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Daily News Roundup: Monday, 12th August 2019

Posted: 12th August 2019

BANKING

RBS poised to appoint Alison Rose as chief executive

Alison Rose is set to be the next CEO of Royal Bank of Scotland, making her the first woman to run a large British bank. Ms Rose is expected to take over later this year from Ross McEwan, who was recently appointed chief executive at National Australia Bank. Ms Rose, currently head of commercial and private banking at RBS, is understood to have fought off competition from Ian Stuart, head of HSBC UK, and Mark Bailie, who leads Bó, RBS’s new digital bank. The Sunday Telegraph says the appointment would be “the clearest indication yet of RBS’s attempts to move on from the macho, high-risk culture”. The Times notes that Ms Rose will receive £250,000 less in lieu of pension than Mr McEwan due to new corporate governance rules.

Banks educate on fraud risk as branches close

Research by Which? shows 60 bank branches are closing every month with London, Manchester, Glasgow, Birmingham and Edinburgh suffering the most closures over the last four years. Gareth Shaw, head of money at Which?, said: "Online banking and digital payments are on the rise, but there is still widespread demand for the full range of services and access to cash currently offered by dedicated bank branches.” The Sunday Times suggests that as more people bank online, they have become increasingly vulnerable to fraud, particularly older customers who may not be so familiar with the risks of the internet. The paper notes that banks such as Royal Bank of Scotland, Barclays, Santander and Nationwide are attempting to educate customers about fraud risk.

Top bankers shift tone over horror of no-deal Brexit

The Sunday Times details how banks have called on the UK and the EU to speed up no-deal preparations so that institutions have clarity on crucial operations. A letter seen by the paper says more measures are needed to ensure customers from EU countries can continue to have access to services such as savings, loans, mortgages and credit cards. Separately, David Crow reports in the FT on how some senior bankers are swinging behind a no-deal Brexit. Tired of the inertia and buoyed by Boris Johnson’s enthusiasm, some say the disruption would be good.

NatWest to trial voice-only banking

NatWest is to launch a trial of voice-only banking allowing customers to ask Google Assistant for details such as their bank balance or recent spending. Only basic account information will be available under the trial but NatWest said the technology may in future allow customers to instantly transfer money and pay bills.

Interview: Anne Boden

The Sunday Times interviews Starling boss Anne Boden who says she hopes the challenger bank will remain independent “for as long as possible” as she predicts a flotation in two or three years. David Brear, founder of fintech consultancy 11:FS comments: "In terms of the retail banking fight, Revolut and Monzo are acquiring more customers, but Starling has more of a range. I think they are presenting a good case for an acquisition."

Standard Chartered plans charm offensive

Standard Chartered has invited shareholders to a meeting with the chairman and remuneration committee in September to discuss the row over CEO Bill Winters’ pay, including his £474,000 pension pot. More than a third of investors voted against the bank's pay policy in May, but Mr Winters angered shareholders further when he called those who had protested "immature".

Interview: Monzo boss Tom Blomfield

The Observer interviews Monzo boss Tom Blomfield. The app-based bank is notoriously risk-averse, with customer deposits totalling £1.1bn sitting safely in the Bank of England, says Blomfield. The bank has 1,000 staff but is still losing money – Blomfield says it will turn a profit soon. He goes on to talk about the bank’s culture and his dream to turn Monzo into a social enterprise.

Job cuts at investment banks near 30,000 as outlook deteriorates

Almost 30,000 investment banking lay-offs have been announced since April, with Deutsche accounting for more than half. The job cuts are due to falling interest rates, weak trading volumes and automation.

Mortgage price war squeezes lenders

A price war has led to profit margins at the UK's 15 largest mortgage lenders falling in the first half of the year, prompting many banks to turn to riskier lending.

STB lending balances up 13.4%

Secure Trust Bank’s commercial finance arm saw lending balances increase by 13.4% in the six months to June 30. It provided £220.7m worth of funding to UK businesses, an increase of £33.2m on H1 2018.

PRIVATE EQUITY

Funding for British biotech companies hit by Brexit uncertainty

Funding for British biotech firms has dried up this year in contrast to fundraising across Europe. According to data compiled for the Telegraph by Pitchbook, British biotech companies have raised just $107.4m (£89m) across 15 deals so far, compared with $643m across 62 deals in 2018. European biotech companies have attracted $1.6bn in funding this year, exceeding the $1.5bn invested in the whole of 2018. Overall, in the first three months of 2019, the number of venture capital investments into British businesses fell by almost 60%.

BlackRock buys $870m stake in Authentic Brands

BlackRock has acquired a controlling stake in celebrity and clothing licensing group Authentic Brands for $870m. It is Blackrock’s first major buyout deal after raising $2.75bn for Long Term Private Capital, its first private equity fund.

Lady Cobham rails at takeover

The widow of Sir Michael Cobham, who founded the defence company Cobham, has said the proposed £4bn takeover by Advent International would put the UK's national security at risk and should be stopped by the Government.

