BANKING
Co-op bank losses widen
Co-operative Bank has reported widening losses during Q3, with losses before tax hitting £118.6m during the nine months to 30 September compared to £87m in the same period last year. Half of the losses were due to a £60m charge from customer claims over the mis-selling of PPI. A number of banks were hit by a surge in PPI claims before the deadline closed in August, with RBS, Lloyds Banking Group and Santander saying PPI related costs had hit their quarterly results. While Financial Conduct Authority data suggests around £36bn in compensation has been paid out so far, the New City Agenda think-tank expects the total PPI bill to climb as high as £53bn.
HSBC warned over non-financial risks
The Bank of England (BoE) has told HSBC to tighten up compliance controls for fraud, staff conduct and other non-financial risks. It is reported that the issues, flagged by the BoE’s Prudential Regulation Authority (PRA) during routine regulatory work, will be addressed by HSBC executives at a forthcoming meeting. The PRA’s warning does not involve any risk to credit or the bank’s financial position.
Standard Chartered to cut CEO’s pension
Standard Chartered will reportedly bow to investor pressure and agree to cut CEO Bill Winters’ pension in response to a shareholder revolt over his retirement benefits. The bank is expected to reduce its boss’s pension allowance so, as a percentage of his salary, it falls in line with the rest of the company’s workforce. The new policy will also apply to CFO Andy Halford. This comes after 40% of shareholders opted not to back a remuneration policy handing Mr Winters a pension contribution in cash amounting to £474,000 this year.
Revolut tops tech growth rankings
Fintech bank Revolut has taken top place in a ranking of the 50 fastest-growing tech companies in the UK. The study identified the firms with the quickest revenue expansion, placing challenger bank Oaknorth and credit provider Dividebuy second and third respectively. The average revenue growth of all 50 firms was 3,878%.
PRIVATE EQUITY
KKR's fund targets record $15bn
KKR’s new Asia-focused fund is targeting a record $15bn. KKR's fundraising will start in the first quarter of 2020.
INTERNATIONAL
Ireland set to lift ban on bankers' bonuses
Ireland is looking to lift a ban on bankers’ bonuses that has been in place since the financial crisis in the coming months, with the country’s government set to introduce more flexible pay packages for bankers. The government imposed a €500,000 ($431,000) salary cap and a ban on bonuses for bankers at Allied Irish Banks, Permanent TSB and Bank of Ireland in 2008. These were among six lenders the state pumped €64bn into between 2008 and 2011.
Italy says German banking union plans will harm eurozone banks
Italian finance minister Roberto Gualtieri has questioned a banking union plan laid out by his German counterpart Olaf Scholz, suggesting it could harm the competitiveness of European lenders.
Commerzbank warns on full-year profits
Germany’s Commerzbank has warned it will miss its full-year profit target, with full-year net profit set to be lower than in 2018 as economic weakness and ultra-low interest rates hit the bank.
UniCredit raises prospect of share buyback
UniCredit has reported a 25.7% year-on-year jump in Q3 profits, which hit €1.1bn. It also signalled its intention to buy back shares for the first time in more than a decade.
Joint venture to help offset fee pressure
UBS' co-head of investment banking Rob Karofsky says a joint-venture by UBS Group and Banco do Brasil SA will help the Swiss bank offset global pressure on investment banking fees.
AUTOMOTIVE
Aston Martin customers' loyalty not enough to stem losses
Aston Martin's already sold out DB4 Zagato Continuations, which are £3m each, was not enough to boost its third quarter as the luxury carmaker swung to a £13.5m loss. Revenues were down 11% after sales of its entry-level Vantage sports car remained weak.
CONSTRUCTION
Bovis agrees Galliford Try deal
Bovis Homes is to buy Galliford Try’s housing arm for almost £1.1bn. Bovis will pay £300m cash and £675m in shares to acquire Linden Homes and Galliford Try Partnerships & Regeneration - more than doubling the size of its housebuilding operations in the process. The deal will be voted on by shareholders in early December and will be formally completed on January 3.
McCarthy & Stone eyeing retirement rentals
Bankers at Rothschild are helping McCarthy & Stone to secure investment for £300m of new rental properties for pensioners. The retirement housebuilder began piloting rental homes for the first time in its history earlier this year. As the group warned of “challenging” trading conditions amid political and economic uncertainty, it still managed to boost sales to £720m in the 14 months to October - up 7% from the year to August 2018.
