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Daily News Roundup: Friday, 10 August 2018

Posted: 10th August 2018

BANKING

Banks refusing to raise rates for savers 
The Times reports that only one of 100 banks and building societies has passed on last week’s interest rate rise in full to all its savers, leading MPs and campaigners to express criticism. Only the Beverley Building Society has said it will increase its savings rate for all customers by the Bank's full rise, to match the base rate of 0.75%. Of the Big Five banks - Lloyds, Santander, HSBC, RBS and Barclays - only Santander has announced detailed plans for increases to some savings accounts. In the case of an online and some children's accounts, it will pass on the full 0.25 points. Nicky Morgan, chairwoman of the Treasury select committee, commented: “It’s no wonder that our banks have such a lot of work to do to rebuild trust among customers when they ignore the first opportunity to give a little something back to savers, while moving speedily to increase costs for borrowers.” Meanwhile, James Daley, the managing director of Fairer Finance, said that the FCA should focus on the issue as part of its review of the savings industry. Several campaigners have also suggested that NS&I, the bank owned by the government, should take the lead. Tom Adams, head of research at Savings Champion, said: “It would have been good to see NS&I lead by example and make an early announcement.” An editorial in the Times describes the banks and building societies’ behaviour as short-sighted, unfair and economically damaging. 

Treasury putting Brexit contingency plans in place
The Treasury has announced that it will start putting contingency arrangements in place for financial services regulation if Britain crashes out of the EU without a deal. A spokesperson said that firms should still continue to plan for a transition phase of just under two years, which will come into force when Britain leaves the bloc in March next year - as long as the two sides agree a deal. The announcement comes as UK financial firms have requested clarity be provided regarding Brexit to ease increasing concerns from their employees. Meanwhile, the FCA has said it was open to a ‘broad range’ of arrangements on how banks book risk and profit after Brexit, provided they were properly overseen.

Repossessions on the slide 
The number of households struggling to pay their mortgages hit a record low in the second quarter, according to industry body UK Finance, which said there were 76,740 homeowners behind by 2.5% or more on their remaining payments - a fall of 8% year-on-year. The number of homeowner repossessions fell 5% year on year, with only 1,060 in the second quarter. Many households will be insulated from a rate rise at first because two thirds of borrowers are on fixed-rate deals, Bank of England data suggests.

No revolution at Barclays … yet 
Nils Pratley in the Guardian comments on Edward Bramson’s involvement at Barclays, noting that this week his Sherborne fund raised the prospect of replacing chairman John McFarlane. Pratley suggests that Sherborne’s investor update was limp and the game will start in earnest when Bramson makes clear his views on Barclays’ investment bank. Pratley ends by saying that perhaps Bramson has discovered that Barclays’ shareholders have little appetite for another strategic U-turn.    

Secure Trust looks solid 
The Times Tempus examines the prospect for Secure Trust’s shares. Tempus recommends they are worth buying, noting that the shares look cheap and the bank looks solid, having focused on its risk management. 

Crowley to step down  
Des Crowley, the UK boss of Bank of Ireland Group, is to step down next year after more than 30 years at the bank. He will remain a senior executive until his retirement. 


PRIVATE EQUITY

Data firm completes deal 
Data information company Dun & Bradstreet has accepted a $145-per-share offer from a consortium led by CC Capital, Cannae Holdings and Thomas H Lee Partners. The price represents a 30% premium to the stock's value in February, when the company said it was open to offers.


INTERNATIONAL 

Deutsche Bank cuts perks 
Deutsche Bank has warned managers not to overspend beyond their budget, while the German bank has axed free daily fruit supplies for its staff, told workers they cannot travel first class on a train and has cracked down on them attending conferences. New CEO Christian Sewing has told chief operating officer Frank Kuhnke to oversee the cutbacks. 

Ex-Goldman Sachs director claims whistleblowing led to dismissal
Christopher Rollins, a former Goldman Sachs director, has claimed that his dismissal from the bank was part of an effort to avoid a money laundering scandal at the bank. 

Vietnam to limit foreign bank licenses 
Vietnam has said it will limit or possibly stop issuing new licenses for foreign banks to set up in the country as it looks to encourage takeovers of weaker local lenders and strengthen the financial system.


AUTOMOTIVE 

AA on road to recovery
The AA has reaffirmed its drive to meet full-year targets of between £335m and £345m. In a trading update ahead of half-year results in September, the breakdown firm said poor weather in March has resulted in it rescuing 1.91m motorists, up 8% on last year.


