BANKING
Consumers adopt ‘pick ‘n’ mix’ approach to payments
The latest UK Payment Markets report from UK Finance shows that one in 10 adults are living a largely cashless life, with this climbing to 17% among those aged 25 to 34. Last year, four in 10 payments in the UK were made by debit card, reflecting the popularity of contactless cards. It was also found that almost half of UK adults used mobile banking in 2018, up from 41% the previous year. At the same time, the number of bank payments made using online or mobile banking in 2018 grew to 2bn, up from 1.6bn in 2017. Additionally, an estimated 8.5m people were registered to buy goods and services using mobile payment services such as Google Pay, Apple Pay and Samsung Pay. Stephen Jones, chief executive of UK Finance, said: “The same pick ‘n’ mix approach people now take when it comes to music, television or the news is expanding into payments, as consumers take advantage of new technologies to pay in a way that suits them.” A total of 39bn transactions were made in the UK last year by businesses and individuals, the report said, with 34.9bn by consumers and 29.7bn of these spontaneous, rather than scheduled payments.
Currency rigging fines top £70m
Switzerland’s competition watchdog has fined RBS, Barclays, Citigroup, JPMorgan Chase and MUFG more than £70m after investigations uncovered “several anti-competitive practices”. Citigroup must pay £22.7m, while Barclays, RBS, JPMorgan and MUFG were fined £21.5m, £17.9m, £7.6m and £1.2m respectively. The settlements end investigations in the country into two cartels formed by the banks - and UBS, which blew the whistle and avoided a fine - to manipulate the foreign exchange currencies.
TSB job cuts
TSB is expected to cut 100 jobs following its IT debacle last year. The cuts were originally planned after TSB switched from a computer system run by previous owner Lloyds to one run by its current Spanish parent Sabadell. However, because of IT problems TSB delayed the shake-up. The Accord union said the job cuts affected mainly back-office roles.
INTERNATIONAL
Crédit Agricole raises profit target after reaching 2019 goal early
Crédit Agricole has pledged to boost its net income by more than €600m over the next three years and drive down costs as CEO Phillipe Brassac focuses on corporate banking and asset management.
Deutsche Bank investment banking boss targeted in tax probe
Prosecutors in Cologne have launched a criminal investigation against Garth Ritchie, Deutsche’s Bank investment banking boss, over links to illicit tax transactions.
UBS and Sumitomo Mitsui Trust Bank strike partnership
UBS and Japan’s Sumitomo Mitsui Trust are set to sign an agreement establishing a new wealth management tie-up in Japan.
UBS and Goldman say markets overplaying odds of US rate cuts
According to UBS and Goldman Sachs, the markets the odds of the Federal Reserve cutting interest rates in 2019 are overblown.
AUTOMOTIVE
Ford confirms Bridgend closure
Ford has confirmed it will close its Bridgend engine plant in September 2020, with the loss of 1,700 jobs. Ford blamed the closure on the imminent end to a contract for engine production with Jaguar Land Rover, as well as a global decline in demand for the Ford engines made in Bridgend. Stuart Rowley, the president of Ford in Europe, said the decision to close the site was not connected to Brexit. He said: “If Brexit had never happened would it have been a different decision? The answer to that is no.”
Auto Trader drives up profit
Online car marketplace Auto Trader has reported a 15% rise in profit for the 2018-19 financial year, with the company saying it is not concerned about Brexit. The firm’s profit before tax rose 15% to £242.2m for the year ended 31 March, compared to £210.7m in the previous year. Revenue rose by 8% to £335.1m from £330.1m previously.
Rolls-Royce offloads third of pension scheme
The engine manufacturer Rolls-Royce has moved a chunk of its pension scheme responsibility to Legal & General in a move that removes future risk from its balance sheet. The company has shifted over £4.6bn of assets and £4.1bn of liabilities to Legal & General in the transfer. Joel Griffin, pensions boss at Rolls-Royce, said the move would offer “greater stability and certainty” for its workers.
AVIATION
IAG launches aviation start-up incubator
British Airways-owner IAG has launched its Hanger 51 global accelerator programme for aviation start-ups. IAG is looking for applications in airport operations and logistics, future of customer interaction, including wearables, disruption management, future cargo logistics, sustainability, including carbon offset, carbon capture and innovative waste management, and also a "wildcard," category - for any new disruptive ideas that have the potential to reshape the travel industry.
