BANKING
Digital banking push dents Nationwide profits
Nationwide Building Society has reported a 21% fall in profit for the first nine months of the year to £703m and warned that it plans to cut margins further in the final quarter. The society blamed the drop on a £167m charge linked to writing down the value of IT systems, as well as its increased spend on digital banking. Nationwide did however lift its share of net mortgage lending from 10.4% to 15.2%. The amount written off on bad loans during the three months fell by £10m to £69m, suggesting that borrowers are increasingly able to keep up with mortgage repayments.
Small business lending slows
Net lending to SMEs shrank to £500m last year, compared with £700m in 2017, according to a report by the British Business Bank. The study also reveals a dramatic slowdown in the growth of alternative forms of funding, including peer-to-peer lending and asset finance. Lending through peer-to-peer platforms rose by 18% last year, compared with 51% in 2017. More than a third of small businesses said they expected Brexit to make it more difficult to access finance, although half said they still expected to grow in the next 12 months.
RBS set to post profits
Royal Bank of Scotland is set to book its second consecutive year of annual profits this week. City analysts expect RBS to post operating profits of £3.2bn, up from £2.2bn last year, when the bank presents full-year results on Friday. RBS is also expected to reveal that staff payouts have shrunk to £335m – marking the 10th consecutive year that its staff bonus pot has been cut.
Current account complaints surge
Research by the Mail on Sunday suggests unfair treatment of consumers by banks is triggering a new wave of complaints. Analysis of cases taken on by the Financial Ombudsman Service in the nine months to the end of last year shows that disputes relating to current accounts are now only second in number to those about Payment Protection Insurance. And the rate at which the Ombudsman has found in favour of customers has doubled in a year - to an average of 52%.
Metro Bank faces legal action over accounting failure
Investors have turned to the UK’s largest litigation-only law firm Stewarts Law to consider a claim against Metro Bank after it failed to accurately weigh the risk of some of its loans, an error that led to £800m being wiped off its share price. Another City firm has also looked into the issue and litigation funding giant Therium is reviewing whether or not there might be a case.
Calls for new Barclays chair to shake up board
Barclays’ incoming chairman Nigel Higgins is facing calls from major shareholders to shake-up the bank’s board. Higgins has already kicked off discussions with the bank’s top investors and will hold a string of one-on-one meetings in the month ahead as activist investor Edward Bramson seeks backing for a board seat. Barclays is also shifting some jobs in its London-based credit and equity derivatives sales teams to Paris ahead of Brexit, according to two sources familiar with the matter.
Revolut referred to FCA over ‘single-shaming' ad
A fintech company which sparked complaints with a "spoof" advert addressed to people who ordered a takeaway meal for one on Valentine's Day last year is facing scrutiny from the Financial Conduct Authority over the issue. Revolut has admitted that the figures in the ad should have been labelled fictitious.
Tide backs calls for SME tribunal
Challenger bank Tide has backed calls for a tribunal system for small businesses to settle disputes with their lenders, although increased competition in the sector would go further in protecting firms, the digital bank said.
Monzo courts business customers
Monzo is launching its first business accounts. Unlike the mobile bank’s 1.5m current account customers, who use it free, businesses will have to pay a fee — the first time Monzo will have charged to use its services.
Lloyds to hire 700 advisers in wealth management push
Lloyds Banking Group is planning to hire more than 700 financial advisers and has set a goal of increasing its assets under management from about £13bn to £25bn.
HSBC’s Mark Tucker to become chair of TheCityUK lobby group
HSBC chairman Mark Tucker is set to replace Barclays chairman John McFarlane as chair of TheCityUK.
PRIVATE EQUITY
Addison Lee up for sale
Carlyle Group, owner of Addison Lee, is to put the London taxi group up for sale this year with a price tag of about £390m. The US group bought Addison Lee in 2013 in a deal that valued the company at about £300m.
INTERNATIONAL
Danske Bank facing €1bn damages lawsuit
Up to 70 institutional investors are set to file a lawsuit against Danske Bank over losses related to allegations of money laundering involving the lender. The investors, who have collective damage claims of €1bn, plan to file a complaint against the Danish bank next month through law firm DRRT.
Pressure rises for US bank mergers after biggest tie-up since financial crisis
Industry executives, investors and analysts say the $66bn merger between BB&T and SunTrust will increase pressure on America’s mid-sized lenders to find merger partners.
