MPs to probe bank IT failures
The Treasury Select Committee has launched an inquiry into IT failures in the financial services sector following a number of meltdowns involving high street banks. These include failures that have seen Barclays and RBS customers unable to access accounts and issues at TSB following an IT upgrade, as well as an incident that saw Visa’s card payments network fail. The committee is to look at causes of such failures, the impact on consumers and whether bodies such as the Bank of England and the Financial Conduct Authority are able to hold anyone to account. Nicky Morgan, chairwoman of the committee, said the number of IT failures in recent years is “astonishing,” adding: “Measly apologies and hollow words from financial services institutions will not suffice when consumers aren’t able to access their own money and face delays in paying bills.” Stephen Jones, chief executive of UK Finance, has defended the industry, saying banks "work around the clock" when problems occur and have invested heavily to ensure systems are secure.
Nationwide profits fall by a fifth
Profits at Nationwide Building Society fell by almost a fifth in the first half of its financial year as an investment programme to boost technology weighed down earnings. Profit before tax fell 17.8% to £516m for the six months to the end of September compared to the same time last year as it took a £135m charge from asset write-offs and extra spending on technology. Costs in the first half were flat when compared with 2017, while the company said it is on track to achieve £100m in sustainable savings for the full fiscal year. Nationwide said a plan to invest another £1.3bn on technology in the next five years would substantively affect profits in the short term but said the resulting IT improvements should help it take £200m from annual costs by 2023.
HSBC cuts 50,000 staff pensions
HSBC has cut the pension payouts of 50,000 former staff who joined the bank between 1975 and 1996 by up to £2,500 a year. The cohort had opted to pay less national insurance (NI) by "contracting out" of one of the two former state pension schemes. HSBC also paid less NI but agreed to pay a guaranteed minimum pension when staff retired. Thousands of employers offered staff the same deal but began to cut pension payouts in the light of concerns around poorly kept payment records and the exclusion of state pension data from calculations. Some firms decided to cut pension payouts to compensate for overpayment. In response to its overpayments, HSBC is now cutting how much pension it pays.
Edmonds launches Lloyds lawsuit
TV personality Noel Edmonds has launched legal action against Lloyds Bank and is seeking at least £30m over claims fraud at the Reading branch of HBOS, which was later bought by Lloyds, led to the demise of his Unique Group business. Mr Edmonds’ lawyers served Lloyds with a pre-case letter to initiate action, which could start next month. Mr Edmonds, who is currently appearing on ITV’s I'm a Celebrity... Get Me Out Of Here, says he will use his appearance on the reality show to promote his cause.
Asset managers consider diversity when voting
An Investment Association survey has found that over half of asset managers actively engage with companies over gender diversity, while four in ten have made a voting decision based on a company’s gender diversity. The poll, which involved 59 firms, saw 80% of respondents say engagement leads to better investor decisions. Investment Association chief executive Chris Cummings said: “Companies should expect greater scrutiny on diversity issues in the future, and should be acting now to address the imbalances they have at the top.”
Goldman Sachs’s Lloyd Blankfein met 1MDB’s Jho Low in 2012
Goldman Sachs has revealed that former chief executive Lloyd Blankfein, now chairman, met with Jho Low, the man at the heart of the 1MDB fraud scandal, in 2012, meaning they met at least twice.
China blocks copycat fund names
New rules from the Asset Management Association of China (AMAC) will prevent copycat asset managers from exploiting well-known brands, barring the unauthorised use of renowned trademarks or the names of famous people and institutions for new private fund products. AMAC notes that around 60 funds use the HSBC name in Chinese characters despite no link to the firm, with seven private funds and eight asset managers using the Chinese name for Goldman Sachs, while the Chinese name for Fidelity is used in about 40 products and 12 firms.
Emergevest combines logistics businesses
Private equity house Emergevest is to create the UK’s biggest private operator in the logistics sector by combining six businesses which it has spent £400m acquiring in recent years. The investor will bring together Adjuno, Allport Cargo Services, CM Downton, Jigsaw, NFT and Palletforce to create EV Cargo.
Goldman goes family-friendly
Goldman Sachs has adopted a family-friendly position and is offering a “back-up care” scheme for its 6,000 staff which provides free emergency nannies for sick children and carers for elderly parents.
