BANKING
Hammond: EU must include financial services
Philip Hammond will refuse to sign a Brexit trade deal with the EU unless financial services are included. Speaking at the World Economic Forum in Davos yesterday, the Chancellor said: “The only deal that can ever get done is one that is fair to both parties. And a deal that included goods but didn’t include services could never be fair, could never be attractive to the UK”. He added that it was a fantasy to think cities such as Frankfurt or Paris could replace London as a global financial centre. Meanwhile, EU commissioner Pierre Moscovici has ruled out a special deal for financial services after Brexit, insisting a “global” agreement that worked across multiple sectors would be required.” His views were echoed by Bruno Le Maire, the French finance minister, in Davos yesterday, who said Britain’s insistence on favoured status for the City is “a dead end” and that the UK would not be able to “have a pick and choose model.” However, his position was contradicted by Irish Taoiseach Leo Varadkar, who advocated a deal which reflected Britain’s unique relationship with the EU.
Blankfein warns on irreversible Brexit plans
Lloyd Blankfein, CEO of Goldman Sachs, has warned that the US bank's Brexit contingency planning is reaching the point of no return. Mr Blankfein said that some steps already taken to deal with UK’s exit from the EU were now very unlikely to be reversed. For example, he explained that some contracts between Goldman Sachs UK and EU clients have been redrawn, or “repapered”, to apply to Goldman Sachs Germany. “Once we start to repaper - which is very cumbersome because it involves lots of lawyers on both sides and takes months - once we start that are we going to go back? Probably not,” Mr Blankfein said. Meanwhile, Barclays CEO Jes Staley has insisted that the bank will very much remain a British institution post-Brexit. Mr Staley said the bank has “tremendous business” in the UK and they were going to “stick” to Britain.
Mortgage approvals hit four-year low
Banks approved just 36,115 loans for house purchases in December, a 19% drop on the previous December, as UK mortgage approvals fell to their lowest level since April 2013. According to UK Finance, last month's figures were also significantly lower than the long-term average of 51,609 monthly approvals. Meanwhile, M&S Bank will today launch its first mortgage range in which it will allow up to four borrowers who will live in the property to take out a mortgage together. Separately, the Post Office is to make its 73 branch-based mortgage advisers redundant and instead appoint eight “customer relationship assistants”, who can be reached only online or on the phone.
BoE suffers payment glitch
The Bank of England suffered a technological glitch yesterday that affected wholesale bank transactions, which could see some payments expected last night delayed until today. However, the problem had not impacted the UK's clearing house automated payment system (Chaps), or the Bank’s real-time gross settlement service (RTGS).
PRIVATE EQUITY
Silicon Valley investors line up to back Telegram ICO
Kleiner Perkins Caufield & Byers, Benchmark and Sequoia Capital are among VC firms that are lining up to buy into an initial coin offering (ICO) by Telegram, the encrypted messaging service. Separately, the FT looks at how the ICO boom has exposed shortcomings in venture capitalists’ funding models.
Cyber VC firm plans European deals
C5 Capital is planning a string of acquisitions to create a pan-European cyber-security specialist. The VC fund, which is advised by former British and US intelligence officials, aims to create a regional managed security service leader combining cloud-based cyber defences, high levels of automation and local regulatory knowledge.
INTERNATIONAL
BofA customers complain over end to free service
Bank of America customers have complained over a rule change that makes it harder for consumers with low balances to continue receiving free checking. The bank switched e-banking customers into accounts that require a $12 (£8.40) monthly fee unless they have a direct monthly deposit of $250 or more or maintain a minimum daily balance of at least $1,500.
ZKB capital boost from model switch
Zuercher Kantonalbank (ZKB) has switched to an internal model to measure credit risk as of the end of 2017, which will give the Swiss lender’s capital ratio a boost by pushing down risk measurements. Swiss regulators treat state-owned ZKB, the country's fourth-largest lender, as a systemically important bank.
Davos 2018: European bank bosses struggle to stay upbeat on Trump’s trade policy
European banks are warning that Donald Trump’s “America First” policy is a concern for the global economy. ING boss Ralph Hamers said: “I see a further polarisation of the world economy”.
