Hammond hands Bank of England new powers
The Chancellor has granted the Bank of England new powers to pump £500bn into Britain’s banks without approval from the Treasury. The Government would give the Bank £1.2bn to underwrite the new lending pot, Philip Hammond said. However, under the new deal, the Bank will be responsible for covering losses, not the Treasury. BoE Governor, Mark Carney, called the new deal “a great achievement, adding that the Bank can now deploy half a trillion pounds without a green light from the Treasury. "Today marks a step change in our ability to provide liquidity," he added. "We now have a balance sheet fit for purpose."
TSB's IT testing 'inadequate', IBM says
A report by IBM, published by the Commons' Treasury Select Committee, claims that TSB failed to sufficiently test its new IT platform before the roll-out that left many customers locked out of their accounts. A TSB spokeswoman cautioned that IBM's observations were made after just three days at the bank, but IBM's report indicates that "early findings" concluded that testing did not show sufficient evidence of the system's capacity. The committee has asked to be provided with a separate report into the IT outage currently being produced by law firm Slaughter and May.
Bank holds rates, for now...
The Bank of England has held interest rates at 0.5%, with members of the Monetary Policy Committee voting 6-3 to keep rates unchanged. In a sign of increasing likelihood of a rise next time however, policymaker Andy Haldane joined Ian McCafferty and Michael Saunders in calling for a hike to 0.75%.
Banking protocol thwarts £25m of fraud
UK Finance says almost £25m worth of fraudulent transactions have been thwarted since a scheme was launched to protect potential victims of scams, with fraud worth £3m prevented last month alone. The banking protocol allows bank branch staff to contact police if they suspect a customer is being scammed. Since its launch last year, £24.7m of potential fraud has been prevented and 197 arrests made.
Carlyle raises $6.6bn for fund
Carlyle has raised $6.6bn for its largest Asia-Pacific buyout fund, beating its original target of $5bn. The private equity group is set to focus on sectors including retail, financial services, telecommunications, media, technology and healthcare.
Private equity’s pass the parcel deals raise concern
The FT looks at pass the parcel acquisitions between private equity groups, noting that while managers argue such transactions cut execution risks, concern remains that some buyers may overpay and see low returns.
US banks pass stress test
The Federal Reserve says the United States’ 35 largest banks, including JP Morgan Chase, Citigroup and Bank of America, have cleared the first stage of an annual stress test that determines if they would be able to maintain enough capital in a recession to meet requirements, although a severe downturn would see them lose a combined $578bn. "Despite a tough scenario and other factors that affected this year's test, the capital levels of the firms after the hypothetical severe global recession are higher than the actual capital levels of large banks in the years leading up to the most recent recession," The Fed’s vice chairman Randal Quarles said.
SocGen has wound down contracts with Panama Papers firm
Société Générale has wound down its clients' contracts with Mossack Fonseca, the law firm forced to close after documents were stolen and made public in the Panama Papers tax evasion scandal. " Société Générale Private Banking works exclusively with jurisdictions operating to the highest standards in terms of fiscal transparency," SocGen said in a statement.
Daimler forecasts lower earnings
Daimler says it expects to see lower earnings this year because of US-China trade tensions, with a tax on the import of US vehicles into China resulting in lower sales of Mercedes-Benz cars. Daimler, owner of Mercedes-Benz, said this year's earnings from car sales are expected to be "slightly below the previous year". On the impact of the trade dispute, Harald Hendrikse, analyst at Morgan Stanley, warned: “Daimler won’t be alone”.
London mayor backs legal action against Heathrow expansion
London Mayor Sadiq Khan will join legal action by Hillingdon, Richmond, Wandsworth and Windsor and Maidenhead councils against a third runway at Heathrow, if MPs vote for it next week. Separately, trade minister Greg Hands, MP for Chelsea and Fulham, is resigning over the government's plans to expand the airport.
Airbus warns ‘negative’ impact of Brexit threatens its UK future
Airbus has warned that it could leave the UK after warning that under “any scenario Brexit has severe negative consequences for the UK aerospace industry.” The company, which generates £1.7bn in tax revenues, is preparing to abandon plans to build aircraft wings at its British plants and move production to China, the US or elsewhere in Europe.
Hammond demands mutual recognition for financial services
The Chancellor used his Mansion House speech on Thursday to accuse the EU of making no credible proposals for post-Brexit regulation of financial services. The UK has sought a system of “mutual recognition”, so far dismissed by Michel Barnier, the EU’s chief negotiator. In his own speech at Mansion House, BoE governor Mark Carney urged Brussels to match Britain's ambition to build an open global financial system, saying the BoE “recognises that a new economy, a new world and new demographics demand a new financial system.”
Legal & General looks to millennials
Legal & General is targeting millennials in a £60m boost for its personal investment business. A new advertising campaign will focus on issues important to young people, including gender diversity and the environment, with the firm’s Helena Morrissey saying there is a market of 12m people in their twenties and thirties who could be attracted by L&G’s offering.
Saga holding steady
Saga has asserted that growth investment had driven branded policy counts and cruise bookings - taking branded retail insurance policies up by 1% year on year, aided by growing motor and home policies, up 30% and 14% respectively. The over-50s travel and insurance firm's new membership scheme, Possibilities, boasts 740,000 members as of June 2018.
Chemring profit rises
Chemring Group profits have risen 5.2% on the back of increased defence spending by the US government, with underlying profit hitting £18.1m in the six months ending 30 April. Chief executive Michael Flowers said: "Market conditions and business performance in the first half of 2018 have continued to strengthen, with margins and earnings improving across the Group.”
Flexible workspace use increasing
The number of flexible workspace offices has risen by 10% in the last year, according to research by provider The Instant Group, which shows some 30% of such space in London is now occupied by larger firms. Profits at Workspace and WeWork are rising, though more niche providers actually make up 83% of the market in London.
Dixons Carphone profits down
Dixons Carphone has reported a 24% dip in profit for 2017/18 and forecast a further 21% dip for the current year. The retailer saw pre-tax profit of £382m in the year to April 28, down from £500m the year before. It said it expects the figure for 2018/19 to be around £300m. It also revealed that revenue was up 3% to £10.5bn.
Government borrowing lowest since 2005
Government borrowing in May was the lowest since 2005, according to the ONS, which has said public sector net borrowing, not including the value of nationalised banks, fell £2bn in May compared to last year, to £5bn. The size of government debt relative to GDP fell by 0.4 percentage points in the year to May to 85%, leaving the total size of borrowing at £1.78tn. Strong income tax and VAT receipts helped cut the government deficit. Income tax and capital gains receipts jumped 7.5% compared with the same month last year, while VAT receipts increased 5.4% year on year. However, overall tax receipts grew by only 3%, below the Office for Budget Responsibility's full-year forecast of 3.6% growth.
Finger tech means you can bin the PIN
Dutch chipmaker Gemalto has launched biometric debit cards which could see fingerprint scans replace PINs for transactions. The enhanced security of the new authentication system could also see the end of limits for contactless payment. The card has been rolled out to debit card customers with the Bank of Cyprus.