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Daily News Roundup: Friday, 16th February 2018

Posted: 16th February 2018

BANKING

Germany gives UK banks until June to secure access post-Brexit

Bundesbank director Andreas Dombret has said that UK banks wanting to secure a foothold in Germany after Brexit should submit their applications for a banking licence by June. Mr Dombret said supervisors cannot guarantee that every application for a new or extended licence will be processed in time if there is a wave of late requests. “Those who have not completed their planning by June and start implementing it run the risk of being on the losing side next year after Brexit,” he stated.

Scotland poised for open banking ‘revolution’

Sandra Dick writes in the Scotsman that Scotland is poised to take advantage of a wealth of incoming new fintech initiatives like the Second Payment Services Directive (PSD2) and Open Banking. Steve Tigar, CEO of Money Dashboard, says the new open banking rules should boost customer confidence in third party operators and, once trust is established, repercussions could be “significant”. Meanwhile, Dan Cooper writes in the Telegraph that open banking will help people to make more informed financial decisions, access new service providers and further increase competitiveness across the sector. He says the challenge for the industry will be to convince consumers to get on board.

New mortgage allows family buy-to-lets

A new mortgage from Mansfield Building Society will cater to those looking to rent a home to their children or family members, allowing borrowers to charge their family rent that equals the mortgage payments. “With the housing market in a state of flux, this deal enables landlords, with sustainable uncommitted earnings, to support relatives without having to charge rental income over and above the mortgage payment” said Mike Taylor of MBS.

Lorenzo expected to emerge from the shadows

Katherine Griffiths in the Times looks ahead to Lloyds Banking Group’s strategic review next week, which will highlight how the bank intends to boost its share of the pensions and wealth market. She contends that Antonio Lorenzo, head of Lloyds’ insurance and investment division, Scottish Widows, will be thrust into the limelight.

SFO should move on from Barclays case

The Standard’s Simon English suggests that the SFO’s pursuit of Barclays’ Qatari fundraising in 2008 can only be about money. He contends that if what Barclays did was so obviously bad, then the SFO should have brought charges within a year. Pursuing the bank 10 years later looks petulant and hardly in the public interest. He ends by saying that the bank looks in better shape than it has for years, and the SFO should move on.

Staley to collect bonus

The Times reveals that Barclays is expected to hand CEO Jes Staley an annual bonus worth £900,000 for last year. The award is less than half of his maximum potential annual bonus.

Virgin Money forms female top team

Virgin Money has appointed former HSBC executive Irene Dorner as chairwoman. The appointment means that the bank, whose chief executive is Jayne-Anne Gadhia, is the only FTSE 350 company which is headed by a female duo.

Rise in young using online and mobile banking

Halifax has reported a 40% rise in the number of customers aged 11 to 18 using online and mobile banking.

INTERNATIONAL

Paris neck-and-neck with Frankfurt in race for City jobs

Arnaud de Bresson, chief executive of Paris Europlace, which promotes the French capital as a destination for financial businesses, has said that Paris is now neck-and-neck with Frankfurt in the race to lure jobs from the City of London’s financial district ahead of Brexit. He said: “Paris, since last October, has seen stronger growth due to new announcements from financial firms.” Reuters notes that up to 4,000 job moves to Paris have been announced by companies including HSBC, Bank of America Merrill Lynch, Citi and JP Morgan.

Goldman Sachs boss warns against Trump tax plan

Goldman Sachs chief executive Lloyd Blankfein has voiced concerns that Donald Trump’s $1.5tn tax cut and spending plans could lead to an overheated US economy. He warned that over-stimulating an already healthy economy could prove “too much of a good thing”. Separately, Treasury Secretary Steve Mnuchin has revealed that the president is in favour of introducing a national tax on internet sales.

US Bancorp fined over $600m for transaction failings

The U.S. Justice Department has reached a $613m settlement with U.S. Bancorp over charges that it failed to have an adequate anti-money-laundering program.

AVIATION

Airbus takes big hit on troop carrier

Airbus has taken a €1.3bn (£1.2bn) charge on its troubled A400M military transport plane, bringing total charges on the project to more than €8bn. The aerospace group reported better-than-expected 2017 profits however of €4.3bn, against €3.9bn in 2016. Revenues were "stable" at €66.8bn, up from €66.6bn.

