Yesterday’s half-year results gave further grounds for holding fire. Assets under management were down year on year, from £12.281bn to £11.347bn, but operating expenses were nonetheless down too, at first sight only slightly as a percentage of those assets, 1.6 per cent to 1.5 per cent, but in fact equivalent to a 6.3 per cent cut in costs, an indication that Borrows’ plans to drive efficiency are moving in the right direction.
So, indeed, they should be. A quarter of 3i’s workforce has been laid off since April, and Borrows’ plan calls for about a sixth of those who are still left to lose their jobs by the end of next March.
Borrows also indicated that 3i is actively repositioning itself for growth. A new $500m (£315m) fund in Brazil is planned for the second half of next year, together with a strategic retreat from Barcelona, Copenhagen and Birmingham.
It is also closing offices in Hong Kong and Shanghai. That contrasts with its Brazilian expansion: an encouraging sign that the strategic focus on Brazil is altogether more considered than a crude emerging markets push.
The City may wonder if all the cutting and refocusing is preface to a transformative deal of the kind it expects from such an experienced investment banker, but making hard calls on 3i’s turnaround is unquestionably a good start.
TRIAL AS RETRIBUTION
CPP saw its shares halve in value with the announcement of the FSA’s investigation in March 2011, and the price has trended lower since then. More than a year and a half later, the regulator has imposed a £10.5m fine but acknowledged that the credit card insurer’s current financial position means the FSA will now have to allow payment of the fine to be made in instalments over the next two years.
There is no excuse for CPP’s lapses and it is essential that firms are held to account when they fail to communicate fairly and clearly with their customers. Yet there must be a less counterproductive way to achieve that end without such a long-drawn-out process.
CPP, after all, agreed to settle at an early stage. It was rewarded today with a fine that was £4.5m lower, but it might have preferred an earlier decision to cut short the damaging period of uncertainty it has endured. As recently as August the group’s half year report accepted that there were some grounds for doubt as to whether it would be able to continue as a going concern.
Since the FSA has concluded that it does not want to drive CPP out of business, and so will now wait for its money, speedier justice would surely have been in everyone’s interests.