TheChek News Flow

Adrian Hallmark points to poor incentives and energy prices that are putting off carmakers

The UK’s failure to attract investments from electric vehicle start-ups or large battery makers was “concerning”, the chief executive of luxury-car maker Bentley has warned.

The government needs to deal with energy costs to spur investment and compete with other countries whose incentives are “an order of magnitude more attractive than the UK”, Adrian Hallmark told the Financial Times.

The Bentley boss’s comments come as governments across the world vie to attract battery manufacturing plants in order to protect their own car industries as they gradually switch to making electric vehicles.

Companies such as Bentley’s owner Volkswagen are choosing “Canada, Spain, Poland, Belgium, even Germany — one of the highest-cost markets in Europe” to locate battery factories, he said.

In these countries “the incentives that are offered, which are all publicised, are an order of magnitude more attractive than the UK”, he added.

Speaking in a pre-recorded interview for the FT Future of the Car Summit this week, the Bentley chief said: “It’s surprising, if not a bit concerning that no [electric vehicle] manufacturer or battery manufacturer has chosen the UK over any other location as an investment destination.” 

He also pointed out that “no one has chosen so far to put any strategic investment in green mobility into the UK beyond the incumbents”.

The three-day event held in London from Tuesday will feature the chief executives or senior leaders from Ferrari, Geely, Renault, Nissan, Volkswagen, Stellantis, Ford and Aston Martin, as well as electric car start-ups Polestar and Fisker.

While the UK has previously held talks with start-ups including Rivian and Tesla, so far none of the new entrants have chosen to build factories in the UK. China’s BYD earlier this year said that it did not even consider a plant in the country because of its decision to leave the EU.

Chinese battery group Envision is building a larger battery plant for Nissan in Sunderland, and is expected to work with India’s Tata on a site to serve Jaguar Land Rover, which is choosing between the UK and Spain for the factory.

The government should offer “affordable energy prices and at least something approaching equivalent incentives to get the ball rolling in terms of inward investment,” Hallmark said, adding that UK energy costs are about a third higher than on mainland Europe.

Bentley has committed to making its future electric cars in the UK as part of a €3bn investment into its Crewe facility, but plans to use imported batteries.

The brand, which made about 15,000 cars last year, is not large enough to support a dedicated battery plant in the UK, Hallmark said. “To get a critical mass, to create a gigafactory and to make it work from an economic point of view is going to be a real challenge in the UK, unless a big player steps in to fulfil their own needs and has spare capacity”.

EU steps up efforts to clamp down on Russia sanctions evasion

Whack-a-mole

The EU’s 11th package of sanctions on Russia is meant to be an exercise in closing down loopholes. But that doesn’t mean it will be easy to land, write Sam Fleming and Andy Bounds.

Context: EU members want to further tighten the noose around key sectors of the Russian economy. But with little left to hit there, the discussions have focused on countering sanctions evasion through third countries.

Among the most radical ideas is a mechanism that would allow the EU to restrict sales of certain products to other third countries that then leak into Russia.

Critics, however, fear that targeting countries through which banned goods transit could alienate them. “We want to do this in such a way that we don’t push those third countries towards China or Russia,” an EU diplomat said.

According to the text, which will need to be unanimously approved by member states, the bloc would first try to counter circumvention through diplomatic means, using more restrictive measures for certain goods as last resort.

The sanctions would, if approved, also explicitly target a handful of companies in countries including China, because of claims they are selling equipment that could be used in weapons. Member state representatives will discuss the draft on Wednesday, and it could still change.

Other parts of the proposed package focus on ironing out wrinkles and listing dozens of new individuals and entities.

Brussels has, for example, proposed ending the temporary exemption from the Russian oil embargo for the north Druzhba pipeline to Poland and Germany.

The proposed sanctions also include ending the transit of certain goods through Russia and fresh export controls for newly identified dual-use goods.

More controversial proposals such as imposing sanctions on the Russian nuclear sector did not make it into the current text.

Still, expect lengthy discussions. “Experience has shown that these proposals need to be studied in detail,” one senior EU diplomat said.

