.png?width=200&height=78&name=CH%20Diligence%20(thicker%20line).png "CH Diligence (thicker line).png")
Our briefing for Thursday October 8, 2020:
Oct 8, 2020 3:38:56 PM
- In the United States, the next presidential debate’s status is about as chaotic when Donald Trump and Joe Biden took the stage a little over a week ago. It all started Thursday morning when the Commission on Presidential Debates announced the second debate, scheduled for October 15th would be virtual due to President Trump’s recent positive coronavirus diagnosis. Joe Biden’s camp agreed to the virtual setting, but the Trump team declined and came back with a counteroffer of pushing back the debate one week to October 22nd. Joe Biden’s camp declined that option stating, “Donald Trump doesn’t make the debate schedule; the Debate Commission does.”
- In Canada, the government will be lifting COVID-19 cross-border travel restrictions for a wider range of family members. As of Thursday, Canada will allow entry to certain extended family members of citizens and permanent residents, including couples who have been dating for at least for a year and their children, as well as grandchildren, siblings and grandparents. The government will also consider “potential limited release from quarantine” for some visitors. In other COVID-19 related travel news, Bloomberg is reporting Canada is aiming to capitalize on its more conservative approach to its border closures once the pandemic subsides. The article notes Canada will look to promote itself as a safe destination for tourists as compared to other nations like the United States.
- In the United Kingdom, a noticeable increase in coronavirus cases over the past week is highlighting the strain on the country’s test and trace program. For instance, the number of people testing positive for the coronavirus rose more than 50% over the last week and fewer than 70% of people who had been in contact with these cases were reached and advised to self-isolate. According to the test and trace program, positive cases, “have been rising steeply over the past five weeks with over seven times as many positive cases identified in the most recent week compared to the end of August.”
- Spain’s efforts to contain the coronavirus surge suffered a setback on Thursday when a Madrid court blocked the regional government from applying curbs on movement in one of Europe’s most notable COVID-19 hotspots. The Madrid High Court ruled that restrictions which came into effect last Friday by Pedro Sanchez’s central government and regional administration, violated fundamental rights. The rules had officially banned people from entering and exiting the city without good reason such as work, or education.
- Germany’s health minister has noted the biggest surge in daily cases of coronavirus since April as “alarming”. The Robert Koch Institute (RKI), Germany’s main public health authority, recorded over 4,000 cases in the past 24 hours – 1,200 more than Wednesday. Lothar Wieler, head of the RKI said it’s possible that Germany could see 10,000 new cases a day and that “the virus would spread in an uncontrolled fashion.” The new spikes are concerning for a country that handled the first wave much better than some of their European counterparts, such as France and Spain.
- Brazil surpassed five million cases of the coronavirus on Wednesday and while the country is doing better, health officials are worried about a quarantine hangover for a country known for its party atmosphere. At its height Brazil was recording more than 45,000 cases and 1,000 deaths per day. They are currently at about 27,000 and 700 deaths per day. Epidemiologist Pedro Hallal said a second wave of infections is unlikely this year because of how long Brazil’s crest lasted but a second wave in 2021 is “very likely”. “People thought it unacceptable that 1,000 people were dying every day two months ago, and now they are fine with 700 people dying every day. It simply doesn’t make any sense,” said Hallal.
Covid-19 – Due Diligence And Asset Management
James Gorman Goes Hunting Again with $7 Billion Eaton Vance Deal
Brief: More than a decade into his tenure, James Gorman is busier than ever remaking his firm. The Morgan Stanley chief has carried out a dealmaking blitz that’s transformed the white-shoe firm, from a Wall Street specialist to a big player in the world of money management. If stealing away a wealth manager from Citigroup Inc. propelled the Melbourne-born banker to the top perch in 2010, his recent shopping spree guarantees that the 62-year-old executive’s mark will be left on Morgan Stanley long after he’s gone. Gorman’s two latest mega-deals -- the takeover of E*Trade Financial Corp., to go after millennials and other individual investors, and now the $7 billion purchase of asset manager Eaton Vance Corp., announced Thursday -- are the largest carried out by any of the big banks in Wall Street’s post-crisis reincarnation. And both were done in the span of just 10 months. The acquisitions guarantee Morgan Stanley’s wealth and asset-management group a standing that overshadows the bank’s core Wall Street operations, despite their dominance. And Gorman, who rose up through Morgan Stanley’s wealth business and has been bolstered by a stock price that’s outperformed major Wall Street rivals this year, said the 38% premium he’s paying to gain Eaton Vance’s roughly $500 billion in assets is worth it.
