The World Bank, just a block from the White House, found it had an unexpected ally during Donald Trump’s first term.
Instead of facing the usual battle for funding on Capitol Hill, the path was smoothed by first daughter Ivanka who was a star attraction on women’s issues at the development bank’s annual meetings and was even touted, by her father, as a future president.
Among the most far-reaching actions of the Donald Trump presidency, as it seeks to end US government largesse, has been to cancel funding for USAID.
Less noticed was its decision to order a review of the World Bank. America is the biggest shareholder, with a 16 per cent stake giving it a veto over stuff it doesn’t like.
The Bank is headed by former Mastercard chief executive Ajay Banga who was drafted in by Joe Biden after Republican predecessor David Malpass was ambushed by Democrat climate change zealots John Kerry and Al Gore.
Trump is set on erasing almost everything Biden touched, so that places the World Bank, headed by an American since its creation in 1944, in a vulnerable place.
Insider: Ivanka Trump (pictured) has been a star attraction on women’s issues at the World Bank’s annual meetings and was even touted, by her father, as a future president
The International Development Association (IDA) arm, which provides concessional assistance to the world’s poorest nations such as Ethiopia and Bangladesh, might be in danger.
It is seeking a $24billion (£18.5billion) funding package. Biden signed up to $4billion (£3.1billion) before leaving office. The impact of Keir Starmer’s cuts on the UK’s contributions to IDA is also a known unknown.
Britain is committed to spend £1.98billion over the next three years in an organisation where it has been a dominant voice.
Whether that can be maintained when it comes to the 2028 funding round is unclear. Banga’s emphasis since taking the controls has been on efficiency.
Not quite Elon Musk’s DOGE but the same kind of thing. In making the case for continued White House support the Bank can also point to this and its ‘Triple A’ rating for the capital it raises to support $33.5billion (£25.8billion) of lending to middle-income nations.
However, the Bank’s emphasis in recent times on climate change projects will not find much sympathy in a ‘drill, baby drill’ US administration.
Ivanka, an absentee voice in Trump’s second coming, could be the World Bank’s ace card should rationality fail.
Legal defence
The Trump effect has arrived at Britain’s biggest asset manager, Legal and General. Under the previous stewardship of Nigel Wilson, all the talk was of using invested funds to boost UK infrastructure such as university facilities and housing.
Wilson’s successor, Antonio Simoes, is now making the case for diverting money into defence as Britain and Europe seek to fill the chasm opened by the US coolness to Nato.
Simoes rightly insists that defence companies, such as BAE Systems and Rolls-Royce, are investable despite the environmental, social and governance rules, which have frozen them out.
Since taking charge he has focused on simplifying the enterprise, pulling out of housebuilding and selling its US protection arm. Focus continues to be on continuing to agglomerate a portfolio of pension fund buyouts.
This year L&G has completed £1.2billion of deals, is aiming for £17billion by the end of 2025 and has a further £27billion in the pipeline.
Simoes believes it is in a strong position to speedily vacuum up closed legacy pension funds on both sides of the Atlantic.
But there are more players in the space, and it is not a growth enterprise. Asset management is equally difficult, especially for highly regulated firms with limited capacity to invest in alternative assets.
L&G is keeping investors happy by throwing off the cash with a bigger-than-expected share buyback of £500million, and £1.2billion in the stars for 2026.
Exciting, it is not.
Wrong call
Transparency is at the core of good regulation. So it is a pity that the Financial Conduct Authority has been coerced into dropping its ‘name and shame’ proposals for firms under investigation.
Embarrassing maybe for targets, such as trusts in Neil Woodford’s collapsed empire, but consumers would welcome red flags. An unmitigated triumph for providers of financial services over the customer.
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