INTERNATIONAL

Goldman Sachs executives charged over 1MDB

Malaysia has charged 17 former and current Goldman Sachs bankers over a corruption investigation at its state development fund 1MDB. These include Richard Gnodde, vice chairman of Goldman Sachs, and former vice chairman Michael Sherwood. Attorney General Tommy Thomas said custodial sentences and criminal fines would be sought against those charged. The matter centres on £5.4bn Goldman helped Malaysia raise to finance government projects via 1MDB. These charges have been brought under a section of the Malaysian Capital Markets and Services Act which holds senior executives responsible for offences.

German Government considers Commerzbank sale

The German government is considering selling its 16% share in Commerzbank, with the country’s finance ministry saying it is looking for an adviser to deliver an assessment of Commerzbank’s “strengths, weaknesses, opportunities and threats”, as it considers its stock in the lender which has seen share values dip 91% in a decade. The government paid €26 per share on average for its stake when it bailed Commerzbank out in the financial crisis, while the current share price stands at €5.43.

€2m seized from former Danske Bank employee

Estonian prosecutors have ordered a local court to seize around €2m from a Latvian bank account belonging to a former Danske Bank employee. This comes as part of an investigation into alleged money laundering that saw 10 former employees at the local branch of Danske Bank arrested by Estonian police last December.

India one step closer to creating national gold exchange

Banks including JPMorgan Chase, Standard Chartered and State Bank of India, along with the World Gold Council, have submitted a blueprint to the Indian government for setting up a physical gold exchange.

HSBC’s Greater China chief resigns in latest high-profile exit

HSBC has said Helen Wong, its chief executive of Greater China, is leaving to pursue a job at another company. This comes a week after HSBC CEO John Flint left his role.

FINANCIAL SERVICES

Watchdog urged to close loophole

The Telegraph says the Financial Conduct Authority (FCA) is facing “mounting” pressure to close a loophole which means regulated firms and advisers can sell unregulated schemes to consumers. Former City minister Lord Myners urged the FCA to “require all authorised firms or individuals to disclose in big letters when a scheme they offer is not regulated or protected by the Financial Services Compensation Scheme.” He added: “I find it disappointing that the FCA has not moved more rapidly to address this." Ian Cornwall of financial adviser trade body Pimfa said the matter means firms could sell "weird and wonderful" schemes, adding that some investments “are not suitable for run-of-the-mill clients”.

Poor performing funds’ £300m fees

Bestinvest's 'Spot The Dog' report suggests that under-performing investment firms have raked in more than £300m in fees this year. Neil Woodford's Equity Income fund was identified as the worst performer over the past three years among those with more than £1bn of assets. Woodford has taken in almost £100,000 in fees every working day for a fund that operates 28% behind its average rival.

L&G buys pension fintech firm

Legal & General has bought the company behind My Future Now for an undisclosed sum. The fintech firm, which enables users to trace old pension entitlements and display them on one page, will help L&G create a full pensions dashboard service.

Seedrs shares suspended as reserves dwindle

Seedrs has suspended its shares from trading on a secondary market while it attempts to complete a financing deal. Seedrs has previously raised £25m from investors including Woodford and Augmentum Capital.

ESG investing sparks race in tech and hiring at asset managers

Pension fund clients are increasingly focussed on sustainable investing, with data from Cerulli Associates revealing investors aged under 40 are more interested in ESG investing compared with their older peers.

Prudential prepares for the big split

The FT says the looming demerger of Prudential’s UK business from the group's Asian and American division could be the first stage in a wider break-up of the insurer.

HEALTHCARE

Pru launches online doctor services app in Asia

Prudential has launched its AI-driven health app Pulse in Malaysia after announcing a partnership with Singapore digital healthcare provider MyDoc. Pulse will target 245m customers in 11 Asian markets.

REAL ESTATE

Bets build against Hammerson

Bets against Hammerson have risen to an all-time high after the shopping centre developer’s shares fell to their lowest level since the financial crisis. Investors including US hedge fund Maverick Capital and New York's Woodson Capital Management have been ramping up their short positions against Hammerson, as the shift to online shopping has wiped billions off the value of British retail property.

Sanjeev Gupta’s bank buys GFG Alliance’s Mayfair office

Sanjeev Gupta’s challenger bank, Wyelands Bank, has invested more than £60m in a property in London’s Mayfair, whose tenants include the Gupta-controlled GFG Alliance.

RETAIL

Shop vacancy rate worst since 2015

The number of empty shops in town centres is at its highest for four years, according to a British Retail Consortium and Springboard survey. The vacancy rate was 10.3% in July, its highest level since January 2015, while footfall also fell by 1.9% in July, the worst July performance for seven years.

ECONOMY

Economy shrinks as investors shun FTSE

ONS data shows that the economy shrank by 0.2% between April and June, marking the first contraction since 2012. Consensus among analysts had seen a forecast of 0% growth in Q2. The 0.2% dip in GDP follows growth of 0.5% in the first three months of the year, with Q1 boosted by stockpiling ahead of the original Brexit deadline of March 29. Separately, analysis by Goldman Sachs indicates that FTSE 100 shares are trading at their biggest discount to global peers in a decade.

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