Co-op Bank increases small business lending
Co-op Bank has increased its lending to small business customers for the first time in six years, with deposits rising 2.5% in the first half of the year. The lender, which currently has 3.5m retail customers and 85,000 small business customers, made a statutory loss before tax of £38.5m for the six months to June 30, compared to a £39.5m loss in the same period last year, citing "sustained pressure on mortgage margins" and a "challenging external environment". Chief executive Andrew Bester said: "We've delivered a positive first-half financial performance that is ahead of expectations and, although loss-making overall, is near break even on an underlying basis”. The bank has updated some of its expectations for the year, saying that its customer net interest margin would fall to about 1.7%, compared with previous guidance of up to 1.8%.
Nationwide to refund £6m to customers
The Competition and Markets Authority (CMA) has ordered Nationwide to hand back £6m to current account customers after it broke rules which state that people should receive a text alert before banks charge them for unarranged overdrafts. The CMA has told Nationwide to take immediate action and improve its practices and compliance with the instruction. A Nationwide spokesperson said: “As an organisation that prides itself on service, we apologise for these incidents and any inconvenience caused. We have started the process for refunding members and will ensure no one is left out of pocket.”
Banks see fees fall
Research produced by Refinitiv shows that fees at all but one of the world's 20 largest investment banks fell in the first half of 2019. China’s Citic was the only bank to record a rise in fees, while JP Morgan earned the most in fees, pulling in $3.3bn. Europe's investment banks earned a combined £11bn worth of fees in H1 2019, a 14% dip on H1 2018.
HSBC names interim commercial boss
HSBC has promoted Barry O’Byrne to head up its global commercial banking unit. He takes on the interim role as Noel Quinn, former chief executive of global commercial banking, steps up to become interim CEO of HSBC after John Flint stepped down by mutual agreement.
Ex-Barclays trio face trial
Three former Barclays executives are to face a criminal trial on fraud charges relating to their involvement in emergency fundraising involving Qatar during the financial crisis. The Serious Fraud Office has confirmed that Barclays former Middle East head Roger Jenkins, former wealth boss Tom Kalaris and ex-European head of financial institutions Richard Boath will appear at Southwark Crown Court on October 7.
JC Flowers to sell Shinsei Bank shares
Private equity investor JC Flowers & Co is set to sell around $700m of shares in Japan's Shinsei Bank, a move that will cut its 21.4% stake to less than 4%. The sale will see JC Flowers founder, J. Christopher Flowers sell down his personal stake in the lender and exit the bank's board. JC Flowers partnered with private equity firm Ripplewood to buy the failed Long-Term Credit Bank and relaunch it as Shinsei in 2000, making it the first Japanese lender to be owned by foreign investors.
Deutsche Bank benefit cuts anger overseas staff
Deutsche Bank has tightened holiday rules and stopped long-service awards for staff outside Germany, with a ban on carrying forward unused annual leave among measures announced as part of its “cost catalyst” initiative.
Chase 'forgives' credit card debt
Chase Bank, which is operated by JP Morgan Chase, says it will "forgive" the outstanding credit card debt of its Canadian cardholders as part of its move to exit the country’s credit card market. It announced in January 2018 that all credit card accounts in Canada were to close in March of the same year but customers were required to continue making payments. It has now opted to write off the remaining debt.
Hargreaves Lansdown weathers Woodford storm
Hargreaves Lansdown has overcome the adverse publicity over the suspension of Neil Woodford's flagship fund to increase full-year assets by 8.4% on a growing client base and net savings inflows. Hargreaves said that total assets under administration were £99.3bn at the end of June, up from £91.6bn a year earlier and beating a company supplied consensus of 15 analysts for £98.7bn, helping to underpin a 7.7% rise in its shares. A 133,000 rise in client numbers to 1.22m helped drive net new business of £7.3bn, while market gains added a further £400m.