Alessandro Michele, the architect of Gucci’s revamp who abruptly resigned in November, is preparing his comeback. The 50-year-old stylist is secretly working on reviving the Italian fashion name Walter Albini, according to several industry sources. Albini, widely considered the father of Italian ready-to-wear, is a designer Michele has always admired. Could it be a match made in fashion heaven?

Michele made his first appearance in public in months at the Met Gala in New York last week on the arm of Agnelli heiress and movie producer Ginevra Elkann. Michele dressed as a flamboyant, 1970s’ version of Karl Lagerfeld, at the event in the Kaiser’s honor.

In that flamboyancy, Michele also recalled Albini, a brilliant dandy designer who shot to fame in the late 1960s and 1970s. His explosive creativity and classy looks had him compared with both Lagerfeld and Yves Saint Laurent at the time.

But Albini did not live long enough for many people to remember him outside of Italy. Albini died of AIDS in 1983, at the height of his stardom, at the age of 42. For fashion insiders Albini is ripe for revival - and Michele is the ideal creative to do it.

GENDERLESS

Like Michele, Albini was considered a pioneer of genderless fashion, making suits for women and men alike. Albini too was known for his “total looks.” These involved not only entire silhouettes and accessories using the same theme, fabric or colors but also matching curtains and sofa.These produced striking images beloved by photographers and fashion magazine editors. Albini was known for working closely with fabric and clothes manufacturers. He helped industrialize and democratize fashion and contributed to the emergence of what would become known as Italian ready-to-wear.

In common with Albini, Michele’s baroque and eclectic universe is not only about clothes - it’s also about lifestyle and decoration. The long-haired and tattooed stylist loved designing for the Tuscan porcelain maker Ginori 1735 which Gucci saved from bankruptcy ten years ago. And like Albini, Michele is passionate about unisex clothes and accessories. Some fashion critics say Michele has influenced the rise of genderless as a major trend in fashion. The Italian stylist, who spent 20 years at Gucci and became creative director in 2015, admitted several times in interviews to being inspired by Albini’s legacy.

Some Italian media reported that Walter Albini is being relaunched by the Qatari fund Mayhoola that owns Valentino and Balmain. That’s incorrect, informed sources have told Miss Tweed.The Walter Albini brand and its archives were acquired last year by Bidayat, an investment company founded two years ago by Rachid Mohammed Rachid, several sources with first-hand knowledge of the matter told Miss Tweed on condition of anonymity. Rachid is also CEO of Mayhoola and chairman of fashion brands Balmain and Valentino.An Egyptian national, Rachid was previously Minister of Trade, Industry, and Investment of Egypt and president of Unilever North Africa.

BIDAYAT

Based in Switzerland, Bidayat is funded by Rachid’s family office Alsara Investment Group which has over $2 billion in assets under management and focuses primarily on markets in the Middle East, North Africa and Europe. The group has invested in many companies, including Japanese luxury eyewear maker Akoni which works for Valentino and Balmain.

Though Bidayat, Rachid invests in up-and-coming fashion, jewelry and accessories brands from around the Mediterranean Basin, putting in from $500,000 to $10 million. Bidayat has invested in the Egyptian accessories brand Okhtein and in the jeweler Azza Fahmy, a brand currently advised by former Kering watch and jewelry executive Albert Bensoussan.

“Mr Rachid is passionate about entrepreneurship and Bidayat is a way for him to support talents and take risks,” a source close to Mayhoola told Miss Tweed declining to be named. “This is a very serious project for Bidayat,” the source explained. “A lot of work and resources are being invested in it,” the person said, adding that the relaunch of the Walter Albini brand was due to take place a few months from now. Rachid may have found the designer to relaunch the label but he is still looking for a CEO and a Chief Merchandising Officer, the source said. Building teams takes time and is no easy task.

