TheChek News Flow

Thames Water freezes executives’ ‘retention payments’ after backlash

Crisis talks with regulator and government led to agreement to pause controversial payouts

Thames Water has agreed to pause executives’ lavish retention payments that were agreed as part of a £3bn emergency loan after a furious backlash from the Labour government. 

Crisis talks with regulator Ofwat, the government, the utility, and its creditors held over the weekend agreed to “pause and reconsider the retention payments”, said one person close to Thames Water. “All the parties recognise that the payments are a distraction from the major issues at hand.”

Steve Reed, environment secretary, welcomed Thames Water’s decision to withdraw the controversial payments, saying that handing the money out would have been “the wrong thing to do”.

The decision by the UK’s largest water company comes just days after a war of words between the Department for Environment, Food and Rural Affairs and Thames Water’s management over whether the utility would be able to press ahead with the payouts. 

The company, which serves about a quarter of the country’s population, is struggling under the weight of its £20bn debt mountain and is in exclusive discussions with the private equity firm KKR to take over the business as it attempts to avoid temporary renationalisation. The utility came perilously close to running out of money before it agreed the £3bn loan this year with its senior creditors, including US hedge funds Elliott Management and Silver Point.

Details of the company’s retention payments emerged last week when Thames Water chair Sir Adrian Montague told parliamentarians that the payouts could involve as much as half of annual salary for some of the beleaguered utility’s top executives. 

The company initially insisted that it would be able to sidestep attempts by ministers to stop the generous payouts. Defra officials in turn said on Friday that they would “not stand idly by if Thames bosses try to plunder the company for personal gain”. 

Reed confirmed to a session of the environment select committee on Tuesday that the plans had been scrapped. 

“Just over the last few days we have seen a very unfortunate situation where Thames Water appeared to be attempting to circumvent that ban, calling their bonuses something different so they can continue to pay them,” he said. “I am very happy indeed that Thames have now dropped those proposals.”

At issue has been whether the government has the powers to block the payments, which would be paid for out of the £3bn loan, which comes with a 9.75 per cent interest rate, plus fees.

Defra has passed a Water Act that will give Ofwat greater powers to claw back bonuses in certain circumstances, for example where the company has failed in its financial or environmental performance.

But Thames Water argued last week that the retention bonuses did not fall under the government’s new legislation because they are not performance-related. 

The company had already admitted it would raise pay packages to compensate for the bonus restrictions.

Feargal Sharkey, the pop star-turned-environmental campaigner, accused the government of “pantomime politics” in focusing on the bonus issue. “It’s the kind of policy that will grab headlines but achieve nothing and deliver even less,” he said.

The payment of bonuses has become a lightning rod for public anger against water companies including Thames, which has raised bills by at least a third this year. 

“It has never been the Thames Water board’s intention to be at odds with the government’s ambition to reform the water industry,” the company said in a statement. “Following recent discussions the Board has decided to pause the retention scheme and await forthcoming guidance from the regulator [ . . . ] to ensure our approach supports both our turnaround objectives and broader public expectations.”

French luxury house ‘very cautious’ on outlook as profits decline following aggressive price rises

Chanel’s profits dropped a third last year as the privately held French luxury house defended its aggressive price rises in the run-up to a global luxury downturn.

Chanel, privately held and which has headquarters in the UK, said on Tuesday that its operating profits fell almost a third to $4.5bn in 2024, compared with a year earlier.

Sales dropped 4.3 per cent to $18.7bn, led by Asia, where sales fell 7.1 per cent to $9.2bn. It was the first time that sales and operating profits both fell at Chanel since 2020, when the pandemic forced store closures.

“Macroeconomic and geopolitical volatility is unquestionably challenging,” Chanel’s global chief executive Leena Nair told the Financial Times. “We’ve seen these conditions have an impact on sales in some markets.”

The sharp decline in profits came before any impact from US President Donald Trump’s erratic tariff regime. Nair said she was “very cautious” for Chanel’s outlook in 2025 in an environment that remained “extremely uncertain”. 

“We’ve been here a hundred years, we have navigated ebbs and flows,” Nair added.

Chanel, founded by designer Coco Chanel, has pushed through some of the sharpest price increases in the luxury industry in recent years, leading some customers to complain of a disconnect between price tags and product creativity and quality.

For example, the price of a classic Chanel flap bag has more than doubled to top €10,000 since 2019, compared with a 50 per cent rise in the average price of luxury goods, according to analysts at HSBC.