FINANCIAL SERVICES

Legal & General balancing slowing longevity rate
As improvements in UK life expectancy slow, Legal & General expects to book an exceptional profit of up to £400m this year, up from £332m last year. Experts say increased obesity, dementia, stress, a lack of exercise and alcohol, and also government cuts in health and social spending, have all contributed to worsening life expectancy in recent years, allowing insurers to set aside less cash for pension payments and enabling L&G to increasingly release reserves previously held back to pay customers. While chief executive Nigel Wilson noted that life insurance pay outs were increasing, L&G's operating profits for the first six months rose by 5% to £909m.

Insurer Zurich profits rise as costs fall in first half
Zurich has improved first half net profits by 19% to $1.8bn on the back of major cost-cutting. The insurance group's combined ratio improved by 2 percentage points to 97.5%. 

GAM chief Friedman battles to retain investor support
Alexander Friedman, chief executive of Swiss fund house GAM, is vulnerable after the recent suspension of a top portfolio manager, a profit warning and a tanking share price.


LEISURE AND HOSPITALITY

Tui expecting solid earnings growth despite weak update
The Tui Group has said it will continue to deploy the proceeds of its disposals into higher returning assets as it revealed weaker earnings in its package holiday business. Underlying earnings dropped 12.7% in the third quarter, to €193.4m (£174m), while profits in Tui's hotels and resorts business fell by 3.9%, though revenue grew by 5% to over €5bn - resulting in full year earnings growth expectations of at least 10%.

China’s HNA to sell stake in Radisson Hospitality to Jin Jiang
HNA Group, the Chinese conglomerate, has agreed to sell a stake in Radisson Hospitality AB to an international consortium led by Jin Jiang International. 


MANUFACTURING

Thyssenkrupp posts Q3 net loss despite sales growth
German manufacturer Thyssenkrupp, which has faced heavy activist investor criticism lately, has swung to a net loss for the third quarter (€131m) while asserting that sales and orders are growing.


MEDIA AND ENTERTAINMENT

BT announces customer service push
BT is creating 1,000 new customer service call centre jobs to improve its poor rankings following its cull of 13,000 back office and management roles earlier this year. Ofcom's most recent report found BT received 23 complaints per 100,000 customers about its broadband service - the second most complained about UK firm behind TalkTalk.


REAL ESTATE

Derwent unfazed by retail closures
Derwent London has brushed off the tough retail climate, with strong growth in its core London office business taking its portfolio to a £5bn valuation after the property business invested £80.9m in new developments. Net rental income climbed 1.6% to £80.6m in the six months to June 30, while new lettings totalled £8.4m - 8.2% higher than December 2017.

WeWork secures $1bn SoftBank investment
WeWork, the shared office provider, has secured a $1bn investment from SoftBank. The company said it would use the investment to lift its existing cash pile and cash commitments to $4bn. 


RETAIL 

Card Factory posts profit warning 
Card Factory has warned that “continued consumer caution across the UK” and “cost pressures arising from wage inflation and other factors” will hurt profits. Though total sales were up 3.2%, the retailer reported a 0.2% fall in like-for-like sales during the first half of its financial year and full-year underlying Ebitda is now expected to come in between £89m and £91m, 4.6% down on last year's figure of £94m. Card Factory opened 25 net new UK stores in the period, with a further 25 expected in the second half.


ECONOMY

Interest rate will remain low for 20 years 
Ian McCafferty, a Bank of England policymaker, has said that the era of low interest rates will last for at least another 20 years, despite official borrowing costs rising gently in the coming years. Mr McCafferty, who is leaving the MPC at the end of the month, said structural changes in the global economy meant UK borrowers and savers should get used to interest rates being “significantly” below the 5% they averaged in the 10 years leading up to the financial crisis in 2008.

Pound continues to slide 
The pound has continued to slide as fears of a no-deal Brexit continued to pile pressure on the British currency. During the markets yesterday, sterling shed 0.3% versus the dollar to leave it at $1.28, its lowest level for almost a year. Connor Campbell, financial analyst at SpreadEx, said: “The fears of a no-deal Brexit have really gathered steam in the last few sessions, a snowball effect stemming from Mark Carney and Liam Fox's warnings either side of the weekend.”

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