<ul><li><keyword id="6357147" type="General" weightage="80" keywordseo="tata-steel" source="Orion">Tata Steel</keyword>, one of the largest steelmakers in India, has seen a considerable decline in its share price over the last few weeks.</li><li>After capitalizing on steel demand from Europe and other regions since the Covid pandemic, <keyword id="8555" type="General" weightage="100" keywordseo="tata" source="Orion">Tata</keyword> Steel now finds itself in a tough spot.</li><li>From hefty export taxes to weak domestic demand, Tata Steel is the second most indebted company in the Tata Group.</li></ul>Tata Steel shares have been under pressure for a while now. This week, they finally fell below the ₹1,000 level for the first time in 2022. However, the decline today is not due to the company’s fundamentals or a worsening outlook. Tata Steel’s share price declined nearly 4%, marking a decline of over 30% since peaking in April. <div type="image" title="Tata Steel 01_01_22 to 15_06_22." msid="92229361" hostid="261" caption="&amp;lt;p&amp;gt;Tata Steel share price in 2022 so far&amp;lt;/p&amp;gt;"></div> Another Tata Group company – Tata Chemicals, also witnessed a 4% fall today. The common thread between both the Tata companies is that their stock went ex-dividend today. While Tata Steel declared a dividend of ₹51 per share, Tata Chemicals announced ₹12.5 per share dividend. <cmsannotation type="cmsannotation" annotationid="What does a stock going ex-dividend mean?" comment="subhead" text="What does a stock going ex-dividend mean?">What does a stock going ex-dividend mean?</cmsannotation> A stock going ex-dividend means that the value of the dividend is no longer included in the stock price of the company. This happens after the company declares a dividend and announces a record date. The record date is when the stock is said to be ex-dividend. All things remaining constant, if a stock is trading at ₹100 per share, and the company declares a dividend of ₹15, then the ex-dividend price will be ₹85. <cmsannotation type="cmsannotation" annotationid="What are the analysts saying?" comment="subhead" text="What are the analysts saying?">What are the analysts saying?</cmsannotation> According to research reports, the revenue boost that Tata Steel and other steel companies got due to the post-Covid and Russia-Ukraine war disruptions – that boost is now all but over. The reason behind it is the Indian government <a href="https://www.businessinsider.in/stock-market/news/heres-why-all-steel-stocks-like-tata-steel-sail-jindal-jsw-down-today/articleshow/91735433.cms">imposing a hefty export tax of 15%</a> in order to cool down the steel prices in India, to tackle inflation. Shares of Tata Steel, SAIL and Jindal Steel nosedived by 16% after the news. The iron and steel product category has witnessed a net trade surplus in the last two years – since the outbreak of COVID-19 – with the total surplus standing at $14.1 billion (approx. ₹1,07,000 crore) in 2020-21 and 2021-22. <div type="image" title="Steel exports imports FY04-22." msid="92229394" hostid="261" caption="&amp;lt;p&amp;gt;India&amp;#39;s steel exports and imports since FY04 to FY22&amp;lt;/p&amp;gt;"></div> “The government imposition of hefty export duties on steel will lead to decline in realizations for steel companies which have been resorting to exports in the last few years,” said a report by IDBI Capital, stating that Tata Steel has been exporting 10-12% of its steel production. Citing weakness in domestic demand, the brokerage firm downgraded Tata Steel to ‘Hold’. With a debt of ₹69,000 crore, the steelmaker will have to find better ways to ensure its revenue remains buoyant. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/why-hindustan-motors-stock-wakes-up-from-a-slumber-doubles-investor-wealth-in-one-month/articleshow/92224507.cms">Hindustan Motors stock wakes up from a slumber, doubles investor wealth in one month – here’s why</a> <a href="https://www.businessinsider.in/tech/enterprise/news/asus-story-from-nobody-knows-you-sell-laptops-to-the-third-largest-laptop-maker-in-india/articleshow/92220613.cms">INTERVIEW: From ‘nobody knows you sell laptops’ to the third largest laptop maker in India — the Asus India story</a> <a href="https://www.businessinsider.in/sustainability/news/indias-largest-insurer-cuts-down-its-paperwork-and-thats-helped-cut-its-costs-by-40/articleshow/92227158.cms">India’s largest insurer cuts down its paperwork and that’s helped cut its costs by 40%</a>

Tata Steel shares fall below ₹1,000 for the first time in 2022 this week – here’s why

Tata Sons slams Cyrus Mistry’s claims, accuses him of twisting facts. Read the full letter here

