Gulf oil giants tighten their belts

One scoop to start: Matthew Freud is looking at options to sell his eponymous PR consultancy after 40 years as one of London’s top spin-doctors and corporate fixers.

And another scoop: Ken Griffin’s hedge fund Citadel has been outshone by smaller rivals so far this year, as the firm was stung by the market volatility unleashed by Donald Trump’s trade war.

And one more scoop: A two-year-old Swedish artificial intelligence start-up that promises to make programming an app as easy as writing a few sentences is nearing a valuation of almost $2bn, in the latest sign of investor fervour for AI coding businesses.

In today’s newsletter:

Aramco and Adnoc’s deals slowdown

Over the past few years, M&A in the energy sector has been powered by two companies more than any others. As oil prices fall, that’s set to change.

Dealmakers have feasted on more than $60bn of acquisitions courtesy of Saudi Aramco and Abu Dhabi National Oil Company, who’ve deployed the cash over the past three years to expand into gas, chemicals and lubricants.

That’s made the two state-owned energy giants the oil industry’s most active buyers, but they’re slowing their roll, according to the FT’s Malcolm Moore, Chloe Cornish and Ahmed Al Omran.

It follows a steep fall in oil prices that has hit the bottom line of many energy businesses and created a volatile environment in which dealmaking is tough.

Benchmark crude prices have fallen from more than $80 a barrel in January to $67 this week, despite a jump during the Israel-Iran war.

Analysts don’t think things will improve any time soon: one of the main reasons for the price drop is a glut of oil, and oversupply is expected to put further downward pressure on prices.

Aramco announced $8bn of deals over the past three years. Adnoc was even more prolific, with more than $52bn in transactions over that period.

That sum included a $19bn offer last month for Santos, one of Australia’s largest energy groups. The bid was made via XRG, a platform Adnoc launched last year for overseas acquisitions.

While some deals are likely to continue — especially in gas — both groups will now be more selective in their M&A activity. Notably, neither company is bidding to buy Castrol, BP’s lubricants business. 

Aramco and Adnoc will use the respite to digest the deals they’ve already announced and assess the energy landscape.

They’ve spent big and now it’s time to take stock. As one prominent energy lawyer put it: “They don’t want to be seen as the dumb money.”

Standard Chartered’s $2.7bn 1MDB nightmare

The 1MDB scandal shocked the world when it came to light in 2015.

A decade later, liquidators are still trying to recoup the money siphoned off from Malaysia’s sovereign wealth fund and this week, they hit Standard Chartered with a $2.7bn lawsuit over its alleged role.

Billions of dollars were laundered after being misappropriated from 1MDB and used to fund luxury purchases for financier Jho Low and then-Malaysian prime minister Najib Razak. Infamously, some of the cash was allegedly used to finance the film The Wolf of Wall Street.

The effort to reclaim the money has drawn in several of the world’s largest banks and now liquidators have set their sights on StanChart.

They argue that the UK-headquartered lender failed to conduct the anti-money laundering checks expected of it.

The claimants allege that between 2009 and 2013, StanChart ignored several red flags and permitted more than 100 intra-bank transfers, which helped conceal stolen funds.

For its part, StanChart told the FT it “emphatically rejects any claims” made by the 1MDB companies and “will vigorously defend any lawsuit commenced by the liquidators”.

StanChart said it had made “significant investments” in its anti-money laundering controls and standards. It added it hadn’t yet received the claim documents.

This isn’t the only scandal StanChart has battled in recent years. It’s fighting a £1.5bn lawsuit in the UK over claims that its breaches of sanctions against Iran were more widespread than it has acknowledged.

The bank has struggled with regulatory problems and low growth in its core markets. Its cost-to-income ratio last year was the same as it was back in 2014 and longtime chief executive Bill Winters declared its share price “crap”.

There’s hope that new leadership may be able to drive a turnaround. New chair Maria Ramos, appointed in February, is expected to find a replacement for Winters.

Santander’s UK pivot

Just a few months ago, Santander was entertaining bids for its UK arm.

On Tuesday though, it agreed to buy British high street lender TSB, committing it to its UK retail operation in a sharp about-turn.

The £2.65bn deal solidifies Santander’s presence in the UK and comes during a period of upheaval for the Spanish bank’s UK operations.

Santander had been cutting jobs in the country and its UK chair announced his departure earlier this year after disagreements with the bank’s top brass.

The acquisition also comes as European banks weigh up consolidations and seek scale to compete with US lenders.

It gives TSB owner Sabadell an injection of cash as it fights a prolonged takeover battle with Spanish rival BBVA, which last year made an €11bn hostile approach.

Sabadell kicked off the bidding process for TSB after it received unsolicited interest in the British bank, as the FT revealed last month.

The TSB deal is also likely to play a part in the acrimonious BBVA-Sabadell fight.

That battle has put the Spanish government, which wants to block a merger, and the EU at loggerheads.

The European Commission has warned Spain that it has no power to block the deal. The Spanish government has nevertheless gone ahead and thrown a spanner in the works, declaring BBVA can’t merge with Sabadell for at least three years if its takeover is successful.

The ball is now in BBVA’s court: it can fight Spain’s government in court or give up its dream of buying Sabadell.

Job moves

• Meta has named Alexandr Wang as its chief AI officer. The 28-year-old, whose company Scale AI was backed by Meta last month, is joined by a number of hires from competitors including OpenAI, Google and Anthropic.

• Linklaters partners have re-elected Aedamar Comiskey as senior partner and Paul Lewis as firmwide managing partner.

• Moelis & Company has appointed Thorold Barker to its board as an independent director. Barker is a senior adviser at AlixPartners and was previously US editor of the FT’s Lex column.

• Simpson Thacher has appointed Elizabeth Cooper as global head of private equity and Rajib Chanda as global head of asset management, two newly created roles. Barrie Covit and Jonathan Karen will co-head the firm’s investment funds practice.

Smart reads

Pay fight AI researchers and engineers are in high demand, with Meta recently offering $100mn sign-on bonuses to top hires from OpenAI. The FT has dug into the data behind the pay wars.

History lesson Trump wants a Federal Reserve chair who’ll cut rates. It brings to mind a previous conflict around the time of the central bank’s birth, which led to the resignation of the Fed’s then chair, Alphaville writes.  

Deepfake economy Fraudsters are using AI to bombard small business owners with scams, Business Insider reports. It’s affecting everything from job interviews to diabetes treatments.

News round-up

Brainlab shelves IPO in latest blow to Europe’s struggling listings market (FT)

Renault takes €9.5bn loss on Nissan stake (FT)

Warner Music and Bain target $300mn Red Hot Chili Peppers catalogue deal (FT)

Donald Trump threatens to unleash Doge ‘monster’ on Musk’s companies (FT)

Southern Water secures £1.2bn bailout from Macquarie (FT)

Boeing set to take over Spirit in Northern Ireland as buyer talks fail (FT)

US Senate rejects plan to stop states regulating AI (FT)

Ofgem approves £24bn investment into UK energy networks (FT)

Aberdeen chair says ‘save the world’ claim by asset managers was a ‘mistake’ (FT)

Smythson, UK maker of £185 diaries, snapped up by private equity firm (FT)