Still, the prospect of Michele reviving Albini is tantalizing. Michele, may have left Gucci because owner Francois-Henri Pinault wanted a change of mood at the Italian mega brand, but Michele still remains a creative juggernaut whose maximalist style has millions of followers. During his seven-year tenure, Gucci’s annual revenues went from €3.9 billion to more than €10 billion.

“He’s a great match for Albini,” one senior industry source said about the choice of Michele for resuscitating the name of the late Italian designer. Some creatives are better at telling others’ stories than their own. Michele’s run at Gucci suggests he is a master at this skill. Will he be able to do the same at Albini? The superlative example of this was Karl Lagerfeld, who worked for Krizia alongside Albini in the late 1960s, and who was always more successful designing for Fendi and for Chanel than he was for his own eponymous brand, fashion critics say. Some designers are not comfortable telling their own personal story. It forces them to reveal their inner selves and makes them feel vulnerable. They much prefer hiding their sensibility behind the mask of another person. That way, they feel protected and more at ease to create.

SLEEPING BEAUTIES

The fashion industry is full of success stories of designers who resuscitated sleeping beauties. The advantage of that business model is that when the brand parts ways with a designer for whatever reason, it still has a chance to survive and even thrive under another creative director. Balenciaga, Schiaparelli and Yves Saint Laurent are good examples. And then are some prestigious historic names in fashion such as early 20th century Madeleine Vionnet and Paul Poiret who never found the right designer and business partner to help them really take off. Under the ownership of Korean retailer Shinsegae International, Paul Poiret’s fashion debut flopped and now it’s mainly a cosmetics brands sold in Asia.

Even though Michele built a huge fan base with his colorful, romantic and geek chic looks and is now actually much better known today than Albini, it makes more sense for him to bring back a historic name on the fashion map and make it relevant again than launching his own label, fashion industry analysts say. “Michele is currently working on a start-up but he’s keeping that project very secret,” a senior industry source told Miss Tweed.

ILLUSTRATOR

Born in Busto Arsizio, outside of Milan, in 1941, Albini was the only male attending the all-girls Institute of Art, design and fashion at Turin University. At 17, he started as an illustrator, producing ads for fashion magazines and rapidly applied his talent to drawing clothes and accessories.

Albini broke with the tradition of showcasing in Florence’s historic Palazzo Pitti, by hosting catwalks in Milan. And many other brands would follow him. Today, Milan is Italy’s fashion capital. The designer drew inspiration from all kinds of artistic movements from Gustav Klimt and Art Deco to films from the Inter-War period. He was also very impressed by the rigor and vision of Coco Chanel whom he met in Paris in the early 1960s.

In the meantime, there are plenty of signs a relaunch is underway, although it remains behind-the-scenes. TheWalter Albini website that showcased the late designer’s work and told the designer’s story was shut down this week. It now only features a logo with “W” sitting above an “A” on a white page with an email contact. That email contact never replied to a request for an explanation as to why the website was pulled down.

Hired by Bidayat, students at Italy’s Bocconi University, have been interviewing specialists on how to best revive dormant heritage brands in preparation for this project, one senior industry source said.Official documents from the European Union Intellectual Property Office show that the owner of the brand changed address in Milan last month.

What’s more, Stefano Tonchi, an Italian fashion industry veteran is understood to be advising Rachid and the Bidayat teams on how to best bring back the spirit of the legendary designer. Maria Luisa Frisa co-authored with Tonchi, former editor of W fashion magazine, a book called Walter Albini and his times: All power to the imagination, published in 2010 by Marsilio Editori.

Bidayat, Rachid and Tonchi did not reply to requests for comment.

Even though speculation is growing about Michele’s comeback and his involvement with this revival, the project is kept under wraps for now. The plan is to say something only when the teams and the strategy are in place. This may not happen as fast at Rachid would like.

Still, the stage is being set for an enticing revival not only of Albini, but also Michele.

Big clinics are giving Leqembi to some patients while rural providers wait and watch

Move comes amid drop in value of local dollar and persistent inflationary pressures

Zimbabwe is launching gold-backed digital tokens as President Emmerson Mnangagwa’s government struggles to prop up the southern African nation’s inflation-wracked currency months before elections.

