Businesses face lending squeeze
The Bank of England’s (BoE) quarterly credit conditions survey suggests British businesses are facing the biggest lending squeeze in a more than ten years. It found that a balance of -13.5% of lenders expect to restrict access to credit over the next three months, marking the weakest reading since the beginning of 2008. Lenders expect default rates for total unsecured lending to consumers to increase in the period, with default rates on loans to corporate entities also expected to rise. The BoE survey found that a net balance of -12% of lenders saw a rise in demand for loans among small businesses over the last quarter, with a reading of -3.1% for medium sized businesses. Brexit uncertainty is among factors said to be behind muted expectations on demand in the next three months.
MPs question Barclays’ Post Office plan
In a letter to Barclays chief executive Jes Staley, 124 MPs have accused the bank of abandoning its most vulnerable customers, criticising the bank’s move to stop its savers withdrawing cash from Post Offices. The MPs, in a letter co-ordinated by Labour’s Chris Elmore, criticised the bank for the “retrograde decision”, saying they are “‘extremely disappointed.” They tell Mr Staley: “‘It sends a message – rightly or wrongly – that those who cannot properly access the digital economy will have the carpet dragged from under their feet.” Barclays said it is working with MPs “to confirm our new commitments that will ensure that no one will be left without access to cash.”
NatWest increases small businesses fund
NatWest is increasing the size of its Growth Funding programme by £2.2bn to £8.2bn after thousands of smaller businesses were identified as facing potential disruption from Brexit. Paul Thwaite, managing director of commercial banking at NatWest, commented: “During a time of such uncertainty, it is imperative that we do all we can to support our customers.” Small Business Minister Kelly Tolhurst responded: “Financial support from banks is often crucial to the success of an SME… So it is great to see NatWest reaffirming support for their business customers through our new SME Finance Charter.”
HSBC and First Direct cut regular savings accounts interest
Popular regular savings rates at HSBC and its digital sister bank First Direct have been reduced from 5% to 2.75%, with Andrew Hagger, personal finance expert at Moneycomms, commenting: “The banks have little appetite for customer savings at the moment. The other problem is that mortgage rates have been falling due to competition in the market so if banks lend at lower rates but don't trim savings rates then their margins and profits take a hit.”
BC Partners seeks €700m for European real estate fund
BC Partners is seeking to raise about €700m for its first European real estate fund, BC Partners European Real Estate. The fund will acquire real estate assets in some of Europe's largest cities, including London, Paris, Berlin and Madrid. The fundraising comes after Blackstone bought a minority stake in BC Partners in August.
BaFin: Banks cutting fat is not enough
Felix Hufeld, head of German regulator BaFin, has called on banks to restructure amid challenges from a weakening economy and persistently low interest rates. "It will not be enough to cut excess fat and leave bones and muscles untouched. Many banks have business models that are too complex and they should ask which activities and products were profitable. There is a lot of room to manoeuvre, without putting money supply at risk," Mr Hufeld said. BaFin is not opposed to large tie-ups among banks, including cross-border mergers, Mr Hufeld said, although he added that the risks in carrying out such deals were often underestimated.
Chinese banks build up asset recovery teams as bad debts mount
Chinese lenders’ offshore loan recovery teams are being strengthened, with struggling overseas firms and acquisitions bringing a wave of bad debts to ICBC, Bank of China and China Construction Bank.
Saudi Aramco IPO warning from environmental groups
Oil Change International and Friends of the Earth, among other environmental groups, have written a letter to banks linked to Saudi Aramco’s planned market float, warning that it would represent “the biggest single infusion of capital into the fossil fuel industry” since the Paris climate accord was signed four years ago. JPMorgan Chase, Morgan Stanley, Goldman Sachs and the other banks involved declined to comment on the matter.
Peter Babej named Asia Pacific chief executive at Citigroup
Peter Babej, Citigroup Inc’s global head of financial institutions, has been named the bank’s new Asia Pacific chief executive officer. This comes as the lender saw revenue in the region grow 7% to $4.01bn. in the last quarter.
Morgan Stanley sees strong quarter
Morgan Stanley has reported net income of $2.17bn, with bond trading revenue making up for a reduction in wealth management revenues in its strongest third quarter in the past decade.
British Airways boss plays down electric planes impact
British Airways chief executive Alex Cruz has downplayed the possibility of electric aircraft disrupting the sector in the near future, stating that “it looks like will take some time”. This follows a recent report by Citigroup researchers, which had concluded that the regional flights market could see electric planes in service as soon as 2030, and comes as BA owner International Airlines Group said it would invest $400m (£312.1m) into alternative sustainable fuel development over the next two decades.
