Philip Green doesn’t do empathy. Green’s retail is red in tooth and claw. Now his pugilistic, foul-mouthed response to criticism has returned to bite him where it hurts. Make him pay the pensioners! Strip him of his knighthood! Hang him from the yardarm of his yacht!

Well, perhaps that is going a bit too far, especially since his spanking new gin palace lacks a yardarm, and were he to be reduced to the ranks, it would mark another step towards making all knighthoods contingent on future good behaviour, rather than a reward for past services.

The pensioners are a different matter. Sir Philip could, if he asks his wife nicely, cover the deficit, which has now ballooned to a headline figure of £571m, but the shortfall says at least as much about the crisis in the pensions industry as it does about his unloading British Home Stores for £1 to a bunch of retail naifs.

This week the UK government borrowed £4.75bn for 49 years. The issue went swimmingly, at a 2.35 per cent yield and a premium which guarantees holders a capital loss in 2065. The buyers, the likes of the BHS pension fund, subscribed not because they could see an unmissable bargain, but because their actuaries have told them that shares are much too dangerous. Rather, they must match their future liabilities with bonds. As the yields on bonds fall, the present value of those liabilities rises, requiring more bond purchases to match them.

This is the process which his taken the headline BHS pension fund deficit to £571m. The cost of past promises is so much greater than anyone envisaged that paying them would guarantee the failure of a fading retail giant like BHS, however competently it was run. This is little compensation to the BHS employees who will see those promises devalued, although it does show why only the doziest companies are still persevering with defined benefit schemes. One of the many curiosities of this affair is why Sir Philip failed to close the scheme when he bought the business 16 years ago, rather than letting the liabilities continue to accumulate.

The trustees of the BHS pension scheme will also have to answer for acquiescing to the £1 sale last year, but theirs is a thankless, often unpaid, task, and eviscerating them publicly would only cause mass resignations and a crisis in the pensions industry. Sir Philip, meanwhile, needs to avert the threat of a boycott his highly profitable Top Shop empire, so easing the pensioners’ pain is not entirely philanthropic. Perhaps he should simply pay £1 and buy BHS back, liabilities and all, and run it down professionally.

Don’t bank on good behaviour

Those nice chaps from Bank of America Merrill Lynch have kindly agreed to underwrite an emergency £500m rights issue for Cobham, the aerospace and defence specialist. The money will prevent Cobham being swamped by debt taken on two years ago to finance an ill-judged takeover in America. The joint lead adviser on that deal was BoA.

Bizarrely, Cobham still intends to pay out an unchanged £126m in dividends, presumably after taking advice from BoA, although this did not prevent the existing shares cratering. We do not yet know the terms or fees of the fundraising, but with Cobham now valued at just £1.9bn, BofA has a fine opportunity to demonstrate that it takes some blame for its client’s plight. It should abandon the scandalous practice of risk-free underwriting at a deep discount, and back an issue close to today’s depressed 164p. Do not hold your breath.

Financial toxic waste

It could be worse. You could be a shareholder in EDF, alongside the French government with 85 per cent. To round off a nightmare year which saw the shares more than halve, EDF wants E4bn from its owners to shore up its radioactive balance sheet, where debts total E37bn. The good news: dividends will continue to be paid. The bad news: they will be paid in shares, not cash. The worse news: the directors still think they can build a working nuclear power station at Hinkley Point in Somerset for £18bn. Well, some of them do.

This is my FT column from Saturday (with apologies for delay)

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