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Daily News Roundup: Friday, 3rd May 2019

Posted: 3rd May 2019

BANKING

Lloyds bullish despite flat profits

Lloyds Banking Group has reported pre-tax profits of £1.6bn for the first quarter, unchanged from the same period a year earlier. The bank also warned that continuing Brexit uncertainty could have a further impact on the UK economy but said it had not seen the quality of its assets deteriorate. Lloyds took a £100m hit for mis-sold PPI however, along with a £339m charge for “volatility and other items,” which included £109m in break fees after it pulled a mandate from Standard Life Aberdeen. Lloyds’ chief executive António Horta-Osório said: "I remain confident that our unique business model, and in particular our market leading efficiency and targeted investment, will continue to deliver superior performance and returns for our customers and shareholders." Meanwhile, MPs have written to Lloyds asking why Mr Horta-Osório’s pension top-up equates to 33% of his salary when almost every other employee gets just 13%.

Barclays sees off Bramson

Ed Bramson has lost in his attempt to join the board of Barclays after a large majority of shareholders voted against the plan. Only 12.8% of shareholder votes backed the activist investor becoming a director at the bank's annual general meeting. Bramson is expected to continue his efforts to win round Barclays investors despite the setback. Meanwhile, Barclays came under fire over pay for top bosses, with a third rejecting its remuneration report. The bank said it was "disappointed" by the outcome and would discuss the issue with shareholders.

Metro Bank shares suffer meltdown

Metro Bank shares fell to a record low of 630p yesterday morning after it revealed profits had halved in the aftermath of its £900m loans error. The drop sparked suggestions Metro may struggle to find the £350m in fresh equity it has promised to raise without potentially heavily diluting existing shareholders.

RBS takes aim at former subsidiary Worldpay

Royal Bank of Scotland has launched NatWest Tyl, a new merchant acquiring service for SMEs that will put the bank in direct competition with its former subsidiary Worldpay.

Legal action launched against Clydesdale

Claims management firm RGL has launched legal action against Clydesdale Bank and its former owner National Australia Bank in a £350m dispute over the treatment of small business loan customers between 2001 and 2012.

PRIVATE EQUITY

VC firms delay funding for startups

Research by Tech London Advocates reveals almost a quarter of London’s technology startups have suffered a drop in VC funding since the end of 2018.

Apollo to ditch partnership status and become a corporation

Apollo Global Management is to abandon its partnership status and become a corporation, following private equity rivals Blackstone and KKR.

INTERNATIONAL

UBS shareholders revolt after record French tax-evasion fine

UBS shareholders have voted against managers who opted to fight rather than settle a probe into money laundering, with 42% of investors voting against discharging the board and executives from legal liability.

BNP Paribas boosted by investment banking rebound

BNP Paribas has seen revenues rebound at its corporate and investment banking business as it announced net income increased 22.4% to €1.92bn in the first quarter.

Accounting body to help lenders move from scandal-hit Libor benchmarks

The International Accounting Standards Board is planning to modify standards for how banks and companies treat Libor-related deals on their balance sheets.

Trump's Federal Reserve pick pulls out

Stephen Moore, another of Donald Trump's picks for a seat on the Federal Reserve, has dropped out of the running following fierce criticism of his views.

AUTOMOTIVE

Tesla seeks to raise $2.3bn

Tesla has launched a $2.3bn fundraising to shore up its balance sheet. It comes after the carmaker announced it had lost $702m in the first three months of the year and had sold 31% fewer vehicles in the first quarter than in the fourth quarter of 2018.

VW profit falls in Q1

Volkswagen’s profit before tax fell to €4.1bn for the first quarter, down from €4.5bn for the same period in 2018, although sales revenue rose to €60bn. The carmaker has also set aside €1bn (£858m) for the ongoing legal battle surrounding its emissions cheating scandal.

AVIATION

Budget airlines reveal soaring passenger numbers

Ryanair and Wizz Air both enjoyed a rise in passenger numbers last month, the former up 10% to 13.5m passengers compared to April last year and the latter up to 3.28m - an increase of almost 20%.

CONSTRUCTION

Construction sector shows signs of stabilisation

The UK construction sector showed signs of stability in April as it narrowly returned to growth, according to the latest IHS Markit purchasing managers’ index. The gauge rose to 50.5, up from 49.7 in March, and back above the 50-mark splitting expansion from contraction. Construction was boosted by the housebuilding sector, while commercial work and civil engineering activity continued to decline.

