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Daily News Roundup: Friday, 20th July 2018

Posted: 20th July 2018

BANKING

Bankers warned on hard Brexit

Nausicaa Delfas, head of international strategy at the Financial Conduct Authority, has advised that banks, insurers and brokers must prepare for a hard Brexit, saying that uncertainty over the legality of financial contracts extending past the planned Brexit date next year could lead to "cliff-edge" risks. She commented: “With eight months until we exit the EU it is important we all plan for a range of scenarios."

Two former traders jailed in Euribor rate-rigging case

Two former traders have been jailed for plotting to rig the Euribor global interest rate. Former Deutsche Bank employee Christian Bittar was sentenced to five years and four months. Philippe Moryoussef, a former Barclays trader, was sentenced to eight years after a jury unanimously convicted him last week. The Serious Fraud Office said it would seek a retrial of three former Barclays traders after the jury failed to reach a verdict following the 11-week trial.

FCA’s Bailey receives £75,000 bonus

Despite criticism over his handling of scandals at RBS and Co-op Bank, Andrew Bailey, chief executive of the Financial Conduct Authority, received a £75,000 bonus in 2017.

PRIVATE EQUITY

Blackstone prepares for fundraising round

Exceeding analysts’ expectations with a second-quarter $1.1bn profit, Blackstone has signalled the beginning of a “fundraising supercycle”, with net economic income up 56%.

INTERNATIONAL

HK regulator fines HSBC

Hong Kong’s securities regulator has fined a local unit of HSBC HK$9.6m (£940m) for systemic deficiencies in its bond selling practices. The Securities and Futures Commission said HSBC Broking Securities (Asia) did not conduct proper and adequate product due diligence on individual bonds before making recommendations to its clients, and did not have an effective system in place to assess its clients’ risk profile and to ensure that its recommendations were suitable and reasonable.

Whistleblower wins Royal Bank of Canada case

An employment tribunal has ruled that John Banerjee, a former City trader at Royal Bank of Canada turned whistleblower, was unfairly dismissed after he raised concerns about compliance. The tribunal stated: "Using his late arrival at work as a pretext, the bank sacked the claimant. The main reason for his dismissal was his public interest disclosure." The firm has defended its actions, saying it disagreed with the ruling.

Sabadell agrees €3.9bn sale of property portfolio to Cerberus

Spain’s Banco Sabadell is to sell most its real estate portfolio to private equity investor Cerberus in a €3.9bn deal. This comes after a €7bn deal which saw Lone Star buy much of CaixaBank’s portfolio.

Mifid leads to BofA analyst departures

As Mifid markets regulations affect investment bank research departments, at least 24 analysts have left Bank of America Merrill Lynch’s London office this year, with many joining asset managers.

Post-crisis repairs still needed at European banks

Gillian Tett, writing in the FT, discusses US and European banks’ respective performance ahead of the 10-year anniversary of the Lehman Brothers collapse.

AUTOMOTIVE

EU prepares retaliatory measures for US

Should the US go ahead with car tariffs, the European Union will implement counter-measures, the bloc has warned ahead of a meeting between President Donald Trump and Jean Claude Juncker. EU trade commissioner Cecilia Malmstrom said EU member states were working on a list of “rebalancing measures” to be put into action if necessary.

AVIATION

Thousands of BA passengers see flights cancelled and delayed

British Airways cancelled dozens of flights to and from Heathrow airport, with at least 7,000 passengers affected. The control tower was closed for over half an hour after a fire alarm sounded, which was followed by an IT issue causing further disruption to airlines.

Demand up for Boeing and Airbus

Despite increasing trade tensions, demand for aircraft remains buoyant with both Airbus and rival Boeing expecting to sell more aircraft than they deliver in 2018.

