Frankfurt set to benefit from London exodus
The lobby group Frankfurt Main Finance has claimed that London will lose up to €800bn (£700bn) in assets to Frankfurt by March 2019 as banks start to transfer business to the German city ahead of Brexit. The lobby group released the figures as it was confirmed that 30 banks and financial firms had chosen Frankfurt as the site of their new EU headquarters. The group also believes that up to 10,000 jobs could move to Frankfurt by 2022. Hubertus Väth, the managing director of Frankfurt Main Finance, commented: “Banks are faced with the choice of either relocating only what is absolutely necessary or preparing for the relocation of the entire business.”
Lenders urged to improve stress test scores
The Bank of England has warned that lenders face being named and shamed if they fail to improve the models used in its annual stress tests. All seven of the banks tested had enough capital to pass their latest stress tests but the Bank of England wants to improve the quality of their work and force banks to make their models more robust. The Times notes that in future, banks will have to demonstrate that their directors have a better grasp of the process, which could prompt them to look for fresh talent.
Mortgage approvals rise to nine-month high, consumer borrowing slows
Figures from the BoE show mortgage approvals rose to a nine-month high last month, while consumer borrowing increased at its slowest pace since May 2015. While the Bank said mortgage market activity was “broadly stable” in October, households borrowed an extra £4.1bn against their homes and the number of mortgages approved rose to 67,086, the highest since January. The Bank's monthly report on borrowing and deposits also found that annual consumer credit growth slowed to 7.5%. Consumer borrowing rose less than £1bn - £900m.
UKAR edges closer to clearing debts
UK Asset Resolution, which was set up to manage the assets of failed lenders Northern Rock and Bradford & Bingley after the financial crisis, has repaid further £6.3bn in Government loans. The latest repayments, aided by sales of loans to Rothesay Life and a Barclays-led consortium, means UKAR has now repaid £44.7bn, or 92% of the Government support. The balance sheet has shrunk by over £100bn since 2010.
Monzo questioned over shares tactic
The Times reports that Monzo has been accused of “going beyond the pale” for allowing its customers to use their overdrafts to buy shares in the digital bank. The bank is aiming to raise £20m through a crowdfunding website and its mobile phone app. Roger Gewolb, chairman of the Campaign for Fair Finance, commented: “It is never a good idea to borrow money to buy shares, unless one is a professional share trader. To do so in order to buy illiquid, unlisted shares in a relatively new company through a crowdfunding platform seems to us somewhat beyond the pale.”
RBS moves into data hub
RBS has leased space at the Bayes Centre, the University of Edinburgh’s recently opened data innovation hub. The move will see data specialists from the bank work alongside analytics experts and researchers from the university's schools of business, informatics and mathematics.
Deutsche Bank HQ raided over money laundering
Deutsche Bank’s Frankfurt HQ has been raided by prosecutors in a money laundering investigation. Prosecutors are looking into whether Deutsche Bank staff helped clients set up offshore accounts in tax havens to “transfer money from criminal activities”. Meanwhile, the FT reports that doubts have been raised about Garth Ritchie’s suitability to run Deutsche Bank’s investment division after continued underperformance at the unit.
ECB warns eurozone increasingly vulnerable to financial shocks
The ECB has admitted that a resurgence in protectionism, political turbulence within the eurozone and turmoil in some emerging markets have made the bloc’s financial system more vulnerable to shocks.
SocGen chief resorts to ‘digital speed-dating’ to win over investors
The FT examines how Société Générale’s boss Frédéric Oudéa has met with investors to outline the French’s bank technology strategy, including its online bank Boursorama.
Hard Brexit would be a catastrophe – Ford
Steven Armstrong, head of Ford Europe, has backed Theresa May’s Brexit deal arguing that a “no deal” departure from the EU would be “catastrophic”. He said the proposed deal was “not perfect” but allowed the car manufacturer to plan ahead. Mr Armstrong revealed that Ford was considering importing extra cars into the UK and stockpiling them to avoid disruption if the Brexit proposal is rejected by MPs.
JLR moves production to Slovakia
The BBC has discovered that about 200 jobs will be cut when JLR moves production to Slovakia. The firm announced in June it planned to move production of its Land Rover Discovery SUV from its Solihull plant. There will also be a “temporary pause” in production at the Wolverhampton engine manufacturing centre, understood to affect about a third of workers. JLR said it was “continuing to invest heavily in its UK manufacturing”, but the transformation of the company towards more electrified vehicles relies on "tough decisions".
Icelandair cancels Wow Air takeover
Icelandair has cancelled its planned $25m (£16.9m) takeover of budget airline Wow Air. In an update to the Icelandic Stock exchange, the country's flag carrier confirmed the purchase agreement signed on 5 November has been cancelled.
