BANKING
Consumers hesitant on card spending, BoE survey shows
The Bank of England’s (BoE) credit conditions survey shows consumers were more hesitant about credit card spending in the closing months of 2019, with a balance of -13.3% of lenders reporting a rise in demand for unsecured lending. A balance of -6.7% of respondents had increased the availability of unsecured credit. The survey also found that the amount of credit made available to corporates fell for the sixth successive quarter in Q4 2019. It fell to minus 9.2 in Q4, down from minus 3.5 in Q3, marking the fastest rate of decline since Q4 2008. The balance for expected demand for credit for capital investment over the next three months fell to minus 27.4 from minus 18.5, the weakest since Q1 2009. The survey saw a balance of -12.7% of lenders report a rise in demand for mortgages in the three months to December 20, down from +12.5% in the previous quarter.
Banks told to move away from Libor
The Bank of England (BoE) and Financial Conduct Authority (FCA) have told major banks and insurers they expect to see “clear evidence of engagement” that they are moving away from Libor. Banks have been warned that they could face punishment if they do not find an alternative to the interest rate benchmark by the end of next year, with the FCA and BoE threatening to use "supervisory tools" against firms failing to show sufficient progress. The joint letter tells recipients: “The intention is that sterling Libor will cease to exist after the end of 2021. No firm should plan otherwise." Libor was at the centre of a scandal when, in 2012, it was found that traders were fixing it, distorting global markets. The revelations led to £7bn of fines.
Banks offer fewer zero-interest credit cards
Banks have reduced the number of zero-interest credit cards available and tightened lending criteria, research by the Bank of England shows. Moneyfacts analysis shows that the number of cards that allow balance transfers has dropped by more than a third in the past three years, hitting a record low. There are currently 76 balance transfer deals available, compared to 122 in January 2017, while the longest interest-free period on the market has dropped from 43 months to 29 months. Some of the shift can be attributed to a Financial Conduct Authority crackdown on lenders profiting from customers who are in persistent debt and have no plan in place to pay it off.
Former Barclays boss accused over Qatar fees
Prosecutors have accused Thomas Kalaris, the former head of Barclays’ wealth division, of proposing two separate illegal deals before settling on an advisory agreement that allegedly disguised £322m in payments to Qatar in 2008. The Serious Fraud Office has accused Mr Kalaris and two former Barclays executives of devising fraudulent advisory services agreements in order to disguise payments that were actually fees demanded by Qatar in exchange for investing £4bn in the bank as part of an £11bn emergency fundraising drive.
Barclays set to cut investment bank jobs
Barclays is reportedly preparing to cut around 100 senior jobs in its investment bank across London and Asia as it looks to reduce costs.
Britain’s retail banking reform has fallen short
The FT says Open Banking “promised much more than it has delivered”, citing Which? analysis showing that, two years from its launch, three-quarters of people have not heard of it.
PRIVATE EQUITY
Value of UK deals surges
The value of UK private equity and venture capital deals almost doubled in the last quarter of 2019, according to data from private equity research firm Unquote. While the total number of deals fell during the three months to December 31, several mega-buyouts worth more than €1bn helped push overall UK deal value to €27bn. This marks an 80% increase on Q3’s total of €15bn. “The European private equity market is continuing on its spectacular bull-run,” said Unquote head of data and research Julian Longhurst. Investors signed off 2,960 private equity deals in 2019, an increase of almost 15% on 2018’s total.
INTERNATIONAL
Morgan Stanley sees record profit
Morgan Stanley saw profit climb almost 50% in Q4, taking annual earnings to a record high. Profit climbed 46% year-on-year to $2.2bn in the final three months of 2019, taking earnings per share to $1.30 – an increase of 81 cents on the same period a year earlier. Fourth-quarter revenue rose 27% to $10.9bn, year-on-year, with increased bond trading driving a 33% rise in trading revenue.
Credit Suisse has questions to answer over spying - FINMA
Thomas Bauer, chairman of Switzerland's financial watchdog FINMA, says Credit Suisse still has questions to answer about claims it spied on former executives. He said regulators “still have unanswered questions about governance, such as documentation, control, information behaviour and communication channels.” FINMA has appointed an independent investigator to look into the matter.