FCA: Firms saw 4.29m complaints in H1
The Financial Conduct Authority (FCA) has published the complaints figures for regulated firms for the first half of 2019, with the data showing an increase in complaints from 3.91m in the second half of 2018 to 4.29m for the first half of 2019. The increase can be largely attributed to a 34% climb in the volume of PPI complaints, which rose from 1.58m to 2.12m and accounted for 49% of all complaints received. Complaints not related to PPI dipped 6% from 2.32m in H2 2018 H2 to 2.18m in H1 2019. With PPI-related complaints stripped out, current accounts were the most common subject of complaints, accounting for 14%, followed by credit cards (8%) and motor and transport insurance (6%). The FCA figures show that the average redress per complaint upheld increased from £175 to £200 between the last six months of 2018 and the first six months of 2019, with this average not including redress related to PPI. The FCA said 94% of complaints made were closed within 8 weeks, excluding those relating to PPI, with 57% of these upheld.
Watchdog frustrated over new powers rejection
The Financial Conduct Authority (FCA) has called for greater assistance in its fight against rogue investments, questioning the Government’s decision to rejected proposals to implement new rules that would allow the regulator to ask for greater powers if it identified a gap in its framework. Ministers opted against such a move despite the Treasury Committee suggesting the creation of a new system to prevent consumer harm. In a formal response to the committee’s report, FCA chief executive Andrew Bailey said the regulator needed more help to fight firms operating outside of its remit. He said the FCA shares the committees view that there is a case for “a more structured and transparent approach” for identifying and engaging with the Treasury on perimeter changes. He added: “This could allow for a regular opportunity to consider what activities are covered by regulation and enhance transparency surrounding changes to the FCA regulatory perimeter.”
Moneysupermarket warns of weakness in money segment
With product availability problems affecting Moneysupermarket’s money division, its share price fell 10% as the division shrank 5% to £20.6m for the quarter to the end of September. Revenue was up 4% year on year to £100.9m with its insurance market up 3% compared to this time last year, reaching nearly £50m in sales. Chief executive Mark Lewis noted: “Our Reinvent strategy continues to do more for our customers – the new Moneysupermarket Energy Monitor service means our customers need never overpay for energy ever again.”
Hargreaves Lansdown faces questions over Woodford collapse
Hargreaves Lansdown has come under fire from savers after the collapse of Neil Woodford’s investment empire. Many investors say they only put their money in the fund manager’s doomed funds because they were championed on Hargreaves best-buy list. The FCA has now called for more information about what bosses at Hargreaves knew and when. MPs are also planning to launch an inquiry into the collapse. The Mail notes that around 133,000 Hargreaves customers invested directly in the flagship Equity Income fund and were unable to access their money when it was frozen in June.
Axa IM chief’s abrupt exit sparks renewed sale speculation
The future of Axa Investment Managers is reportedly in question following the sudden departure of Andrea Rossi as chief executive, with the firm also making other changes to its personnel.
Rathbone Brothers warns on tighter profit margin
Investment management firm Rathbone Brothers has reported that its profit margin will narrow over the next two or three years. However, the firm said its operating income was up 11% to a total of £86.3m for the quarter. Rathbones’ chief executive Paul Stockton remarked: “In difficult markets we continue to focus on providing a quality service to our clients, navigating through ongoing market uncertainty but also selectively investing to pursue organic growth opportunities and develop our business.”
LEISURE AND HOSPITALITY
Domino’s pulls out of key European markets
Domino’s Pizza Group is pulling out Switzerland, Iceland, Norway and Sweden, with outgoing chief executive David Wild noting: “Whilst they represent attractive markets, we are not the best owners of these businesses.” The firm also issued a trading update showing an increase in like-for-like sales in its UK and Republic of Ireland business for the 13 weeks to September 29, while sales on this basis at the European unit were down 2.7%, year-on-year.
Consumer growth stalls with UK retail sales stagnant
Office for National Statistics data shows that UK retail sales were flat last month after a decline in August, with volumes in the three months to September up 0.6% on the previous quarter. An increase in online sales in July was largely responsible for the growth. Sales were up 3.1% year-on-year in September, up from the 2.7% year-on-year increase recorded in August. The statistics for last month lead some analysts to conclude that poor business confidence is spreading to the consumer sector. This comes as employment reaches near-record highs and real wage growth increases.
WH Smith acquires Marshall Retail Group
WH Smith is to acquire Las Vegas-based Marshall Retail Group for $400m, with the deal financed through a combination of new debt and equity. Alongside the Marshall deal, WH Smith announced that revenue rose 11% in the year to August 31 to £1.4bn, with a 1% rise in like-for-like sales. Pre-tax profit was flat at £135m, while the retailer raised its dividend by 8% to 41p a share.