FCA calls for regulation pact to combat no-deal Brexit threat
The Financial Conduct Authority has called on European and British lawmakers to quickly recognise each other’s rules for banks and insurers to avoid significant disruption from a no-deal Brexit. The FCA said: “Many of the effects of a no-deal scenario could be managed if the EU and UK were able to find each other equivalent ahead of exit. There is a strong case for this, since the UK and EU would have the most equivalent frameworks in the world at the point of exit.” The regulator also warned that even before March 2019, protracted political uncertainty - without a transition period to 2020, as outlined in the Government’s Withdrawal Agreement could cause turmoil.
City expects May to lose Brexit vote
Jim Leaviss, head of retail fixed interest at M&G Investments, has said that the City is so certain that Theresa May will lose the vote on her Brexit deal that only a huge loss will move markets. Mr Leaviss said there was “little expectation” of victory for May at the crunch vote and reaction will be “relatively muted” on a narrow defeat. However, he warned that credit and foreign exchange markets will be more closely focused on the margin of the loss, with a heavy defeat for May prompting a bigger sell off.
German help for UK financial firms
Draft law changes proposed by the German Treasury last week could allow UK-based firms providing cross-border financial services to continue operating in Germany until the end of 2020. The same "transitional agreement" could be provided by German regulators Bafin to UK-based insurance firms, giving them more time to transfer, augment or terminate existing contracts.
Europe’s fintechs head east to challenge Asia’s traditional banks
Nutmeg, Tandem and Revolut are among the European fintech firms heading for Asia to shake up wealth management and retail banking services as they seek to diversify their businesses away from the UK.
Bayer to cut jobs and offload brands
Bayer plans to sell brands including Dr Scholl’s foot care and Coppertone sunscreen in a cost-cutting drive that includes about 12,000 job cuts following its takeover of Monsanto. The cuts will account for about one in ten workers globally, with a “significant number” going in Germany. Bayer also plans to sell its animal health division, which could be worth up to €7bn (£6.2bn).
LEISURE AND HOSPITALITY
Thomas Cook posts loss
Thomas Cook has posted a pre-tax loss of £53m, down on the £43m pre-tax profit the tour operator posted in the year to September 2017. Underlying earnings of £250m were also down from £326m the previous year and net debt rose to £389m, while group revenue was up 6% on a like- for-like basis at £9.6bn.
Reuben brothers provide loan to Savoy owners
The Evening Standard reports that the billionaire Reuben brothers have provided a loan, believed to be around £270m, to the owners of London’s Savoy Hotel. It is understood that it replaces a debt package from German banks that recently expired.
World Cup boosts Greene King
Greene King has posted a 1.9% rise in first-half revenues to over £1bn. The pub group benefited from the World Cup and hot weather, and comparable sales at pubs increased 2.7%. Pre-tax profit rose 3% to £127.7m.
MEDIA AND ENTERTAINMENT
Profits slip at DMGT
The Daily Mail and General Trust (DMGT) has said pre-tax profit had slipped 16% to £182m in “challenging trading conditions”. The Daily Mail owner said advertising revenue from its online operations had overtaken its revenue from print advertising for the first time. Revenue was down 9% at £1.426bn, and earnings per share down 23% at 42.2p.
Online gambling firms fined
The Gambling Commission has fined three online casino companies and one has been prevented from operating in the UK for not having “effective safeguards” to prevent money laundering and harm to customers from gambling. Daub Alderney is to pay £7.1m, Casumo £5.85m and Videoslots £1m. A fourth firm, CZ Holdings, surrendered its licence to operate in the UK.
Intu takeover collapses
Shares in Intu Properties have plummeted after a £2.8bn takeover bid was abandoned. The consortium bidding for the shopping centre operator blamed economic uncertainty and market volatility for scrapping the deal. It was led by the Peel Group and included Saudi Arabian firm Olayan and Canada's Brookfield Property. Shares in Intu sank 35% to 125p - almost half the 210.4p a share the consortium had offered for the company.
BoE knew no-deal scenarios could be misleading
The Telegraph reports that previously unreleased Bank of England meeting minutes have revealed that its bleak no-deal predictions on Brexit “could be misleading”. The minutes show that the Bank harboured fears for more than a year that releasing such predictions was “against the public interest”. The reluctance was because they feared that “a suggestion of apparently precise scenarios could be misleading and liable to misinterpretation”. Meanwhile, Mark Carney warned yesterday that many companies in the UK were in no position to cope if the UK crashed out of the EU without a deal.
Bosses fear Corbyn more than Brexit
A survey by Korn Ferry has found that four out of five FTSE 100 chairman believe Jeremy Corbyn in Government would be more harmful to their fortunes than Brexit. Bosses are said to be concerned about the threat of companies being nationalised and the prospect of increased government spending under Labour. One board member stated: “A Corbyn government will be anti-aspiration, anti-business, wealth destructive and result in contracted spending leading to no growth.” Korn Ferry’s research also found that amid a backdrop of Brexit uncertainty and the risk of a Labour government, 13% of FTSE 100 organisations are considering shifting their operations to foreign locations.