AT least seven people have been killed in a horror crash after a wedding bus plunged into a ravine in Pakistan.

Another 37 people were injured in the smash, including children.

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Shocking pictures show the destroyed bus upside down with emergency services at the scene.

The cause of the accident near Quetta, the capital of Balochistan province, remains unknown.

An investigation isunderway.

According to Wasim Baig, a spokesman for the health department, the bodies of the victims and the people who were injured in the accident were brought to a local hospital.

Some of the injured were said to be in critical condition.

Chief Minister Balochistan, Mir Sarfraz Bugti,described the accident as “heartbreaking and deeply saddening.”

He has ordered an inquiry into the cause of the crash, stating, “If negligence is found, action will be taken.”

In August, 32 people were killed in two bus accidents, one in Balochistan and the other in eastern Punjab province.

Authorities at the time said both accidents were caused by the negligence of the drivers.

And earlier in August, 28 Pakistani pilgrims were killed in a bus crash in neighboring Iran while heading to Iraq.

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The writer is First Deputy Governor of the Bundesbank and chair of the Central Banks and Supervisors Network for Greening the Financial System

It is clear that the effects of climate change have started to influence the monetary policy considerations of several central banks. Unfortunately, such factors will become even more relevant in the future.

Severe weather events are intensifying, and so too are their economic impacts. Tropical storm Helene in south-eastern US is just the latest reminder of the damage that can be wrought.

The annual damages on properties caused by natural catastrophes have more than doubled in real terms over the past two decades, reaching $280bn globally in 2023, according to Swiss Re. The overall impact is much larger, as acute physical effects ripple through the economy, influencing supply, demand and financial flows — and thus also monetary policy.

A new Network for Greening the Financial System report compellingly illustrates how natural catastrophes such as floods and hurricanes affect the economy. They destroy homes, local infrastructure and production sites, requiring years and enormous amounts of money to rebuild. Waning confidence could prompt companies and households to cut back on spending, further undermining economic growth prospects.

Price impacts are not spared, as severe weather events, among other factors, damage agricultural production and drive up food prices across regions. These sectoral effects can lead to an increase in overall inflationary pressures, depending on how much a drop in demand balances them out. For instance, droughts tend to exert upward pressure on headline inflation for several years, with developing economies especially affected, because of their higher dependency on agriculture.

Against this backdrop, central banks might face the complicated task of taming inflationary pressure in a weak economy. Think of a situation when rising inflationary pressure might warrant policy tightening — particularly for central banks, whose primary mandate is price stability — even though this could contribute to economic strain. The State Bank of Pakistan, for instance, in 2022 opted to continue raising policy rates after the devastating floods caused a sharp increase in food prices.

Climate change — and its uncertain outcomes — mean that central banks must focus on looking ahead and extend their horizon beyond the usual projection period. Estimates of future impacts illustrate what could be in store for the economy and the financial sector. At a global level, climate change could drive up annual food price inflation by between one and three percentage points by 2035, according to a study of the European Central Bank and the Potsdam Institute for Climate Impact Research.

However, most studies still fail to consider the risk of crossing climate tipping points, which can significantly accelerate climate change. According to the OECD, ignoring these critical thresholds results in a severe underestimation of the economic costs. Extreme weather events can also bring us closer to these tipping points. The current drought in the Amazon region — the most severe since systematic recording began in 1950 — exemplifies this risk. With one-fifth of the Amazon rainforest already lost, mostly due to deforestation, concerns are mounting that this carbon sponge is on the brink of collapse. That would trigger a cascade of climate events, leading to higher economic costs globally.

What is more, uncertainties surrounding the magnitude and duration of severe weather events — coupled with governments’ responses — will make the short-term forecasting of key economic indicators particularly challenging. An example is Hurricane Katrina in 2005, and the subsequent landfalls of hurricanes Rita and Wilma. In the highly dynamic weeks and months that followed, staff of the Federal Reserve adjusted their estimates of output and inflation a few times, as new information trickled in. Throughout the process, the Fed remained predictable in its actions, highlighting that good communication is key.

