BANKING
Banks need to address cultural reform
Speaking on the 10th Anniversary of the Northern Rock collapse, Lord McFall has said that cultural reform is still required in the financial sector. The former chairman of the Treasury Select Committee has called for greater transparency over bonuses as well as a need to address how staff target customers. “We are already seeing signs of the culture going backwards and therefore delaying the trust that the banks say that they want the public to have in them,” he added. Meanwhile, it emerged yesterday that Northern Rock board members were ordered out of their beds by the Bank of England as they slept through last-ditch efforts to prop up the stricken lender. City regulator Andrew Bailey also recalled how Northern Rock lawyers tried to haggle over the terms of the rescue package.
Northern Rock investors step up compensation efforts
Former shareholders in Northern Rock have asked the Prime Minister to listen to their moral case for compensation. A delegation of investors visited 10 Downing Street yesterday to hand in a letter to Theresa May, setting out their claim that it is unfair that the government has received all of the proceeds from sales of Northern Rock’s assets. Separately, the FT’s Chris Tighe looks at what has happened to Northern Rock’s directors since the bank’s funding crisis was disclosed in 2007.
Ten years on, is the banking sector a wise investment?
Garry White, chief investment commentator at Charles Stanley, asks in the Telegraph whether the banking sector, ten years on after the financial crash, is now a wise investment. He says UK banks may give good dividend yields paid out of current profits, but investors should be wary that bank profitability could drop if margins come under more pressure and loan losses start to mount. He suggests that US financials look a more attractive proposition.
PRIVATE EQUITY
Hoberman raises $85m for new tech fund
Brent Hoberman, the investor and serial tech entrepreneur, has launched a new European venture capital fund with an $85m (£64m) pot. Firstminute Capital will use the money to invest in early stage technology firms. The company had planned to raise $60m but was overwhelmed with interest, highlighting the current strength of the UK tech scene.
US blocks tech firm takeover by China
Donald Trump’s administration has blocked Chinese private equity firm Canyon Bridge Capital Partners’ planned £1bn acquisition of Lattice Semiconductor Corp. US scrutiny of the deal grew after it was reported that Canyon Bridge was funded partly by capital from China’s central government.
INTERNATIONAL
Ireland may repurpose “bad bank” to deliver housing
Ireland’s Prime Minister Leo Varadkar said a housing supply shortage could see the government repurpose the country’s bad bank into a development agency that could deliver housing on behalf of the state. He said the move could see the National Asset Management Agency “step in where the private sector has failed.”
RBA pays dividend despite loss
The Reserve Bank of Australia has said it will pay the federal government a A$1.3bn dividend, despite making a A$900m loss. The central bank said the rise in the Australian dollar was a key factor behind its loss.
Central bank says Otkritie falsified accounts with Eurobonds
The Central Bank of Russia has said that failed Russian lender Otkritie falsified its accounts through a gigantic eurobond purchase.
AVIATION
Ryanair prepares bid for Alitalia
Michael O’Leary, the CEO of Ryanair, has said his airline is close to making a final offer to take over Alitalia. Alitalia’s brand and long-haul operations would survive the takeover but Ryanair, which prefers to own its aircraft, would jettison the Italian carrier’s model of leasing planes. Mr O’Leary also ruled out a Ryanair bid for Air Berlin, accusing Germany of rigging the process to benefit and strengthen Lufthansa.
CONSTRUCTION
Interserve issues profit warning
Interserve shares dropped 55% in under an hour following a trading update in which the support services and construction group issued a profit warning on the back of mounting energy contract costs. The construction division has recently suffered tough market conditions, while the support services division has suffered this year due to a break in Government procurement as the result of Brexit and newly-enforced regulations.
FINANCIAL SERVICES
Investment consultants face competition probe
The Financial Conduct Authority has referred the investment consultancy and fiduciary management sector to the Competition and Markets Authority. The regulator said there were reasonable grounds to suspect that there were features of the sector that prevented, restricted or distorted competition. Amongst its concerns, the FCA flagged the high level of concentration held by three firms – Mercer, Aon Hewitt and Willis Towers Watson – which together account for up to 80% of the market. It also pointed to a lack of transparency, barriers to expansion for smaller players and conflicts of interest.
