BANKING
Analysts: No profits for Metro Bank until 2021
City analysts believe Metro Bank’s £350m fundraising means it is unlikely to return to profit until 2021. It is estimated that a bond issue relaunched this week that offered extremely high returns will cost the bank about £33m a year. Ian Gordon, a banks analyst at Investec, said: “It is an off-the-scale cost … It's the most expensive bond issue by any bank raising this type of debt, which bluntly reflects the fact they were up against a wall with only a small remaining window to accomplish it." John Cronin, a banks analyst for Goodbody, added that the price of the debt issue means the bank "will be in loss-making territory until 2021".
Lloyds offers switch sweetener
Lloyds Bank has launched a £125 switching bonus in a bid to tempt customers to its Club Lloyds accounts, with those switching to either the Club Lloyds or Club Lloyds Platinum bank accounts using the Current Account Switch Service eligible. The announcement came on the same day that changes to Club Lloyds accounts come into force, with the interest paid on balances below £4,000 cut from 1.5% to 1%. The bank will pay those with between £1 and £4,000 a 1% rate, while those with between £4,000 and £5,000 will receive 2% on the extra £1,000.
Bank settlement dodged sanctions
The Times reports that Britain used a third country to avoid US sanctions as it paid Iran’s Bank Mellat a settlement in a £1.25bn damages case. The issue stems from a Supreme Court ruling that British sanctions imposed in 2009 were illegal. Bank Mellat, in which the Iranian government holds a 17% stake, sued the UK government over the sanctions that barred it from doing business with the UK’s financial sector.
PRIVATE EQUITY
CVC to invest in IronSource
CVC is to buy a minority stake in Israeli advertising technology firm IronSource for more than $400m. IronSource did not say what percentage stake CVC would own, or what the deal would value the whole company at.
PAI Partners cooks up a bid for food firm
PAI Partners is reportedly preparing a bid for food group Hain Daniels Group – the UK arm of US-based firm Hain Celestial which is behind brands including Linda McCartney, Sun Pat peanut butter and Hartley's jam.
INTERNATIONAL
Europe’s biggest insurer lambasts ECB over rates
Oliver Bäte, chief executive of insurer Allianz, has criticised the European Central Bank (ECB) over the "politicisation" of monetary policy and accused the ECB of "multiplying risk".
US regulator fines RBC Capital Markets
RBC Capital Markets has been fined $5m by the US Commodities and Futures Trading Commission. The fine relates to failures that resulted in unlawful trades and other violations. The regulator said that between December 2011 and October 2015, RBC Capital Markets - a unit of Royal Bank of Canada - engaged in at least 385 non-competitive, fictitious or unlawful trades.
EU rules in favour of Polish borrowers over Swiss franc-linked loans
The European Court of Justice has ruled that Polish borrowers with Swiss franc-linked mortgages can ask national courts to annul them after contracts which left consumers with higher repayments were challenged.
Policymakers in fiscal pledges
European Central Bank vice president Luis de Guindo has voiced a belief that a "dedicated centralised fiscal capacity" could focus on "common area-wide stabilisation", while incoming economic commissioner for the EU Paolo Gentiloni has pledged "adequate" fiscal efforts to tackle slowing growth in the region.
AUTOMOTIVE
Self-driving cars hit London’s streets
The first demonstration of self-driving taxis on London’s streets has been held by Oxford-based firm Oxbotica, which is working with taxi firm Addison Lee to produce the country’s first driverless cabs by June. The demonstration was the result of a two-year project with Transport for London. Prof Paul Newman, the founder and chief technical officer of Oxbotica, said the ambition for the technology went well beyond driverless cars, with a system removed from GPS tracking and not reliant on maps. He said: “We’re going to change the way people and goods move anywhere and everywhere.”
FINANCIAL SERVICES
UK fund outflows accelerate as no-deal Brexit looms
Active equity fund withdrawals hit £3.5bn in the latest quarter, according to figures from transaction network Calastone, while withdrawals from property funds hit £667m.