<ul><li>India’s benchmark indices <keyword id="6484188" type="General" weightage="20" keywordseo="sensex" source="Orion">Sensex</keyword> and <keyword id="2931774" type="General" weightage="20" keywordseo="nifty50" source="Orion">Nifty50</keyword> were flat in morning trade on Tuesday amidst positive cues in global markets. </li><li>Amongst the top losers were heavyweights <keyword id="45123" type="General" weightage="100" keywordseo="hdfc" source="Orion">HDFC</keyword>, <keyword id="6357149" type="General" weightage="20" keywordseo="hdfc-bank" source="Orion">HDFC Bank</keyword> as their shares are now ex-dividend, and Maruti Suzuki. </li><li>Amongst sectoral indices, realty, PSU bank and IT emerged as the top gainers.</li></ul>India’s benchmark indices Sensex and Nifty50 were flat in morning trade on Tuesday amidst positive cues in global markets. Amongst the top losers were heavyweights HDFC, HDFC Bank as their shares are now ex-dividend, and Maruti Suzuki. Amongst sectoral indices, realty, PSU bank and IT emerged as the top gainers. Both the 30-stock Sensex and 50-stock Nifty50 were trading on a flat note, with Sensex at 62,361 points and Nifty50 at 18,410 points. Top gainers and losers <table style="border-width: initial; border-style: none;"><colgroup></colgroup><col /><col /><col /><col /><tbody><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top gainers </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Change </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Top losers </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 1pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Change </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Divi's Labs </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.39% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 1pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.64% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">ONGC </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.36% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">HDFC Bank </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-1.01% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Bajaj Finance </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">1.24% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Maruti Suzuki </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.69% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Asian Paints </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">0.97% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Power Grid Corporation </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.55% </td></tr><tr><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Cipla </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">0.96% </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">UPL </td><td style="border-left:solid #000000 0.5pt;border-right:solid #000000 0.5pt;border-bottom:solid #000000 0.5pt;border-top:solid #000000 0.5pt;vertical-align:top;background-color:#d9d9d9;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">-0.51% </td></tr></tbody></table> Source: NSE, as on May 16, 2023 Earlier on Monday, both the indices ended on a positive note despite heightened volatility in equity markets around the world – both Sensex and Nifty50 closed the day with gains of 0.5%. Gold and silver prices edged up, with gold at ₹61,100 per 10 grams while silver was hovering at ₹73,400 per kilogram. Crude oil prices also cooled down, with Brent crude hovering at $75 per barrel. <cmsannotation type="cmsannotation" annotationid="Sentiments improve in global markets" comment="subhead" text="Sentiments improve in global markets">Sentiments improve in global markets</cmsannotation> Amidst an ongoing debt ceiling debate in the US, investor sentiments improved around the world. While the Dow Jones closed 0.14% up on Monday, S&amp;P 500 gained 0.3%. The tech-heavy Nasdaq gained 0.66%. Asian markets were largely positive, with Taiwan Weighted up by 1.22%, followed by Nikkei 225 which gained 0.68%. Hang Seng was up 0.56%, while KOSPI was higher by 0.27%. Shanghai Composite, on the other hand, was trading flat. <cmsannotation type="cmsannotation" annotationid="Stocks to watch" comment="subhead" text="Stocks to watch"><keyword id="73648" type="General" weightage="20" keywordseo="stocks-to-watch" source="Orion">Stocks to watch</keyword></cmsannotation> Earnings today: Bharti <keyword id="15491" type="General" weightage="20" keywordseo="airtel" source="Orion">Airtel</keyword>, Bank of Baroda, LIC Housing Finance, JK Paper, Jindal Steel &amp; Power, Oberoi Realty, Jubilant Ingrevia, Metropolis Healthcare, Paras Defence And Space, among others. <keyword id="4568700" type="General" weightage="20" keywordseo="pvr-inox" source="Orion">PVR Inox</keyword>: The multiplex chain reported a net loss of ₹333 crore in the March quarter as against a loss of ₹105 crore a year ago. Its revenue rose 113% to ₹1,169 crore as against ₹579 crore a year ago. It announced plans to close 50 screens across the country over the next six months. HDFC Bank, HDFC: Markets regulator SEBI has approved a change in the control of HDFC Capital Advisors, which is a subsidiary of HDFC, pursuant to the amalgamation of HDFC with HDFC Bank. <keyword id="44612" type="General" weightage="20" keywordseo="pfizer" source="Orion">Pfizer</keyword>: The pharmaceutical company reported a 3% YoY rise in net profit to ₹130 crore, while its revenue grew 4.2% to ₹573 crore. It announced a final dividend of ₹35 per share, along with a special dividend of ₹5 per share. