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Daily News Roundup: Friday, 14th December 2018

Posted: 14th December 2018

BANKING

UK fintech booming amid positive predictions for 2019

The UK’s fintech sector has enjoyed record levels of investment this year, according to new research, with $16bn secured in the first six months of 2018, with the anointment of two British billion-dollar unicorns - currency exchange app provider Revolut and challenger bank Monzo - along with the listing of Argo Blockchain, the London Stock Exchange's first ever crypto firm. Separately, an informal survey of business leaders by City AM revealed that 2019 would see the continued expansion of artificial intelligence and big data, while ‘open banking’ comes into its own.

FCA investigates sky-high mortgage rates at 'zombie banks'

The Financial Conduct Authority wants so-called “zombie banks” to provide more information about their mortgage contracts, amid concerns that customers are paying “sky-high” rates of interest. Hundreds of thousands of homeowners have mortgages with inactive lenders, dubbed "mortgage prisoners" because they cannot be offered a cheaper deal by their lender, given these firms are not regulated to offer new mortgage contracts, nor can they switch to a rival provider.

Promotion for Allen

Susan Allen has been promoted to become Santander UK’s head of retail and business banking. She will also become an executive director. Ms Allen has been at Santander since 2015, having joined as managing director of retail banking.

BNY Mellon halts search for new London HQ

BNY Mellon has dropped plans to move to a new HQ in London and will instead extend the lease on its current base, 160 Victoria Street, which expires in 2023.

INTERNATIONAL

ECB ends eurozone QE stimulus programme

The ECB has confirmed it is ending its huge net asset purchase programme to stimulate the eurozone economy this month. The move, first announced in June, is a big step towards unwinding the policies brought in to stabilise the eurozone in the wake of the financial crisis. The ECB said it was keeping its main interest rate on hold at 0%.

Morgan Stanley to close equities and FX desks in Moscow

Morgan Stanley is closing its equities and currency sales and trading desks in Moscow, joining other banks like Deutsche Bank and Credit Suisse in cutting back on its presence in Russia.

German bank consolidation: Deutschmerz

The FT’s Lex comments on a possible merger between Deutsche Bank and Commerzbank concluding that a deal makes a lot of sense on paper.

Warburg Pincus launches $5bn China distressed property venture

Warburg Pincus has teamed up with Hande Group, a Beijing-based investment conglomerate, to launch a $5bn venture to acquire distressed Chinese property assets.

AVIATION

Luton Airport unveils £160m expansion

A three-year £160m transformation of London Luton Airport is set to be officially opened. The airport said the upgrade was the “biggest” in its 80-year history and would increase capacity by 50% allowing it to welcome 18m passengers by 2020.

CONSTRUCTION

UK’s biggest contractors have a combined £562m pensions black hole

Britain's five major listed contractors - Interserve, G4S, Serco, Mitie Group and Capita - have a combined pension scheme shortfall of £562.4m, the Mail reports. Frank Field, chairman of the House of Commons Work and Pensions Select Committee, commented: “If the Government wants to continue to play this high-stakes game of finding partners to provide public services, it must steeply upgrade our system of corporate governance so they actually serve the public.”

FINANCIAL SERVICES

Derivatives industry welcomes no-deal Brexit clearing proposals

The Futures Industry Association (FIA) has backed plans to grant EU financial institutions access to London’s clearing houses in the event of a no-deal Brexit. The FIA said the move would protect futures, options and swaps markets. The Association for Financial Markets in Europe also backed the plans, which are likely to spark relief in the City and across the continent.

GAM shares hit 20-year low after profit warning and dividend cut

Shares in GAM plunged by nearly 30% yesterday after the Swiss money manager forecast a huge loss, scrapped its dividend and unveiled job losses.

HEALTHCARE

NHS funding squeeze hurts Spire

Shares in Spire Healthcare fell a further 10% yesterday after JP Morgan cut its price target for the company by more than 40%. The broker predicted that the NHS will be “neglected” by the Government ahead of the Brexit deadline.

LEISURE AND HOSPITALITY

TUI leaves rivals in shade

Analysts have praised TUI for moving faster than its rivals to update its holidays offer and expand cruise deals following the travel outfit posting impressive rising sales. TUI, which last year killed off the Thomson brand, saw sales for the year up 5% to €19.5bn (£17.6bn), though profits slipped 10% to €972m amid “a challenging market”.

MANUFACTURING

Christmas cheer at JCB

JCB is giving thousands of its workers the biggest Christmas bonus for more than a decade. Around 7,200 employees at the firm’s 11 plants across Staffordshire, Derbyshire and Wrexham will receive an extra £1,000 in their pay packets. Machine production at JCB reached a 73-year high in 2018.

MEDIA AND ENTERTAINMENT

Apple to build new base in Texas

Apple has announced plans to build a new campus in Austin, Texas, saying the project will involve a $1bn (£790m) investment. Apple said the new 133-acre (0.54 sq km) campus would initially be home to 5,000 new workers but had the capacity to accommodate 15,000. The iPhone-maker said it expected the latest move would eventually make it the state capital's biggest private employer.