FINANCIAL SERVICES
FCA urged to probe buylists
The Financial Conduct Authority has been urged to probe the way platforms run their fund buylists in the wake of Woodford’s Equity Income Fund closing to investors amid liquidity concerns. Shaun Port, chief investment officer at Nutmeg, believes vested interests between fund houses and platforms' best buylists should be investigated, while Fundscape consultant Bella Caridade-Ferreira has added a call for fund buylists to be regulated altogether. Meanwhile, Nicky Morgan, chair of the Treasury Committee, has said investors in the Woodford Equity Income Fund should not be charged fees while trading in the fund is suspended. On the call for fees to be waived, Ms Morgan said the committee would “raise this troubling episode” when it spoke to the Financial Conduct Authority and the Bank of England. As yet, Mr Woodford has refused to cut any fees. Elsewhere, Mark Carney, governor of the Bank of England, has said investment funds need closer scrutiny to lessen the risk of a system-wide financial crisis.
Hargreaves Lansdown co-founder offloads shares
The co-founder of Hargreaves Lansdown, Stephen Lansdown, sold 7.5m shares in the company on May 22 at 2280p, earning himself a total of £171m. He still has a 9.3% stake worth £839m at last night’s closing price of 1900p. Hargreaves Lansdown’s shares have tumbled as the company has been dragged into the crisis engulfing fund manager Neil Woodford.
Job losses planned at Aviva
Aviva has announced it plans to cut 1,800 jobs over the next three years and separate its life and general insurance business in the UK. Aviva said it will attempt to keep redundancies to a minimum as it slashes costs, with some of the role cuts coming from natural staff turnover. CEO Maurice Tulloch commented: “Reducing costs is essential to remain competitive and this means tough decisions and job losses which I do not take lightly. We will do all we can to minimise redundancies and support our people through this.” Andy Case, officer at the trade union Unite for Aviva, said that the cuts would be met with “disbelief” by employees. “Unite have arranged urgent discussions with Aviva management in order to ascertain the rationale for cutting an already extremely stretched workforce,” he said.
M&G Prudential reaffirms commitment to Scotland
M&G Prudential has moved 400 jobs to Edinburgh amid plans to more than halve its UK office footprint. The life and asset management company said it was placing its sites in Stirling, Edinburgh and London “at the heart of its strategy” as it consolidates its UK locations.
CMC Markets slashes dividend
CMC Markets has cut its dividend after reporting a 90% drop in profits. The firm said its annual investor payout would be cut from 8.9p to just 2p per share. CMA blamed its dismal year on a regulatory crackdown, although it claimed the worst was over.
HEALTHCARE
Opioid maker Insys agrees to pay $225m to settle US criminal cases
Insys has agreed to pay $225m after admitting illegal conduct when promoting Subsys, a fentanyl-based spray that was designed only for the worst “breakthrough” pain suffered by cancer patients.
MEDIA AND ENTERTAINMENT
Entertainment One sees shares leap
Shares in Entertainment One rose by as much as 15% yesterday morning after the company dismissed reports that boss Mark Gordon was in talks to leave the company. Last month Entertainment One posted a 43% decline in pre-tax profit, which it blamed on an “unprecedented” acceleration of changes in consumer behaviour.
Dentsu Aegis launches new UK marketing agency
Dentsu Aegis has launched a new UK marketing agency after merging four of its existing brands. The company said its new agency, Dentsu X, will bring together skills in media, technology, creativity and data to offer a full-service proposition to clients including Jaguar Land Rover, Converse and Lidl.
PROFESSIONAL SERVICES
Mitie moves ahead of its forecasts
Outsourcing firm Mitie has surpassed its guidance for full-year profit and predicted solid growth this year after weathering a tough period for British outsourcers by cutting costs and focusing on its core businesses. The firm said its operating profit came in at £88.2m, around £3m above the company’s own expectations.
RETAIL
Ofcom boss appointed next John Lewis chair
Sharon White, the boss of Ofcom, is to replace Sir Charlie Mayfield as the next chair of John Lewis. It marks the first time John Lewis has appointed externally and Ms White will be the first woman to hold the role in its 155-year history. Sir Charlie said he was aware that the appointment was not a "conventional retail choice, but these are not conventional retail times, nor is the partnership a conventional company”.
ECONOMY
Carney warns of threat from illiquid assets
The Governor of the Bank of England, Mark Carney, has warned that the world economy faces growing risks from $30trn (£24trn) of investment that has the potential to boost growth in the poorest countries but also threatens their long-term health if markets freeze or volatility increases. Speaking in Tokyo, he said: “Financial openness has proven a double-edged sword. Time and again, waves of investment into emerging market economies are sharply withdrawn. And more generally, financial openness has tended to amplify domestic imbalances and leave 'emerging markets' more vulnerable to foreign shocks.” He added that foreign currency debt and the boom in investment funds had pushed up risks in the past decade.