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/new-demat-account-additions-decline-18-in-april-zerodha-upstox-groww-impacted/articleshow/100265046.cms">New demat account additions decline 18% in April; Zerodha, Upstox, Groww impacted</a> <a href="https://www.businessinsider.in/stock-market/news/top-new-stocks-mutual-funds-added-in-april/slidelist/100245761.cms">Here are the top new stocks mutual funds added in April</a> <a href="https://www.businessinsider.in/business/auto/news/tata-motors-in-top-gear-jlr-to-drive-growth-in-fy24/articleshow/100252339.cms">Tata Motors in top gear, JLR to drive growth in FY24</a>

Sensex, Nifty50 flat in morning trade: HDFC twins, Maruti Suzuki amongst top losers

<ul><li>India’s benchmark indices <keyword id="2931774" type="General" weightage="20" keywordseo="nifty50" source="Orion">Nifty50</keyword> and <keyword id="6484188" type="General" weightage="20" keywordseo="sensex" source="Orion">Sensex</keyword> extended their losses for the third consecutive day.</li><li>While Sensex ended 519 points lower at 61,145 points, Nifty fell 148 points to 18,160.</li><li>However, Nifty PSB continued on its upward trajectory with a gain of 1.4% during the day.</li></ul>India’s benchmark indices Nifty50 and Sensex extended their losses for the third consecutive day, with the IT, realty and metal sectors declining the most. While Sensex ended 519 points lower at 61,145 points, Nifty fell 148 points to 18,160. Investors remain concerned about global economic slowdown post fresh Covid-19 cases in China. “Nifty continued its down move on Nov 21 for the third consecutive day. It fell the most in 11 days (down 0.81% or 147.7 points at 18159.9). Investors globally fretted about the economic fallout from fresh Covid-19 restrictions in China, with resulting risk aversion benefiting bonds and the dollar and about the likelihood of future monetary tightening and the impact on future economic growth,” said Deepak Jasani, head of retail research at HDFC Securities. On the other hand, Nifty PSB continued on its upward trajectory with a gain of 1.4% during the day. “On the domestic front, PSU banks and metals were in the limelight. PSU banks especially many mid and smaller ones are undervalued and hence attracting buying interest. These banks reported better quarterly numbers along with improving balance sheets and increasing traction in loan growth,” said Siddhartha Khemka, head - retail research at Motilal Oswal Financial Services, explaining the continued rally in PSU banks. <div type="image" title="daily-profit-loss (3)" msid="95664059" hostid="261" sizebytes="52410"></div> US Fed on investors’ minds Markets <a href="https://www.businessinsider.in/stock-market/news/indian-markets-open-in-the-red-tracking-covid-19-concerns-in-asian-markets-tata-steel-tata-motors-zomato-and-others-in-focus/articleshow/95649915.cms">began the week on a negative note</a> with selling pressures across several pockets including information technology, auto, metals, pharmaceuticals and real estate. Demand concerns due to the fresh Covid-19 outbreaks in China had an impact on crude oil prices as well. Brent crude oil price fell 0.46% on Monday to $87.22 per barrel. “Investors were cautious ahead of US Fed minutes to be released on Wednesday, which would give insights into the central bank’s future rate hike stance given the softening inflation,” Khemka added. Metal stocks fail to shine Metal stocks were the <a href="https://www.businessinsider.in/stock-market/news/metal-stocks-have-a-mixed-day-after-export-duty-withdrawal-jindal-stainless-apollo-tubes-sail-stocks-rise-tata-steel-jsw-steel-drag/articleshow/95660285.cms">talk of the day</a> as the government withdrew export duty on steel products and iron ore. Jindal Stainless was the top gainer, with its shares rising by 9.2% during the day’s trade to ₹182. NMDC and SAIL posted relatively moderate gains, with their shares gaining between 1.2-3.5% during the day. However, despite the gains made by some metal stocks, the Nifty Metal index closed the day with a decline of 0.8%. Analysts at Nomura believe the withdrawal of export duty will not significantly push up the export prices as demand is already low in the global markets and