SEC Reports 700 Enforcement Actions in Fiscal 2020, ‘Significant’ During Telework Period
Brief: The head of the U.S. Securities and Exchange Commission (SEC) said on Thursday that the agency has brought 700 enforcement actions in the 2020 fiscal year, a ‘significant’ amount after March 15. In a virtual address kicking off “SEC Speaks 2020,” an annual SEC enforcement conference put on in conjunction with the Practicing Law Institute, Jay Clayton said the agency had also obtained financial remedies of more than $4 billion, up from a year prior. The SEC has also reviewed disclosures of more than 10,700 funds--including more than 1,200 new funds--in 2020, an increase of 7% over last year, Clayton added. “While the pandemic significantly impacted how we do our work, it did not negatively impact the work itself,” Clayton said. "At the same time, we added to our work load," the top market's watchdog added in reference to the agency's extended telework period that began here on March 10 after an employee at its Washington, D.C., headquarters was treated for coronavirus symptoms.
Mizuho Employees to get Option to Work Three Days a Week, but With Reduced Salary
Brief: Mizuho Financial Group Inc. plans to introduce a system that would allow employees to work a three- or four-day week, according to informed sources. It aims to launch the system in December after holding talks with its labor union. Mizuho Financial will be the first among the nation's megabanks to implement a permanent system allowing employees to take three or more days off every week. The group is adopting diverse work styles in response to the pandemic. The new work system will cover some 45,000 employees of the holding company and such operating units as Mizuho Bank, Mizuho Trust & Banking Co. and Mizuho Securities Co., the sources said. Each employee will be allowed to choose to work three or four days. Basic salary will be reduced to 80 percent of the current level for employees who work four days a week and to 60 percent for those working three days, according to the sources. Mizuho Financial seeks to prevent talented workers from leaving the group by creating an environment in which employees, many of whom need to take care of older family members or raise their children, find it easy to work according to their own circumstances. The new system is also intended to help employees take time to brush up their skills in their respective areas of work, according to the sources.
Demand for Risk and Compliance Outsourcing Jumps Over 25 Per Cent in the Age of COVID-19
Brief: ACA Compliance Group (ACA) has identified a global spike in financial services firms turning to RegTech, outsourcing, and operational resilience solutions for risk and compliance management in the age of Covid-19. The firm has seen a 25 per cent rise in demand for outsourced managed services when compared with pre-pandemic levels, with cybersecurity and regtech solutions also seeing an increase in demand. A key driver is that risk and compliance leaders are being asked to do more with less and reduce costs while enhancing operational resilience. The Covid-19 pandemic has forced financial services firms to abruptly change the way they work now – and in the future. As the global pandemic mutated into an economic crisis, it caused massive unemployment and social unrest. Fires and floods added additional environmental crises to the mix. All of these risks interacted and mutated to present firms with key risks and challenges, including business disruption, remote work, cyber threats, and ultimately risk and compliance monitoring challenges. At the same time, firms are seizing the chance to invest in new opportunities created by the disruption and to modernise their infrastructure to be more resilient, both of which will serve them well in the future. This is a phenomenon that ACA has termed RiskMutation.
AIMA Plans ITN-Produced Content to Promote Hedge Funds’ Role in Global Economy
Brief: The Alternative Investment Management Association (AIMA), the hedge fund industry trade body, has paired up with ITN Productions to produce a news-style programme which aims to push the case for hedge funds’ role in the economic recovery following the coronavirus crisis.Due to launch in summer 2021, ‘Holding Strong: Alternative Investments in a Volatile Market’ will explore the role played by alternative assets and hedge fund managers in the global economy and their value to investors and markets, and how they offer allocators a differentiated risk/return profile and provide alternative funding avenues for borrowers. The programme will also examine how the alternatives sector is utilising technology, ESG and socially responsible investing in its investment strategies, and the steps firms are taking to strengthen diversity and inclusion at firms. ITN Productions, a commercial communications unit of ITN, produces creative content for broadcasters, businesses, brands, rights holders and digital channels. Its Industry News arm offers bespoke material for industry associations and trade bodies produced in a broadcast news-style programme format.
Senator Warren asks Big U.S. Banks for Details on Pandemic Performance
Brief: U.S. Senator Elizabeth Warren is asking large U.S. banks to disclose how they performed under a recent Federal Reserve exam of their finances during the coronavirus pandemic. In a letter sent to 14 large firms Wednesday, Warren asked each to provide its results from a confidential Fed test, arguing the central bank’s “limited transparency” on whether banks could weather a severe economic downturn is insufficient. “The safety and soundness of the banking sector cannot be taken for granted, and the American people deserve full transparency regarding the health of the financial system,” the Democratic senator wrote in a letter seen by Reuters. Warren added that the recent collapse of negotiations for further economic stimulus makes the matter more pressing, as the Fed previously noted that some banks’ capital forecasts were “strongly dependent” on additional economic support. In June, the Fed announced that large banks could suffer as much as $700 billion in losses under a severe pandemic-driven recession. But the central bank only released those results in aggregate, citing the fact that the recent onset of the pandemic prevented it from conducting a full-blown stress test of each bank.
