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Daily News Roundup: Friday, 24th January 2020

Posted: 24th January 2020

BANKING

FCA criticised over overdraft changes

The Financial Conduct Authority has come under fire for its change to overdraft rules. The City watchdog told banks to scrap unarranged overdraft fees and charge all customers who go into the red the same. The result has been that banks have hiked borrowing rates across the board. The FCA insisted all 14m of those with unarranged overdrafts will pay less. But Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Borrowers with large, arranged overdrafts, are already paying through the nose for their borrowing, but the new rules could see their rates double. It's going to be very difficult to persuade them that the FCA's overdraft reforms are good news for borrowers.” The backlash comes after Lloyds Banking Group said borrowers could pay up to 49.9%, depending on their credit history.

Banks breaking code on fraud refunds

Banks are denying reimbursement to victims of bank transfer fraud, despite having signed up to a new voluntary code, Which? claims. The consumer group said it was seeing a "worrying trend" of banks relying on fraud warnings to justify not refunding customers - a move it said flies in the face of the code. A UK Finance spokesman said: "The authorised push payment (APP) scams voluntary code, developed in conjunction with consumer groups including Which?, delivers significantly increased levels of protection for customers. All firms that have signed up to the code have committed to reimbursing any customers who fall victim to an APP scam, provided they have met certain standards."

RBS sets aside £1bn for female entrepreneurs

Alison Rose is today launching a £1bn fund to support women entrepreneurs. The Royal Bank of Scotland CEO has set a target for the bank to help create 50,000 businesses in the next three years. Before she got the top job at RBS, Ms Rose conducted a government-backed review into funding for female entrepreneurs finding less than 1% of all venture capital funding goes to female business owners. “It doesn't matter what gender an entrepreneur is,” she said. “But if there are barriers in the way, we should do something about it.” Ms Rose talks to the Mail’s Ruth Sunderland about her career and what she envisages for the bank – turning it into a “good corporate citizen” is a key goal.

INTERNATIONAL

Goldmans refuses to float firms without a woman on board

Goldman Sachs has said it will not take companies public in the US and Europe unless there’s at least one woman or non-white person on their board. The policy doesn’t include Asia, which has the worst record on gender diversity. The bank’s CEO David Solomon said: “I look back at IPOs over the last four years and the performance of IPOs where there’s been a woman on the board in the US is significantly better than the performance of IPOs where there hasn’t been a woman on the board.” Goldman Sachs will raise the requirement to two diverse board members in June 2021.

Candidate for EU bank watchdog rejected by lawmakers

Irish central banker Gerry Cross has been rejected as the successor to Adam Farkas as executive director of the European Banking Authority due to fears over a “revolving door” between the EBA and the Association of Financial Markets in Europe (AFME). Mr Farkas left the EBA to work for AFME and Mr Cross had previously worked for the lobby group. German MEP Sven Giegold, who was among those who voted against the appointment, commented: “Such conflicts of interest undermine trust in EU authorities.”

ECB launches monetary policy review

Christine Lagarde, president of the European Central Bank, has launched a strategic review of monetary policy – the central bank’s first in 16 years. The framework for the review includes the inflation target that defines its core price stability mandate and the ECB’s future role in tackling climate change.

Central banks developing digital coins

A survey of 66 central banks by the Bank for International Settlements (BIS) found that at least 52 were developing their own digital currencies last year, the Telegraph reports. One in 10 had progressed to the pilot stage after completing conceptual research and experiments.

Jamie Dimon’s pay rose to $31.5m in 2019

JPMorgan Chase CEO Jamie Dimon was paid $31.5m for 2019, up 1.6% on his pay a year earlier. Mr Dimon’s 2019 pay is 236 times the average $133,000 compensation across the company’s almost 257,000 employees.

Stumpf to pay $17.5m over Wells Fargo fake accounts

Former Wells Fargo CEO John Stumpf has agreed to pay $17.5m to the US banking regulator over his role in the fake accounts scandal at Wells that came to light in 2016.

Eurozone bankers launch fresh push against negative rates

The dangers of long-term negative interest rates have been raised again by Eurozone bankers who warn policymakers of the damage to savers and price bubbles in riskier assets.

AUTOMOTIVE

VW slapped with largest environmental fine in Canadian history

Volkswagen has pleaded guilty to dozens of diesel emissions violations in Canada leading authorities there to issue the carmaker with the largest environmental fine in the country’s history. VW will be forced to pay CA$196.5m (£113.7m) for 60 counts of breaching the Canadian Environmental Protection Act.

CONSTRUCTION

John Laing chief steps down

Olivier Brousse is leaving infrastructure giant John Laing in order to take up a new role at French utility Veolia. Brousse led the firm’s IPO in 2015 and will remain at the company while a successor is identified.

Countryside enjoys 65% lift in orders

Countryside Properties has said its forward order book is up 65% to £1.6bn in the three months to 31 December, compared with the same period a year earlier.