the export prices are largely in line with global peers. Further, analysts see global development to provide cues to the Indian markets amid no major domestic event in the near term. “This week markets are expected to be lacklustre in the absence of any major domestic event, while the monthly derivatives expiry may induce some volatility. Hence investors would track global cues including Fed minutes, oil prices, and US bond yields,” said Khemka. Among Nifty500 space, EasyMyTrip operator Easy Trip Planners was the top gainer with shares of the company spiking 20% as the stock traded at ex-dividend and ex-bonus. The company’s board has fixed November 22 as the record date to finalise the shareholders eligible for bonus shares and stock split. Bonus shares are approved at 3:1 ratio along with stock split in the ratio of 1:2. In Nifty50, the BFSI sector dominated the list of top five active stocks by value. This includes ICICI Bank, HDFC, Bajaj Finance and HDFC Bank, while Reliance Industries was the only other non-BFSI stock to find a place here. Foreign institutional investors (FII) were net sellers, pulling out ₹1,594 crore, while domestic institutional investors (DII) were net buyers, with an investment of ₹1,263 crore. <div type="image" title="sectoral-indices" msid="95664126" hostid="261" sizebytes="45568"></div> SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/metal-stocks-have-a-mixed-day-after-export-duty-withdrawal-jindal-stainless-apollo-tubes-sail-stocks-rise-tata-steel-jsw-steel-drag/articleshow/95660285.cms">Metal stocks have a mixed day after export duty withdrawal – Jindal Stainless, Apollo Tubes, SAIL stocks rise; Tata Steel, JSW Steel drag</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/capital-intensive-cyclical-and-value-stocks-to-continue-their-outperformance/articleshow/95659482.cms">Capital-intensive, cyclical and value stocks to continue their outperformance</a>

Nifty50, Sensex extend losses for the third straight session – Easy Trip Planners, Bank of Maharashtra top gainers; Cochin Shipyard top loser

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/573ee0c2dd08953e738b4778-1144-858/rtr3a4ia.jpg" alt="Kourtney (L) and Kim Kardashian pose with Arcadia Group chief executive Philip Green (C) during a media event before the launch of their clothing line Kardashian Kollection at the British high street retail chain Dorothy Perkins in London November 7, 2012." data-mce-source="REUTERS/Chris Helgren" data-mce-caption="Sir Philip Green with Kim Kardashian in 2012." data-link="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0FCI6DKPZ3U&amp;SMLS=1&amp;RW=1440&amp;RH=720#/SearchResult&amp;VBID=2C0FCI6DK2IBD&amp;SMLS=1&amp;RW=1440&amp;RH=720&amp;PN=2&amp;POPUPPN=87&amp;POPUPIID=2C0408TPNQMX3" /><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0FCI6DKPZ3U&amp;SMLS=1&amp;RW=1440&amp;RH=720#/SearchResult&amp;VBID=2C0FCI6DK2IBD&amp;SMLS=1&amp;RW=1440&amp;RH=720&amp;PN=2&amp;POPUPPN=87&amp;POPUPIID=2C0408TPNQMX3">REUTERS/Chris Helgren</a>Sir Philip Green with Kim Kardashian in 2012.</div></div></div>I never thought I'd say this, but I'm starting to feel sorry for the billionaire who is the current "unacceptable face of capitalism."Retail tycoon Sir Philip Green has been <a href="http://uk.businessinsider.com/bhs-collapse-pressure-on-sir-philip-green-and-darren-chappell-2016-4">pelted by MPs</a> and the press ever since <a href="http://uk.businessinsider.com/bhs-in-administration-11000-jobs-risk-2016-4">BHS collapsed last month</a>, putting 11,000 jobs at risk. Now those workers face cuts to their pensions too.But the pension cuts aren't Green's fault. Surprisingly, the Bank of England is responsible for that.Some history: Green owned the department store until last year when he sold it for £1 to Dominic Green, a three times bankrupt former racing driver with little retail experience.Everyone is angry about this sale - how could Green have ever thought it was a good idea? But worse than that is the hole in BHS's pension scheme. When the retailer went under, the company's scheme showed a deficit - it owes more it can pay to retired workers - which pushed it into the arms of the "Pensions Lifeboat", the state-backed Pension Protection Fund (PPF), with a deficit of £275 million.The PPF will now make sure the scheme's 20,000 members get their pensions, but members who have not yet reached retirement age will have to take a 10% haircut on their payouts.Now there are calls for Sir Philip to meet the pension shortfall. The government Pensions Regulator is pursuing an anti-avoidance action against Arcadia, his company, to try and claw back money for the scheme. There have even been calls for Sir Philip, <a href="http://www.bbc.co.uk/news/business-36139828">dubbed the "unacceptable face of capitalism" by MP Richard Fuller</a>, to be<a href="http://uk.businessinsider.com/sir-philip-green-calls-for-frank-field-to-resign-from-bhs-investigation-over-pensions-row-2016-5"> stripped of his knighthood.