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Daily News Roundup: Friday, 11th October 2019

Posted: 11th October 2019

BANKING

FCA refused power to recommend changes to its remit

The Government has declined to adopt proposals from the Treasury Select Committee (TSC) that the Financial Conduct Authority (FCA) be given the formal power to recommend changes to regulations in its remit. In its response, the Government said that decisions on the perimeter of regulation “should ultimately be for Ministers, with approval by Parliament.” Catherine McKinnell MP, Interim Chair of the Treasury Committee, described the Government’s position as “disappointing”.

Better data on modern finance reveals uncomfortable truths

The FT’s Gillian Tett raises concerns about the banking sector’s exposure to non-financial companies through cross-border financing, particularly those associated with offshore financial centres.

PRIVATE EQUITY

Sequoia’s Surge launches second round of Asia start-ups

Surge, the nine-month-old incubator set up by Sequoia Capital, has launched its second cohort of 20 start-ups, the FT reports, noting Surge’s massive impact on VC investing in India and south-east Asia.

INTERNATIONAL

Fed finalises rules easing regulations for banks

The Federal Reserve has finalised its “tailoring” rules, which will see all but the largest and most complex banks subject to lower liquidity and capital requirements. The move means that local branches of foreign banks will not have to submit to tough new liquidity rules, a move likely to benefit Deutsche Bank more than any other.

EU signs off on Greek scheme to clean up banks’ bad debts

The European Commission’s competition chief has approved a Greek government scheme designed to help its banks rid themselves of toxic debts, declaring the move does not breach unfair financial assistance rules.

Ray-Ban billionaire Del Vecchio to lift stake in Mediobanca

Leonardo Del Vecchio plans to lift his stake in Mediobanca above 10% and push the Italian investment bank to expand and become less dependent on Generali and Compass.

Tokyo Stock Exchange head hits out at foreign investment rule

The head of the Tokyo Stock Exchange has condemned a proposal from the Japanese government to sharply tighten rules on foreign investment as “idiotic” and a threat to Japan’s standing.

ECB’s Draghi ignored in-house advice on decision to restart QE

A leak exposing how ECB officials objected, via a letter sent to Mario Draghi, to the bank restarting its bond-buying programme last month, will pressure Christine Lagarde to change course.

US banks: of interest

The FT’s Lex suggests the outlook for interest rates does not bode well for US banks with strong retail banking operations with risks also rising on the trading and investment banking front.

Danske Bank begins hiring freeze

Danske Bank has initiated a hiring freeze on non-critical positions as it seeks to offset rising compliance costs relating to a €200bn money laundering scandal in Estonia.

AUTOMOTIVE

Dyson scraps electric car project

Sir James Dyson has said his company will not proceed with its £2.5bn electric car project because it was not "commercially viable". His company will instead spend some of the cash on other new technology and put more into growing its education institute.

No-deal Brexit would render Nissan Europe “unsustainable”

Nissan has warned that a no-deal Brexit could make its European business model unsustainable. Nissan's European chairman, Gianluca de Ficchy, said if a 10% export tariff was introduced after the UK left the EU it would put its operations "in jeopardy".

Warnings issued for Aston

Shares in Aston Martin Lagonda fell 14½p, or 3.3%, to a fresh low of 422¾p as house broker JP Morgan Cazenove and JP Morgan flagged further liquidity and output concerns.

AVIATION

Brexit reassurance sought by aerospace industry

Concern among key aerospace manufacturers about regulatory alignment and the ability to bring products to market after Brexit has led firms to seek reassurance that the UK would continue to be a member of the European Aviation Safety Agency after any Brexit deal and that alignment with EU chemicals regulations would also continue.

Heathrow third runway unlikely now, says Walsh

IAG believes the £14bn third runway at Heathrow Airport is unlikely to go ahead due to growing concerns about the environment. CEO Willie Walsh said although he wouldn’t rule it out completely, he put the chances of it going ahead at 60/40 against. Walsh also predicted more small airlines would face distress due to credit card companies holding back payments in case an airline fails.

CONSTRUCTION

Ilke Homes hires new director

Offsite house manufacturer Ilke Homes has hired ex-Crest Nicholson director, Matthew Bench, as group executive director of growth and partnerships.

FINANCIAL SERVICES

Hargreaves boosts customer numbers

Hargreaves Lansdown added 35,000 new clients in the three months to the end of September, up from 29,000 in the same quarter a year earlier, taking the total to 1.26m. In its latest trading update, the investment firm also revealed that assets under administration stood at £101.8bn at the end of September, up from £99.3bn three months earlier. However, Hargreaves added that new business in the period had been dented by “weak investor sentiment arising from continuing Brexit and political uncertainty in the UK and wider global macro issues such as trade tariffs”. Hargreaves also came under fire from small investors over its links to Neil Woodford, and several of Hargreaves’ senior executives agreed to waive their bonuses for 2019 in the wake of the Woodford scandal. The FT’s Lex remarks on the loyalty of Hargreaves customers suggesting their “allegiance is sometimes hard to understand.”

SLA axes up to 70 IT roles

Standard Life Aberdeen is to axe up to 70 jobs in its IT department after management decided to outsource tech services to US-headquartered company Cognizant. A spokesman for SLA said: "This is part of the overall merger and integration plan set out in 2017. Those colleagues transferring to our strategic IT partner Cognizant will importantly continue to be based in Aberdeen, Edinburgh and London.”

Merian Global agrees to acquire Kestrel’s multi-asset team

Merian Global Investors has bought Kestrel Investment Partners’ multi-asset business for an undisclosed sum. The acquisition will add £123m to Merian’s £26.4bn of funds under management.

HEALTHCARE

Philips in profit warning on US-China trade war

Philips has cautioned that the US-China trade war will damage its attempts to improve profit margins this year, in an update ahead of its third-quarter report, with overall sales for the quarter expected to reach around €4.7bn (£4.23bn).

MEDIA & ENTERTAINMENT

Read will have to face Vodafone’s financial constraints

The Telegraph’s Ben Marlow considers Vodafone chief Nick Read’s initial moves since taking over last year, praising him for taking a series of tough decisions but warning too that the massive debt hangover from the expansionary years of predecessor Vittorio Colao could stymie his plans.

RETAIL

Homeware market softens for Dunelm

Dunelm reported a 7.5% year-on-year rise in sales to £262.6m for the three months to the end of September but said trading had been mixed due to a "softer homeware market". Shares fell 10% yesterday with traders noting the company’s exposure to falls in sterling.

ECONOMY

Quarterly growth calms recession fears

Britain’s estimated GDP increased 0.3% the last three months, ONS data reveals, as weak manufacturing was offset by buoyant TV and film production. The results surprised analysts who had forecast a recession brought on by Brexit-related uncertainty. Samuel Fuller, director of Financial Markets Online, noted that “Against all expectations, the UK is on course to dodge a recessionary bullet.” The data show a return to growth in financial services and professional services with the largest contributions coming from areas such as consultancy, accounting and advertising.

OTHER

JMW Turner features on new £20 note design

The new design of Britain's £20 banknote has been unveiled by the Bank of England. Security features on the next £20 note, featuring artist JMW Turner, will include two see-through windows on the note and a metallic hologram. In the first half this year, 88% of detected banknote forgeries were £20 notes, the Bank's statistics show. The new design, which the Bank describes as its most secure, enters circulation on 20 February next year.

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