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Daily News Roundup: Friday, 31st January 2020

Posted: 31st January 2020


Bonuses back at TSB as it recovers from IT meltdown

TSB staff are to receive bonuses for the first time in three years after the company turned a full-year profit for the first time since a much-publicised IT problem in April 2018. Pre-tax profit of £46m was posted for 2019, with chief executive Debbie Crosbie saying customer loans were up 3.6% to £31.1bn for the year, on the back of increased mortgage lending. The lender plans to grow net lending by 5% annually until 2022. Ms Crosbie said: “TSB is back to doing what it does best, focusing on serving customers and innovating to meet their needs.”

Contactless payment smart poster to benefit homeless

In what is a first for British high streets, a branch of Nationwide in Bath has installed a "smart window poster" which allows contactless donations to be made to the homeless. Each tap makes a payment of £3 to a local charity which provides shelter and food to homeless people in the area. The Good Start Tap to Donate scheme is managed by local homeless charity Julian House and developed with Nationwide Building Society and Bath Business Improvement District.

Paragon boss cautious

Nigel Terrington, the boss of specialist lender Paragon, has said he remains cautious about an uptick in confidence in the UK after issuing a trading update. Terrington said it was too early to tell whether the recent improved sentiment turns into sustainable activity. Paragon said volumes at its commercial lending division rose by 19.9% to £254.1m. Deposit balances stood at £6.6bn, compared with £5.6bn a year earlier.

Virgin Money’s chief financial officer to leave for Nordea Bank

Ian Smith, a former senior finance boss at Lloyds Bank, is leaving Virgin Money to become Helsinki-based Nordea Bank’s new chief financial officer. It is the second boardroom departure in less than a week after Virgin Money disclosed last Friday that Jim Pettigrew, its chairman, will retire by September next year.


Apollo and Blackstone build $250bn 'permanent capital' war chest

US private equity giants Apollo and Blackstone both smashed analyst expectations for the final quarter of 2019 and between them now control over $250bn which doesn't need returning to shareholders.


Deutsche Bank reveals fifth consecutive annual loss

Deutsche Bank has revealed a loss of €5.7bn (£4.8bn) last year, its fifth consecutive annual loss, as the German lender's ongoing turnaround mission continued to hit profits. Revenue fell 4% in the fourth quarter to €5.3bn and was down 8% for the year to €23.2bn. The €1.6bn loss in the fourth quarter was significantly larger than the €1bn forecast, meaning the full-year result missed expectations of a €5bn loss. The bank's management board is to share a €13m "group level" bonus this year, despite surrendering around half of their variable pay by not accepting individual rewards. In the last five years the bank has lost €15bn and over the last decade its share price has lost 82%.

JPMorgan hires William Vereker as chief ‘rainmaker’ for Europe

JPMorgan has appointed William Vereker as vice-chairman of investment banking for Europe, the Middle East and Africa.


Jaguar to cut costs as boss moves on

Jaguar Land Rover has launched a new £1.1bn efficiency drive and a search for a new CEO following the departure of Ralf Speth. The company said it was planning no more redundancies at present, with savings to come from reductions in investment spending and material costs. JLR said that its Project Charge transformation programme has delivered cost and cash flow improvements of £2.9bn, exceeding its £2.5bn target three months ahead of schedule.

Tesla shares jump again as Model Y production begins

Tesla has revealed that its fourth-quarter revenues rose to $7.4bn, up 2% from a year ago. The electric car maker said it has ramped up production of its Model Y crossover utility vehicle.


Airbus set to agree fine

European aircraft manufacturer Airbus’s £3bn plea deal with prosecutors is expected to be approved in court later today, settling its long running corruption probe with the Serious Fraud Office. The deferred prosecution agreement will be part of a wider settlement with the US Department of Justice and France’s Parquet National Financier.


London traders call time on long hours

The Association for Financial Markets in Europe (AFME) and the Investment Association (IA) have responded to the London Stock Exchange’s consultation and called for market trading hours to be reduced by 90 minutes to seven hours. The consultation document recognised that among the benefits of a change were that it could help “encourage staff diversity” and have a “positive impact on mental wellbeing” of traders. Faye McGuinness, of mental health charity Mind, welcomed the proposed cut. She said long hours and excessive workload were commonly cited as "causes of stress and poor mental health at work”.

St James’s Place ‘knuckles down’

Total funds under management at St. James’s Place hit nearly £117bn in the period between September to December, after the UK’s largest wealth manager brought in £2.4bn more from clients. Though the figure was down from £2.6bn last time it was still better than the market expected. Chief executive Andrew Crofts said the good trading showed the business had “knuckled down” after some bad publicity.

Baroness Vadera to become Prudential’s first female chairman

Labour peer Shriti Vadera, currently chairman of Santander UK and senior non-executive director at BHP Billiton, will become Prudential’s first female chairman next January when she replaces Paul Manduca. Baroness Vadera, a former UBS banker and minister under New Labour, will step down from BHP and Santander to join the Pru board in May.