UBS overhauls pay for 10,000 workers
Employees working in UBS’s “corporate centre” will no longer receive variable bonuses and will instead receive fixed annual bonuses that equate to roughly half their monthly salary.
Deutsche Bank’s funding woes deepen
Deutsche Bank has had to pay the highest financing rates on the euro debt market for a leading international bank this year, as it struggles to reduce its funding costs.
BofA names head of EU broker-dealer in Brexit-planning ‘milestone’
Bank of America Merrill Lynch has appointed Sanaz Zaimi to lead its new EU broker dealer as the investment bank steps up its Brexit planning.
AVIATION
Flybe investor raised fears of collusion
The Telegraph reports that Flybe’s biggest shareholder, investment firm Hosking Partners, expressed concern to bankers running the sale process that suitors were communicating with one another several weeks before Connect Airways’ bid for the airline. Hosking has called for an investigation into the sales process.
FINANCIAL SERVICES
Visa trumps Mastercard’s Earthport offer
Visa International has trumped Mastercard’s £233m offer for London-based crossborder payments processor Earthport with a £247m counter-bid. Visa announced that it was offering 37p per share for the fintech firm – 12% higher than Mastercard’s 33p per share. Earthport described the new offer as “compelling” and recommended that shareholders take no action in relation to the Mastercard offer.
Bosses who mismanage pensions face jail
Company bosses could face up to seven years in prison if they mismanage employee pension schemes. Work and Pensions Secretary Amber Rudd said current fines were not enough and that a new criminal offence would be introduced to punish "wilful or reckless behaviour" relating to a pension scheme.
L&G takes stake in data centre
Legal & General Capital is taking a 50% stake in Kao Data campus in Harlow, Essex, a £230m data centre that will serve life science and technology businesses along the London to Cambridge innovation corridor. The deal is a partnership with Goldacre Noé Group that will see the site expand its operations, including the construction of three new data centres.
EU governments provide Brexit relief for asset managers
France, Germany, Italy and the Netherlands are among countries that have amended national laws to ensure UK asset managers can still serve foreign customers in the event of a no-deal Brexit.
Vanguard boss warns returns will plummet
The chief executive of $5trn fund giant Vanguard has warned that stock market returns will halve over the next decade as volatility surges and the era of cheap money ends. Tim Buckley said investors will face “muted returns” and more wild swings in stock prices after an extraordinary bull run.
Investors demand huge fee discounts from asset managers
A survey by Broadridge and Refinitiv reveals institutional investors pay 24 basis points on average for government bond funds — 33% less than the average listed price.
Japanese insurer moves over Brexit
Japanese insurer Aioi Nissay Dowa has moved part of its European business from London to Luxembourg ahead of Brexit.
MEDIA AND ENTERTAINMENT
Daily Mash publisher bought for £1.2m
Mashed Productions, owner of satirical news website the Daily Mash, has been bought by media firm Digitalbox for £1.2m.
REAL ESTATE
Stamp duty hike has hampered house sales
Increases in stamp duty have caused a slowdown of the housing market, the Bank of England has warned. Increased taxes for expensive properties and second homes put in place by former Chancellor George Osborne have put off potential buyers, the Bank’s economists said. “The London market has probably been disproportionately affected by regulatory and tax changes,” a report from the bank stated.
Property funds face fresh battering from Brexit headwinds
According to Morningstar, the largest nine UK property funds have seen their average size decline to £1.4bn - down from £1.8bn at the time of the Brexit referendum.
RETAIL
Record number of retailers close
Analysis by the Local Data Company shows that 18,355 shops closed their doors for the last time in 2018, compared to 13,676 new openings, leaving a net loss of 4,679 retail outlets. When bank and restaurant closures are taken into account, a total of 50,828 consumer outlets were closed, a new record.
SPORT
Liverpool post record profit
Liverpool FC has announced a post-tax profit of £106m - a record for a football club. In its yearly financial results, the club made an annual pre-tax profit of £125m - up from £40m - as turnover increased in the 12 months to May 2018 by £90m to £455m, also a record.
ECONOMY
Quarterly growth rate has halved, say economists
Official figures due out today are expected to show UK growth slowed sharply in the final three months of 2018. City economists estimate economic growth halved to 0.3% in the fourth quarter of last year, compared with the 0.6% growth in the third quarter.