Chanel’s global chief financial officer Philippe Blondiaux pushed back against the idea that price increases had dented sales, saying that he believed consumers “totally understand that the price of the Chanel items they buy is commensurate with the quality of the raw materials”.

He added that Chanel raised prices by about 3 per cent in 2024 on its so-called fashion products, and prices would probably rise by a similar amount this year.

Chanel’s weak results underscore the challenges facing newly appointed artistic director Matthieu Blazy, formerly of Bottega Veneta, who started in April. Blazy will present his first collection in October.

Despite its struggles, Chanel invested at record levels last year. Capital expenditure, including spending on store acquisitions, increased 43 per cent to $1.75bn.

The company invested in silk manufacturer Montero, a metal jewellery maker and tanneries as part of a 10-year project to control more of its supply chain. The house also spent $2.4bn on so-called brand activities, such as fashion shows and events for clients.

Blondiaux said the investments were being made so that Blazy arrived with the “best possible conditions”.

The group is planning to make another $1.8bn of capital expenditure this year, as well as a “record” $600mn spending on further integration of its supply chain, Blondiaux added.

“We are financially solid, and we have a long-term view and long-term approach to everything we do,” he said.

Few luxury groups have managed to come through the industry downturn unscathed. Sales at industry leader LVMH declined 2 per cent last year, while Kering’s sales slumped 14 per cent because of weak demand at Gucci.

However, other top-end brands in a similar category to Chanel — including Hermès and Brunello Cucinelli — both grew sales by double digit percentages last year.

The French fashion house sees no quick fix in 2025, despite the arrival of Matthieu Blazy as creative director.

PARIS — The Chanel juggernaut came to a halt last year, as revenues fell for the first time since the coronavirus pandemic and operating profits plummeted 30 percent amid a sharp slowdown in luxury spending in mainland China.

The French fashion house reported on Tuesday that revenues totaled $18.7 billion in 2024, down 4.3 percent at comparable rates, as growth in Japan and South Korea failed to offset the impact of macroeconomic and geopolitical volatility elsewhere.

Operating profit fell to $4.5 billion from $6.4 billion the previous year as Chanel continued to invest heavily in its store network and supply chain.

In an interview with WWD, global chief executive officer Leena Nair and chief financial officer Philippe Blondiaux said they saw an inflection in the first quarter of 2024 and expect little improvement this year, despite the arrival of Matthieu Blazy as artistic director of fashion activities on April 1.

“We continue to operate in a very challenging environment,” said Nair, adding that the house is taking a long-term view. “As a 100-year-[old] brand, we expect ebbs and flows, and we will continue to navigate with a long-term strategy, which is why last year, we invested more than ever in our fundamentals.”

Chanel has declared a hiring freeze, with plans to maintain its headcount stable at 38,400 this year after hiring 10,000 people in the last three years, including 1,900 in 2024, mostly in the first semester, Blondiaux said.

The privately owned company said earlier this year it was cutting 70 roles in the U.S., representing about 2.5 percent of its workforce there. Blondiaux denied reports that it plans to slash its headcount in China by 20 percent this year, clarifying that it plans “relatively minor” adjustments in regions where growth has stalled.

“For a company of our size going through this change of cycle, it’s normal, I would say, to adapt your structures in different places,” he said. “In China, we are adjusting our workforce to a large extent through natural attrition.”

Investments are also expected to remain stable, after a 43 percent jump last year, with capital expenditure forecast at $1.8 billion in 2025. Chanel plans to plug a record $600 million into its manufacturing network, as illustrated by its purchase of a minority stake in Como-based silk specialist Mantero, Blondiaux noted.

Among its key acquisitions last year was a 25 percent stake in Swiss high-end watchmaker MB&F, as well as the building housing its boutique on Avenue Montaigne in Paris.

Investments in “brand-support activities” were broadly stable at $2.45 billion in 2024, versus $2.46 billion the previous year, with key initiatives including a new No.5 campaign featuring Margot Robbie, the new face of the fragrance, and Jacob Elordi.

“We set our own course in challenging economic conditions. We could have slowed down the momentum of investment. We’ve done the opposite. We’ve invested more than ever, and plan to do so in 2025 as well,” Nair said.

She detailed plans to open 48 new stores this year, including 22 new boutiques across key markets such as the U.S. and China, in addition to expansions in less-developed territories like India and Canada.