</a>The popular narrative runs that Sir Philip profited when the going was good, <a href="https://www.theguardian.com/business/2016/apr/25/bhs-philip-green-family-millions-administration-arcadia">taking around £400 million in dividends from BHS in the early 2000s</a>. But he failed to re-invest in the chain, letting it rot, and then simply washed his hands of his obligations to the pension scheme when things got tough, via the £1 sale. He walked away from his commitments.Except this narrative glosses over one massive, crucial event - the 2008 financial crisis and what the Bank of England did in response.<h2>'Zombies' abound</h2>While BHS was no doubt underinvested in, it was the financial crisis that caused BHS' pension crisis. <a href="https://www.theguardian.com/business/nils-pratley-on-finance/2016/apr/25/sir-philip-green-must-do-more-to-sort-out-the-bhs-pension-mess">The Guardian has a good graphic on this</a>, showing that in 2008 the scheme was actually running a £3.8 million surplus. A year later - with stocks and bonds around the world plummeting - a huge £137.9 million deficit appeared.This is not because cash-strapped consumers stopped shopping at BHS. It's because the investment environment fundamentally changed post-2008. To keep the <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> economy liquid in the crisis, between August 2008 and March 2009, <a href="http://news.bbc.co.uk/1/hi/business/7925620.stm">the Bank of England cut the base interest rate from 5% to a record low of 0.5%</a>, where it has stayed ever since. Those BofE's low rates are still propping up the economy today.This was a disaster for pension schemes, however. Among the worst hit was the type BHS had - a so-called "defined benefit" (DB) scheme. DB schemes promise a guaranteed payout to pensioners when they retire, £30,000 a year, for example. Often this is also linked to things like the retail price index, meaning that final payout must rise with inflation.The problem arises in the difference between the amount of money set aside to cover eventual pensions and the obligations. The entire DB scheme is a bet that today's investments will always come good, forever, and cover tomorrow's guaranteed payments. Schemes had been banking on annual returns from their investments of at least 5%. Suddenly, with low interest rates, and stocks going through the post-crisis trough, it's down to 0.5% as a base. That means they have to put up a lot more new money to get the returns they need.Add to this the fact that the businesses backing up these schemes suffered a downturn at the same time as interest rates collapsed, meaning they have less cash to put into these schemes, and you've got a pensions crisis.<div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/573ee0c2dd08953e738b4779-1044-783/rtx1u53h.jpg" alt="zombie" data-mce-source="REUTERS/Hannibal Hanschke" data-mce-caption="A woman takes part in a zombie walk during Halloween celebrations in Berlin, Germany, October 31, 2015." />REUTERS/Hannibal HanschkeHundreds of 'zombie' schemes exist, simply servicing their deficits.</div></div></div>BHS is indicative of a wider problem in the pensions industry, not a flagrant example of cowboy capitalism run amok. A recent study <a href="http://www.scotsman.com/news/politics/pension-crisis-looming-as-uk-firms-face-800bn-black-hole-1-4084637">estimated the black hole in the nation's pensions schemes is £800 billion</a>, despite employers pumping in £160 billion since 2006.In his submission to the Parliamentary inquiry on BHS, ex-Pension Minister Steve Webb said there are <a href="http://uk.businessinsider.com/bhs-inquiry-hundreds-of-zombie-pension-schemes-in-the-uk-2016-5">hundreds of "zombie" DB pension schemes in the UK that look a lot like BHS.</a>People are living longer, and therefore increasing pension schemes liabilities, plays a part in the black hole. But the biggest cause is low interest rates.Webb told BI: "A dose of high inflation would go through this like a dose of salt. Higher interest rates and inflation would very quickly change the situation. But we're going to have a sizeable deficit for years to come."Clearly there is a problem here and that ain't going to change. Other things being equal, there's a set of things out there where unless something turns in the economy dramatically or interest rates go up, the deficit is going to get bigger not smaller and everyone else is going to have to pick up those deficits."