FINANCIAL SERVICES

Moneysupermarket boosted by energy services

Moneysupermarket.com has reported a better-than-expected 6% growth in second-quarter revenue, driven by its division selling energy services. Shares in the price comparison site rose to a six-month high after Thursday's update. Adjusted core earnings for the first half were flat at £62.2m, while revenue rose 5% to £173.7m.

Risk associate with algorithms

As algorithms increasingly help to deliver financial services, City AM looks at the risks associated with algorithmic trading and the threats that could arise from mis-specifications of models.

HEALTHCARE

Novartis shelves US price increases

Novartis has pledged to scrap price increases for medicines in the US following criticism of the sector from President Trump.

LEISURE AND HOSPITALITY

Gaucho Group collapses, leading to Cau steakhouses shutting doors

Some 540 jobs are to go at the Cau steakhouse chain following the collapse into administration of parent company Gaucho Group. The administrator commented: “The Cau brand has struggled in the oversupplied casual dining sector, with rapid overexpansion, poor site selection, onerous lease arrangements and a fundamentally poor guest proposition all being factors in its underperformance." They added that Gaucho "continues to trade well in its market segment, is profitable and has a strong underlying brand and guest loyalty".

MEDIA AND ENTERTAINMENT

Comcast abandons $71bn pursuit of Fox

Comcast has abandoned its $71bn pursuit of 21st Century Fox, conceding defeat to opponent Disney. Brian Roberts, Comcast chief executive, remarked: "I'd like to congratulate Disney chief executive Bob Iger and the team at Disney and commend the Murdoch family and Fox for creating such a desirable and respected company".

Revenue down at Publicis

Publicis said overall revenue was down 0.5% in the second quarter, while revenue from existing operations dropped 8.3% in the second quarter to €2.2bn. The French advertising group explained the fall was mainly down to an "operational bump" in its health sector business in the US, adding that its Health Solutions arm was now "under strategic review".

REAL ESTATE

First-timers lead the market

The Lloyds Bank Homemover Review shows that the proportion of first-time buyers buying homes has overtaken the number of existing homeowners moving house for the first time since 1995. The report, which only looks at properties bought with a mortgage, shows that the first half of 2018 saw 170,000 home-movers and 175,500 first-time buyers. The report also shows that the average price of a home has climbed 35% since 2013, rising from £219,479 to £296,936 in 2018.

RETAIL

Sports Direct profit hit by Debenhams stake

Sports Direct has seen pre-tax profits fall 72.5% to £77.5m from £281.6m a year earlier due to the group's 29.7% stake in Debenhams. The firm did report rapid progress overseas, with revenue in rest of world retail (outside Europe) up 595% to £192.4m, taking group revenue up 3.5% to £3.36bn. UK sports retail revenue came in at £2.18bn, down 2% since last year, though underlying earnings before one-off costs and tax were £306.1m, at the top end of the company's projections.

All Poundworld shops to shut

All of Poundworld’s 355 shops are set to close by 10th August, with thousands of jobs to be lost. Distribution and head offices will shut today with the loss of nearly 300 positions. The administrator commented: “We would like to thank all the employees for their continued support and commitment during this difficult time.”

Toys R Us workers seek help

Toys R Us workers made redundant are talking to buyout firms KKR and Bain about a possible hardship fund, but Vornado Realty Trust has refused to answer emails.

SPORT

Goals Soccer Centres disappoints

Goals Soccer Centres said results for the full-year will be “materially below” market expectations. Analysts had pencilled in pre-tax profits of £6.4m, but they are now likely to come in at £5m to £5.5m.

ECONOMY

Pound value drops under $1.30 after fall in retail sales

Figures published yesterday show that retail sales volumes decreased unexpectedly last month, with the pound falling below $1.30 for the first time since September 2017. Sales had fallen 0.5% month on month, after increasing 1.4% in May and 1.3% the month before. Ruth Gregory, senior UK economist at Capital Economics, noted that the "big constraint on spending, namely the squeeze on real wages from high inflation, has eased".

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