Diamond steps up acquisitions with Kepler stake
Former Barclays chief executive Bob Diamond’s Atlas Merchant Capital fund has acquired a 20% stake in equity research and sales house Kepler Cheuvreux.
ECB holds fast on stimulus withdrawal plans despite weak data
Minutes from the European Central Bank’s last meeting before it votes on halting the expansion of the €2.6tn bond-buying quantitative easing programme say the underlying strength of the economy continues to support confidence.
StanChart explores first buyback in a generation to lift flagging share price
Standard Chartered is drawing up plans to buy back shares, with analysts suggesting that the bank would be able to afford a buyback of at least £1bn.
ASIC takes action against NAB over fraud
The Australian Securities and Investments Commission has taken action against National Australia Bank over home loan fraud. The regulator has already taken action against individuals over the fraud and misconduct by 60 bankers, including branch managers, with it found that they created false documents and accepted cash payments from introducers.
South African investigators probe new EFF links to fallen bank
Investigators commissioned by South Africa's central bank have uncovered links between collapsed lender VBS and the opposition Economic Freedom Fighters party.
Nissan sacks Ghosn as chairman
Nissan’s nine-member board has voted unanimously to sack Carlos Ghosn as both chairman and representative director following his arrest earlier this week. Mr Ghosn has been accused of fraud, with it claimed he under-reported his salary and misused company funds. Co-director Greg Kelly, who has been implicated in the fraud claims, has also been sacked. Nissan says a committee has been set up to determine who will replace Mr Ghosn.
Virgin Atlantic in Flybe talks
It has been reported that Virgin Atlantic has opened talks with Flybe, which has recently put itself up for sale after profits dipped 54%.
Government ban on moving retirement money
The government has temporarily banned members of the Local Government Pension Scheme from transferring their money while contributions are recalculated. A spokesman for the Ministry of Housing, Communities and Local Government said: “We have temporarily suspended transfers out of the local government pension scheme in England and Wales. This is necessary while work is completed to update the underlying basis for calculating such transfers.” The Local Government Pension Scheme covers 14,000 employers and has 5m members.
TheCityUK: PM's Brexit deal ‘infinitely better’ than no-deal
John McFarlane, chairman of lobby group TheCityUK, insists that Theresa May's proposed Brexit deal is "infinitely better" than the alternative no-deal scenario that could present "severe and unpredictable" damage on the UK economy. Speaking at the lobby group's annual conference in Birmingham, he said: "This has been recognised and the financial markets are telling us strongly about it."
CMC Markets profits down 76%
Spread betting group CMC Markets saw pre-tax profit decline 76% to £7.2m and net operating income fall 21% from £89.6m to £70.6m in H1 as low volatility and new European Securities and Markets Authority rules had an impact. Chief executive Peter Cruddas said: “Whilst trading in the first quarter outperformed the same period last year, as previously announced, the second quarter was particularly difficult. Volatility was low, and unusually the majority of asset classes traded in tight ranges.”
MEDIA & ENTERTAINMENT
Sorrell's S4 poaches WPP executive
Sir Martin Sorrell’s advertising venture S4 Capital has hired Michel de Rijk from WPP, the firm Sir Martin founded and formerly served as chief executive of. Mr de Rijk, who last month resigned as global chief growth officer for WPP's media measurement unit, will be S4’s chief executive of operations in Asia-Pacific.
UK house sales increase in October
HMRC data indicates that the number of homes sold in October rose month on month, with, on an unadjusted basis, 111,950 completed residential property sales in the month - an increase of 12% on September.
Price cap is proposed on ‘rent to own’ retailers
The Financial Conduct Authority says it plans to introduce a cap limiting the price that rent-to-own retailers can charge customers for household goods. The new rules will also see restrictions placed on credit charges so they cannot be more than the cost of the product. Greg Stevens, chief executive of the Consumer Credit Trade Association, said the proposed price cap may force rent-to-own retailers to shut down.
UK salaries set to rise
The average UK private sector worker will receive an extra £20 per month, or £237.35 per year before tax, from next year, according to data firm ECA International, on the back of a 0.8% real-term salary increase.