Central banks have another side to watch, too, namely the green transition. Inflation and output may become more volatile as we undergo a transformation of the energy sector and supply chains. In the short term, carbon pricing and rising climate investments could reinforce inflationary pressures.

Intensifying climate change adds to the array of challenges that monetary policy needs to adjust to. As extreme weather events become more frequent, central banks must pay even greater attention to longer-term inflation expectations. Though the reaction of each central bank will depend on its mandate, clear communication is essential to guide market expectations and ensure that policy decisions are well understood.

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Being honest with your employees is key to staff retention, Cairn Independent operations director Laura Young has insisted.

She was responding to an audience question about the best way to keep people within advice businesses at the Lang Cat’s HomeGame 4 event in Edinburgh yesterday (3 October).

“In terms of retaining the team, the only constant is change,” Young said.

“People’s needs and wants evolve, and what they initially say they want might not be the same as what they desire by the end of the process.

“My focus is on understanding what that looks like for them throughout the journey.”

She said there is always a risk someone may leave for another opportunity, but “the key is to focus on what that individual wants” and whether you can offer it.

“I’ve found that being honest with the team helps,” she said. “It might not always work out, but you’re never caught off guard.”

She said maintaining regular communication is also invaluable in staff retention.

“You know where you stand, and from both a management and team perspective, that’s valuable.

“It’s about managing expectations on both sides. By having regular check-ins, you can ask, ‘Is this what you expected? If not, why? How can we adapt?’

“That kind of approach helps ensure alignment.”

Editor’s note: This story contains a graphic image and descriptions of violence.

Up to 600 people were shot dead in a matter of hours by al Qaeda-linked militants in an August attack on a town in Burkina Faso, according to a French government security assessment that nearly doubles the death toll cited in earlier reports. The new figure would make the assault, in which civilians were shot dead as they dug trenches to defend the remote town of Barsalogho, one of the deadliest single attacks in Africa in recent decades.

Militants from Jama’at Nusrat al-Islam wal-Muslimin (JNIM), an al Qaeda affiliate based in Mali and active in Burkina Faso, opened fire methodically as they swept into the outskirts of Barsalogho on motorcycles and shot down villagers, who lay helpless in the freshly upturned dirt of the trench, according to several videos of the August 24 attack posted by pro-JNIM accounts on social media. Many of the dead were women and children, and the footage is punctuated by the sound of automatic gunfire and screams of victims as they are shot while apparently trying to play dead.

The horrific death toll, if the French government estimate is confirmed, would mark an unusually brutal moment in the Sahel, an increasingly lawless swathe of West Africa just south of the Sahara where security projects spearheaded by the United States and French militaries have struggled to slow the march of jihadists. A series of coups across Mali, Burkina Faso and Niger led to the departure of French and American forces. The Russian mercenaries summoned by the juntas to bolster their grip have instead left a vacuum in which jihadists have thrived, says the assessment, given to CNN by a French security official.

The United Nations initially estimated the death toll was at least 200. JNIM said it had killed nearly 300 people but claimed it had targeted militia members affiliated with the army, rather than civilians, according to a translation by Site Intelligence Group cited by Reuters.

“Large-scale deadly attacks (at least a hundred deaths) against civilian populations or defense and security forces have been occurring for several weeks at a rate that seems unsustainable for the government,” the report says of Burkina Faso, “which no longer really has a military strategy to offer and whose propaganda discourse seems out of breath and ideas.”

The French official told CNN there had been a “very significant deterioration in the security situation” in Burkina Faso where “armed-terrorist groups are enjoying increasing freedom of action because security forces are unable to cope.” The report notes an attack on a military convoy in the village of Tawori, 15 days before the attack in Barsalogho, where “no fewer than 150 soldiers” were killed by jihadists, adding that the military is struggling to retain potency and credibility.