FINANCIAL SERVICES

Payments firm Checkout valued at $2bn

Checkout.com has been valued at almost $2bn (£1.5bn) in its latest funding round, in a further sign of the UK’s booming fintech sector. The London-based payments company provides technology which allows firms to process payments from different regions and methods. Its latest round, which is the largest fintech Series A round in Europe at $230m, attracted investors including Singapore's sovereign wealth fund GIC and Insight Partners.

London named top European city to invest in…

London has moved up to second in Schroders’ global ranking of cities with the most investment potential. The capital rose from third place in 2017 and eighth place in 2016 in the Schroders Global Cities 30 index, with only Los Angeles ahead of it. Paris in 17th place and Munich in 28th are the only other European cities to make the grade. Schroders said the ranking “reinforces London’s position as a significant contributor to the UK economy and highlights the UK capital’s attraction as a location for real asset investing”.

…but investors remain deterred by Brexit

Figures from the Investment Association show retail investors pulled a total of £205m from UK investment funds in March amid Brexit uncertainty. European and UK equity funds have also been hit by concerns around Brexit and growth, as savers withdrew £1.4bn and £816m, respectively. Meanwhile, research by Morningstar shows that UK-domiciled investment funds lost £5bn in assets in March and £30bn in total over a 12-month period.

Schroders heiress stays on board

Schroders has suffered a pay revolt at its annual meeting, with just over 12% of votes going against the group’s 2018 remuneration report. However, shareholders overwhelmingly backed the re-election of billionaire heiress Leonie Schroder to the board by a margin of 37 votes to one.

Janus Henderson reveals continuing outflows

Asset management firm Janus Henderson saw outflows continue in the first quarter, sending net income down 43% to $94.1m, from $165.2m in the first quarter of 2018.

MANUFACTURING

Bombardier to sell off Northern Ireland business

Bombardier is to sell its Belfast business as part of a wider consolidation push to focus on its operations in the US, Canada and Mexico. The Canadian aircraft manufacturer, which employs about 4,000 people in Northern Ireland, said it would work with unions through any future transition period to a new owner.

MEDIA AND ENTERTAINMENT

Mirror publisher Reach drops revenues

Reach has posted a dip in revenue ahead of its investor showdown. Like-for-like revenue fell by 6.4% in the first four months of the year on the back of a 7.9% drop in print revenues, though overall revenue grew 4.4% with its £127m acquisition of the Express & Star group last year.

Paddy Power Betfair doing well abroad

Paddy Power Betfair has posted a 17% increase in revenue for the first quarter of the year, driven by growth in Australia (20%) and the US (47%). Online revenue dropped 1% however, due to unfavourable results in racing and football.

RETAIL

Watches of Switzerland starts clock on London IPO plan

Watches of Switzerland (WoS) is looking at a London IPO, in a bid to reduce debt and increase its profile. Apollo Global Management, the luxury watch retailer’s largest shareholder, would reduce its holding but retain a controlling stake.

SPORT

Global sports sponsorship 'to hit £35bn' this year

Business spending on sports sponsorship is set to grow by 4% to £35bn globally in 2019, according to research from agency Two Circles.

ECONOMY

BoE upgrades economic forecasts

The Bank of England has upgraded its economic growth forecast for the year to 1.5%, up from the 1.2% foreseen in its February forecast, thanks in part to the temporary boost from Brexit stockpiling. The Bank's Monetary Policy Committee once again voted to keep interest rates on hold, amid its predictions that Britain’s economic growth will remain flat at 1.6% in 2020. But governor Mark Carney said future interest rate increases could be "more frequent" than markets currently expect.

OTHER

FCA report reveals generational wealth gaps

Research from the Financial Conduct Authority (FCA) has revealed gaps between different generations’ finances. It was found that baby boomers are £78,000 wealthier than people the same age were a decade ago, with data from between 2006 and 2016 showing that the median total wealth of people in their sixties has grown from less than £250,000 to over £300,000. The key driver of this has been increased property prices. The Intergenerational Differences report also found that the wealthiest people across average consumers were 60 to 69 between 2014 to 2016, five years older than the average between 2006 and 2008.

Reprieve for copper coins

The UK Treasury has reprieved 1p and 2p coins, saying they will continue to be used "for years to come" The copper coins were theoretically under threat when Philip Hammond consulted on the current mix of coins and banknotes in circulation. The chancellor has now said he wants people to "have a choice" over how they spent their money. He has also set up a group to oversee the cash system, ensuring everyone can get hold of their money in cash.

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