The US crackdown on trade finance for Russia from international banks – designed to impede imports needed for the continuing assault on Ukraine – is biting hard, reports the FT, quoting an investor who thinks ‘the logical endpoint of this is turning Russia into Iran’. Quite right too: sanctions like these are a vital non-military way to hobble Vladimir Putin’s campaign.
But war and finance intersect in many different ways. Consider also the fate of 400 western-owned commercial aircraft that were leased to Russian airlines before the invasion in February 2022. Now stuck in Russia or its satellites, unmaintained to western standards and unfit to fly back into our airspace, they’re a potential multibillion loss for their owners and insurers.
The aircraft leasing companies are mostly based in Ireland, a global leader in that specialism. The planes were insured with the world’s major insurance companies and in most cases reinsured through Lloyd’s of London. While the aircraft are grounded the related lawsuits are flying, almost 100 of them to date, seeking compensation for lessors from Russian operators, or payouts from insurers who are resisting on grounds of ‘force majeure’, or both.
Some cases have been settled – the Russians are paying a portion of the insured value – but the leases insist that contested claims must be heard in Russian courts, where fair hearings are effectively impossible. One insurance newsletter calls it all ‘an epic brawl [that’s] going nowhere’.
And at the end of the line are reinsurers at Lloyd’s such as Atrium Syndicate 609, which includes many of the now rare breed of individual Names who continue to accept unlimited liability. Its managing agent speaks of ‘multiple ongoing litigations in a number of jurisdictions’ as a result of which profits or (much more likely) losses from past aircraft business will remain uncertain for years.
The moral, I suppose, is that it’s simple enough to block money channels, but complex globalised financial structures are capable of spreading damage everywhere.
Courtroom drama
This column comes from New York, where the big story is the trial of Donald Trump for allegedly disguising ‘hush money’ paid to the porn actress Stormy Daniels as legal expenses in his company’s accounts (Trump denies the charges). Reporting focuses on his antics in and out of court, but Rebecca Roiphe, a former Manhattan assistant district attorney, points out in the New York Times that ‘boring as it may sound’, the nub of the case is about ‘business integrity’. New York is a great centre of finance and trade; if powerful players can get away with falsifying business records, the city’s reputation for honest dealing and regulatory rigour is tainted; and no one should be above the law. Put like that, Trump’s grubby political soap opera is actually a serious matter.
Uber or Lyft?
I’m a late adopter of Uber, but you can’t move around any American city without the ridesharing app whose name has replaced ‘taxi’ in common parlance, or its rival Lyft, which has a quarter of this two-horse market. Friends here used to say Lyft was kinder to drivers; latterly the terms have equalised and many drive for both. But as a ruthless quasi-monopolist, Uber must eventually fade.
Meanwhile, its shares have tripled from a post-pandemic low while those of Lyft, which has yet to break into profit, stand at a quarter of their 2019 float price but have been called an ‘eye-popping bargain’ by the Motley Fool website. Another news story is that the great investor Warren Buffett’s Berkshire Hathaway company is sitting on $189 billion of cash for want of worthwhile share-buying opportunities: if you’re reading this, Warren, why not take a punt on Lyft?
As for in-car conversation, New York’s Uber drivers don’t offer pungent opinions the way London cabbies do – best to keep schtum in such a divided society – but some are willing to talk about themselves. Typical was Sandeep, a recent arrival from Punjab, driving all hours to pay off debts so he can start his own plumbing business and play the stock market as a would-be Buffett. America is an anthology of aspirational life stories.
Above our weight
I’m here with a centenary delegation from the city of York to salute its ‘Godchild in America’ – as New York referred to itself in a plaque unveiled by the then Duke of York (later George VI) on our side of the pond in 1924. Led by Archbishop Stephen Cottrell, the group includes the vice-chancellors of both York’s universities, its lord mayor, a team from the Minster and a contingent from the business community. Dignified and costumed but with a commercial subtext, we’re punching a long way above our weight given that the godchild’s economy is some 200 times larger than the ancient godparent’s.
But I’d say we’re on to something: we’ve placed the image of York in the shop window of British brands that appeal to Americans, from Jaguar Land Rover and Barbour to Brompton bikes and Victoria Beckham. As I said last week, the UK is trailing in global tech and London’s capital markets are in decline. But we can still bottle Britishness and export it if we play to our strengths; like it or not, history is the strongest.
Too close to Trump
You’ll want to know where I’ve been eating in the Big Apple. I loved Musette, a French wine bar in Harlem – though the Uber driver wrong-turned on to scary Bruckner Boulevard in the Bronx, where I feared I might relive the episode that ruins Sherman McCoy’s life in Tom Wolfe’s The Bonfire of the Vanities. And I admired Il Tinello on West 56th Street, a classic American Italian whose only disadvantage is close proximity to Trump Tower: its trade fell 30 per cent in the early days of presidential roadblocks and motorcades and may be about to do so again. We insisted, by the way, that our martinis were made with award-winning York Gin.
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