BANKING
UK banking system resilient to no-deal Brexit
The Bank of England’s latest Financial Stability Report maintains that the UK banking system remains resilient to the financial impact of a worst-case disorderly Brexit. The Bank warned that the “perceived likelihood” of a no-deal Brexit had increased since Theresa May’s resignation, which would bring with it “material risks of economic disruption” and “significant” market volatility. However, the BoE also said Britain was more prepared for a disorderly Brexit than it was six months ago. Since last year, UK banks have been forced to hold back more capital and demonstrate easy access to £1trn in funding. The Bank says that such a buffer would allow the banking system to continue to lend into the economy, even if the UK were shut out of international markets for three months.
HSBC extends debt collection compensation scheme
HSBC is extending a compensation scheme for borrowers who were charged “unreasonable” debt collection fees after discovering that four times as many customers were affected than originally thought. The bank has already paid out around £4m to 6,700 people who held credit cards with John Lewis Financial Services (JLFS) and HFC Bank, both of which are now part of HSBC. The Financial Conduct Authority said yesterday that HSBC has now written to a further 18,500 people who had not previously been contacted.
Lloyds Bank swipes Callsign deal to bolster cyber security
Lloyds Banking Group has agreed a deal with Callsign which will see the cyber security start-up provide digital identification and authentication of online payments, to comply with forthcoming antifraud legislation.
Bank of England scrutinising overhaul of Deutsche Bank
Sam Woods, head of the Bank of England’s Prudential Regulation Authority, has said the Bank is scrutinising Deutsche Bank’s radical overhaul to ensure it is “safely executed.”
PRIVATE EQUITY
Carlyle raises $3bn for new private credit fund
Carlyle has raised about $3bn for a new fund that will lend directly to companies and has already handed out $850m in loans to 10 firms in North America and Europe.
INTERNATIONAL
Deutsche Bank drawn into Malaysian 1MDB Fund scandal
Federal prosecutors are investigating Deutsche Bank’s role in the scheme that looted money out of Malaysia's state infrastructure fund. The Justice Department is looking at whether the German lender violated foreign corruption or anti-money laundering laws in its work for 1MDB, which included helping the fund raise $1.2bn in 2014 as concerns about its management and financials were becoming known.
German fintech challenger launches in the US
German fintech N26 has become the second major European digital bank to launch its services in the US in a partnership with Axos Bank. Starting in a staged rollout, 100,000 customers on N26’s US waiting list will be invited to open an account and have full access to the bank’s app and debit card.
Australia’s big banks told to boost capital on governance risks
The Australian Prudential Regulation Authority is forcing Westpac, ANZ Bank and National Australia Bank to each hold an extra A$500m ($348m) capital due to corporate culture and governance risks.
Saudi wealth fund lines up $10bn bank loan
Saudi Arabia's sovereign wealth fund has agreed initial terms for a $10bn loan from a group of banks including Bank of America Merrill Lynch, BNP Paribas, Crédit Agricole and Citigroup.
AVIATION
Norwegian Air boss quits
Norwegian Air’s veteran chief executive Bjorn Kjos has quit amid the Boeing 737 Max groundings - and their potential impact on the carrier's full year results. Finance boss Geir Karlsen will act as interim leader.
Jet2 profits soar
Travel agent and airline Jet2 has seen profits soar more than a third to £178m. Owner Dart Group said sales had broken through the £3bn barrier in the year to March.
FINANCIAL SERVICES
Bank of England to tighten up on investment funds
The Bank of England is planning a crackdown on investment funds following the commercial property sell off after 2016's Brexit vote and the recent Woodford equity income fund scandal. Under plans being considered by the Bank, investment firms may be banned from allowing customers to pull out their money with a day’s notice if their underlying assets are difficult to sell. Sweeping changes to rules governing so-called open-ended funds will be looked at by the Bank along with the Financial Conduct Authority. Announcing the work alongside its latest Financial Stability Report, BoE governor Mark Carney warned that “financial stability risks are increasing” from giant funds.
Swiss Re suspends Reassure float
Swiss Re has confirmed it is postponing plans to list its £3bn British life insurance arm Reassure amid weak investor demand. John Dacey, Swiss Re’s chief financial officer, said: “While we firmly believe that the long-term interests of ReAssure are best served by a more diversified shareholder base, there has been no pressing need for Swiss Re to divest shares at a price that we consider to be unrepresentative of ReAssure’s value and future prospects.”
Investors lack awareness of platform fees
Research commissioned by AFH Wealth Management has found that 41% of investors are unaware of how much they are paying in platform fees, which can amount to thousands of pounds in some cases. AFH said that on a pot of £50,000, invested over 25 years and growing 5% a year, an investor will typically fork out £12,500 in platform fees alone.
Overhaul of financial crime rules too weak, warn critics
Campaigners have criticised the government’s plans to tackle economic crime after it failed to address how to hold companies criminally liable for financial wrongdoing. Separately, MPs have said regulators need to act more robustly to prevent financial consumers from being exploited by suppliers.
Lloyd’s chief vows to force through insurance changes
Lloyd’s of London chief executive John Neal has pledged to force through his proposed changes to the world’s leading insurance market, regardless of opposition.
HEALTHCARE
Reckitt settles opioid addiction treatment case
Reckitt Benckiser has reached an agreement with the U.S. Department of Justice and the Federal Trade Commission to pay $1.4bn to resolve investigations into how its former subsidiary marketed Suboxone, a drug used to treat opioid addiction.
US hedge fund considers bid for Four Seasons Health Care
US hedge fund Davidson Kempner Capital is considering making a formal offer for UK care home operator Four Seasons Health Care, which collapsed into administration earlier this year.
MANUFACTURING
Eurozone industry struggles to emerge from slowdown
Industrial production expanded month-on-month in all five of the eurozone’s largest economies in May, although the European Commission says the bloc’s economy still faces a “host of negative risks.”
MEDIA AND ENTERTAINMENT
Centaur shelves sale of The Lawyer
Business publisher Centaur has abandoned the sale of its flagship title, The Lawyer, after a lengthy sale process failed to attract hoped-for bids of more than £40m.
PROFESSIONAL SERVICES
Profits up for magic circle
Turnover at Linklaters reached £1.63bn last year, with profits at the firm hitting £751m. Fellow magic circle firm Freshfields reported turnover of £1.47bn and profits of £688m. Meanwhile, Allen & Overy’s revenue for last year was £1.7bn, with profits of £708m, while Clifford Chance reported income of 1.7bn and profits of £637m.
REAL ESTATE
Landsec chief to step down next year
Landsec boss Robert Noel is retiring after almost eight years at the helm. Prior to Landsec he was property director at Great Portland Estates.
RETAIL
M&S ousts fashion boss
Marks &Spencer has ousted its clothing and home boss, Jill McDonald, who spent two years attempting to turn around the struggling division. Chief executive Steve Rowe said the firm needed to "address long-standing issues in our clothing and home supply chain around availability and flow of product".
OTHER
Decision on Carney’s successor must wait for new chancellor
Initial interviews for the next Bank of England governor have been completed, although the process is now effectively on hold until a new chancellor is named. Roughly 30 candidates applied to take over from Mark Carney, and about ten are thought to have been interviewed by the Treasury panel. The panel’s recommendations will be put to Boris Johnson, should he become prime minister in the coming weeks as widely predicted, and his chancellor, expected to be Sajid Javid. Meanwhile, Mr Carney has positioned himself as a contender to be the next head of the International Monetary Fund after refusing to rule out joining the race to take over from Christine Lagarde.