The Reserve Bank of Zimbabwe said the tokens would “expand the value-preserving instruments available in the economy”, a reference to a sharp drop in the value of the Zimbabwe dollar. But the planned launch throws a spotlight on another round of currency chaos driven by the ruling Zanu-PF party’s use of money printing ahead of elections this summer.

The Zimbabwe dollar has lost more than half its value since the end of last year to reach about 2,200 against the US dollar in the country’s parallel market, compared with an official rate of about Z$1,000 that is derived from foreign exchange auctions to importers.

Now Harare is betting on the success of the digital investment, hoping that its backing with gold will damp price pressures in a country that has suffered regular rounds of hyperinflation. The launch on Monday will follow the issuance last July of physical gold coins as stores of value.

Zimbabwe produced 35 tonnes of gold last year and the central bank is a leading buyer via a gold trading subsidiary. Last week, prices for gold futures matched an all-time high of $2,072 a troy ounce.

The central bank has said the digital tokens will be backed by gold in its reserves and will be redeemable at international prices after 180 days. But analysts have called the scheme a distraction from the root causes of the currency crisis.

The token issue “has absolutely nothing to do with what’s happening on the ground — it is a sideshow”, said Tinashe Murapata, an economist, who added that the central bank had given few additional details on the physical gold backing for the token scheme, such as storage or auditing.

As ordinary Zimbabweans turn away from the local currency, its slide “is the thing [the bank] should be worried about”, Murapata said. 

Inflation has continued to run at triple digits when measured in Zimbabwe dollars, though the central bank has adopted a “blended” rate that includes prices in both Zimbabwe and US dollars. This rate is about 87 per cent. Zimbabwe’s main interest rate is 140 per cent, having been as high as 200 per cent in January.

The central bank said gold coin sales, worth up to Z$25bn up to the end of March, had “aided the dissipation of domestic inflationary pressures”.

But because the digital gold tokens will be linked to the official currency rate, analysts have said the bank is propping up demand for the Zimbabwe dollar by effectively offering them at a discount to the parallel rate.

“There is a very clear arbitrage opportunity through participating in the forex auction or buying gold coins,” said Richard Honey of Harare-based Msasa Capital, an investment advisory firm.

Economists say the central bank is also not tackling a root cause of the currency slide: the printing of money to fund government spending, reflected in a surge in money supply this year. Harare is preparing for its second election since the 2017 coup that toppled Mugabe.

“They are printing — we are in an election period,” said Murapata. “Unfortunately, [the country’s] revenues are just not enough. We have an insatiable expenditure. It will take deep-seated institutional reforms to solve it.”

Zimbabwe has struggled with monetary chaos ever since hyperinflation under Mugabe obliterated the value of an earlier form of the Zimbabwe dollar in 2008-09. Money-printing and foreign exchange shortages before Mugabe’s downfall led to the rise of an ersatz “bond note” currency that shadowed the US dollar and which was reworked into a resurrected Zimbabwe dollar by the post-coup government in 2019.

The new currency has haemorrhaged value despite frequent attempts to impose its use. The switch to a blended inflation rate acknowledged the rise of US dollar transactions but Zimbabwean businesses said the move will damage accounting standards.

“The complexity of doing business in Zimbabwe continues to increase,” said Honey.

Nik Storonsky says fallout from SVB and other lenders has made regulators ‘extra cautious’

Revolut chief executive Nik Storonsky has blamed recent banking turmoil for the latest delays to the fintech’s long-awaited UK banking licence, claiming the cause of the hold up “is really not us”.

Revolut has been locked in discussions with the Financial Conduct Authority and Prudential Regulation Authority about a UK banking licence for more than two years, far longer than the typical turnround time of less than a year.

Since the application was lodged in January 2021, Revolut has lost several of the most senior executives in its UK banking team. Regulators have also carried out a review of the fintech’s culture, which executives say has been improved.

Revolut’s chief financial officer Mikko Salovaara said a UK licence was coming “any day now” on March 1.

