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Daily News Roundup: Friday, 8th March 2019

Posted: 8th March 2019


Banking industry warned victims ‘won’t trust’ redress scheme

The all-party parliamentary group on fair business banking has said significant improvements to proposed dispute resolution schemes are needed to secure the trust of companies that have been mistreated by banks. It has set out its concerns to Lewis Shand Smith, the independent chairman of the group that is implementing new voluntary adjudication and redress initiatives. The APPG’s criticisms include an alleged lack of appropriate representation of victims on the steering group establishing the schemes and eligibility criteria that “will exclude a significant number of claimants”. UK Finance is leading the creation of a voluntary ombudsman scheme for companies who are not covered by next month’s extension of the ability of businesses to access the Financial Ombudsman Service. It is also setting up a scheme that will allow an estimated 60,000 small business owners to ask for past grievances against banks to be re-examined.

Banks commit to Investing in Women Code

Lloyds, RBS, HSBC and UK Finance have already committed to a new voluntary investor code that asks UK lenders to publish details on how much funding they provide to female-led businesses. The Treasury’s Investing in Women Code comes after a Government review led by RBS executive Alison Rose revealed a big gender investment gap. Commenting on the Rose review, Theresa May said its findings showed there was "much further to go" for the UK to make it easier for women to start businesses.

BNY Mellon backtracks on home working crackdown

BNY Mellon has paused a proposed overhaul of flexible working arrangements after employees objected to the plans. The bank had launched a review of flexible working with staff expected to work from the office in most circumstances. However, in an all-staff memo chief executive Charlie Scharf said the bank “did not fully appreciate the level of impact” the changes would have on employees and would hold off on implementing any changes to remote working arrangements.

SFO 'failed to seek evidence' in Barclays trial

A judge has ruled that the Serious Fraud Office failed to procure key documents from US law firm Latham & Watkins in its investigation into four former Barclays bankers. Mr Justice Jay ruled before the trial began in January that the SFO "failed to take reasonable and appropriate steps" to obtain potentially crucial documents.

Conflict of interest row startles Starling

Starling Bank's £100m award from the Banking Competition Remedies board two weeks ago has prompted a conflict of interest row. Starling boss Anne Boden is understood to be a close friend and business associate of the BCR’s Aidene Walsh, who has worked for Boden several times over the past 15 years, including for Starling itself.

Transaction work is fastest growth area for big banks

Data from Coalition shows the top 12 investment banks’ revenues from transaction banking increased by 9% last year, to $31.3bn.


Cloud-first operating system outfit closes funding round

Tech firm Hadean has closed a £7m funding round in London, led by venture capital firm Draper Esprit. Hadean, which has created the world’s first cloud-first operating system to allow programmers to scale up their code and reduce the manpower and time spent on engineering, also enjoys the support of Aster, London Venture Partners and Luminous Ventures.


ECB acts to boost struggling eurozone

The European Central Bank has signalled interest rates in the eurozone will not rise until next year at the earliest, amid evidence of a slowdown in the 19 countries using the single currency. The ECB also unveiled a round of fresh stimulus, offering banks cheap loans to try to help revive the economy. The unexpected moves came as the bank made sharp cuts to its forecasts for both growth and inflation this year.

Global regulators launch inquiry into leveraged loans

The Financial Stability Board has launched an examination of parts of the $1.4tn leveraged loan market, amid concerns that corporate debt could undermine financial stability.


Interserve wins Aberdeen backing

Major Interserve shareholder Aberdeen Standard Investments has endorsed the firm’s rescue deal designed to stop it going into administration. Interserve’s board is locked in an ongoing struggle for control of the outsourcer against US hedge fund Coltrane Asset Management, which opposes the proposed rescue deal.


FCA warns Provident Financial bidder

Non-Standard Finance has been warned by the Financial Conduct Authority that its plans to shake up Provident Financial if it succeeds with its £1.3bn hostile bid must not result in customers being exploited for higher profits. The FCA said borrowers' rights must be protected and lending rules cannot be relaxed. FCA retail lending chief Philip Salter, in a letter to NSF, said: “Any change in controls or a shift in culture towards one that is driven by profits and incentives at the cost of good customer outcomes, resulting in unaffordable lending, will be something we act on immediately.”

Aviva chief seeks to re-energise insurer

Aviva’s new chief executive has pledged to speed up the pace of change and cut complexity at the insurer as it unveiled a 2% rise in annual profit. Maurice Tulloch, appointed on Monday, said the group was “far too complex and this is holding us back”. “I plan to leave no stone unturned to drive better underlying operational performance,” he added. Aviva’s results were boosted by a £780m benefit from falling life expectancy, making the cost of providing its policies cheaper.

Funding Circle losses widen

Business lending broker Funding Circle fell to a £51.6m operating loss in 2018, up 40% from £36.9m losses the prior year. Revenue excluding property rose 55% to £141.9m and, in the UK, net lending to SMEs was £725m, comfortably beating high street banks - which collectively loaned small businesses £515m. A company spokesman said that the losses were due to the prioritising of growth over profitability.

UK will remain part of key euro payments system

The European Payments Council (EPC) has ruled that the UK can remain part of the Single Euro Payments Area even in a no-deal Brexit. The arrangement will enable UK consumers and businesses to make and receive payments in euros and hold bank accounts in the currency beyond 29 March.

Cryptoassets lure ‘get rich quick’ investors, says regulator

The Financial Conduct Authority, on the back of two surveys on cryptoassets, has warned that investors should be prepared to risk their investments in such "complex, volatile products."

Schroders retains family values

Schroders has appointed Leonie Schroder, the daughter of the late Bruno Schroder, to its board.


Melrose upbeat on GKN takeover

Melrose Industries is upbeat about the progress of last year’s £8bn takeover of GKN after beating analysts' expectations. The industrial turnaround specialist posted a loss of £550m for 2018, weighed down by charges relating to the takeover. Melrose generated adjusted pre-tax profits of £703m on revenues of £9.1bn. Melrose has also set aside £629m after discovering that contracts accounting for about 10% of the engineer’s net sales were loss-making.


Brexit pushes Countrywide to issue profit warning

Countrywide hit investors with a £5m profit warning on Thursday morning, with executive chairman Peter Long underlining the continuing political uncertainty for dragging on the market - particularly in London and the South-East. Countrywide’s full-year figures showed an 80% fall in pre-tax profits for 2018, down to £4.5m, and a shortfall in predicted first-half profits of up to £5m, and the firm says profits will be broadly similar to last year with a second-half recovery.

Doubts over Halifax's 'volatile' house price index

Halifax's latest index has indicated that house prices increased 2.8% in the three months to February, compared with the same period a year ago, a rise of 5.9% on a monthly basis - the largest single monthly increase ever recorded on the index. The stark contrast to figures from rival lender Nationwide last week, which showed prices were just 0.4% higher in February than the same month last year, has prompted concerns over Halifax's data.


John Lewis staff bonus lowest since 1954 as profits plunge

John Lewis has paid out its lowest bonus to staff in 65 years as profits plunged last year amid "challenging" trading. Staff at its department stores, and the Waitrose supermarket chain, will receive a 3% bonus, the lowest since the 4% awarded in 1954. Profits at the partnership sank last year by 45.4% to £160m. Group sales were up 1% at £10.3bn.


Second MPC member backs rate cut after no-deal Brexit

A second member of the Bank of England’s monetary policy committee has indicated that they would cut rates in response to a no-deal Brexit. Silvana Tenreyro, one of four external members of the nine-strong MPC, has joined Gertjan Vlieghe, another external, in signalling that she would loosen policy.

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