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Daily News Roundup: Friday, 27th April 2018

Posted: 27th April 2018


TSB on its knees over bank fiasco

Paul Pester, the boss of TSB, has said the bank is on its knees as it attempts to recover from an online banking meltdown. Mr Pester said he had taken personal charge of the crisis, six days after disruption began when the lender launched a botched switchover of customers between IT platforms. He said: “We have tripped up big time, we are on our knees. We will get back up, we will come back.” Mr Pester also said he could not give a firm date on when the problems would be fixed. The bank has called in experts from IBM to help resolve continuing "performance" problems with new servers. Nils Pratley questions in the Guardian whether Mr Pester will pay the price for the problems at TSB, despite the primary blame for the problem being due to the bank’s parent company Banco Sabadell. James Connington in the Telegraph adds that bank customers must learn to vote with their feet when these situations arise. He states that customer inaction enables banks to get away with poor service and technical disasters.

US payout hit Barclays hard

Barclays has reported a pre-tax loss of £236m for the first quarter, compared with a profit of £1.68bn for the same time last year, pushed into a loss after paying $2bn (£1.4bn) to settle its US lawsuit over the sale of mortgage-backed securities. Chief executive Jes Staley said: "While the penalty was substantial, this settlement represents a major milestone for Barclays, putting behind us a significant decade-old legacy matter". Excluding litigation costs, pre-tax profit rose by 1% to £1.7bn and the bank put aside an additional £400m to cover an increase in PPI mis-selling claims.

UK Asset Resolution sells £5.3bn loan books to Barclays consortium

A consortium led by Barclays has purchased £5.3bn of loans from Bradford and Bingley, allowing the nationalised bank to pay back the taxpayer. UK Asset Resolution, which was set up after the nationalisation of B&B, said the sale comprises two separate portfolios, one of buy-to-let mortgages and one of residential owner-occupied mortgages. The Treasury will receive £5.3bn from the sale, covering the remaining £4.7bn from the £15.65bn Financial Services Compensation Scheme loan extended during the crisis. The residential loan portfolio will be securitised, allowing parts of it to be sold on to other investors. Art Mbanefo, head of financial resource management at Barclays International, said: “We are delighted that the newly-created Asset Finance business, still in its first year, has been able to arrange the winning bid versus strong competition.”

Equity release timebomb warning for lenders

The Bank of England has warned that with increasing levels of equity release in the UK, there is a growing risk that banks may end up in negative equity as a result of lending to younger borrowers. David Rule, executive director of insurance supervision at the Bank of England, told the Westminster and City Bulk Annuities Conference: “Simple projections suggest that equity release mortgage books could face difficulties in scenarios of flat, as well as falling, nominal house prices”.

FCA lacks sub-prime bandwidth - Morses Club

Paul Smith, the chief executive of Morses Club, has accused the FCA of lacking the “bandwidth” to regulate lending to lower-income Britons. He commented: “The Financial Conduct Authority was gifted the opportunity by the Treasury of looking after consumer credit… They didn't have the bandwidth to be able to go out and adequately supervise 400 individual companies in this market. So they focused their attention largely on the top three, Provident Financial, Morses Club and Non-Standard Finance.”

PPI guidance could cost consumers billions

Barristers have claimed that if banks follow FCA guidance on Payment Protection Insurance (PPI) payouts, consumers could find themselves underpaid by billions of pounds.


Deutsche Bank retreats in investment bank overhaul

Deutsche Bank will retreat from the US investment banking market under new chief executive Christian Sewing, after pre-tax income in the corporate investment bank collapsed dropped 74% in the first quarter.


Toyota launches London start-up to develop new car services

Toyota is to base its European start-up office in London. Toyota Connected will hire tech prodigies to help devise new offerings for its markets worldwide.


Norwegian IAG share move attracts suitors

Several inquiries from unnamed suitors are said to have been made for Norwegian Air, with shares rising 15% yesterday morning. This follows International Airlines Group’s acquisition of a 4.6% stake in Norwegian.


Taylor Wimpey confident amid sales dip

Amid a dip in sales due to the recent cold weather, Taylor Wimpey expects strong demand for new homes in 2018. The UK housebuilder's average first quarter private sales dropped to 0.85 per outlet per week, down from 0.93 in the same period last year, while its order book value stood at approximately £2.16m, down from £2.21m in the same period last year.