Chanel has prioritized Greater China for events, staging a repeat show of its cruise collection in Hong Kong last November, and presenting its Métiers d’Art line in Hangzhou in December, which Nair billed as its most viewed show ever. It garnered 84.3 million views across social media platforms including Weibo and Douyin, the brand said.

“We have about 127 boutiques across China, and we opened 15 last year. We’ll continue to open 15 this year,” she said. “We’ve invested in new cities like Chengdu, Nanjing, to talk to our client base that’s diversifying in China, so there’s a lot to look forward to in China.”

Chanel ended the year with 644 boutiques, up from 612 at the end of 2023, with openings including its first U.S. store dedicated to watches and fine jewelry on Manhattan’s Fifth Avenue, and its inaugural House of Beauty in Paris.

Nair emphasized that although Blazy will show his first collection in October, Chanel is not expecting immediate results.

“Matthieu is one of the most talented and gifted designers of his generation. His vision and understanding of the Chanel codes quickly convinced us that there is no one else better suited for the job, and we were very impressed by his mastery of natural, luxurious materials, his deep commitment to craftsmanship, the amount of time he spends in workshops, ateliers, really understanding the product and the craftsmanship,” she noted.

“Chanel is a profound brand. It takes time to understand the depth and the essence of our brand,” Nair continued. “We are having patience and perspective as Matthieu settles into his job. We don’t just think about the next collection or the October collection, but look at it long-term, because we know a vision takes time to unfold and it has impact over time.”

She paid tribute to the studio team, which has designed collections since June 2024, and thanked former creative director Virginie Viard for her contribution, noting that Chanel’s revenues nearly doubled over the previous three years.

Nair also highlighted key launches this year, including Chance Eau Splendide, which she flagged as the house’s first new fragrance in eight years, and the Chanel 25 handbag, which she

Blondiaux said that after growing 23 percent in 2023, ready-to-wear sales have remained relatively resilient despite the absence of a creative figurehead — though he declined to provide figures.

“Ready-to-wear was one of the best-performing product lines last year and this year, year-to-date, we are positive in terms of growth with ready-to-wear, so it really shows that the quality of the work done by the studio has been amazing, even in the absence of a creative director,” the executive said.

But Chanel appears to have lost some of its pricing power amid growing criticism of a series of hikes that pushed the price of its signature Medium Classic bag above $10,000.

After several years of twice-yearly price increases to reflect inflation in raw materials and harmonize its prices between different regions, it raised prices for fashion by 3 percent in 2024, in line with global inflation.

“It was more or less the same for all the product lines on average,” Blondiaux said. “And for 2025, we plan more or less to increase prices in the same way.” In the U.S., the brand is taking a wait-and-see attitude to prospective trade tariffs amid ongoing negotiations with the European Union.

Blondiaux declined to delve into the reasons why Chanel, which is owned by the secretive Wertheimer family, underperformed leading luxury sector peers last year. Hermès revenues rose 14.7 percent in comparable terms to 15.17 billion euros, while luxury conglomerate LVMH Moët Hennessy Louis Vuitton said revenues rose 1 percent to 86.15 billion euros.

“We never compare ourselves with competition, because we think our portfolio is obviously different from LVMH, we are operating in different geographies,” he said. “We are confident that the consistency of our long-term approach and the unique strengths of the Chanel brand position us very well for the future.”

SAN FRANCISCO, May 20 (Reuters) - German chipmaker Infineon (IFXGn.DE), opens new tab said on Tuesday it will work with Nvidia (NVDA.O), opens new tab on developing chips for new power delivery systems inside artificial intelligence data centers.

Infineon said it will work with Nvidia to develop high-voltage, direct current power delivery systems. In current data centers, most high-voltage power is distributed as alternating current and then converted to the direct current needed by computer chips by individual power supply units inside of servers.

But that method of distributing power introduces losses in moving power around and converting it. With each server rack within AI data centers expected to take a megawatt of power by the end of the decade, Infineon and Nvidia said they are hoping to reduce those losses by creating a centralized direct-current distribution system.

“Through this innovative approach, Nvidia is able to optimize the energy consumption of our advanced AI infrastructure, which supports our commitment to sustainability while also delivering the performance and scalability required for the next generation of AI workloads,” Gabriele Gorla, vice president of system engineering at Nvidia, said in a statement.

