BANKING
More job losses at RBS “inevitable”
RBS’s CFO Ewen Stevenson has said it is “inevitable” that the bank will cut more jobs in the coming years as the lender accelerates its investment in technology. Speaking to Bloomberg TV, he said the cuts would focus on slimming down head office functions, as well as legacy data centres, but refused to address the size of the redundancies expected. Mr Stevenson added that RBS’s leadership was “very comfortable with the shape of the branch network”, and would give six months’ notice before closing any more branches.
Banks borrow £127bn under Term Funding Scheme
Data published by the Bank of England has revealed that banks borrowed £127bn under the Term Funding Scheme (TFS), which closed on Wednesday. The scheme delivered a stream of almost interest-free loans to banks in an effort to aid the pass-through of interest rate cuts to the real economy. Lloyds is likely to be the biggest borrower from the scheme; it borrowed almost £20bn up until the end of 2017, although the final individual bank totals from the TFS in 2018 will not be published until the end of the quarter. Lloyds's tally was slightly ahead of RBS, which had borrowed £19bn when the last breakdown was published.
FCA warns of ‘unanswered’ Libor question
Andrew Bailey, head of the Financial Conduct Authority, has said the shift away from Libor as the main benchmark for lending will “lead to a stronger financial system”, but added the problem of contracts still tied to Libor leaves a “very big question unanswered”. In a speech at the London office of RBS, Mr Bailey told the industry to look into solutions such as a “synthetic” version of Libor to serve as a “proxy” beyond July 2021.
YBS chief hails mutual model
The CEO of Yorkshire Building Society (YBS), Mike Regnier, has said Britain’s mutual sector is outperforming the financial services market, after the firm posted a record level of mortgage lending in 2017. YBS reported a 9% increase in pre-tax profits to £165.8m after it increased gross mortgage lending by 13% to £8.1bn. He said that the society's focus on its core business of mortgages and savings was paying off for its members and the business at large.
UK credit card debt rises 10% in January
UK credit card borrowing increased almost 10% in January - an extra £746m and the second highest annual rise since 2005, according to the Bank of England. Consumers now have a record £70.4bn of credit card debt, fuelling fears the binge will end badly.
PRIVATE EQUITY
Asia-focused private equity funds raise record $50bn
According to data from the Emerging Market Private Equity Association, private capital funds focused on Asia raked in $49.7bn last year.
INTERNATIONAL
Luxembourg lures top firms
More than 20 major international institutions chose to set up activities in Luxembourg last year, the country’s financial development agency has revealed. “Following the UK’s decision to leave the European Union, last year alone over 20 top-ranked international institutions chose Luxembourg to set up all or part of their activities and benefit from the specialization that exists within the Luxembourg financial ecosystem,” it said in a statement.
MetLife warns of new reserving problems
US insurance group MetLife has disclosed that the Securities and Exchange Commission was investigating a second “material weakness” after it over-reserved for annuity payments in Japan.
Wells Fargo reveals it overcharged wealth management clients
Wells Fargo has revealed that four more directors are set to leave the bank after it acknowledged that it had overcharged customers at its wealth business.
AUTOMOTIVE
GKN in talks to sell automotive arm
GKN is in talks about selling its automotive Driveline business to the US Dana Corporation. The Times suggests that such a deal could scupper efforts by Melrose to take over the British engineering group.
FINANCIAL SERVICES
Schroders and GAM see assets surge
Schroders and GAM have each reported significant increases in new business and profits. Schroders reported net inflows of £9.6bn for 2017, while net income was £2.07bn and pre-tax profit was £760m. GAM attracted net inflows for its asset management division of SFr24.3bn and raised pre-tax profits 44% to SFr172.5m.
Equitable Life mulls sale
Equitable Life has hired advisers at Goldman Sachs to consider a potential sale of the business. Chief executive Chris Wiscarson said the society was considering selling itself as a way to boost returns to customers. He added: “If someone could do better than we could, we'd be very interested.”
BNP Paribas' funds arm has ditched tobacco investments
BNP Paribas Asset Management is to ditch tobacco investments across all of its actively managed vehicles.