Malaysia’s central bank raises key rate to 3.25% as forecast
Malaysia’s central bank has raised its key interest rate to 3.25%, the first upward move since July 2014, and expects inflation to ”average lower in 2018”.
HNA bank accounts temporarily frozen in Chinese bank dispute
Tianjin Tianhai Investment, a unit of Chinese conglomerate HNA, has had accounts frozen at three banks following a dispute with Ningbo Commerce Bank.
Rescued Belfius and IKB return to market with risky debt
A number of European banks that were rescued during the financial crisis have this week sold high-risk bonds for the first time.
AVIATION
Easyjet adds to accelerator programme
Easyjet has named the latest additions to its travel tech accelerator programme - WeTrip, peer-to-peer car sharing community Car and Away and FlightSayer, which uses simulation algorithms and machine learning to better predict flight delays before departure. Its Founders Factory incubator supports the growth of five early-stage travel tech startups each year for five years.
CONSTRUCTION
Keir attempts to reassure investors over debt
Keir Group has sought to reassure investors that it is not another Carillion by explaining in a trading update that its debts are under control and business remains brisk. The construction and services group, which last year had revenues of £4.2bn, compared with Carillion's £5bn, attempted to play down the jitters in the market about its level of debt, after admitting that as of December 31, seasonal outflows meant its debts had risen to £350m.
FINANCIAL SERVICES
Politicians call for cryptocurrency regulation
Politicians attending the World Economic Forum in Davos have called for more regulation to prevent cryptocurrencies such as Bitcoin from being used for criminal activity. Chancellor Philip Hammond said: “I think we should be cautious about Bitcoin and possibly we do need to look at the way we regulate this environment before the amount of outstanding Bitcoin becomes large enough to be systemically important in the global economy.” Steven Mnuchin, the US Treasury secretary, added: “My number one focus on cryptocurrencies, whether that be digital currencies or Bitcoin or other things, is that we want to make sure that they're not used for illicit activities.”
Deutsche AM unit attracts net inflows
Deutsche Bank's asset management unit, which is aiming for a stock market flotation, recorded net asset inflows of €15.8bn ($19.6bn) in 2017, recovering from outflows the previous year. In 2016, the unit saw nearly €40bn in outflows. Last year marked a return to more normal times like in 2015, when inflows were €19bn.
LEISURE AND HOSPITALITY
Diageo toasts rise in sales
Diageo reported that sales grew 3% in the six months to December, to £9.9bn, helped by a 58% surge in tequila sales and 15% growth in gin. Organic net sales rose 4.2% in the half-year ended in December, exceeding the 3.7% average estimate among analysts. Pre-tax profits increased 6% to £2.2bn. UK sales were up 7%, buoyed by higher sales of Tanqueray gin and Guinness. Elsewhere, Asia Pacific and Latin America and the Caribbean also saw sales rise 7%, while they were up between 2%-4% in North America, Europe, Turkey and Africa.
Greene King snowed in
Greene King became the second major pub group to count the cost of snow in its trading update today, as the weather dampened Christmas sales growth. Acknowledging the impact of inclement Christmas weather, the group has revealed like-for-like sales across its 2,900 branches came in at 1.6%. For the full third quarter, ending 14 January, comparable sales at managed pubs were down 1.4%, dragged down by food sales. Tenanted pubs posted growth of 0.2%.
MEDIA AND ENTERTAINMENT
Sky signals ‘peak dish’
Sky plans to make all its channels and content available online, as opposed to customers requiring a dish receiver, to help reduce costs and allow it to enter new markets. Reporting its results for the six months to December 31, Sky said average revenue per user in the UK and Ireland fell £1 to £46 a month. However, the number of customers leaving decreased from 11.6% at the end of 2016 to 11.2%. Like-for-like revenues rose 5% to £6.7bn in the half-year and pre-tax profit jumped by £106m to £448m compared with the same period in the previous year.
RETAIL
Asos praises “exceptional” performance
Total retail sales at Asos grew 30%, year-on-year, in the four months to December 31st, to £790.4m. The online retailer described it as an “exceptional performance”, driven by a 23% increase in what it described as a “challenging” UK market, with international sales up 35%.