The fintech sees a UK licence as crucial to its hopes of offering loans and other services to the more than 5.8mn clients it already has in the UK. It would also act as a seal of approval to help win other banking licences in key markets.

“Ultimately it is not really us, it is generally the banking crisis we see at the moment that makes regulators extra cautious,” Storonsky told the Financial Times of the hold-up to the UK licence approval.

The FCA and PRA both declined to comment. The operational teams working on Revolut’s licence application are not the same officials who were overseeing the UK’s regulatory work on Credit Suisse and Silicon Valley Bank — two of the biggest victims of a banking crisis that shows no sign of abating — though there is some overlap at very senior level.

Two people familiar with the UK licence process said the recent turmoil “would not impact” Revolut’s application.

Regulators in the UK quizzed Revolut bosses about the qualification on their delayed 2021 accounts, which warned that there was a risk that revenues were “materially misstated”, a person familiar with the situation told the FT. Separately, the FCA ordered an independent review of Revolut’s policies to prevent and detect financial crime in 2020, under a process known as a section 166.

Fees from crypto trading were Revolut’s single biggest source of revenue in 2021, accounting for approximately a third of its reported £636mn. Other streams include subscription services for higher-tier cards and lending products in Europe such as a buy now, pay later service.

The FCA has faced criticism for being slow to process licences and other authorisation applications made to it generally.

In a recent interview with the FT, FCA chief executive Nikhil Rathi would not comment on Revolut’s case but said most of the delays in its licence applications were down to genuine regulatory concerns and said the regulator would be “much more forthright and public about saying that in future”.

Movement on Revolut’s banking licence appears to have slowed down, or almost halted, according to two people familiar with the approval process. In the meantime, the lack of a licence is preventing Revolut from competing fully in the US, Canada or Australia, because regulators there are watching the UK’s decision making.

Revolut said it does not comment on licence applications or its regulatory relationships.

“If you are a business and you want to build something, uncertainty is a thing that kills you because you don’t know what you can do, what you can’t do,” Storonsky added.

Two people familiar with the company said it has considered leaving the UK, in what would deal a blow to the UK’s fintech sector and at odds with prime minister Rishi Sunak’s aims to become a global tech hub.

The company said in a statement: “We’re a British company and London is our home.”

When asked about the government’s aspirations to encourage innovation and investment, Storonsky said: “The reality is pretty different.”

The legendary investor confirms he won’t bid for Occidental, praises Apple

OMAHA, Neb.—It has been a tumultuous year since Warren Buffett last took the stage to talk to his company’s shareholders.

Markets swooned. Tensions between the U.S. and China rose to new heights. And three U.S. banks toppled in quick succession, raising fears about the potential for wider fallout in the financial system.

Through it all, Mr. Buffett retained his sense of optimism.

Sure, society has changed significantly since he bought his first stock at age 11 in 1942. But the basic rules of investing have stayed the same, he said.

“What gives you opportunities is other people doing dumb things,” he said at Berkshire Hathaway’s BRK.B 1.21%increase; green up pointing triangle annual shareholder meeting Saturday. “In the 58 years we’ve been running Berkshire, I’d say there has been a great increase in the number of people doing dumb things.”

Mr. Buffett, chairman and chief executive of Berkshire, addressed a crowd of thousands who gathered in an arena to hear him and his lieutenants speak. The famed investor has used his company’s annual meeting as an opportunity to muse on everything from share buybacks to activist investors to corporate taxes, as well as more philosophical topics, like the meaning of a good life.

This year, he addressed Berkshire’s big bet on oil stocks, which have made it the biggest shareholder of both Occidental Petroleum and Chevron and stoked speculation that it might ultimately try to acquire Occidental.

“We’re not going to buy control,” he said of Occidental. “We’ve got the right management running it, and we wouldn’t know what to do with it.”

Mr. Buffett also praised Apple, Berkshire’s biggest stock investment. As in previous years, the iPhone maker’s chief executive, Tim Cook, was in the audience attending the meeting.