FCA points to ETF stability
The Financial Conduct Authority says it “does not detect any initial signs of concern to financial stability” in the exchange-traded funds (ETFs) market. The watchdog added that the market can cope with liquidity issues like those which have hit Neil Woodford’s flagship fund, saying that while in typical trading periods the primary market is highly concentrated, other authorised participants step in to provide alternative liquidity “in times of stress”. The FCA said that while its research had offered “reassuring results”, it is “only the first step in investigating the resilience of ETF markets”.
Central Bank of Ireland: London will remain a leading financial centre
A Central Bank of Ireland report says London is likely to remain a leading global financial centre, whatever Brexit scenario plays out. It offers that while “a less open, productive and rich UK might influence the future path of the City … the impact of fundamental factors could be very small”. Miles Celic, chief executive of The City UK, said the report shows that London will “remain Europe’s leading financial centre whatever happens with Brexit, but it also warns strongly against complacency in the longer term.”
Burford hits back at Muddy Waters
Burford Capital has published a response to “false and misleading” claims by US hedge fund Muddy Waters, which had accused Burford of misleading investors and questioned its accounting practices, governance and financial health. Burford insists it “is solvent, generates strong cash flow and has good access to expansion capital.”
Hastings profit falls
Insurer Hastings has reported a 47% fall in pre-tax profit, which hit £46.1m for the six months to the end of June. Its gross written premiums grew 3% to £499.2m.
Aviva’s H1 results mixed
New Aviva boss Maurice Tulloch has indicated a potential sale of its Asian business, and revealed that the insurer has cut costs by £25m since June 6. Half-year results were mixed, with strong general insurance profits, up 29%, pulled down by lower profits in fund management, which were off 18%, and life insurance - down 8%. Operating profit rose 1% to £1.45bn.
Robinhood to launch free stock trading service
US commission-free stock trading start-up Robinhood is bringing its fintech offering to the UK after the Financial Conduct Authority approved its platform. Transferwise veteran Wander Rutgers will head its London office and UK business, as it looks to rival Revolut, Freetrade and Etoro.
Bayer to buy rest of US biotech company in rare offensive move
German pharmaceuticals group Bayer is to take control of BlueRock Therapeutics, a US biotech company it already owns 41% of, in a deal that values BlueRock at up to $1bn
LEISURE AND HOSPITALITY
Cineworld sees admissions slide
Cineworld saw profit before tax dip 12.5% to $140m in the six months to June, while revenues rose $2.2bn as admissions fell 14% to 136m. The cinema chain says it is confident it will meet expectations for the full year, with sequels to It and Frozen – as well as the new Star Wars film - expected to draw movie fans later in the year.
Preferred British Steel buyer set to be named
Business Secretary Andrea Leadsom has contacted potential buyers for British Steel, saying one of the three firms left in the running will be named the Government’s preferred option in the coming days. City AM says British industrials firm Liberty House and pension fund Oyak, the largest shareholder in Turkish steel firm Erdemir, are believed to be the frontrunners. The official receiver took control of British Steel after its failure in May and will continue to run it during the sales process.
Online sales surge but high street struggles
New data shows that in-store like-for-like sales increased 0.1% in July. Online sales fared far better, posting a 20.5% increase which marks the strongest growth figures since December 2017.
Economy vulnerable to housing crash
Economists at IHS Markit have warned that the world economy is vulnerable to a major housing crash, suggesting that risks stemming from prices which have soared since the financial crisis could have a greater impact than Brexit or the US-China trade war. It says that an outright collapse in property prices in key economies could see global GDP growth fall from current forecast rates of about 2.5% a year to a low of just 0.9% next year, although it would not deliver a full-blown global recession.
Lyons: BoE should focus on growth
Gerard Lyons, one of the frontrunners to replace Mark Carney as governor at the Bank of England, has suggested the Bank should put more focus on boosting economic growth. He told the Telegraph: “We've got lots of strengths going for us, but we need to adapt and change … Maybe the Bank of England's policy mandate has to be part of that." He added that while he agrees with Mr Carney’s suggestion that a no-deal Brexit would shock the economy, the UK is well-placed to cope. “It should have been made clear that, whatever the short-term disruption, the economy would cope and policy would respond in an immediate and appropriate way," Mr Lyons commented.