Chinese direct investment in Europe rises for first time in 7 years

Report shows pivot to greenfield projects, but €10bn FDI in 2024 still far below 2016 peak

Chinese investment in Europe rose for the first time in seven years in 2024, driven by a surge in electric vehicle and battery projects in Hungary, even as Chinese firms increasingly shunned the UK, Germany and France.

Total Chinese foreign direct investment in the EU and UK climbed 47 per cent to €10bn last year, according to data from the Berlin-based Mercator Institute for China Studies and consultancy Rhodium Group.

While the rebound marked a break in the downward trend, total FDI was just a fifth of the 2016 peak and was heavily concentrated among a small group of firms, including battery makers CATL and Envision, tech group Tencent and carmaker Geely.

“The EU remains attractive for Chinese investment,” said Max Zenglein, chief economist at Merics. But he warned that Beijing could increasingly deploy corporate investment as “a tool for strategic influence”.

Facing mounting political scrutiny and trade tensions, Chinese companies have pivoted from mergers and acquisitions to greenfield investments. CATL’s €7.5bn battery facility in Debrecen and BYD’s planned €5bn electric vehicle plant in Szeged — both in Hungary — are emblematic of the shift.

Hungary accounted for 31 per cent of all Chinese investment in Europe in 2024, retaining its position as the top destination for a second consecutive year. In contrast, the combined share of the UK, Germany and France fell to just 20 per cent, down from an average of 52 per cent over the previous five years.

Prime Minister Viktor Orbán, widely seen as China’s closest supporter within the EU, sees Chinese capital as providing a vital pillar to the economy amid weak domestic growth.

China’s carmakers are under pressure to expand abroad as they grapple with overcapacity and faltering demand at home. The EU’s decision last October to impose tariffs of up to 45 per cent on Chinese car imports has further incentivised local production within the bloc.

Nevertheless, the study noted a sharp drop in new investment announcements by Chinese electric-vehicle manufacturers — down 79 per cent last year compared with 2022—2023 levels. Battery-maker Svolt, for instance, abandoned plans for two plants in Germany worth €4.2bn, while a European Commission preliminary foreign subsidy investigation into BYD’s Hungary plant could further dampen momentum, it said.

The decline was partially offset by a modest uptick in M&A. Tencent acquired Polish video game developer Techland for €1.5bn, though such dealmaking activity is expected to remain subdued. The traditional motivation for M&A — access to Western technology — has waned as China builds its own R&D capabilities.

Chinese investment in strategic sectors such as renewable energy is also drawing heightened scrutiny across Europe. Yet the authors of the study saw scope for a short-term easing in tensions, as some EU member states sought to avoid simultaneous trade conflicts with both Beijing and Washington, while China renewed a charm offensive aimed at Brussels.

GB News investor Paul Marshall calls for break-up of ‘giant toad’ BBC

Right-leaning media baron says ‘anti-competitive’ national broadcaster distorts UK’s media market

Paul Marshall, the hedge fund boss and co-owner of GB News, has called for the BBC to be broken up or sold, in a speech describing the national broadcaster as “an embodiment of anti-competitive market distortion”.

Marshall, who also owns The Spectator magazine and online media group UnHerd, gave a lecture at Oxford university on Tuesday arguing that the BBC was “held to a lower standard of impartiality than any other channel” and that it marks its “own homework”.

He described the BBC as squatting “like a giant toad in the middle of the UK media landscape, an embodiment of anti-competitive market distortion, as well as the source of many of the worst cases of media bias”.

The British hedge fund boss suggested a solution would be to sell the BBC. “As long as the BBC remains a ward of the state, it will continue to be the propaganda arm of the state”, Marshall said.

He argued that, at the least, the BBC should be broken up between its public service elements, such as news, and commercially focused activities, such as the BBC Studios production company.

A BBC spokesperson said: “The BBC is the number one brand for media in the UK, used by 95 per cent of UK adults on average per month, and the most used and trusted news provider.

“We . . . are engaging with the public and government on what the long term future of the BBC should look like.”

Last week, BBC director-general Tim Davie said in a speech that “trust in the BBC went up in 2024” because of its focus on “impartiality and transparency”.

He pointed to its work tackling the risks of disinformation, as well as “doubling down on impartiality, championing free, fair reporting alongside landmark investigative journalism . . . as well as increasing transparency and frankly holding our nerve amidst culture wars”.

Separately, Marshall complained that UnHerd had been the victim of an online shadow ban — in effect, he argued, being pushed to the margins by algorithms that can dictate what is better read and watched online.

