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Daily News Roundup: Friday, 28th June 2019

Posted: 28th June 2019


Banks under fire for treatment of fintech firms

The treatment of fintech firms by big banks has come under scrutiny after the takeover talks of two start-ups collapsed, forcing one to shut down. Several individuals in the sector have claimed Royal Bank of Scotland’s dealings with Loot and HSBC’s treatment of Pariti are examples of an unfair relationship between big banks and start-ups. Loot, set up in 2014 to help students and young people manage their finances, went into administration last month after RBS walked away from a plan to buy it following due diligence. That left Loot urgently searching for new funding, which it could not raise. Separately, HSBC was working with aggregation specialist Pariti to create a customer platform, with sources saying the two had talks about HSBC buying the start-up. Instead, Pariti sold itself to larger fintech Tandem last March. Two months later HSBC launched its own aggregator, Connected Money, which sources claim bore strong similarities with the Pariti technology. Anne Boden, chief executive of Starling, comments: "It's far from a two-way partnership in most of these relationships. Talent, ideas and intellectual property get sucked into the big banks. And in most cases sufficient capital does not flow in the other direction to provide fintechs the support they need to survive independently."

Ex-UBS executive and friend jailed

Former UBS compliance executive Fabiana Abdel-Malek has been sentenced to three years in jail for passing inside information to her friend and former trader Walid Anis Choucair, who made about £1.4m from her tips. The Financial Conduct Authority said the case represented "insider dealing at its most venal".

Barclays boss turned fintech pioneer hails his ‘Uber moment’

Matthew Vincent says JPMorgan’s plan to take a stake in 10x Future Technologies shows business lenders are alive to the threat posed to traditional banking infrastructure by data aggregators.


Private equity amasses £2trn war chest

Private equity dealmaking has risen to its highest level since the lead-up to the global financial crisis, with the value of leveraged buyouts totalling $256bn in the first six months of 2019. The dealmaking frenzy looks likely to continue, with PE companies worldwide having raised an estimated £1.9trn cash pile from backers, according to data firm Preqin.


Concerns mount over shadow banking sector

Ratings agency DBRS has warned that worrying excesses are building up in the $52trn shadow banking sector, with investors likely to face serious losses when the financial cycle turns. While banks have been forced to raise their capital buffers and are now deemed safer than in 2008, hazards have migrated to dark pockets of the non-bank sector, which now makes up 62% of the $97trn assets of the financial industry. DBRS warned of “significant risk” in the changing character of US shadow banking and especially in leveraged lending.

Credit Suisse singled out over ‘weakness’ in Fed stress test

The Federal Reserve has said Credit Suisse must fix “weaknesses” in its capital plans before it will allow the bank’s US arm to increase payments to its parent in Switzerland.

South Korea’s responsible debt issuance surpasses $6bn

South Korea's Kookmin Bank has priced the world's first sustainability contingent convertible bond, or "coco", taking the country's issuance of responsible debt this year to more than $6bn.


Ford plans to cut 12,000 jobs in Europe

Ford has announced plans to cut about 12,000 jobs across its European operations by the end of 2020, including 3,100 jobs in Britain. The American carmaker said the restructuring was “the most comprehensive redesign in the history of its business in Europe”.

Vauxhall Astra UK production depends on Brexit

French carmaker PSA has said the next generation of the Vauxhall Astra will be built at its Ellesmere Port car plant from 2021 but only if a satisfactory Brexit deal is reached.

Pendragon chief departs

Pendragon chief executive Mark Herbert will leave the motor dealer this week after less than three months in the job, as it scrambles to recover from a string of profit warnings.


Barratt Developments purchases leading timber firm

Barratt Developments has acquired leading British timber manufacturer Oregon Timber Frame. The firm - which has built 5,500 homes using timber frame and is increasing its use of the material for residential developments in England - says the move will help boost the number of properties it is able to build using offsite construction techniques.


FCA to review credit reference industry

The Financial Conduct Authority is to investigate whether vulnerable customers are disproportionately impacted by the credit reference industry. The regulator announced yesterday that it will review the market to determine how it can better work for consumers. The FCA’s Christopher Woolard commented: “Through the study we will seek to get a better understanding of how this vital market works and will identify remedies, where appropriate, to make it work more effectively for credit information users and individual consumers.” Financial complaints service Resolver received more than 2,000 complaints about credit reference agencies last year and 20,000 in the past five years.

FCA seeks to ‘give teeth’ to forex trading code with endorsement

The Financial Conduct Authority has endorsed a voluntary code outlining good conduct in currency trading by explicitly linking it to its Senior Managers and Certification Regime.

Fund industry floats new structure for illiquid assets

The Investment Association has proposed a new kind of fund structure for investing in illiquid assets in the wake of the liquidity crunch at Neil Woodford’s flagship equity fund.

Inside the advisory company run by women, for women

The FT profiles Fulcrum Capital, an investment advisory company led by three women, that has been allocating its clients’ assets using what it calls a “gender lens” investing strategy.

Life insurer ReAssure eyes valuation of up to £3.3bn in IPO

ReAssure has announced a price range for its forthcoming float that will value the UK’s sixth largest life insurer between £2.8bn and £3.3bn.


Greene King enjoys rise in sales

Greene King has recorded a strong rise in sales, despite a slump in profit and the impact of unseasonable weather in the first eight weeks. The pub chain operator said group revenue increased 1.8% to £2.2bn in the 52 weeks to the end of April. Pre-tax profit dropped 12.5% to £172.8m. The firm posted a 2.9% increase in like-for-like sales.


Tata to build UK’s biggest carbon capture project

Government funding will help Tata Chemicals Europe build Britain’s biggest carbon capture project in Cheshire. The £16.7m project will capture 40,000 tonnes of carbon dioxide a year.


Buy-to-let landlords warned over 'zombie banks'

As mortgage lenders leave the market, buy-to-let landlords have been warned to ensure that they are not overly reliant on a single bank for financing their properties. In the last six months lenders such as the AA, Amicus Finance, Magellan Homeloans and Secure Trust Bank have all left the market, Nick Morrey of mortgage broker John Charcol underlined the potential risks of "zombie banks," asserting: “Landlords would be well advised to diversify not only their property portfolio but their lending portfolio as well.”


Karen Millen put up for sale

British retailer Karen Millen is set to be sold by Icelandic bank Kaputhing, with the owners reportedly to enter formal talks with potential bidders soon. The fashion chain, which made a loss of £1.4m last year, holds a presence in 50 international markets, with 50 stores and over 164 franchise stores globally. The decision to sell reportedly follows several unsolicited offers for the business.


Billions added to economy in statistics review

The Office for National Statistics has revealed Britain’s economy is about £26bn bigger than previously thought, as it published a major revision of its growth data for the past 20 years. The ONS said that average GDP growth between 1997 and 2016 was about 0.1 percentage points higher than the previous estimate of 2.1%. It means that over the period, the country’s economy was 1.3% larger than previously thought.

Business confidence buoyant

The latest Business Barometer from Lloyds Bank Commercial Banking shows overall business confidence grew three points to 13% this month. Firms' confidence in their own prospects grew five points to 22%, while their economic optimism also grew by three points to 5%.

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