BANKING
Barclays may have to cut costs
Barclays has warned that it might have to cut costs further after posting a 10% drop in first quarter profits. The bank reported underlying pre-tax profits of £1.5bn for the first three months of this year, down from £1.7bn a year ago, after suffering a tough quarter for investment banking. On a bottom-line basis, Barclays swung to a £1.5bn pre-tax profit between January and March, from losses of £236m a year earlier, when it was hit by around £2bn of conduct and litigation charges. Jes Staley, group chief executive of Barclays, admitted to a “lightness” in revenues and said bankers would pay the price through their bonuses. He also said that shareholder activist Edward Bramson was wrong to argue that Barclays is “structurally disadvantaged against the US banks.” Barclays’ investment bank saw revenues drop by 6% in the first quarter. On average, Wall Street banks saw revenues fall 14% in the same period. The FT’s Lex argues that Bramson has yet to prove his case that Barclays has made a strategy error over its investment unit.
McEwan set to leave RBS
Ross McEwan, the CEO of RBS, has announced his resignation from the bank after five and a half years in charge. Mr McEwan said that he had “delivered the strategy” that he set out when taking over in 2013. Under his leadership the bank, which is 62% government-owned, has closed hundreds of branches, but last year reported a profit of £1.62bn, more than double the profit of the previous year. He will remain in the role until a successor has been appointed. Mr McEwan said: “The only regret I have is that because of all the conduct litigation and restructuring issues I haven’t really done enough on the customer service delivery, but the bank is well-positioned for that going forward.” RBS’s chairman Sir Howard Davies commented: “The board and I are grateful for the huge contribution Ross has made in one of the toughest jobs in banking. His successful execution of the strategy to refocus the bank back on its core markets here in the UK and Ireland has helped to deliver one of the biggest UK corporate turnarounds in history.”
Rose touted as next RBS boss
Alison Rose, head of RBS’s commercial and private banking business, is seen as the leading internal candidate to replace Ross McEwan. Ms Rose has worked for RBS for more than 20 years and was also promoted in December to deputy chief executive of NatWest Holdings, the bank's ringfenced holding company that houses RBS's retail and corporate banking. The FT says potential external candidates include Jayne-Anne Gadhia, the former Virgin Money chief; and Alison Brittain, the Whitbread boss. The Times adds that António Simões, the former CEO of HSBC in the UK, and Andrew Bester, CEO of the Co-operative Bank, are in the frame for the role.
What next for McEwan?
The Telegraph considers what outgoing RBS boss Ross McEwan will do next. Analysts expect National Australia Bank, whose chief executive Andrew Thorburn stood down earlier this year, to begin circling McEwan. John Cronin, UK banks analyst at Goodbody, comments: “I’ve got the sense he wants to get back to Australia and New Zealand. NAB would be a great fit considering his deep experience with politicians and regulators over recent years.” Mr Cronin adds that Mr McEwan has done a “stellar job bringing RBS back from the brink”.
PRIVATE EQUITY
PE investment boosts business revenue by over 50%
Businesses backed by private equity saw revenue soar by more than half in the last five years with PE-backed companies enjoying a growth rate of 10% in the last financial year alone, according to an analysis of 2,000 firms. The research also showed that private equity backed firms also created on average between five to ten new jobs a year and boosted employment levels by 43% over the five year period, creating an additional 86,500 positions in the UK.
INTERNATIONAL
Deutsche Bank and Commerzbank abandon merger talks
Merger talks between Germany’s two largest lenders Deutsche Bank and Commerzbank have collapsed. Berlin had pushed for the merger, which would have created the Eurozone’s second largest lender behind BNP Paribas, over concerns surrounding the health of both banks, however Deutsche Bank said discussions had been abandoned as there were “too many risks attached”. The potential partnership had also faced mounting opposition from trade unions - with 30,000 jobs under threat - and was criticised by both investors and analysts. The FT says the collapse of the merger talks will leave Deutsche Bank seeking a new plan for its future as other bidders circle Commerzbank.
Profits slide at UBS
UBS has revealed that profits at its investment arm fell by almost two-thirds in the last quarter. Profits slumped to $221m (£171m) from $619m in the same period last year. The lender says a “synchronised global slowdown” hurt its business. Profits at UBS’s wealth management business dropped by 21% despite $22bn of net new assets from wealthy clients.
Lazard beats expectations following M&A boost
Lazard has reported a higher-than-expected quarterly profit as its M&A advisory business got a boost from the strongest start to U.S. deal-making in nearly two decades. Lazard said revenue in its financial advisory business fell 15% to $330m, but topped Wall Street estimates.
