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Daily News Roundup: Friday, 1st November 2019

Posted: 1st November 2019


MPs urge banks to refund fraud victims

The Commons Treasury Select Committee has recommended that banks should consider refunding victims of push-payment fraud dating back to 2016, a move that could land banks with a £1bn compensation bill. Most banks have signed up to a voluntary code launched in May that will see them reimburse victims of such fraud - but compensation is not retrospective. The committee said: “We strongly encourage firms to consider whether refusing to retrospectively reimburse customers who relied on the payee name is fair and just.” Rushanara Ali MP, leader of the Treasury committee inquiry, said: “It should now be compulsory for financial firms to reimburse money lost to victims of authorised push payment fraud, and they should consider doing so retrospectively.” MPs on the committee also suggested a mandatory 24-hour delay on all first-time payments from one bank account to another would help tackle fraud. Stephen Jones, chief executive of UK Finance, said: “We welcome the committee’s recommendations that issues of liability and reimbursement should be addressed by new laws rather than just a voluntary code alone.” UK Finance data shows that £354m was stolen through push-payment fraud in 2018, with bank customers defrauded of £208m in the first half of 2019.

Lloyds Bank profits hit by PPI

Lloyds has announced a 97% fall in pre-tax third-quarter profits, to £50m, citing the payment protection insurance scandal, an increase in provisions for bad loans and a 31% increase in impairment charges to £371m. Lloyds said it would take a £1.8bn charge from PPI claims over Q3. Revenues fell 6% to £4.2bn. Pre-tax profit rose to £2.9bn in the first nine months of the year. The lender expects full-year operating costs to be under £7.9bn, £100m lower than previous guidance suggested. The bank also announced it would soon begin looking for a new chairman, with incumbent chair Norman Blackwell approaching the usual nine-year maximum time on its board.

Co-op Bank and Capita in mortgage deal

Capita is to run the Co-operative Bank’s mortgage servicing operations for the next six years, with a £141m deal agreed. Capita’s existing contract with the bank for its mortgage servicing operation was signed in August 2015 and was due to conclude in 2020.

RBS backs payments service

Royal Bank of Scotland has joined forces with Mastercard, Motive Partners and EFM Asset Management to invest in Pollinate - a business that aims to "transform the global merchant services market". The move will see it compete against Worldpay in the global payments market. RBS CEO Alison Rose said: “We are committed to continually improving the products and experiences that we deliver to our customers, and the creation of Pollinate represents an innovative and successful approach of working with partners to do this."

CEO to exit British Business Bank

Keith Morgan, CEO of British Business Bank, will stand down at the end of 2020 after eight years at the helm of the Government-owned group.


Sberbank profit slips following DenizBank sale

Sberbank has reported a 32% year-on-year decrease in third-quarter net profit to Rbs156bn ($2.4bn), citing a foreign exchange loss from selling Turkey’s DenizBank.

BNP Paribas profit fall dulled by French economic strength

BNP Paribas has reported third-quarter net income of €1.94bn, with chief executive Jean-Laurent Bonnafé noting that “Operating expenses were well contained and benefited from the transformation plan”.

Japanese bank Daiwa to pay $150m after losing negligence case

Daiwa Capital Markets Europe must pay damages of more than $152m for its “negligence” in failing to check a customer transaction, the Supreme Court has ruled.

Yes Bank boosted by $1.2bn offer from investor

India’s Yes Bank has received a $1.2bn offer for a stake in the lender. The unnamed foreign bidder would invest through newly issued equity.

Bank of Japan hints it is willing to cut interest rates further

The Bank of Japan’s forward guidance has been altered, indicating that interest rates could be cut further as part of a new drive to reach an inflation target of 2%.

Piraeus accused of violating capital controls

Eleni Touloupaki, Greece's chief anti-corruption prosecutor, has accused Piraeus Bank of violating capital controls in transactions relating to Libra Group - a US conglomerate that bailed it out.


Fiat Chrysler/PSA consider merger

Peugeot owner PSA and Fiat Chrysler are to enter merger talks, with such a move potentially creating the fourth largest carmaker in the world. The firms issued a statement confirming that: “Both boards have given the mandate to their respective teams to finalise the discussions… in the


British Airways owner IAG's profits down on industrial action

British Airways’ parent company International Airlines Group has cited industrial action and rising fuel costs as it revealed a 7% fall in operating profit to €1.43bn. Willie Walsh, chief executive of IAG, said of recent industrial action: “I know the team at British Airways are very much focused and engaged on resolving the issue… I am very confident that we will see a resolution in the very near future.” The company reiterated guidance that it expected full-year profits at €215m lower than in 2019.

