May 11, 2023 | Editor: Martin Wennerström
JPMorgan Chase takes over failed First Republic Bank
JPMorgan Chase has acquired the assets and deposits of First Republic Bank after California authorities seized and auctioned the troubled lender. The Federal Deposit Insurance Corporation (“FDIC”), an independent governmental agency established to maintain financial stability through the insurance of banks’ deposits, took possession of First Republic Bank after the lender suffered a severe liquidity crisis following the failure of SVB and Signature Bank earlier in March. The default of the two banks caused investors to transfer their funds from smaller lenders to larger and safer banks, resulting in USD 100 billion in deposit outflows from First Republic. The takeover deal will see JPMorgan pay USD 10.6 billion to FDIC to acquire First Republic and return USD 25 billion of the USD 30 billion the lender received in lifeline deposits from other U.S. banks. FDIC will cover 80% of First Republic’s losses, for an amount estimated at USD 13 billion, and will grant USD 50 billion in financing to JPMorgan.
UK regulator plans listing rules
revamp to boost attractiveness
BP shareholders rejected a resolution by activist investors demanding more aggressive carbon emission reduction targets at the company’s 2023 AGM. The motion, filed by shareholder group Follow This, secured 16.75 % in favour, despite BP urging voters to oppose it. This was up from the 14.9 % support it attracted last year but below the 20.6 % won in 2021. Additionally, BP shareholders re-elected the company’s Chair over the objection of several UK pension funds. The fossil fuel giant, which reported a record profit of USD 28 billion in 2022 on the back of rising energy costs, has recently cut back its target to reduce emissions by the end of the decade.
FCA (1) | FCA (2) | Sky | Lexology
First Horizon, Toronto-Dominion
Bank drop merger plans
Canadian lender Toronto-Dominion Bank and U.S. bank First Horizon Corp have abandoned their merger plan, triggering a 36% drop in the First Horizon stock price. The deal was cancelled due to uncertainty regarding the timeline for regulatory approvals. The regulators’ concerns have reportedly been prompted by TorontoDominion’s handling of suspicious transactions in the past years. Under the terms of the termination agreement, Toronto-Dominion Bank will make a USD 200 million cash payment to First Horizon, in addition to paying a USD 25 million reimbursement fee. Toronto-Dominion agreed to buy First Horizon in February 2022 for USD 25 a share.
WSJ | Reuters | CNN | Yahoo | PRNW
Enel appoints gov‘t Chair nominee amidst investor concerns
Shareholders of Italian utility Enel have elected Paolo Scaroni as the new board Chairman despite opposition from investors and proxy advisors. Scaroni was nominated by the Italian government, Enel’s largest shareholder with a 23.6% stake. Scaroni’s candidacy had been challenged, as his former service as CEO of Enel made him a nonindependent candidate while his role as former CEO of Eni raised concerns over his ties with Russian energy businesses. UK hedge fund Covalis Capital had submitted an alternative slate, including former finance executive Marco Mazzucchelli as independent Chairman, that failed to secure any board seat.
Reuters (1) | Reuters (2) | WSJ | Bloomberg
Governance in Brief – June 1, 2023
Citigroup to IPO Banamex after Mexican gov’t interventions hamper sales deal Citigroup has announced a plan to spin off its Mexican business, Banamex, after a failure to sell the unit to conglomerate Grupo Mexico. Citigroup had been in talks with German Larrea, CEO and Chairman of Grupo Mexico, for over a year in an attempt to orchestrate the sale of the bank, which was first announced at the start of 2022.
Governance in Brief – May 25, 2023
Activist investor pushes for leadership and strategy changes at NRG Energy Activist investor Elliott Investment Management has disclosed a 13% stake in the US-based NRG Energy and called for leadership and operational changes at the company to remedy its “meaningful underperformance.” The investor urged NRG to add independent directors with experience in the power and energy sector to its board, noting that it has already identified five executives to guide the operational and strategic changes.
Governance in Brief – May 19, 2023
EU court sides with Ryanair on Lufthansa’s 2020 bailout. The EU General Court, the second-highest court in the EU, has annulled the European Commission’s decision on the approval of state bailout for Deutsche Lufthansa prompted by the 2020 pandemic. The judgment found the EC erroneously considered that Lufthansa could not obtain financing on the markets and failed to ask for the implementation of an incentive mechanism for the airline to buy back the German Government’s stake.
Governance in Brief – May 11, 2023
JPMorgan Chase takes over failed First Republic Bank JPMorgan Chase has acquired the assets and deposits of First Republic Bank after California authorities seized and auctioned the troubled lender. The Federal Deposit Insurance Corporation (“FDIC”), an independent governmental agency established to maintain financial stability through the insurance of banks’ deposits, took possession of First Republic Bank after the lender suffered a severe liquidity crisis following the failure of SVB and Signature Bank earlier in March.