PROFESSIONAL SERVICES

G4S considering cash handling arm sale

JP Morgan is advising G4S on a potential sale of its £1.2bn cash handling arm, which accounts for around 16% of G4S’s business, which has struggled following the loss of some of its larger contracts, including one for U.S. supermarket giant Walmart. Profits have also been dented by a run of attacks on its security vans in South Africa.

Labour floats break-up of Big Four accounting firms

Proposals from Labour would see the Big Four audit firms broken up and a 50% limit on the share of FTSE 350 audits they can undertake.

REAL ESTATE

Purplebricks lowers expectations amid tough market

Despite posting a 75% rise in revenue, to £70.1m in the six months to the end of October, online estate agent Purplebricks is now projecting full-year revenues of between £165-175m, down from a previous forecast of £165-185m, amid the tough property market. The firm completed £5.4bn of UK property transactions during the half-year.

RETAIL

House of Fraser acquisition bites into Sports Direct profits

Sports Direct has posted a 27% drop in half-year profits on the back of its acquisition of struggling chain House of Fraser, with Mike Ashley stressing that last month had been “the worst November for retailers in living memory”. Mr Ashley also made time to take a shot at Debenhams, which he claimed had rejected his offer of a £40m interest-free emergency loan, and in a letter addressed to boss Sergio Bucher suggested that without his money the company “has zero chance of survival”.

ECONOMY

Business invests elsewhere amid Brexit despair

The Confederation of British Industry claims businesses have already sent millions of pounds in investment out of the UK as they despair over the UK’s handling of Brexit. CBI deputy director general Josh Hardie said “contingency plans have now been triggered” for a no-deal Brexit. He added: “The idea that there is a massive wall of money being saved up for April when we know what is going to happen, is just wrong. It has already gone elsewhere. We are talking hundreds of millions of pounds. We are talking tens of millions for some individual companies.”

OTHER

Wages down by a third over a decade in parts of UK

The TUC union has issued a report which suggests wages are still worth a third less in some parts of the UK than was the case 10 years ago. Three-quarters (307) of local authority areas have real wages that are still lower than a decade ago. The research indicates that the average worker has lost £11,800 in real earnings since 2008, with the UK suffering the worst real wage slump among leading economies. The biggest losses have been in areas such as the London borough of Redbridge, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in North Wales.

BANKING

UK fintech booming amid positive predictions for 2019

The UK’s fintech sector has enjoyed record levels of investment this year, according to new research, with $16bn secured in the first six months of 2018, with the anointment of two British billion-dollar unicorns - currency exchange app provider Revolut and challenger bank Monzo - along with the listing of Argo Blockchain, the London Stock Exchange's first ever crypto firm. Separately, an informal survey of business leaders by City AM revealed that 2019 would see the continued expansion of artificial intelligence and big data, while ‘open banking’ comes into its own.

FCA investigates sky-high mortgage rates at 'zombie banks'

The Financial Conduct Authority wants so-called “zombie banks” to provide more information about their mortgage contracts, amid concerns that customers are paying “sky-high” rates of interest. Hundreds of thousands of homeowners have mortgages with inactive lenders, dubbed "mortgage prisoners" because they cannot be offered a cheaper deal by their lender, given these firms are not regulated to offer new mortgage contracts, nor can they switch to a rival provider.

Promotion for Allen

Susan Allen has been promoted to become Santander UK’s head of retail and business banking. She will also become an executive director. Ms Allen has been at Santander since 2015, having joined as managing director of retail banking.

BNY Mellon halts search for new London HQ

BNY Mellon has dropped plans to move to a new HQ in London and will instead extend the lease on its current base, 160 Victoria Street, which expires in 2023.

INTERNATIONAL

ECB ends eurozone QE stimulus programme

The ECB has confirmed it is ending its huge net asset purchase programme to stimulate the eurozone economy this month. The move, first announced in June, is a big step towards unwinding the policies brought in to stabilise the eurozone in the wake of the financial crisis. The ECB said it was keeping its main interest rate on hold at 0%.

Morgan Stanley to close equities and FX desks in Moscow

Morgan Stanley is closing its equities and currency sales and trading desks in Moscow, joining other banks like Deutsche Bank and Credit Suisse in cutting back on its presence in Russia.

German bank consolidation: Deutschmerz

The FT’s Lex comments on a possible merger between Deutsche Bank and Commerzbank concluding that a deal makes a lot of sense on paper.

Warburg Pincus launches $5bn China distressed property venture

Warburg Pincus has teamed up with Hande Group, a Beijing-based investment conglomerate, to launch a $5bn venture to acquire distressed Chinese property assets.

AVIATION

Luton Airport unveils £160m expansion

A three-year £160m transformation of London Luton Airport is set to be officially opened. The airport said the upgrade was the “biggest” in its 80-year history and would increase capacity by 50% allowing it to welcome 18m passengers by 2020.

