Daily Agenda: U.K. PM Says Brexit Starts in March

Theresa May announces target to begin two-year departure process; Deutsche Bank shares rise on rumors of reduced settlement; Henderson to buy Janus; Illinois freezes out Wells.


Jason Alden

In a speech at the Conservative Party’s annual conference on Sunday, U.K. Prime Minister Theresa May stated that she will trigger the withdrawal process for the U.K.’s withdrawal from the European Union no later than March 2017. May intends to present legislation to keep all current laws in place following the separation. Corporate leaders voiced some concerns at the looming deadline, anxious to understand details of new trade agreements. May said that she would move to place new limits on immigration in a signal that relations with Britain’s former EU partners may become more strained as negotiations begin. The pound fell close to a three-decade low versus the dollar in response to the speech and concerns over a so-called Hard Brexit, or departure from the EU. The currency has now declined by more than 13 percent in dollar terms since the referendum vote in June. Despite concerns, underlying fundamentals continue to generate mixed signals with market-manufacturing purchasing-manager index levels released today hitting the highest level since 2014, with the headline index at 55.4 for September versus a prior 53.3. As the fourth quarter begins, U.K. investors find themselves with a better sense for the Brexit timing but remain largely in the dark regarding the full market impact.

Deutsche Bank stock price jumps on rumors of reduced settlement. The share price of Deutsche Bank rose by more than 6 percent in early trading today on media reports that the German lender may be close to a deal that will reduce the settlement demanded by the U.S. Department of Justice over the bank’s sale of mortgage-backed securities before the 2008 financial crisis. According to Agence France-Presse, which cited anonymous sources, the Department of Justice and Deutsche Bank could agree to a levy of only $5.4 billion—less than half the original amount sought by U.S. authorities. Shares of the bank, which is Germany’s largest lender, reached record lows on Friday after reports that some buy-side clients were reducing credit exposures to the bank.

Henderson to acquire Janus. Earlier today, Henderson Group announced a deal to acquire U.S. money manager Janus Capital Group in a move that will elevate the combined firm’s assets under management to more than $320 billion, with Henderson shareholders controlling roughly 57 percent of shares outstanding in an all-stock merger. As part of the transaction, the largest Janus shareholder, Japanese insurance company Dai-ichi Life Holdings, will boost its ownership stake in the new entity. Henderson CEO Andrew Formica and Janus CEO Richard Weil will lead the firm jointly according to a statement.

Illinois considers freezing out Wells Fargo. A press conference scheduled for later today by Illinois Treasurer Michael Frerichs is expected to include an announcement that the state will suspend San Francisco bank Wells Fargo & Co.’s public finance bankers from handling bond issuance because of the ongoing scandal over consumer-loan sales practices. Separately, on Friday Chicago City Council’s finance committee announced that the city would suspend municipal-issue business with Wells for a two-year period. The state of California announced a 12-month suspension last week.

ConvaTec to be biggest U.K. IPO for year. U.K.-based therapeutics company ConvaTec is slated to debut as a public company in an initial public offering that may raise as much as $1.8 billion, making it the largest U.K. IPO of 2016. The medical device and technology firm was sold by Bristol-Myers Squibb Co. in 2008 to companies controlled by Nordic Capital and Avista Capital Partners. The proceeds of the offering will be used by ConvaTec to reduce its nearly $3.5 billion in debt.

Colombian voters reject FARC deal. In a narrow defeat, voters rejected Colombian President Juan Manuel Santos’s peace deal with the Armed Revolutionary Forces of Colombia (FARC) to end a more than 50-year insurgency. The referendum would have allowed former FARC guerillas to sit in Colombia’s Congress and to avoid punishment for wartime atrocities. The No vote was particularly strong in interior regions that had suffered heavily during the conflict, with former President Álvaro Uribe campaigning actively against the deal with the rebels. Voter turnout was notably light with fewer than 38 percent of eligible citizens taking part.