“It just happens to be a better business than any we own,” Mr. Buffett said, adding that he believed consumers would sooner give up a second car than let go of their iPhone.

Mr. Buffett also expressed his faith in the U.S., a common theme of his letters to shareholders over the past few decades. The country isn’t perfect, he said. It faces huge challenges, including a government that appears to have become increasingly tribalistic, he said. Problems in the banking sector have also illustrated that there is a serious lack of understanding among both Congress and the broader public about lenders, he added.

Charlie Munger, Mr. Buffett’s right-hand man, went one step further. The industry itself needs to reckon with its morality, he said.

“Bankers should be more like engineers…avoiding trouble instead of trying to get rich,” Mr. Munger said.

Mr. Buffett maintained, however, that if he had the chance to start life all over and pick when and where he would be born, he would without a doubt pick the U.S. today, he said.

“The world is overwhelmingly short-term focused,” Mr. Buffett said. “I’d love to be born today and go out with not too much money and hopefully turn it into a lot of money.”

Audience members also asked the men what they thought of the rise of artificial intelligence. Programs such as OpenAI’s ChatGPT, which are able to generate humanlike responses to questions, have become increasingly popular—as well as controversial—in recent months.

Artificial intelligence will no doubt disrupt many industries in the years to come, Berkshire Vice Chairman Mr. Munger said. But Mr. Munger expressed skepticism of what he called the hype surrounding the field.

“I think old-fashioned intelligence works pretty well,” he said.

At age 92 and 99, respectively, Messrs. Buffett and Munger remain as sharp as ever, said Chris Bloomstran, president of Semper Augustus Investments Group, at a conference on value investing held by Gabelli Funds on Friday.

“We just take each of these years that we still get as a victory, because it’s been one of the greatest pleasures” in life to get to come to Omaha every year and hear them speak, he added.

The tone was less celebratory outside the convention center early Saturday, where pilots for Berkshire-owned NetJets held up signs in protest of company executives, who they say have failed to meaningfully address conditions leading to a shortage of workers.

“SLOPPY SCHEDULING = FATIGUED PILOTS,” one sign read.

Shareholders present for the meeting mostly strode past, seeming to have other things on their mind. This year, like in previous years, many lined up well before sunrise in the hopes of being able to secure the best seats inside the convention center.

Hotels closest to the convention center where the meeting takes place are frequently booked up months in advance. Last year, 90% of hotel rooms in the county were filled on the Friday and Saturday nights during the weekend of Berkshire’s meeting, according to Jasmyn Goodwin, vice president of marketing and communications for Visit Omaha.

Car rentals are scarce, too. At a Hertz counter in Omaha’s airport on Thursday, one couple was stunned when they were told the last remaining cars available for the weekend would cost them about $500 a day.

To many, the voyage is worth it.

“I’ve been coming since 2012, and I hope I’ll continue coming when I’m Charlie’s age,” Adam Mead, author of a book on the history of Berkshire, said at the value investing conference Friday.

Berkshire kicked off Saturday’s proceedings by releasing its results for the first quarter. The company reported net income of $35.5 billion, or $24,377 a class A share equivalent. That was up from $5.58 billion, or $3,784 a class A share equivalent, a year earlier.

Operating earnings, which exclude some investment results, rose to $8.07 billion from $7.04 billion last year, boosted by big gains in Berkshire’s insurance underwriting business. Mr. Buffett cautioned that the majority of Berkshire businesses would likely report lower earnings this year, due to an “incredible period” for the economy coming to an end.

Mr. Buffett has long told the company’s shareholders that they should ignore net income and focus instead on Berkshire’s operating earnings, which he feels are a better reflection of how Berkshire is doing.

Meanwhile, Berkshire ended the quarter with $130.6 billion in cash and cash equivalents, up slightly from around $128.6 billion at the end of 2022.

Berkshire tapped into that cash pile to go on a buying spree in the first half of 2022, but it has slowed down its pace of stock purchases since then. For the second straight quarter, the company was a net seller of stock, unloading $13.3 billion in shares while buying $2.9 billion.