UBS sees ‘business as normal’ as it fights Hong Kong ban on IPO sponsorships

The 18-month duration of UBS’s suspension is longer than the six months that many bankers in Hong Kong had expected. (Reuters)
Updated 12 March 2018
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UBS sees ‘business as normal’ as it fights Hong Kong ban on IPO sponsorships

HONG KONG: UBS has told staff that it is “business as normal,” after the Swiss bank revealed on Friday it is fighting an 18-month suspension in Hong Kong from leading initial public offerings (IPOs).
In an internal memo sent by Andrea Orcel and David Chin, global and Asia-Pacific heads of UBS’s investment bank, respectively, and seen by Reuters, the bank told staff that until its appeal was heard “we are business as normal” and that it could still sponsor IPOs.
UBS disclosed the suspension by Hong Kong’s securities regulator, the Securities and Futures Commission (SFC), in its annual report released on Friday, and added it planned to appeal the decision as well as a HK$119 million ($15.18 million) fine handed out to it.
The bank did not specify what led to the suspension and the fine but said the regulator had been investigating UBS’s role as a sponsor of some IPOs listed on the Hong Kong Stock Exchange and that the actions related to one of the offerings under investigation.
UBS, on Monday, declined to comment on the memo.
The Swiss bank is a leading IPO bank in Hong Kong and the threat of suspension comes as the city — Asia-Pacific’s most lucrative in terms of IPO fees for international banks — is gearing up for a series of potential blockbuster floats.
Hong Kong IPOs need at least one sponsoring bank and sponsors typically lead the work — collecting a larger proportion of the fees — as the deal progresses. Any company forced to change sponsor during its IPO process — such as because of a sponsor’s suspension — must begin the whole listing process all over again, potentially adding months of work.
The 18-month duration of UBS’s suspension is longer than the six months that many bankers in Hong Kong had expected.
In the memo, UBS said that it would still be able to work on IPOs, including as a joint global coordinator — a rung lower than sponsoring — even if the proposed suspension is upheld.
The bank also told staff that it expected the full hearing of the appeal to be held in the fourth quarter of this year and a final decision to made early in 2019.
The proposed punishments stem from an investigation by the SFC into the listing of China Forestry in 2009. The company was suspended in 2011 and is now being wound down.
The China Forestry IPO was sponsored by UBS and Standard Chartered. On Friday, Hong Kong’s Securities and Futures Appeals Tribunal granted the two banks an extension for their appeals against the SFC’s actions, but did not specify the punishments.
Standard Chartered, which closed its Hong Kong equities unit in 2015, declined to comment.
UBS has been a leading sponsor of IPOs for each of the past 10 years, sponsoring 10 percent of all companies that have listed on Hong Kong’s main board over that period, according to data from Dealogic.
Since the news broke in 2016 of the SFC’s investigation into both banks, UBS’s sponsorship share has fallen to 3 percent of total main board IPOs in 2016 and 2 percent in 2017.


Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

Updated 23 March 2019
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Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

  • Firms under pressure to explain how greener laws will hit business models

PARIS: The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.
Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.
Two of the companies — Shell and Chevron — said they rejected the watchdog’s findings.
“The fossil fuel sector has ramped up a quite strategic program of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.
“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”
The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.
As planet-warming greenhouse gas emissions hit their highest levels in human history in 2018, the five companies wracked up total profits of $55 billion.
At the same time, the International Panel on Climate Change — composed of the world’s leading climate scientists — issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.
InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.

 

It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.
“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.
It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.
The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.
“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.
The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.
In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.
With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.
Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.
AFP contacted all five oil and gas companies mentioned in the report for comment.
“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.
“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”
A spokeswoman for Shell — which the report said spends $49 million annually on climate lobbying — said it “firmly rejected” the findings.
“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.
BP, ExxonMobil and Total did not provide comment to AFP.

FACTOID

$ 28m

Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.