On September 17, the capital of nearby Mali, Bamako, was rocked by another JNIM assault, which hit the airport, among other key buildings, and killed more than 70 people.

‘Defensive trenches’ became mass grave

The massacre at Barsalogho came as locals were ordered by the military to dig a vast trench network around the town to protect it from jihadists circulating nearby. The JNIM gunmen then attacked the defenses, mid-construction, falsely claiming the civilians were combatants because of their involvement, according to eyewitnesses.

One survivor, who asked for anonymity when he spoke to CNN as he still feared for his safety despite having fled the town, said he was one of dozens of men told to dig the trenches by the army that Saturday. He was 4 kilometers from the town at about 11 a.m., in a trench, when he heard the first gunshots.

“I started to crawl into the trench to escape,” he said. “But it seemed that the attackers were following the trenches. So, I crawled out and came across the first bloodied victim. There was actually blood everywhere on my way. There was screaming everywhere. I got down on my stomach under a bush, until later in the afternoon, hiding.”

“There were few remaining men afterwards in the town. Seeing the bodies arrive on motorized carts from the massacre site was the most horrible thing I’d ever seen in my life. Neither women nor children had tears to shed. We were more than shocked. How can you cry if there are no tears to shed?”

“We the survivors are no longer normal. The problem is beyond us all. The massacre started in front of me. The very first shots were fired right in front of me. I was one of the people who picked up the bodies and buried them. I see my late friends when I’m asleep,” he said, adding that the initial reports of 300 dead were too low. “Anyone who denies it, should come and see me.”

Another survivor told CNN two members of her family were killed in the attack. “They killed people all day long. For three days we were collecting bodies – scattered everywhere. Fear got into our hearts. At the burial time, there are so many bodies lying on the ground that burying was hard.”

The assault led to angry protests in which Burkina Faso’s junta leader, captain Ibrahim Traore, who seized power in the second of two successive military coups in 2022, was derided as “IB Captain Zero” for endorsing the construction of the trenches by civilians. The French report said their construction had been part of a plan by the Minister of Civil Service in which each settlement “must organize itself and have its own response plan to an attack.”

The military junta has not taken responsibility for having told civilians to dig the trenches without any protection, amid a heightened threat from jihadists. Survivors said that the regime did not want them to speak out about what happened. The junta has not responded to CNN’s request for comment.

Burkina Faso’s 2022 coups came amid frustrations over the authorities’ inability to quash recurring jihadist violence, despite intensive French military assistance, which has claimed thousands of lives for almost a decade. But that violence has worsened under Traore, according to experts and human rights watchdogs.

Though successful at first, by 2014, France’s military operations in the region were met with growing anti-French sentiment. France broadened its counterterrorism presence but was unable to contain the ever-expanding armed groups who threatened civilians. As a result, local populations became wary of the former colonial power.

Traore has made only one public appearance since the massacre, and the assessment – penned in late August – questions his state of mind and fitness for office. “We see there all the powerlessness of the authorities to provide a serious and credible response to the terrorist threat,” the report reads.

Russian mercenaries on back foot as violence spreads

Meanwhile, Russian mercenaries who arrived in Burkina Faso almost a year ago have failed to bring calm to the country and are at least partially being pulled out to help Moscow in its war against Ukraine, the assessment adds. Increased security in the capital Ouagadougou around key buildings may be linked to the withdrawal of much of the 100-strong Wagner mercenary group’s “Bear” unit, charged with Traore’s personal protection, says the report. The mercenary group has been under new management since the death of Wagner founder Yevgeny Prigozhin in a plane crash last year, but Wagner is still colloquially referred to by its old name in the Sahel.

The report suggests the unit was reassigned to fend off Ukraine’s invasion of the Russian border regions and may be replaced with less capable Russian servicemen.