AUTOMOTIVE
PSA sales fall
PSA, the parent company of Vauxhall and Peugeot, saw a 10% fall in sales last year, with a 2.5% fall in its home European market. According to figures published by the European Automobile Manufacturers Association, Fiat Chrysler, which is set to merge with PSA, suffered a 7.3% fall in car sales in Europe.
European Investment Bank backs Bolt
The European Investment Bank is to provide ride-hailing app Bolt with €50m (£43m) financing. The financing, supported by the European Fund for Strategic Investments, will help the firm develop its technologies.
AVIATION
O’Leary threatens action over Flybe rescue
Michael O’Leary has threatened legal action over the Government support given to regional carrier Flybe. The Ryanair boss has written a strongly-worded letter to the Chancellor, Sajid Javid, saying the state rescue of Flybe contravenes competition rules. He argues measures that are being put in place to help Flybe should be extended to other airlines. If they are not, Ryanair intends to launch legal proceedings against the Government, Mr O'Leary said. British Airways' owner IAG has already filed a complaint with the EU, arguing the rescue breaches state aid rules.
FINANCIAL SERVICES
Pensions claims push up FSCS levy
The Financial Services Compensation Scheme (FSCS) says it’s indicative levy on financial firms for 2020/21 was £635m, an increase of £87m on the levy raised in 2019/20, with the increase driven in the most part by a rise in the number of complex pensions claims, which accounted for 40% of claims. The financial services lifeboat also highlighted the challenges presented by phoenixing - where directors of an insolvent company transfer their business to a new company and continue trading. It has flagged 117 potential cases with the Financial Conduct Authority, with 19 uncovered since September 2019. On the weight of compensation claims it faces, it forecasts that it will process 27,200 claims in 2019/20 and expects a similar volume of claims in 2020/21. It also said it is “too early to predict” how much it would have to pay out in compensation to investors in collapsed mini-bond firm London Capital & Finance.
Profits at Odey rise
Profits at Odey Asset Management rose by 81% to £16m for the year to April 2019. According to the Daily Telegraph, founder Crispin Odey is believed to have taken £3.8m from the profit pool, a significant increase on last year.
HEALTHCARE
Dechra Pharmaceuticals results to lean on H2
Dechra Pharmaceuticals has warned that full-year results would be more heavily weighted to its second half, saying H1 has seen supply problems. Chief executive Ian Page described progress in the first half as “satisfactory”.
LEISURE AND HOSPITALITY
Whitbread sales up
Premier Inn owner Whitbread has published third-quarter results which show total sales increased 1% but comparable sales in the UK fell 1.3%. The firm has warned that business and consumer confidence remains weak outside the capital. The hotel chain said it will take a cautious approach to hotel demand for next year as the “political and economic environment remains uncertain and the sustained industry inflation continues.”
MEDIA AND ENTERTAINMENT
Pearson predicts flat revenue
Education publisher Pearson has predicted annual profit of £590m, at the bottom range of its guidance, leaving revenue flat. It has predicted lower operating profit of between £500m and £580m for 2020. The firm also announced that CFO Coram Williams will leave the company later this year, with deputy CFO Sally Johnson to take over the role.
PROFESSIONAL SERVICES
Hays issues profit warning
Recruitment firm Hays has issued a profit warning, saying political uncertainty led to a slow final three months of 2019. The group anticipates H1 operating profit to be around £100m, down from the £124.1m reported in the same period last year. Group net fees fell 4% on a like-for-like basis in the second quarter.
REAL ESTATE
Election result boosted housing market
December saw a rise in reported home sales for the first time since May 2019, according to a monthly survey of estate agents by the Royal Institution of Chartered Surveyors (RICS), with the Conservative party’s election success said to have boosted the market. A measure of new buyer inquiries hit its highest level since before the Brexit referendum in 2016.
RETAIL
AB Foods keeps earnings guidance after Primark's solid Christmas
Associated British Foods has kept its full-year earnings guidance, due in part to steady revenue growth at Primark in the Christmas trading period. For the 16 weeks to January 4th, group revenue from continuing operations was up 4% year-on-year on a constant currency basis, with Primark sales up 4.5% on the same basis. UK same-store sales fell slightly, though the company did not provide a number. Including the effects of new store openings, sales grew 4% in the UK. Revenue in the eurozone was up 5.1% “as a result of the increase in selling space and like-for-like growth”.