Swedbank creates financial crime unit after dirty money scandal
Swedbank has announced it plans to create a financial crime unit in the wake of a money laundering scandal. The lender admitted it had shortcomings in how it dealt with risks.
AUTOMOTIVE
Ghosn leaves jail on bail
Former Nissan boss Carlos Ghosn has left his Tokyo jail, with conditions attached. These include not being able to see his wife without prior permission, and a lawyer must be present when does. Earlier, a court set bail at 500m yen (£3.5m), paving the way for this latest release. Mr Ghosn faces four charges in Japan over allegations of financial misconduct, which he denies.
Tesla reports $702m quarterly loss
Tesla has reported a loss of $702m for the first three months of the year and predicted another loss for the three months after. The electric car and battery maker said it would return to profit in the third quarter.
AVIATION
Airlines count the cost of 737 Max grounding
Norwegian Airlines and Southwest Airlines in the US have both revealed big hits to their earnings from the grounding of Boeing 737 Max planes. Southwest said it lost $200m (£155m) of revenue in its fiscal first quarter after cancelling 10,000 flights. Meanwhile, Norwegian said “uncertainty” over the issue could cost it up to 500m Norwegian kroner (£45m).
CONSTRUCTION
Brexit stockpiling bites into Taylor Wimpey's margins
Taylor Wimpey boss Pete Redfern has indicated that Brexit stockpiling will hit margins. Although the housebuilder's order book is up 12% to £2.4bn in the year to date amid stronger sales, higher costs mean “we expect margins to be slightly lower”. Redfern acknowledged: “When the supply chain is stretched anyway, trying to build up those stocks has quite a material marginal impact in the very short term.”
Crossrail to be finished by March 2021
Transport bosses have confirmed that Crossrail will be completed two years behind schedule by March 2021. However, completion will not include the opening of Bond Street, one of 10 new stations along the new Elizabeth Line. London mayor Sadiq Khan described the new timetable as "realistic and deliverable".
FINANCIAL SERVICES
Investors given hope of compensation on London Capital & Finance
A meeting between London Capital & Finance bondholders, administrators and lawyers has resulted in a potential claim over LCF’s collapse, on behalf of investors, under the Financial Services Compensation Scheme.
Invesco chief counts the cost of uncertainty over Brexit
Invesco has revealed big outflows from its UK business in the first quarter, when UK investors accounted for $3.9bn for the $5.4bn withdrawn globally from Invesco portfolios.
Nutmeg expands into Asia
Digital wealth manager Nutmeg has expanded into Asia through a partnership with Taipei Fubon Bank. Nutmeg has been appointed as investment adviser to customers of the Taiwanese bank's wealth management product Nano Investment.
PROFESSIONAL SERVICES
UK law firm Fieldfisher readies for Brexit with Irish merger
Fieldfisher is to merge with Irish firm McDowell Purcell, deciding the deal was better than simply opening an office in Ireland to serve clients after Brexit.
REAL ESTATE
Average deposit for first-time buyers now at £31k
First-time buyers looking to get onto the property now require an average house deposit of £30,989 following an increase of 12% in 2018, new figures have revealed. House prices rose across Britain rose just 2.5% over the same period, data from the Office for National Statistics shows, suggesting first-time buyers might be struggling to access the 5% deposit deals that are the most common way onto the property ladder.
RETAIL
CMA blocks Sainsbury’s-Asda merger
The Competition and Markets Authority has blocked the proposed £12bn merger between Sainsbury’s and Asda over fears it would raise prices for consumers. In its final report on the deal, the UK’s competition watchdog claimed it would lead to increased prices in stores, online and at petrol stations across the UK, leading to reductions in the quality and range of products or a poorer overall retail experience.
SPORT
Jockey Club facing financial hurdle
The Jockey Club, which runs the UK’s biggest horse racing festivals, is “financial challenges”, despite a tenth year of record profits. Bookmakers have warned that tougher regulations on gambling could hit the racing industry through the closure of thousands of betting shops. The Jockey Club has estimated the cost to racing could be as high as £50m.
ECONOMY
Living costs rise quickest for poorest
ONS data shows living costs have increased for the poorest households at a faster rate than for the wealthiest. Costs for the poorest tenth of households in Britain rose by 2.7% a year on average between 2006 and 2018, compared with an increase of 2.3% for the richest tenth. For all households the average increase over the period was 2.4% a year.