Blackmore misses another payment

Blackmore Bond, a minibond company that has raised more than £25m from investors, has missed a second consecutive interest payment. The company told more than 2,000 small investors that it was unable to pay their January interest payment having already not paid the quarterly coupon payment that was due in October. Investors have criticised Blackmore for a lack of communication and called for independent scrutiny of its business.


EU court backs UK on GlaxoSmithKline ‘pay for delay’ fine

The European Court of Justice has backed the UK Competition and Markets Authority's decision to fine GlaxoSmithKline for colluding with rivals to delay introducing a generic version of a drug.

Roche sales miss expectations amid pressure from patent expiries

Roche sales increased 9% last year, with sales of new medicines making up for competition posed by copycat versions of some of its most popular drugs.


Non-alcoholic beers shield Fuller’s from Dry January

Fuller, Smith and Turner's celebration of non-alcoholic drinks shielded it from the traditional January sales slump this year. In the 42 weeks to January 18 sales grew 2.5%, while like-for-like sales in the six weeks covering Christmas and New Year at the chain's managed pubs and hotels were up 4.3%.


Huawei 5G cap to hit BT

The government’s decision to cap Huawei’s involvement in the UK’s 5G network at 35% will cost BT £500m over the next five years from having to replace Huawei’s 4G boxes, which must be from the same supplier, from its 5G network. Revenue at BT slipped 2% year on year to £17.25bn in the third quarter, which BT blamed on “ongoing headwinds” relating to regulation, competition and legacy product declines, while profit before tax fell 3% year on year to £1.91bn, which BT blamed on the higher costs of its broadband rollout arm Openreach and customer experience investment.

Data analytics division to shut at Avast

Avast has announced the closure of its Jumpshot business over fears that user data was being compromised. Avast chief executive Ondrej Vlcek remarked: “I am not trying to defend Jumpshot, with hindsight it’s easier to judge it. In the grand scheme of things it was a venture we probably shouldn’t have entered into,” as shares fell 13% to 395p on the news. Meanwhile the firm predicted “healthy growth” in revenue and said adjusted earnings would be broadly flat this year.

Slow growth takes $50bn off Facebook valuation

Facebook has disappointed Wall Street with its most recent results, wiping more than $50bn from its market capitalisation. Facebook reported its slowest quarter of growth since going public in 2012 and its fourth consecutive quarter of revenue growth under 30%. The social media giant also posted a 51% rise in total costs and expenses compared to 2018, after upping spending on improving privacy and security.


‘Soft public sector spending’ leaves Mitie flat

Outsourcer Mitie blamed soft public sector spending for leading it to expect flat organic growth for the financial year. Though earnings are anticipated to be line with previous guidance, revenue growth in the nine months to the end of December was 6%, driven by its £14m acquisition of security business VSG.


Foxtons confident despite tough year

London estate agency Foxtons expects pre-tax profits to come in at £13m to £13.5m after a tough year. Though the firm increased its sales market share, sales fell 4% to £107m and Foxtons shut four underperforming branches last month, including in Muswell Hill and Barnet, contributing to one-off costs of about £6m. Chief executive Nic Budden asserted a “solid performance” in hard market conditions.


Belgian tax authority drops part of Frasers tax probe

Frasers Group, until recently called Sports Direct, has indicated that the Belgian Tax Authority has concluded most of its investigation into a tax dispute. The group, majority owned by Mike Ashley, said it will continue to fully engage and work with the tax authority in order to resolve the smaller remaining matters. The tax authority said it is satisfied with Frasers’ explanation regarding 73% of a query over value added tax of €674m (£570.2m).


Bank of England holds rates but lowers growth prediction

Despite a surge in expectations that it would reduce rates for the first time in four years, the Bank of England's Monetary Policy Committee voted 7-2 on Thursday to hold the interest rate at 0.75%. The Bank slashed its longer-term growth predictions however and expects that the economy will grow just 0.75% in 2020, down from an initial estimate of 1.25%. The Bank estimates 1.5% growth in 2021, down from 1.75%.

Sentiment in UK's key services sector improves

Expectations of a post-election bounce have failed to increase confidence among manufacturers and retailers, even as sentiment in the services sector grew to minus 4.9 this month.


Business leaders back Britain to prosper after Brexit

CEOs across a host of sectors have backed Britain to prosper as the country prepares to leave the EU at 11pm tonight. Bankers in the City are optimistic that Brexit could lead to a £100m surge in deal making. Dwayne Lysaght, M&A co-head of Europe, the Middle East and Africa at JP Morgan, said: “Buyout funds still have a lot of money to put to work and leverage markets are very strong. There is still quite a bit of distance to cover with our EU partners, but investors are done waiting.” City chiefs have also backed the Square Mile to retain its global pre-eminence although a battle awaits with European regulators. Catherine McGuinness, policy chairman at the City of London Corporation, said the City “will continue to lead the world” after Brexit as a centre of global finance.

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