Hill builds profits of £47.2m

Waltham-Abbey headquartered housebuilder Hill has announced a 13% turnover hike in 2017 to £416m, with pretax profits up 27% to £47.2m. Hill has also extended a joint venture partnership with Origin Housing on a £70m development in Harrow and will deliver a further 204 homes there.


Financial services will not get special Brexit deal

Responding to claims that the EU bloc would suffer if access to the City of London’s financial services were lost after Brexit, Michel Barnier, the EU’s chief negotiator said: “Some argue that the EU desperately needs the City of London, and that access to financing for EU27 business would be hampered – and economic growth undermined – without giving UK operators the same market access as today. This is not what we hear from market participants, and it is not the analysis that we have made ourselves.” He added that the City would be granted nothing more generous than that enjoyed by Wall Street.

Post-Brexit bank planned by steel tycoon Gupta

Sanjeev Gupta of GFG Alliance group plans to help the industrial sector expand into developing economies after Brexit with the launch of a new bank. He has agreed to buy the Nigeria's Diamond Bank’s UK operations and rename it British Commonwealth Trade Bank (BCTB). Mr Gupta commented: “Post Brexit, there will be a heightened need for competitive financing for British companies in the commodities and industrial sectors as they seek to grow in new markets globally… BCTB will aim to be the 'bridge' between borrowers and lenders for trade with these markets.”

Revolut updates status to 'unicorn'

Challenger bank Revolut has raised another £179m in Series C funding to take it to a unicorn status valuation of £1.2bn. The fintech start-up has recently added cryptocurrency capabilities, and with almost 2m customers, is currently signing up between 6,000 and 8,000 more each day.

PRA warns insurers over lending standards of equity release mortgages

The Prudential Regulation Authority has warned that UK life insurers appear to have weakened their underwriting standards on equity release mortgages.


Whitbread break-up sought by investors

Sachem Head and Elliott Advisors are set to lobby for Whitbread to break up faster than the firm’s stated two-year timeframe. Alison Brittain, Whitbread chief executive, had said the company’s plan would allow both its Costa Coffee and Premier Inns businesses to “maintain momentum” and complete “critical and complex transformation and infrastructure objectives”.


Despite record profit, Samsung warns of phone fatigue

As a result of the popularity of its flagship smartphone and increasing demand for its chips, Samsung Electronics has posted record profits for a fourth consecutive quarter. Net profits for the first quarter were 11.7tn won (£7.7bn).

BT warned it must invest in technology

Sharon White, chief executive of Ofcom, has warned BT that it risks sliding into irrelevance if it neglects investment in new technology, as mass implementation of faster broadband speeds for consumers and businesses continues to gather pace.


Mortgage lending fell in March

Gross mortgage lending dropped 2.3% in March, compared to the same month last year, to £20.5bn, according to reports, with house purchase approvals also falling 21%. Mortgage approvals were 15% lower, the second lowest level (after December 2017) since January 2015.


Carpetright creditors approve store closures

Creditors of Carpetright have approved 81 closures as part of a turnaround plan. A majority of the home furnishings chain's creditors voted to approve the company voluntary arrangement (CVA) yesterday. Wilf Walsh, chief executive of Carpetright, said: "Addressing our legacy property issues to reduce our fixed costs to sustainable levels is critical to securing Carpetright's recovery".

Elliott Advisors buys Waterstones

US hedge fund Elliott Advisors has bought Waterstones, with James Daunt, the latter’s chief executive, describing it as a “very happy outcome” which would enable the bookshop chain to move forward with its growth plans.


ECB says Eurozone momentum slowing

Speaking yesterday after a meeting of the European Central Bank's governing council, president Mario Draghi noted that there had been "a loss of momentum that is pretty broad-based across countries and all sectors". However, he also spoke of his “unchanged confidence” of moving towards the bank's inflation target of just below 2%.

Consumer confidence in UK remains flat

Casting doubt on British shoppers’ ability to support wider economic growth, measures of UK consumer confidence fell last month. GDP growth slowed from the 0.4% quarterly expansion rate late last year, the ONS is expected to announce today.

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