CONSTRUCTION

UK’s biggest contractors have a combined £562m pensions black hole

Britain's five major listed contractors - Interserve, G4S, Serco, Mitie Group and Capita - have a combined pension scheme shortfall of £562.4m, the Mail reports. Frank Field, chairman of the House of Commons Work and Pensions Select Committee, commented: “If the Government wants to continue to play this high-stakes game of finding partners to provide public services, it must steeply upgrade our system of corporate governance so they actually serve the public.”

FINANCIAL SERVICES

Derivatives industry welcomes no-deal Brexit clearing proposals

The Futures Industry Association (FIA) has backed plans to grant EU financial institutions access to London’s clearing houses in the event of a no-deal Brexit. The FIA said the move would protect futures, options and swaps markets. The Association for Financial Markets in Europe also backed the plans, which are likely to spark relief in the City and across the continent.

GAM shares hit 20-year low after profit warning and dividend cut

Shares in GAM plunged by nearly 30% yesterday after the Swiss money manager forecast a huge loss, scrapped its dividend and unveiled job losses.

HEALTHCARE

NHS funding squeeze hurts Spire

Shares in Spire Healthcare fell a further 10% yesterday after JP Morgan cut its price target for the company by more than 40%. The broker predicted that the NHS will be “neglected” by the Government ahead of the Brexit deadline.

LEISURE AND HOSPITALITY

TUI leaves rivals in shade

Analysts have praised TUI for moving faster than its rivals to update its holidays offer and expand cruise deals following the travel outfit posting impressive rising sales. TUI, which last year killed off the Thomson brand, saw sales for the year up 5% to €19.5bn (£17.6bn), though profits slipped 10% to €972m amid “a challenging market”.

MANUFACTURING

Christmas cheer at JCB

JCB is giving thousands of its workers the biggest Christmas bonus for more than a decade. Around 7,200 employees at the firm’s 11 plants across Staffordshire, Derbyshire and Wrexham will receive an extra £1,000 in their pay packets. Machine production at JCB reached a 73-year high in 2018.

MEDIA AND ENTERTAINMENT

Apple to build new base in Texas

Apple has announced plans to build a new campus in Austin, Texas, saying the project will involve a $1bn (£790m) investment. Apple said the new 133-acre (0.54 sq km) campus would initially be home to 5,000 new workers but had the capacity to accommodate 15,000. The iPhone-maker said it expected the latest move would eventually make it the state capital's biggest private employer.

PROFESSIONAL SERVICES

G4S considering cash handling arm sale

JP Morgan is advising G4S on a potential sale of its £1.2bn cash handling arm, which accounts for around 16% of G4S’s business, which has struggled following the loss of some of its larger contracts, including one for U.S. supermarket giant Walmart. Profits have also been dented by a run of attacks on its security vans in South Africa.

Labour floats break-up of Big Four accounting firms

Proposals from Labour would see the Big Four audit firms broken up and a 50% limit on the share of FTSE 350 audits they can undertake.

REAL ESTATE

Purplebricks lowers expectations amid tough market

Despite posting a 75% rise in revenue, to £70.1m in the six months to the end of October, online estate agent Purplebricks is now projecting full-year revenues of between £165-175m, down from a previous forecast of £165-185m, amid the tough property market. The firm completed £5.4bn of UK property transactions during the half-year.

RETAIL

House of Fraser acquisition bites into Sports Direct profits

Sports Direct has posted a 27% drop in half-year profits on the back of its acquisition of struggling chain House of Fraser, with Mike Ashley stressing that last month had been “the worst November for retailers in living memory”. Mr Ashley also made time to take a shot at Debenhams, which he claimed had rejected his offer of a £40m interest-free emergency loan, and in a letter addressed to boss Sergio Bucher suggested that without his money the company “has zero chance of survival”.

ECONOMY

Business invests elsewhere amid Brexit despair

The Confederation of British Industry claims businesses have already sent millions of pounds in investment out of the UK as they despair over the UK’s handling of Brexit. CBI deputy director general Josh Hardie said “contingency plans have now been triggered” for a no-deal Brexit. He added: “The idea that there is a massive wall of money being saved up for April when we know what is going to happen, is just wrong. It has already gone elsewhere. We are talking hundreds of millions of pounds. We are talking tens of millions for some individual companies.”

OTHER

Wages down by a third over a decade in parts of UK

The TUC union has issued a report which suggests wages are still worth a third less in some parts of the UK than was the case 10 years ago. Three-quarters (307) of local authority areas have real wages that are still lower than a decade ago. The research indicates that the average worker has lost £11,800 in real earnings since 2008, with the UK suffering the worst real wage slump among leading economies. The biggest losses have been in areas such as the London borough of Redbridge, Epsom and Waverley in Surrey, Selby in North Yorkshire and Anglesey in North Wales.

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