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Three Predictions for the City of London in 2021

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Three Predictions for the City of London in 2021 1

By Bob Santella, Chief Executive Officer, IPC

If CIOs in the City of London were asked at the beginning of 2020 about their biggest concerns for the coming year, they likely would have answered: regulation, followed closely by operational efficiency improvements and the challenges of adopting new technologies. These issues undoubtedly remain important for 2021, but the post-pandemic city now has very different priorities. These three in particular stand out:

Remote working is here to stay

While most firms adapted quickly to the new working environment, ad hoc solutions must be transitioned to permanent arrangements. Given the challenges involved in reorganising office space, plus the sheer logistical constraints associated with scheduling facility access, there will be many employees who will simply have to stay in their current remote working environments for an extended period of time.

In order to foster collaborative working environments that maintain required standards of security over the long term, firms will need to invest in more collaboration tools. Currently, virtual conferencing software allows for limited forms of collaboration, such as screen sharing. The City of London will need more, and better, ways of creating shared online workspaces for employees – for instance, virtual whiteboards. Development and cultivation of client relationships will also require new and innovative ways of hosting fully participatory events online, above and beyond the passive consumption of online webinars and content.

The City will fully embrace the cloud

Speaking of collaborative technologies, cloud adoption and the use of “software as a service” can facilitate better scalability and resilience, not only from a technology perspective, but also in terms of the ability to quickly connect to new markets for price discovery and execution.

Bob Santella

Bob Santella

The ability to leverage cloud technology, and a cloud-based community of market participants, is a key differentiator for any firm. With cloud deployments of in-house systems, firms can rapidly scale up resources to support high volumes and throughput without impacting their latencies and can then scale down these resources when they are no longer needed. This effectively creates unlimited headroom for any trading system, at a variable cost — a concept previously unimaginable. Cloud-based providers of services such as market data and exchange connectivity have been able to offer their clients rapid access to new markets, with no new technology deployment required beyond configuration. This is essential at a time when technology teams are working remotely and under constrained circumstances, and deployment windows are minimal and high-risk.

Lastly, participants in cloud-based networked communities can easily connect directly to each other. Given the demonstrable benefits experienced during the crisis by those already on the cloud, it’s clear that acceleration of cloud adoption will be high on the technology spending agenda for many firms.

Next-generation technologies

Technologies such as artificial intelligence and machine learning (AI/ML), as well as Distributed Ledger Technology (DLT), will also play a more significant part in our financial market’s infrastructure going forward.

AI and ML platforms are informing better decision-making in often volatile, fast-moving markets by analysing huge amounts of data and information in a matter of seconds. The ability to augment the judgment of human beings, and to better react to volatile market conditions, is critical under current conditions.

For example, market surveillance is a mammoth undertaking for most firms. Data comes from many sources and exists in many formats: trading systems, chat transcripts and voice recordings. This is where the use of AI/ML techniques can have a transformative impact. AI-driven Natural Language Processing enables voice data to be automatically transcribed and digitised, and then processed in a standard format alongside other electronic communications. Firms can also supplement and make more effective use of their supervision and surveillance teams and allocate their time to higher value activities.

Meanwhile, DLT sits at the core of these systems. DLT integration into existing infrastructure is going to be a crucial requirement for firms wishing to benefit from these massive efficiency improvements. It’s not just about integration, though – to fully leverage the wider capabilities offered by DLT, such as real-time settlement, firms need to start thinking now about the wider changes to their infrastructure that will be required to support increased digitisation.

In summary, as we look to 2021 budgets and beyond, technology investment will need to be deployed in the three above areas by firms wishing to maintain a competitive edge. Remote work, cloud computing and next-generation technologies like AI and DLT support the growing demand for automation in the City of London. CIOs will look to these technologies as drivers of operational efficiency, a means of better managing organisational risk, and as solutions for reducing dependency on large office environments.

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France’s Carrefour does not see Casino as an acquisition target

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France's Carrefour does not see Casino as an acquisition target 2

PARIS (Reuters) – Carrefour, Europe’s largest food retailer, does not see major acquisition opportunities in France and does not view smaller domestic peer Casino as a possible target, Carrefour Chief Executive Alexandre Bompard said on Monday.