CONSTRUCTION

Land banking concerns raised

Fresh accusations of land banking have been levelled at property developers, after figures revealed a surge in the number of homes that have not been built despite receiving planning permission, and hundreds of thousands of new properties left undeveloped. Analysis by the LGA shows more than 400,000 homes have been granted permission but are still waiting to be built, reflecting a 16% increase over the past year. Developers are also shown to be taking eight months longer to build homes than they were four years ago.

FINANCIAL SERVICES

SLA loses Scottish Widows mandate

Standard Life Aberdeen (SLA) has been stripped of £109bn of assets it manages on behalf of life insurer Scottish Widows as a result of losing its customer relationship with Widows’ owner Lloyds Banking Group. SLA, which oversees £646bn in assets including the Scottish Widows cash, stressed the £109bn redemption would account for less than 5% of revenues

Insurer reports loss

Lloyd’s of London insurer Lancashire has reported a pre-tax loss of $3.2m for the three months to the end of 2017, below market consensus of a profit of $6.75m. CEO Alex Maloney said that 2017’s natural disasters had provided a real-time “stress test” for Lancashire’s risk management functions.

HEALTHCARE

Oxford BioMedica shares rise after Bioverativ deal

Oxford BioMedica share prices have jumped up by as much as 10% following a new gene therapy deal with Bioverativ that could be worth more than £71m.

Convatec growth exceeds expectations

Wound care company Convatec has seen organic growth exceed expectations, despite a shrinking in underlying profit margin. The firm reported organic revenue growth of 2.3%.

MANUFACTURING

GKN critical of Melrose’s lack of experience

The boss of GKN has warned that a takeover by Melrose would destroy the British engineering group as the battle for control of the company intensified. GKN’s chief executive Anne Stevens said of Melrose’s bid: “They absolutely would destroy this company and I just feel so passionately I don't want to give them a chance.” Meanwhile, GKN’s chairman Mike Turner has written to the group’s shareholders, saying that Melrose’s management was “more focused on financial engineering than real engineering”. In response Melrose has accused GKN of making “inaccurate and misleading statements” and denied the suggestion it was focused on the short term

Bombardier reports 57% rise in profits

Bombardier has reported a 57% rise in profits. The train and plane manufacturer’s earnings before interest and tax for the whole of last year rose from $427m (£304m) to $672m, driven by rising sales and profits in its rail division. Loses at its commercial aircraft division fell from $417m to $377m and profits at its business aircraft division rose 13%.

MEDIA AND ENTERTAINMENT

Relx simplifies corporate structure

Media firm Relx has chosen London for its top base as the FTSE 100 firm simplifies its corporate structure. The company is to unite a legacy dual parent holding company structure into a single UK parent. Once the changes are completed, Relx’s premium listing will be on the London Stock Exchange, with additional listings in Amsterdam and New York.

REAL ESTATE

Mid-earning millennials priced out of housing

The extent at which young people are locked out of the British housing market has been revealed in new figures from economists. The biggest decline in homeownership in the last 20 years has been among 25 to 34-year-olds with take-home pay of between £22,200 and £30,600 a year, the IFS said. In 1995-96, 65% of this group owned a home, compared with 27% in 2015-16.

London prop tech firm secures US investor

The $13bn (£9.4bn) US investment firm Varde Partners has acquired a stake in venture capital firm Pi Labs. London-based Pi Labs, which closed its second $10m fund last year, focuses on scaling up early-stage prop tech firms and has invested in businesses such as online mortgage broker Trussle and Airbnb management service Airsorted.

RETAIL

Burberry teams up with Farfetch in e-commerce push

Burberry is partnering with e-commerce firm Farfetch to offer its full range to shoppers in over 150 countries. Burberry said the partnership would allow the brand to reach a “young fashion-conscious consumer”.

ECONOMY

Cost of debt to soar, OBR warns

The Office for Budget Responsibility has warned that the cost of servicing household debt is set to rise by a third over the next five years. Households will spend a total of £56bn managing their debts this year, the OBR said, and warned that the figure would hit £72bn by 2023.

OTHER

More Britons planning to become self-employed

The number of British workers aiming to become self-employed has nearly doubled since last year. A new report by Aldermore reveals 29% of workers aspire for a self-employed career, up from 15% in 2017.

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