a modern and efficient port hub, accelerating economic development in Negeri Sembilan, and bolstering Malaysia's global trade position.

As global companies diversify their supply chains, Malaysia has emerged as a beneficiary, attracting investment from electronics producers and other manufacturers. Malaysia's largest port - Port Klang - also plans to double its capacity to meet demand.

 

Deutsche Bank buys €1.7 billion aviation loans from NordLB

Deutsche Bank has agreed to buy about €1.7 billion (US$1.8 billion) in aviation loans from North Germany Landesbank NordLB, which is exiting the sector to focus on areas such as renewable energy financing.

Deutsche Bank will start taking over the assets from the end of this month after prevailing in a bidding process, NordLB said in a statement that did not disclose a price for the deal. The seller, whose total aviation portfolio amounts to about €2.8 billion, will wind down the remaining €1.1 billion over time

Bloomberg reported in October that NordLB was considering options for its aviation financing portfolio, including a partial or full sale. The Landesbank had to be rescued in 2019 after it was hit by soured loans to the shipping industry. While the bank had been winding down its shipping portfolio, it maintained its business with the aviation sector.

The deal with Deutsche Bank is expected to close in the second half of 2024.

ʺIt is an opportunity for us to acquire high-quality loans with an attractive return profile,” Ross Duncan, co-head of the global transportation finance team at Deutsche Bank, said in a separate statement

NordLB has been active in the aircraft financing business for more than forty years. The current portfolio includes around 300 financed aircraft and engines.

In its latest annual report, NordLB warned that newly introduced aircraft models could put pressure on the residual value of existing planes with older technology. Unexpected extreme events, such as pandemics and international conflicts, can also significantly influence passenger air traffic and lead to challenging market developments, the lender added.

Helaba, another German Landesbank, said earlier this year it will stop signing new aviation financing business as it looks to reduce its sector portfolio.

 

Emirates Development Bank and Commercial Bank of Dubai team for international trade

Emirates Development Bank (EDB) and Commercial Bank of Dubai (CBD) have entered into a strategic partnership to enhance international trade services in the United Arab Emirates (UAE).

ʺThis collaboration combines EDB’s extensive client base and robust financial operational capabilities with CBD’s advanced trade finance expertise to create new growth opportunities for businesses across the country,ʺ stated a release.

ʺUnder this strategic alliance, CBD will deliver a comprehensive suite of trade finance products and operational services to EDB’s clients. The initiative is designed to empower businesses to expand their portfolios and excel in the international trade arena. Some of the key services include handling Letters of Credit and Guarantees and supporting foreign currency payments, ensuring a seamless and efficient trading experience. ʺ

His Excellency Ahmed Mohamed Al Naqbi, Chief Executive Officer of Emirates Development Bank, said, “We are pleased to partner with Commercial Bank of Dubai to offer innovative and comprehensive trade finance solutions. This partnership marks a significant milestone in enhancing our trade finance offering and supporting businesses across the UAE. By leveraging our combined expertise and resources, we are dedicated to forging strategic partnerships that will bolster the UAE’s economic development and strengthen its position as a global hub for trade and investment.”