He said that social media platforms should be required to publish all algorithms which they use to analyse or influence user preferences. “Elon Musk believes in open source and transparency for manufacturing. He should do the same for X,” he said.

Marshall also said that Sky — which owns a news channel that competes with GB News — had been moved “to the progressive left” by its US owner, Comcast, “effectively becoming a clone of the BBC”.

He predicted Sky would drop out of regular news coverage in the UK once Comcast’s 10-year commitment to invest in UK news expires. Sky declined to comment.

Marshall has in recent years emerged as one of the UK’s most influential right-leaning media barons.

A self-styled “classical liberal”, Marshall built his fortune as co-founder of London-based hedge fund Marshall Wace. Since its launch in 1997, it has grown into one of the world’s leading hedge funds, with over $70bn in assets under management. 

Marshall is also chair of Marshall Wace Asset Management but holds his media investments in a private capacity.

Marshall’s first foray into the media industry came in 2017 with the purchase of UnHerd. Soon after, he invested in upstart British broadcaster GB News.

In September last year Marshall boosted his growing British media empire with the acquisition of conservative weekly magazine The Spectator for £100mn. The move prompted the resignation of Spectator chair Andrew Neil, who had previously said that hedge fund managers should not be allowed to own newspapers because of potential conflicts of interest

Julius Baer hit by $157mn loan loss in latest blow to turnaround efforts

Swiss lender’s chief risk officer Oliver Bartholet to ‘retire’ at the end of the year after series of scandals

Julius Baer has been hit with another large loan loss, worth SFr130mn ($157mn), and said its chief risk officer was “retiring” from the Swiss bank, dealing a fresh blow to the company’s turnaround efforts.

The Zurich-based lender and wealth manager disclosed on Tuesday that it had taken a loan loss charge related to its private debt business and “selected positions” in its mortgage book, which follows a SFr606mn writedown last year that triggered a leadership overhaul.

It added that Oliver Bartholet, who has served as the group’s chief risk officer since 2018, would “hand over his responsibilities” on July 1 and “retire” from the business at the end of the year.

It comes after the Financial Times revealed last week that Julius Baer had been ordered to pay more than SFr4mn by Switzerland’s financial regulator over anti-money laundering and compliance failings in its handling of high-risk clients.

The enforcement decision had not previously been made public by either the private bank or the Swiss Financial Market Supervisory Authority’s (Finma).

The SFr130mn charge marks the latest blow to scandal-hit Julius Baer, which is trying to execute a turnaround plan under its new leadership. Last year, the bank wrote down its full SFr606mn exposure to now-collapsed Austrian property group Signa and shut its private debt business.

The bank said it booked the latest charge after its new leadership undertook “an extended review of the remainder of the credit portfolio”.

It added: “After applying more prudent criteria with respect to credit quality . . . the loan loss allowances for selected positions in the mortgage book as well as the remaining private debt loan book were increased.”

Meanwhile, Bartholet’s departure is the latest executive leadership change at Julius Baer since former Goldman Sachs banker Stefan Bollinger took over as chief executive in January.

Bollinger has embarked on an aggressive cost-cutting drive, axing jobs, slimming down the executive board and refining the bank’s strategy. Former HSBC boss Noel Quinn also joined as chair earlier this month.

The bank said that Ivan Ivanic, its chief credit officer, who only joined from UBS in February, would replace Bartholet.

“As we are swiftly addressing legacy issues, we are also paving the way forward to unleash the full potential of our unique franchise and delivering on our stakeholders’ expectations,” Bollinger said in a statement.

The bank reported net new money inflows of SFr4.2bn during the first four months of the year “despite ongoing de-risking of the client book”.

Swedish buyout group looks to strike debt restructuring at one of two troubled French portfolio companies

Swedish private equity group EQT has offered to inject €220mn to help secure a restructuring deal at one of its two struggling French portfolio companies.

EQT, which bought the nursing home group Colisée in a 2020 buyout, made the proposal on Monday as part of a package that would see holders of a €1.2bn secured loan write off around 36 per cent of their debt in exchange for a 33 per cent stake in the business, according to people familiar with the discussions.

While no deal has been agreed, EQT’s offer to inject money has been positively received by lenders, one of the people said. A smaller credit line from banks would not be impaired, another person said.

Heavily indebted French companies have come under pressure in recent years, due to a moribund economy coupled with the removal of post-Covid support for businesses and rising interest rates on their borrowings.