Criticism of the army, voiced by relatives of the dead and survivors from Barsalogho, who maintain the military fled the assault, has been amplified by recent accusations of cannibalism by Burkina Faso soldiers, the report adds. It cites videos posted publicly on social media that appear to show soldiers from the Rapid Intervention Battalion 15 (BIR-15) eating parts of dead jihadists.

The report adds: “The general staff of the Burkina Faso armies published a press release on July 24, 2024, in which it ‘condemns these macabre acts’ and ‘reassures that measures will be taken to formally identify the origin of these images as well as their authors.’” It assesses the incident as another sign of discipline in the army deteriorating since the coup two years ago that put Traore in power and led to the French departure.

CNN has reviewed videos of the alleged cannibalism that seem to show Burkina Faso soldiers dismembering and holding up body parts of apparent dead jihadists.

The French security assessment adds the violence in Burkina Faso has begun to spill over into at least one of its peaceful southern neighbors, citing an attack inside Togo from a Burkina Faso border town, Kompienga, on July 20, seizing a Togolese army camp, killing at least 12 soldiers and looting weapons. “Rumors indicate the creation of a new GSIM Wilaya for Togo,” the report adds, referring to a new al Qaeda affiliate for the country, “fueled by terrorists from the North.”

“Barsalogho is proof that Burkina Faso is teetering on the edge because the terrorists have such a hold on the country. Six hundred people have died, and that’s terrible, but what’s worse is that it’s as if it never happened, because the killers continue to roam free with no fear of retribution,” according to the assessment.

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Good morning, this is Sujeet Indap filling in for Rob today. Did you hear that there is a US jobs report coming today? Anyway, while you wait on pins and needles, read on for the latest in private credit financial engineering. Email me with your dream (or nightmare) lending product: sujeet.indap@ft.com.

There goes the neighbourhood

There is $35tn trapped in US residential home equity. And it deserves a far more sophisticated capital market, says Thomas Sponholtz.

A few weeks ago, I got a press release from the venerable Carlyle Group announcing the latest cutting-edge contraption in the private credit frenzy. But this particular deal being announced stood out to me. Carlyle said it was partnering with specialised finance upstart Unison, whose founder and chief executive, Sponholtz, is a former Barclays Global Investors executive. 

Sponholtz had long believed there was room for innovation in home lending, specifically in how Americans could monetise home equity. Home equity loans, home equity lines of credit and reverse mortgages were all debt products that, one way or another, had to be paid back with interest by homeowners.

But what if homeowners get liquidity by avoiding a fixed obligation and instead monetise the upside of their property? And so Sponholtz’s company, Unison, created what it called an “equity sharing agreement” where the homeowner effectively sells stock in their house in exchange for upfront cash.

But the equity-sharing agreement was just the beginning. Carlyle and Unison have now conjured their next frontier idea: homeowners also deserve a convertible bond.

House rules

So far the original equity product has about 17,000 customers and its total portfolio of homes is worth $7bn in aggregate.

Not surprisingly, Unison’s immediate cash does not come cheap. The company will buy as much as a 15 per cent interest in homes, spending between $30,000 and $500,000 per home. The homeowner will pay for an appraisal and Unison will invest at a 5 per cent discount to that appraised value. There is also a 3.9 per cent transaction fee.

And finally at the time of sale, which must happen by year 30, Unison is owed four times the proportion it put in. To put some numbers on it, imagine a deal where the firm buys 10 per cent of a house worth $1mn.

In a decade, let’s say the house is worth $1.5mn. Unison gets its $100,000 back as well as 40 per cent of the gain, or $200,000. The house jumping 50 per cent in value over 10 years reflects an annualised rate of return of 4.1 per cent. Unison’s $100,000 investment turning into $300,000 reflects a return of 11.6 per cent

(Importantly, the equity gains for the homeowner from paying down their initial mortgage are kept by the homeowner and their own equity returns are, of course, determined by the size of their initial down payment at time of purchase).

Unison says its returns have been 21 per cent annualised.