<h2>'If you don't pull the plug a bunch of British companies will have to pay millions of pounds extra'</h2>Economists complain that low interest rates rob savers, and this is perhaps the biggest example. But what could the Bank of England do? In the grand scheme of things, creating a pensions crisis down the road is probably better than letting the economy collapse into a new Great Depression.Not much is being done to tackle the problem either, as Webb explained to me. He thinks in many cases the best thing to do would be to forcibly wind up failing "zombie" schemes before they reach the actual point of failure."The problem is, running their course probably means going into the PPF anyway but with a bigger deficit. By definition, that means somebody has got to pay and that in effect is the sponsoring employers of the remaining DB schemes." The PPF is funded through a levy on healthy DB schemes."If you don't pull the plug, a bunch of British companies will have to pay millions of pounds extra. That's coming out of profits for their business, wages for their staff, etc. It is politically very difficult to do but for the wider public good, that might be the right thing to do."It's clear then that these DB schemes are a millstone around the neck of many businesses, as they proved to be for BHS, and <a href="http://uk.businessinsider.com/uk-government-looking-to-ringfence-tata-steels-15-billion-pension-plan-2016-5">as they proved to be for Tata Steel</a>.<h2>'Project Thor'</h2><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><img src="https://static-ssl.businessinsider.com/image/54d09a49dd0895f54e8b45f9-3744-2810/thor-marvel-chris-hemsworth.jpg" alt="Thor Marvel Chris Hemsworth" data-mce-source="AP Photo/Paramount Pictures-Marvel Studios, Zade Rosenthal" />AP Photo/Paramount Pictures-Marvel Studios, Zade RosenthalThe regulator reportedly blocked 'Project Thor' - a 2012 rescue plan that would have given BHS pensioners a better deal than they have now.</div></div></div>What's more, not only is BHS indicative of a wider pensions crisis, it looks increasingly clear that Sir Philip Green and Arcadia were active in trying to tackle the deficit.BHS's pension trustees approved a 23-year recovery plan to get the scheme back in the black in 2009, a length described as "a-typical" by the government's pensions regulator. So far, so eyebrow raising.But details have been <a href="http://uk.businessinsider.com/report-the-pensions-regulator-stopped-bhs-plan-project-thor-2016-5">emerging about "Project Thor,"</a> a plan in 2012 to reduce the pension liabilities by buying out some members and moving others to a new vehicle with an £80 million cash injection from Sir Philip. <a href="http://uk.businessinsider.com/report-the-pensions-regulator-stopped-bhs-plan-project-thor-2016-5">The Pensions Regulator apparently stymied this plan.</a> Clearly, Sir Philip Green was not as fast and loose with BHS and its pensioners as has been made out.All of this is not to say that Sir Philip and Arcadia do not have questions to answer and possible obligations to meet.The £1 sale to an ex-bankrupt racing driver with no experience raises serious questions about due diligence. Since no recovery plan was reached prior to the sale, perhaps the billionaire has some duty to meet the deficit. And BHS was <a href="http://uk.businessinsider.com/pictures-show-why-bhs-shows-is-in-such-a-mess-2016-5">clearly underinvested in for years</a> while the wider Arcadia group was making huge profits.But let's stop pretending that, <a href="https://www.theguardian.com/business/2003/mar/04/supermarkets">for all his expletive-laden outbursts</a> and <a href="http://www.thesundaytimes.co.uk/sto/news/focus/article1691198.ece">bullying</a>, Sir Philip Green is the pure evil pantomime villain in this. When it comes to the pension deficit, he played the cards he was dealt.In this case, the Bank of England stacked the deck. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/merrill-lynch-wall-street-banks-finance-2016-5">How Merrill Lynch changed the way people are paid on Wall Street</a></h3> <div> <div> <script src="http://player.ooyala.com/v3/6e12e8b3387a44daacfb73afba25a76e"></script> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="o5aThjMzE6B0rd_VIYnQsLwbNdOt0AJU" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> <script> if (typeof RunFunctions === 'undefined') { var RunFunctions = []; } RunFunctions.push(function() { var ooyalapopvideo = OO.Player.create('ooyalaplayer_popvideo', 'o5aThjMzE6B0rd_VIYnQsLwbNdOt0AJU',{ autoplay: 'false' }); }); </script> <noscript><div>Please enable Javascript to watch this video</div></noscript></div> </div> <script>(function() { function createPlayer() { OO.ready(function() { RunFunctions.forEach(function(ooyalaFunction) { ooyalaFunction(); }); RunFunctions = [];}); } createPlayer(); }()); </script> </div>

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The Bank of England is to blame for the BHS pension crisis

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