Vision Fund to increase Greensill stake
SoftBank's Vision Fund is set to increase its investment into Greensill Capital, adding to the $800m it invested in the company in May.
Woodford collects £8m in fees from investors stuck in fund
The Daily Mail claims that Neil Woodford has raked in more than £8m of fees from investors stuck in his Woodford Equity Income fund. Savers have been denied access to cash held in the fund for more than four months. Despite banning any withdrawals, Woodford has continued to collect £65,000 a day in fees. Regulators, industry peers and MPs have all called on him to waive the fees, but so far he has refused.
HEALTHCARE
CMA: Drug firm colluded to restrict NHS supply
The Competition and Markets Authority (CMA) has found three drug firms provisionally guilty of colluding to restrict the supply of a life-saving treatment on the NHS to drive up profits, saying Aspen paid rivals Amilco and Tiofarma to stay out of the market for Addison's disease treatment fludrocortisone acetate. Aspen, which has already admitted its part in the collusion and will pay the NHS £8m as part of a settlement, will be forced to pay an extra £2.1m if the CMA ultimately decides competition law has been broken.
MEDIA AND ENTERTAINMENT
EU rules against Facebook
The European Court of Justice has ruled that courts within the EU can order Facebook to remove worldwide posts by users on the social network that have been declared illegal. Responding to the ruling, a Facebook spokesperson said the judgement “raises critical questions around freedom of expression” and “undermines the long-standing principle that one country does not have the right to impose its laws on speech on another country”.
REAL ESTATE
Pace of housebuilding slows
Housebuilding across England has fallen to the slowest quarterly rate for three years, according to official figures from the Ministry of Housing, Communities and Local Government. Between April and June, there were around 37,220 new homes starting to be constructed across England, a drop of 8% year-on-year and 24% lower than at their peak in March 2007. The number of houses completed rose to the highest level in 11 years, by 8% over the year to 173,660. However, analysts warned the annual 1% decline in new housing starts was a leading indicator for a future downturn in completions.
RETAIL
Worst September for high street sales since 2011
New figures show that last month marked the worst September on the high street in eight years, with like-for-like in-store sales falling by 3.1% year-on-year. Wet weather hit footfall, which slipped 5.8%, with shopping centres hit the hardest as footfall declined by 8%. The figures also show that online sales growth was below the annual average at 12.4% in September.
ECONOMY
UK economy facing heightened risk of recession
The UK's economy may have tipped into recession following a downturn in the dominant service sector, according to closely-watched figures. The IHS Markit/CPS purchasing managers' index for services fell to a six-month low of 49.5 in September. The 50 level divides growth from expansion. It suggests the economy shrank 0.1% in the three months to September, after a 0.2% fall in the previous quarter. "Coming on the heels of a decline in the second quarter, [this] would mean the UK is facing a heightened risk of recession," said IHS Markit economist Chris Williamson. However, some experts urged caution, as official data last month eased recession fears.
Citi: Footsie to hit 8,000 in 2020
Citigroup analysts expect the FTSE 100 to pick up and break through the 8,000-point barrier for the first time by the end of 2020. The investment bank said: "UK equities appear very cheap; they have the highest dividend yield and free cash flow yield amongst major markets.” The research note added: "Much negative sentiment seems to be priced in, as the equity risk premium is at an all-time high. We see valuation as a key support and target 8,100 for FTSE100 at end-2020, implying 9 % upside."
OTHER
Parents start pensions gap
Research from investment firm Hargreaves Lansdown shows that the gender pension gap starts in childhood, with parents more likely to save for the financial future of their sons than their daughters. The analysis found that 13,000 girls aged under 15 had money paid into a pension for them in 2016/17, compared to 20,000 boys. Nathan Long, a senior analyst at Hargreaves Lansdown, said: "Parents and grandparents are far more likely to save for boys than for girls, so the gender pension gap can start from birth."