Debt collector Arrow Global jumps 11% on Italian expansion
Shares in Arrow Global have climbed by 11% after the debt collector announced two purchases in Italy, expanding its reach in Europe’s biggest market for non-performing loans.
LEISURE AND HOSPITALITY
Bumper year for National Express
Transport company National Express has revealed that its revenues climbed by 6.1% to £2.3bn last year. Pre-tax profits at the group accelerated by 11.1% to £200m. The company said it would be targeting new business in charter coaches in North America and contracts in Moroccan and German rail.
Merlin building on Legoland
Revenue at Merlin Entertainments’ star attraction Legoland was up 18.2% in 2017, while pre-tax profits rose by 4.8% to £271m, on revenues up 11.6% to £1.6bn. Merlin increased total visitor numbers during the year to a record 66m and delivered a 9.5% increase in core earnings.
MANUFACTURING
Manufacturing slows but remains robust
British manufacturing sector growth cooled to an eight-month low in February but remains on track for further expansion, as a surge in orders continued to drive the country’s manufacturing revival. The headline activity index inched down to 55.2 last month from 55.3 in January. Any reading above 50 indicates growth.
Siemens pledges to build UK rail factory
Siemens has pledged to build a third train manufacturing plant in Britain, if it wins multibillion-pound rolling stock orders for either HS2 or London Underground. If the plant in Goole, in the East Riding of Yorkshire, goes ahead it will create 700 manufacturing jobs and 1,700 more in the supply chain.
Laird agrees to £1bn private equity takeover
Advent International has agreed a deal to buy Laird, the UK electronics manufacturer, in a cash deal that values the company’s shares at around £1bn.
MEDIA AND ENTERTAINMENT
Struggling WPP’s ‘behemoth’ model challenged
Shares in WPP have slumped after boss Sir Martin Sorrell announced a major shake-up of the world’s largest advertising agency amid rising debts and falling billings. WPP cut its sales outlook three times last year and Sir Martin said: “If I look at our structure it certainly has to be simplified.”
Spotify eyes $23bn market debut
Spotify has filed to start trading on the New York Stock Exchange, valuing the business at more than $23bn (£16.7bn). The Swedish company, which boasts 159m monthly active users and 71m paid subscribers, will list directly - bypassing the traditional stock offering process.
Sky brings Netflix on board
Sky will make Netflix available through its latest box in an attempt to tackle the threat posed by the popular streaming service.
REAL ESTATE
Guy Hands eyes £1bn Network Rail portfolio
Private equity investor Guy Hands is thought to be in the running to buy a £1bn property portfolio currently owned by Network Rail, which announced in November that it would bring the portfolio, which consists of some 5,500 properties, to market. Other bidders are thought to include Blackstone, funds owned by Goldman Sachs, and Telereal Trillium.
House prices fall
Nationwide has said UK house prices in February recorded their first month-on-month fall since August, with average prices down 0.3% on January. The annual growth in house prices to February slowed to 2.2% from January's figure of 3.2%. “Similarly, mortgage approvals declined to their weakest level for three years in December, at just 61,000,” said Robert Gardner, Nationwide's chief economist.
RETAIL
Carpetright issues another profit warning
Carpetright has issued its third profit warning in four months, revealing that it is in talks with lenders to ensure that it does not breach its loan terms. The retailer said that, due to difficult trading conditions and weak consumer confidence, it expects to make a small underlying pre-tax loss for the year to April 28th, and that it is “proactively engaged in constructive discussions with its bank lenders”, who have “indicated that they currently remain fully supportive”.
ECONOMY
UK back in budget surplus
Britain is now running a current budget surplus for the first full year since 2001, ONS figures show. The surplus, which excludes capital investment by the Government, came in at £3.8bn for 2017. The former chancellor George Osborne set this as a target in 2010 with the aim of achieving it in 2015. Responding to the figures, the IMF said Britain had set an example for other countries to follow in slashing the deficit by cutting public spending, rather than raising taxes.
OTHER
UK jobs market returning to strength
British companies have begun to hire new staff in areas such as technology, legal and financial services, according to Robert Walters. Income from the recruiter’s UK division, which accounts for almost a third of its total fees, jumped 16% to £100.9m in 2017.