“We do not see opportunities to strengthen ourselves in France. There is no Casino topic and there is no topic of massive acquisitions in France,” Bompard told BFM television.

Carrefour said last week it was “highly confident” it could accelerate its turnaround even without a merger with Canadian suitor Alimentation Couche-Tard.

“The Couche-Tard episode is behind us. The page has been turned. We are back on the offensive and we will continue to develop,” Bompard also told BFM on Monday

The deal with Couche-Tard, worth close to $20 billion, was killed off by French ministers who said the food retail sector was of strategic national importance.

“Carrefour is a magnificent company but not a ‘sovereign’ company. No-one can believe that the sovereignty of France hinges on the retail sector. Pharma, defence, these are sovereignty sectors but not retail. This argument is not the right one,” Bompard added.

(Reporting by Dominique Vidalon; editing by Jason Neely)

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British Airways owner IAG boosts liquidity by 2.45 billion pounds

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British Airways owner IAG boosts liquidity by 2.45 billion pounds 3

LONDON (Reuters) – British Airways owner IAG raised total liquidity by 2.45 billion pounds ($3.4 billion), through a loan and deferred pension contributions, and said it continued to explore other debt opportunities to improve its finances.

IAG said that in order to clinch the deferral of 450 million pounds worth of pension deficit contributions due between October 2020 and September 2021, BA agreed not to pay any dividends to parent company IAG before the end of 2023.

Like all airlines, IAG has been burning through cash after close to a 12-month period with minimal revenues. It scrapped its dividend last April, and then in October raised 2.74 billion euros from shareholders to help it survive.

Countries around the world have tightened travel restrictions over the last two months in response to new variants of the coronavirus and it is unclear when travel will restart, putting further pressure on airline finances.

“In addition to these arrangements, IAG continues to explore other debt initiatives to improve further its liquidity,” said IAG, which also owns the airlines Iberia and Vueling in Spain and Ireland’s Aer Lingus, in a statement on Monday.

BA said it reached final agreement for a new 2 billion pound loan 5-year loan, which is partially guaranteed by Britain through its UK Export Finance unit, and would draw down the facility by the end of this month.

That facility was secured in December and also includes restrictions on BA making dividend payments to IAG.

Pension trustees also agreed to BA deferring monthly contributions of 37.5 million pounds, in a deal which included putting up property assets as security, and a suspension of dividends to parent company IAG until the end of 2023.

BA is IAG’s biggest and most profitable airline and the pause in dividends from it means it could be years before IAG shareholders see payments again.

That is unlikely to be a surprise for shareholders, given new debts taken on by the airline group, and the fact that travel is not expected to reach 2019 levels until 2024.

($1 = 0.7148 pounds)

(Reporting by Sarah Young, editing by Estelle Shirbon)

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Canada’s GardaWorld to not raise bid for UK security firm G4S further

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Canada's GardaWorld to not raise bid for UK security firm G4S further 4

(Reuters) – Canada’s GardaWorld said on Monday it would not raise its offer for Britain’s G4S Plc further, appearing to leave the way clear for the higher bid lodged by rival Allied Universal to succeed after regulators ordered an auction to conclude the battle over the world’s largest security services company.

Allied has already bid 245 pence per share for G4S, whereas GardaWorld said that its earlier 235 pence offer was final and that it would not overpay. G4s stock closed at 269 pence on Friday.

G4S, which employs more than half a million people in 90 countries, did not immediately respond to a Reuters request for comment, while Allied was not available to respond outside of business hours.

“A successful integration of G4S, a 530,000-employee platform operating in 85 countries will require sizeable resources; addressing its issues will require greater investment and without satisfactory engagement from G4S we have been unable to complete our due diligence,” GardaWorld Chief Executive Officer Stephan Crétier said.

“There are better and less risky opportunities available to GardaWorld.”

Britain’s takeover regulator had stepped in to help resolve the battle for G4S by giving the North American bidders until Feb. 20 to make their final offers or go head-to-head in an auction starting Monday.

The move came after the suitors repeatedly extended their offer deadlines for G4S without making their offers final, thereby leaving room for revised bids.

(Reporting by Muvija M and Yadarisa Shabong in Bengaluru; Editing by Rashmi Aich)

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