If EQT succeeds in recapitalising Colisée, it would mark the latest in a string of debt restructurings in France, with Patrick Drahi’s Altice telecoms group striking a landmark €24bn deal with creditors of its French business earlier this year.

It would also help fix the balance sheet at one of two EQT portfolio companies in France to have come under pressure in debt markets in recent months.

Colisée’s debt slumped in value this year after it disclosed accounting discrepancies and growing liquidity pressures. The debt of medical laboratory group Cerba, which EQT bought in 2021, is also trading at distressed levels following worsening performance.

Cerba’s secured bonds are trading at 77 cents on the euro, while its unsecured debt is trading at about a fifth of face value, suggesting lenders are braced for heavy losses. Cerba reported slowing earnings earlier this month that meant its leverage on a debt to adjusted ebitda basis had risen to 8.6 times.

Colisée operates 400 sites across France, Belgium and southern Europe, making it the fourth largest operator in Europe. Moody’s downgraded its credit rating to Caa2 last month, which the rating agency defines as indicating “high credit risk”, noting there had been a “significant deviation from our expectations for earnings recovery and continued adequate liquidity”.

Moody’s added that a “couple of accounting discrepancies” had also “resulted in lower earnings”.

Colisée’s rival Orpea reached a debt restructuring agreement two years ago, after struggling under a high burden and facing scrutiny from a journalist’s investigation alleging systematic mistreatment at its care homes.

French grocer Casino is also coming under renewed pressure in debt markets, less than a year after it completed a restructuring in which more than €5bn of debt was wiped out and exchanged for equity.

EQT and Colisée declined to comment.

Deal to let Brits skip EU passport queues would have happened without post-Brexit accord

Broader reform of European border checks that has been planned for years would allow use of ‘e-gates’

A so-called breakthrough allowing Britons to use electronic passport gates across the EU — touted as a major victory this week by Sir Keir Starmer’s government — would have happened even without Monday’s historic post-Brexit agreement. 

A broader reform of European border checks that has been planned for years will allow non-EU nationals from around the world to use “e-gates” at airports across the bloc.

Monday’s agreement, which was heavily criticised by UK opposition parties, will streamline food exports to the EU but also cement access for European fishing fleets to British waters for a further 12 years.

As it sought to highlight “wins” from the deal, Downing Street played up the use of e-gates instead of physical passport checks.

“Instead of waiting in long queues at passport control, Brits travelling to Europe will now be able to use e-gates,” Number 10 said. “So you can start your holiday sooner.”

But rather than being a unique bilateral agreement, the changes will come as part of a broader reform of the EU’s border crossings under the so-called Entry/Exit System (EES), which will introduce electronic checks for all non-EU nationals.

It will still be up to individual countries to install the new systems, and they will have discretion over who can use them, officials cautioned.

Starmer said on Monday that the deal should enable easier travel for Britons but admitted that it was now up to European countries to “make this a reality without delay”.

Sir Ed Davey, leader of the Liberal Democrats, said: “While the prime minister boasts about a deal on e-gates, it sounds like the government is actually still just circling the runway.”

The EES will require non-EU nationals to register their biometric information, including photos and fingerprints, when they first enter the bloc. Airlines and airports have in the past warned that this process could lead to longer queues as the system is being rolled out.

The EES will then use this information to automatically analyse who has a right to enter the EU and for how long, making checks faster in the long run.

People who have the right to freely move in the EU, such as Britons who were living in the EU before the expiry of the post-Brexit period in 2020, will not be subject to the checks.

The European Commission said: “The introduction of the EES will open the possibility to use e-gates for all non-EU citizens, including UK citizens. This will contribute to fluidity at borders for both entry and exit.”

It pointed out that the specific use of electronic passport gates was up to the member states. “E-gates are managed by individual Member States, and there is no requirement for them to install or allow their use at all border points. Once the Entry/Exit System (EES) is in place, UK nationals will therefore be able to use e-gates where they are available, provided they are registered in the system.”

British officials have privately conceded that the EU-UK agreement simply clarifies that there will be no obstacles to Brits using e-gates under the bloc’s new electronic border checks.

The text states that “there will be no legal barriers to e-gate use for British Nationals travelling to and from European Union Member States after the introduction of the European Union Entry/Exit System.”

Assita Kanko, the MEP leading parliament negotiations on the new border checks, said the EES “always left the possibility of using self-service systems or e-gates . . . So there indeed was never a legal barrier”.