FINANCIAL SERVICES

Financial firms warned to be ready for no-deal Brexit

The Financial Conduct Authority’s (FCA) executive director of international has warned financial services firms to be ready in case the UK does not agree a trade deal with the EU. Nausicaa Delfas told an audience in London that although the UK has already enshrined all EU financial rules into law and therefore would have “the most equivalent framework to the EU of any country in the world” there are fears broader trade talks could hamper agreement on equivalence. Her comments follow a report from the International Regulatory Strategy Group warning that equivalence could be withdrawn by Brussels for political reasons with only 30 days’ notice. The FT’s Lex also raises this point arguing that regulatory agility may be preferable fighting for equivalence. Meanwhile, US Treasury Secretary Steve Mnuchin told an event in Davos that the US hopes to strike a trade deal with the UK within the year. US Commerce Secretary Wilbur Ross added that a UK trade deal should be easier to do than one with the EU because “our economies are much more similar”. “Both are very heavily service oriented,” he said. “There are financial services and there is already a pretty high degree of integration and co-ordination.”

FCA chief to face questions over LCF scandal

Andrew Bailey, the incoming governor of the Bank of England, is to be questioned as part of an official inquiry into the Financial Conduct Authority's role in the London Capital & Finance mini-bond scandal. LCF collapsed in January 2019, leaving 11,600 bondholders with losses of up to £237m. The bonds were not regulated by the FCA but LCF and marketing material were. One former auditor and bondholder told the Guardian the FCA failed to keep tabs on LCF's marketing materials. "There were adverts - using the FCA's name and logo and no one picked it up for years. They truly were sleeping on the job."

JP Morgan defends asset managers from Woodford fallout

JP Morgan Asset Management's chief executive for EMEA, Patrick Thomson, has said the asset management industry has suffered from the implosion of Neil Woodford’s funds. He says lessons have been learned, adding that JP Morgan has teams of active managers rather than star managers and invests heavily in risk experts and technology to monitor performance.

CMC Markets Q3 income beats predictions

CMC Markets said third quarter net operating income had come in above expectations and that the online trading platform now expected net operating income for the year to be ahead of market predictions of between £184.1m and £189.3m.

LEISURE & HOSPITALITY

CMA to probe Just Eat takeover

The Competition and Markets Authority is to launch a probe into the £5.9bn takeover of Just Eat by Amsterdam-listed rival Takeaway.

MANUFACTURING

Jingye proposes 500 job cuts at British Steel

Up to 500 jobs will go at British Steel after the Chinese firm acquiring the business made an agreement with unions. Jingye's proposals will now be sent to British Steel staff for final sign-off.

MEDIA & ENTERTAINMENT

New specialist press agency launched

A new specialist press planning and buying agency called The Press Business has been set up by WPP veteran Steve Goodman and former Omnicom director Peter Thomson. Goodman and Thomson argue they can benefit from under investment in the medium which has slumped following a surge in online advertising.

Tiktok signs licensing deal with Merlin

The Chinese video app Tiktok has secured a licensing deal the music rights agency Merlin, giving Tiktok access to roughly 15% of the global recorded music market. Tiktok’s owner Bytedance is planning a new music streaming service to take on the likes of Spotify and Apple Music.

Comcast takes aim at CNN with NBC-Sky global news channel

CNN’s dominance in international television news is to be challenged by a new channel jointly launched by Comcast’s NBC and Sky called NBC Sky World News.

Blue Prism shares surge

London-based robotic automation specialist Blue Prism has reported a rise in revenue for the 12 months ending 31 October to £101m, up from £55.2m. The news sent shares up 20%.

REAL ESTATE

Quintain wins funding to build rental homes

Quintain is planning to build almost 400 new homes in Wembley after completing a £150m financing deal with Goldman Sachs. The funding will allow the property developer to construct 398 rental homes across three new buildings in Wembley Park.

RETAIL

Strong Black Friday drives Asos sales growth

Asos group sales were up 20% at constant exchange rates in the four months to December 31, to £1.1bn, well ahead of analyst expectations of around 15% growth. In the UK, sales climbed 18% over the four-month period, compared with increases of 21% in the rest of the EU and 23% in the US and the rest of the world.

ECONOMY

Bailey fears fall in asset values

Financial Conduct Authority chief executive Andrew Bailey has warned that Britons have become far more exposed to a fall in asset prices, partly because of changes to pension rules. Speaking on an internal FCA podcast, the incoming Bank of England governor said that increased exposure to asset values had been accompanied by declining understanding of the fallout from a decline in prices, saying that the issue was “one of the things that worries me most”. Equity markets have been on a bull run stretching back to 2009 while average UK house prices are near record highs, and Mr Bailey said many people were planning their retirement income based on assumptions on asset values that may prove to be overly optimistic.

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