Sponholtz told the Financial Times he had grappled for years with trying to figure out how to take on equity exposure to residential owner-occupied housing but that there was no straightforward security or proxy. Housing was important not just because its gross market size, but also because it was a “dirty hedge” against inflation, the main risk in fixed-income investing, he said. 

“Home prices go up with inflation . . . you have a really interesting investment that neutralises the negative convexity,” Sponholtz said, referring to mortgage prepayments that surge when interest rates fall and fall when rates rise.

Enter private credit and Carlyle. Unison had some success bundling its equity-sharing agreements into structured products — it recently got a credit rating on the tranches created. But the pure equity product by definition comes with erratic cash flows that made it tricky to securitise. 

And so Unison wondered if it could merge housing debt and housing equity into a single product. It has, as a result, created the “equity-sharing loan” that resembles a corporate convertible bond with its fixed obligation attached to a call option.

This is how it works: a homeowner takes out a second mortgage in order to get immediate cash — but the interest rate charged on the second mortgage is lower than the market price. In exchange, Unison gets 1.5 times its proportion in the future appreciation of the house (note that this is less than the four times it is owed in the straight equity product described above).

In an example on its website, Unison said it would shave off almost 2 percentage points from a straight loan interest rate (charging 5.2 per cent annually instead of 7 per cent) in the cash “coupon” it is owed. At the end of the 10-year loan, Unison would, however, get its 1.5x appreciation share as well as the capitalised sum total of the 1.8 per cent initial cash interest rate savings (that’s the 7 per cent minus 5.2 per cent).

Carlyle estimates the all-in cost of capital of the equity sharing loan of 10 per cent to 11 per cent: 6 per cent cash interest, 2 per cent of the cash deferred “payment-in-kind” interest and 2 to 3 percentage points of kicker from the equity sharing slice.

Unison said its typical customer has a Fico score over 700 and that typical use of proceeds are home improvements or paying down credit card debt. The company says its equity-sharing product is far cheaper than getting an unsecured loan from the likes of SoFi.

Carlyle has agreed to purchase up to $300mn in such loans from Unison, which it can then place with its insurance clients. 

“We are taking high-quality assets and making them attractive, bringing private markets to bear to finance the real economy,” said Akhil Bansal, head of credit strategic solutions at Carlyle.

Sponholtz says Unison has several more products in the works, including providing financing to help with initial down payments (reminiscent of this recent Wall Street Journal story about friends buying houses together during the pandemic).

Consumer finance is a tricky balance between innovation and exploitation. Lending people money, extracting user fees and using leverage to turbocharge it all is extremely lucrative (just Google “subprime billionaires” to see for yourself).

Residential housing is equally fraught given its centrality in the lives of individuals and families. Just last month, Invitation Homes, the single- family home roll-up created by Blackstone, entered into a $48mn proposed settlement with the US Federal Trade Commission over charging renters hidden junk fees. 

A more advanced financing is supposed to grease the gears of capital formation and ultimately housing construction. Unison and Carlyle believe their mousetrap will do so, and America needs them to be right.

One good read

My colleague Andrew Jack examines New York City’s most serious current scourge: rats.

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Leipzig-Halle Airport plays a vital role in the transportation of military equipment, making it a strategic target for espionage.

Yaqi X.’s activities included monitoring shipments and people linked to a German defense company, which media sources suggest could be Rheinmetall, the country’s largest arms manufacturer.

Jian G., who allegedly received the information from Yaqi X., had earlier been detained for his role in espionage activities.

He reportedly worked as an assistant to Maximilian Krah, a member of the European Parliament representing the far-right party Alternative for Germany. Investigators believe Jian G. was involved in spying on Chinese dissidents in Germany and providing intelligence about European parliamentary affairs to Chinese authorities.

In May, the German Federal Prosecutor’s Office conducted searches in Krah’s office in connection with Jian G.’s activities. Krah is also suspected of having received money from Russian and Chinese intelligence services.