December 10, 2012 8:32 pm

Survivors in the post-crisis world

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illustration by David Bromley©David Bromley

In the world of finance, the great survivor of 2012 is undoubtedly the euro, some would say against the odds. Last January, the Financial Times asked 83 leading economists whether they thought the currency would survive 2012 “broadly intact”. Only 43 answered “yes”. Yet, as the end of the year approaches, and even if the present calm proves temporary, the worst of the eurozone storm appears to have passed.

If the eurozone had broken up, it would not have been for want of champions trying to hold it together. The year has been marked by supportive policies – ranging from €1tn in loans to the region’s financial system from the European Central Bank to bailouts of Spain’s wobbling banks, not to mention repeated last-minute agreements on Greece’s austerity programme and the establishment (in principle but not, so far, in practice) of a Europe-wide banking union.

A turning point was reached in July when Mario Draghi, ECB president, pledged to do “whatever it takes” to save the euro. The frequent all-nighters in Brussels, as well as developments around the region, were covered by our correspondents and analysed by influential commentators from inside and outside the FT.

Beyond the eurozone, the wider discussion over the shape and nature of the post-crisis financial world remained heated. Martin Wolf followed the FT’s series on Capitalism in Crisis with his suggestions for seven ways to fix capitalism, kicking off a fierce debate on the letters pages.

Fierce debate also characterised many annual meetings, as shareholders across the globe flexed their muscles. In the UK, WPP shareholders voted down the remuneration package of Sir Martin Sorrell, and Aviva’s Andrew Moss and David Brennan of AstraZeneca both stepped down, partly in response to investors’ ire over their pay. Executive pay was also a big factor in the year’s most newsworthy deal, the takeover by Glencore of Xstrata. The deal had a difficult gestation; Glencore’s final offer was a result of talks brokered by Tony Blair, the former UK prime minister, and almost came unstuck over Xstrata’s proposal to pay £170m in retention payments to key staff. Pay was perhaps the only issue that was not a factor in the failure of another of the year’s proposed deals – the £36bn tie-up of EADS and BAE Systems. Bogged down in wrangling between its shareholders, the deal finally fell apart because the German government wanted the merged company to be headquartered in Munich. Petty, though, was not the word to describe some of the losses caused by financial misbehaviour. UK banks racked up huge provisions – £10bn and counting – for their mis-selling of personal protection insurance. JP Morgan was hit by a $6bn loss due to unauthorised trading by the so-called “London whale”. Kweku Adoboli, who lost his employer UBS $2.3bn, was sentenced to seven years.

In the US, the probe into insider trading claimed more scalps. Rajat Gupta, once head of McKinsey, was sentenced to two years and a $5m fine for passing confidential information to Galleon Group’s Raj Rajaratnam, although Mr Gupta remains free pending appeal. HSBC, meanwhile, was fined $700m for money laundering in Mexico. But the most far-reaching financial scandal of 2012 was the revelation that Barclays, and other banks, had rigged market interest rates, including Libor, the London interbank offered rate, for financial gain. Barclays’ involvement led not only to a large fine but to the departure of its chief executive, Bob Diamond, and its chairman, Marcus Agius.

This special report gives a flavour of the FT’s coverage of the continuing upheavals in global financial markets, of the attempts by politicians and regulators to address it, and of those contributing to it. There is much more we could have included – the slowdown in China’s economy; Apple’s rise to become the world’s most valuable company; and commentary from the world of academia as well as business. For those who want more than we can fit on the printed page both now and in 2013, it can be found at www.ft.com.

Sarah Gordon is Companies Editor

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