FINANCIAL SERVICES
Equity funds see record outflows
Equity funds saw their highest quarterly outflows on record at the end of September, with the figure hitting £1.7bn. Though savers invested £352m in UK funds, according to figures from the Investment Association, net retail outflows from equity-based funds grew to a record £4.6bn in the three months to September. Chris Cummings, chief executive of the IA, commented: “Global uncertainty cast a long shadow over stocks and shares in the last quarter.” Sentiment has been hit by worries about the trade war between the US and China as well as uncertainty surrounding Brexit.
RSA sees underwriting profit boost
RSA has announced underwriting profit had grown in the first nine months of the year, but did not publish third quarter numbers. The insurer said net written premiums of £4.8bn were flat overall versus the same period last year, with its large loss ratio at 9.6% compared to 11.2% at the same stage in 2018.
Gocardless and Transferwise launch new global payments service
Fintech outfits Gocardless and Transferwise have partnered to help businesses collect recurring international payments with what they describe as “the first global network for bank debit.” Gocardless co-founder and chief executive Hiroki Takeuchi said: “Businesses today have global ambitions, but an antiquated, fragmented and opaque payments system is holding them back.”
Hiscox told to clarify private broker talks
The Financial Conduct Authority has told insurer Hiscox to issue a clarification about its financial performance after a fall in its shares price prompted concerns that some analysts had been given price-sensitive information.
LEISURE AND HOSPITALITY
Flutter's revenues rise ahead of bumper merger
Gambling operator Flutter Entertainment increased third quarter revenues by 10% ahead of its £11bn merger with Stars Group. Formerly known as Paddy Power Betfair, Flutter said revenue in the quarter to the end of September hit £533m and also increased its profit guidance for its US business after revenue grew 67%.
MANUFACTURING
Rolls Royce expects profit at lower end of guidance
Rolls Royce expects full-year profit to be in the lower end of its guidance, saying it is likely to take a £1.4bn charge to full-year operating profit because of troubles with the Trent 1000 engine. An £800m hit to cash as a result of problems on the engine takes the total expected cash cost between 2017 and 2023 to £2.4bn.
MEDIA AND ENTERTAINMENT
BritBox streaming service launches
Streaming service BritBox, which carries content from the BBC, ITV, Channel 4 and Channel 5, has launched. The service, which will cost £5.99 per month, will include new shows but most of the content will be archive material. BritBox is 90% owned by ITV, which founded it with the BBC. The participating broadcasters will continue to operate their own catch-up and streaming services.
REAL ESTATE
House price growth slows in October
UK house price growth slowed in October according to the Halifax House Price Index, as uncertainty over Brexit continued to dog the market. House prices were up just 0.9% last month – the lowest growth seen so far this year – as potential buyers hold off making purchases whilst the Brexit saga continues. The 0.9% increase, which follows a 1.1% climb in September, takes the value of the average house to £232,249. Analysis shows prices have climbed by an average of £165 a month this year, with values now climbing at the slowest pace annually since the 0.6% recorded in April 2013.
RETAIL
High street sees sales hit
Retailers saw sales climb just 0.7% in October, with sales down 6.45% in the final week of the month.
ECONOMY
Brexit and trade wars will hold back economy, BoE warns
Amid the backdrop of global trade tensions, the Bank of England (BoE) has warned that Boris Johnson’s Brexit deal is likely to hold back growth in the UK economy over the next three years. UK national income will be 1% lower by 2022 than originally thought, the BoE said in its quarterly economic statement, most of which due to “weaker global growth, driven by trade protectionism.” The Bank expects the annual pace of growth to rise from around 1% at the end of this year to more than 2% by the end of 2022, but warned that growth over the next three years will be 1% down on its August forecast. Policymakers believe the UK economy grew 0.4% in the three months to September, double their estimate in August. Meanwhile, two external members of the BoE’s Monetary Policy Committee - which sets interest rates - have called for an immediate interest rate cut. Michael Saunders and Jonathan Haskel voted to cut interest rates to 0.5%, from the current rate of 0.75%.