She added: “Now there is a stronger commitment from the EU and its member states to actually allow British nationals to access those e-gates.”

Anton Spisak, from the Centre for European Reform think-tank, said: “It’s important to remember that individual member states have discretion over how they manage their borders, and this deal doesn’t alter that.”

European lawmakers and representatives of the EU member states on Monday agreed on a phased start for the new system following a series of delays in its implementation, after Germany, the Netherlands and France had raised concerns about the computer systems.

The three countries still need to declare their readiness before the system can start. While an official rollout date has not yet been set, the commission on its website said “it is expected to start in October 2025”.

EU officials, meanwhile, downplayed the UK’s overenthusiastic messaging regarding the agreement.

“It’s good we’re getting closer. How this is then implemented in practice remains to be seen,” said one EU diplomat. Another added: “It’s a sign of a good deal when both sides are happy with the outcome.”

Letter asks regulator to protect American investors from opaque Chinese reporting policies

Top Republican financial officers from 21 states have urged the Securities and Exchange Commission to determine if Chinese companies on US stock exchanges should be delisted for failing to protect American investors.

The officers on Tuesday asked SEC chair Paul Atkins to investigate the companies because of Chinese policies that “create an environment of opaqueness that is antithetical” to the reporting requirements of US laws.

“China’s actions create an environment ripe for fraud and abuse, increasing the likelihood that China-based US-listed companies will violate the disclosure, auditing or anti-fraud provisions of the Securities Exchange Act,” the officers from states including Pennsylvania, South Carolina and Arizona said in the letter obtained by the Financial Times.

The letter marks the latest move in the US by groups and lawmakers who argue that American money should not be used to help Chinese companies, particularly any with links to the Chinese military.

The officers said the SEC had the authority to delist firms that did not comply with the Securities Exchange Act or relied on auditors in countries where the US Public Company Accounting Oversight Board could not carry out effective inspections. 

They noted, for example, that the Chinese Communist party had cracked down on the ability of foreign firms to conduct due diligence on Chinese companies and allowed the use of opaque structures known as variable interest entity arrangements to help “circumvent US regulatory scrutiny”.

The officers said those concerns, coupled with the PCAOB having found “pervasive deficiencies” in inspections of Chinese auditors, “necessitate a close examination of whether China-based companies should be listed on US exchanges”.

The letter comes two weeks after two senior Republican lawmakers urged the SEC to delist Chinese companies, including Alibaba, that they said had military links that hurt US security.

John Moolenaar, chair of the House China committee, and Rick Scott, chair of the Senate ageing committee, urged Atkins to take action. Moolenaar told the FT on Monday that he had since spoken to the SEC chair about the issue.

“We had a productive discussion about the urgent need to address the risks posed by CCP-linked companies in our capital markets,” said Moolenaar. “I look forward to continuing these conversations and working together to strengthen enforcement, protect American investors and ensure our markets are not used to fund the Chinese Communist party’s military and surveillance ambitions.”

OJ Oleka, chief executive of the State Financial Officers Foundation, said his members sent the letter now because President Donald Trump was “a president who is willing to be tough on China and the CCP and put America first”.

“It takes heavy suspension of disbelief to accept that China-based companies are doing their best to comply and be fully transparent with American regulators,” Oleka added.

The SEC declined to comment. Asked about the Moolenaar and Scott letter, Atkins on Monday told reporters the SEC was “still digging in” and was “trying to figure out about this issue”, noting it was his 20th day in the job.

The letter from the financial officers will increase pressure on Atkins to announce policy measures focused on China. His predecessor, Gary Gensler, raised scrutiny of Beijing’s involvement in the US securities market and pushed for inspections of auditors of Chinese groups listed in the US.

The PCAOB has sent teams to inspect Chinese audit firms annually since a deal with Beijing in 2022 that was agreed after Congress passed a law to delist companies whose auditors were not subject to US oversight.

PCAOB chair Erica Williams this month told the FT that the regulator continued to test “every aspect of that very prescriptive agreement” to ensure it can investigate and inspect completely. “Thus far we have been able to,” she said.

But she warned that the agreement between the PCAOB, the China Securities Regulatory Commission and China’s finance ministry would lapse if the oversight board was abolished.

A Republican proposal to close the agency and absorb its functions into the SEC is included in Trump’s tax bill, which is making its way through Congress.