Air France-KLM profits slide as uncertainty hurts passenger demand

Air France-KLM has reported a third-quarter 0.6% drop in passenger unit revenue. It also revealed a 15% fall in operating profit to €900m, with net income of €366m down 53%.


Crest Nicholson profit warning sees shares fall

Crest Nicholson has issued another profit warning, with chief executive Peter Truscott announcing that profit before tax is expected to be between £120m to £130m for the year to 31 October, representing a fall of as much as 32% year on year. AJ Bell investment director Russ Mould noted that: “Profit warnings often come in the early stages of a new chief executive’s tenure if they have done a review of the business and found unsatisfactory practices.”


Financial services exports climb

Data from the Office for National Statistics shows that exports from the UK's financial services sector climbed from £78bn to £82bn in 2018. The figures show that the surplus rose to £63bn, making finance the biggest contributor to the balance of payments of any sector of the economy. An editorial in City AM suggests that the financial services industry will be keeping a close eye on the forthcoming election. The piece suggests that the ONS’s figures underline the importance of the sector to the UK economy, but they should also focus the minds of all sensible politicians and regulators who wish not only to protect this national asset, but see it grow yet further.

Freetrade raises $15m in funding round

Freetrade has revealed the close of its $15m series A funding round, with London-listed fund Draper Esprit injecting $7.5m into the zero-commission stock trading startup. Crowdfunding backers, numbering more than 8,000 individuals, made up the rest of the round. Co-founder and chief executive Adam Dodds noted: “Now is the time we’re going to take on a bit more investment and double down on the business.”


Smith & Nephew raises revenue guidance for second straight quarter

With strong growth in its sports medicine and orthopaedics units, Smith & Nephew has raised revenue guidance for a second successive quarter.


Soccerworld scores Goals deal

Goals Soccer Centres has been acquired by rival Soccerworld and private equity firm Inflexion in a deal understood to be worth around £27m. The acquisition comes via a pre-pack administration.


Bombardier factory deal agreed

US company Spirit AeroSystems agreed to buy Bombardier’s wing factory in Belfast in a £385m deal which will also see it acquire a plant in Morocco and a repair facility in the US. Unions said they will seek assurances on jobs, pensions and terms and conditions.


BT foresees major network spending

BT Chief executive Philip Jansen has said the December general election, alongside delays to Ofcom’s appointment of a new chief executive, have prolonged a deal for the company to invest billions of pounds in a new multibillion-pound full-fibre plan. The firm saw first-half revenue fall 2% to £11.4bn while earnings before interest, tax, depreciation and amortisation fell 3% to £3.9bn, as pre-tax profit of £1.3bn to offset an 18% increase in network investment.


Weak London market hits Foxtons revenue

Revenues at Foxtons have fallen thanks to a weaker housing market in the capital. Third quarter revenues fell 7% to £32.5m, and for the first nine months of the year are down 5% to £83.6m. The estate agent said sales in London were hit by "ongoing political uncertainty", and sales revenue for the quarter dropped 15% to £8.4m.


UK trade deficit hits widest in eight years

The UK trade deficit hit £37.7bn in 2018, its highest level in eight years. The figure represents 1.8% of GDP and is up from £25bn, or 1.2%, the previous year.

Eurozone reports steady GDP growth

Figures from Eurostat, the EU’s statistics office, show GDP in the EU’s 19 member states grew 0.2% in Q3 when compared to Q2, exceeding economist expectations of 0.1% growth between July and September. Separate Eurostat data shows that eurozone inflation fell to 0.7% in October, down from 0.8% in September. Eurostat figures also show that France has the highest tax burden of any country in the EU. Its tax-to-GDP ratio, calculated on the sum of taxes and net social contributions, was 48.4% in 2018, putting it ahead of Belgium on 47.2% and Denmark on 45.9%. Ireland had the lowest ratio, at 23%. Across the bloc, the average was 40.3% last year.


BoE governor announcement postponed

The Government will wait until after the general election on 12 December to name Mark Carney’s successor as governor of the Bank of England. Mr Carney is due to leave the post on 31 January. Front-runners for the position include Andrew Bailey, chief executive of the Financial Conduct Authority, Shriti Vadera, chair of Santander Bank and the BoE's current deputy governor, Ben Broadbent. BBC News’ business editor Simon Jack says the current government has identified Dame Minouche Shafik as its favoured candidate. She has previously served as a deputy governor of the BoE and is currently director of the London School of Economics.

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