Provident downgraded
The Royal Bank of Canada has downgraded Provident Financial to “underperform”. RBC said that Provident faced a mis-selling inquiry on the same scale of PPI and estimated the cost of potentially compensating customers who might have been mis-sold its Vanquis credit products could reach £300m.
Finance workers value flexibility
Pensions, healthcare schemes and flexible working are the benefits most valued by finance workers when applying for jobs, a survey by recruitment firm Reed has found. Three out of five candidates placed a benefits package above pay, including extra holidays and a company car.
BlackRock to foot bill for external research under Mifid II
BlackRock will pay for external research out of its own pocket, rather than pass the expense on to investors, once Mifid II rules come into force in January.
HEALTHCARE
Spire Healthcare warns of slump in profits
Spire Healthcare has reported that its pre-tax profits for the six months to June 30th dropped to £12.1m from £46m a year earlier. The private hospital operator had to set aside £27.6m to settle claims from 750 victims of the disgraced surgeon Ian Paterson. Revenue increased 2.4% to £481m.
MANUFACTURING
Dyson expects no Brexit deal
Sir James Dyson, the founder of engineering firm Dyson, has said he expects the UK to leave the EU with no deal, and trade to default to WTO rules and tariffs. Sir James, who campaigned for Brexit, said that such an arrangement would “hurt the Europeans more than the British”. He said UK business did not need a transitional period to separate from the European single market, saying he thought the term “single market” was “quite wrong”. Sir James explained: “It’s a series of different markets with different languages, with different marketing required and different laws…. it’s actually a very highly complex and broken up market.” Dyson has also launched a push for more female engineers.
MEDIA & ENTERTAINMENT
Murdoch’s bid for Sky referred to competition watchdog
The culture secretary Karen Bradley has referred the Murdoch family’s 21st Century Fox proposed £11.7bn takeover of Sky to the Competition and Markets Authority for further investigation. The CMA will consider not just the proposed deal’s effect on media plurality, but also the company’s commitment to broadcasting standards. 21st Century Fox and Sky said they would not be making substantive representations about Ms Bradley’s decision. Separately, Ms Bradley has indicated that Channel 4 will not be forced to relocate outside of London. Manchester, Birmingham and Glasgow had all been mooted as potential new homes for the broadcaster, which itself opposed the proposals.
RETAIL
Revamp costs John Lewis
Half-year profits at the John Lewis Partnership more than halved due to reorganisation costs and the weaker pound. The group, which includes Waitrose, made £26.6m in the six months to the end of July, down 53.3% on the same period last year. Stripping out the effect of exceptional items, profit before tax was down by 4.6% to £83m, while operating profit fell by 39% to £69m. Gross sales across the Partnership rose 2.3% to £5.4bn. Chairman Sir Charlie Mayfield said the group suffered in categories linked to the housing market, which saw a post-referendum slowdown, though the fashion sector performed well. Like-for-like sales rose 0.7% at Waitrose, while at John Lewis comparable sales nudged up just 0.1%.
ECONOMY
Sterling surges amid hints of rate rise
The pound climbed by more than 1% against the dollar to $1.3363 after the Bank of England said that higher inflation and a pick-up in growth could lead to a rate hike in the coming months. Members of the Bank’s nine-strong Monetary Policy Committee voted 7-2 to keep interest rates on hold at 0.25%. However, Governor Mark Carney said: “The majority of members of the Monetary Policy Committee, myself included, see that that balancing act is beginning to shift, and that in order to… return inflation to that 2% target in a sustainable manner, there may need to be some adjustment of interest rates in the coming months.”
OTHER
Jane Austen note in circulation
The new £10 note, featuring the face of Jane Austen, went into circulation yesterday. Slightly smaller than the old version, it is made from polymer, and comes with a number of new security features, including a see-through window displaying a portrait of the Queen, and a quill which changes colour from purple to orange when the note is moved in the light. Notes with serial numbers beginning JA, after Jane Austen, and particularly JA57 and JA17, marking the years of her birth and death, are thought likely to be of considerable worth to collectors.