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Daily News Roundup: Monday 12th February 2018

Posted: 12th February 2018


Britain's financial system would be 'robust' without EU deal

Deputy governor of the Bank of England Ben Broadbent has said the UK’s financial sector would remain “robust” even if Britain left the EU without a deal. He said risk assessments undertaken by the Financial Policy Committee found the financial system would have enough capital to deal with a no-deal outcome. Meanwhile, Sir Jon Cunliffe, the BoE’s deputy governor for financial stability, has insisted that the financial services sector will prosper regardless of the outcome of Brexit talks. He commented: "The UK's role as the leading international financial centre does not rest or depend exclusively on the EU single market in financial services".

2020 ethnic diversity target for Lloyds

Lloyds Banking Group has set a target of making 8% of its senior management black, Asian and minority ethnic by 2020, placing it as the first FTSE 100 group to set a formal target in this way. Fiona Cannon, Lloyds' director of responsible business and inclusion, commented: "What gets measured gets done and we are confident we can meet our diversity goals with the right focus and determination".

Metro Bank creates 900 new jobs

Metro Bank will take on 900 new staff in 2018 as it bolsters its apprenticeship scheme. The company’s total staff roster will stand at nearly 4,000. Metro Bank offers training through a dedicated in-house unit, Metro Bank University, with around 100 places available on the programme.

New banking recruits may see bonus boost

Salary data group has said that banks look set to pay junior staff bigger bonuses in an attempt to prevent them from defecting to technology firms. Emolument co-founder Alice Leguay commented: "Banks are struggling to retain younger talent. The trend is for higher starter pay because they are struggling to find millennials that say they want a career in banking."

Fintech centre planned by Citi for London

Citigroup is drawing up plans to invest in a new London Fintech innovation centre, despite uncertainty in the financial sector over Brexit. This comes after recruiter Morgan McKinley reported last week that job vacancies in the City of London had fallen 35% in January compared to a year earlier.

New Welsh online bank receives £50m funding from Elliott

Chetwood Financial, a new online bank, has raised £150m in funding from Elliott Advisors. Based in Wrexham, Chetwood is being launched by former deputy head of HSBC's UK retail bank Andy Mielczarek, and financial services technology expert Mark Jenkinson. Chairman Alan Cook also chairs insurance company LV=.


Apple dispute blamed for funding shortfall

British microchip manufacturer Imagination Technologies has attributed another funding shortfall to a long-standing dispute with Apple. Its accounts show that an absence of payments from "significant customers" could result in it needing further support from Chinese-backed private equity group Canyon Bridge, which paid £550m for Imagination in 2017.

B Capital raises £260m

Facebook co-founder Eduardo Saverin has raised £260m for his venture capital firm B Capital Group. The company will invest in global start-ups, with a focus on Asia.


Ripple adopted by UAE Exchange for cross-border payments

Cryptocurrency Ripple has been adopted by UAE Exchange for its international payments, making the foreign exchange firm, one of the largest in the Middle East, the latest significant financial player to invest in blockchain technology. Dilip Rao, Ripple's global head of infrastructure, commented: "We chose to focus on solving inefficiencies in key corridors where payment flows are significant and growing… Adding a market leader like UAE Exchange to RippleNet will bring instant, certain, low-cost payments to the millions of retail customers in the UAE who send money abroad". Separately, Swiss private banks Vontobel and Falcon Bank are among lenders that are agreeing to process cryptocurrency-based investments for clients, despite efforts by regulators to clamp down on the practice.

Framework for virtual currencies may be created in Abu Dhabi

The Financial Services Regulatory Authority of Abu Dhabi has announced that it could create a framework for exchanges handling virtual currencies. This is considered a sign that United Arab Emirates authorities may authorise the development of trade in cryptocurrencies.

ECB investigates ABN Amro after chairman quits

The ECB is probing possible corporate governance failures at ABN Amro after chairman Olga Zoutendijk quit after the bank’s supervisory board and the Dutch government objected to the manner in which CEO Gerrit Zalm was removed.

HNA reduces Deutsche Bank stake

Chinese conglomerate HNA Group has reduced its stake in Deutsche Bank from 9.9% to 9.2%, to raise funding. The group remains Deutsche Bank's largest shareholder on paper.

Wells Fargo scandal “shocked and upset” staff

An interview with Wells Fargo’s Nicolaas Marais, who joined the bank's $504bn asset management arm last year, notes the challenge of repairing trust among clients following a bogus accounts scandal.


UK construction sector suffers longest contraction since 2012

ONS data shows output in the construction industry fell 0.7% in the three months to December 2017, the third consecutive quarter of declines. This marks the longest period of falling output since Q3 2012.

Church leaders condemn Persimmon bonuses

The Church of England and the Methodist Church, which have shareholdings in Persimmon, have voiced concern over levels of executive pay at the housebuilder.


$30bn pulled out of global stocks

As volatility returned to global equity funds last week, a record amount of $30.6bn (£22.2bn) was pulled out by investors. The Vix rose back above 40 points, while Bank of England deputy governor Ben Broadbent stated that volatility does not herald a crash like that experienced in 2007.

Savers to be discouraged from raiding pensions

Pension firms are stepping up efforts to ensure savers are aware of the risks of withdrawing money under the Government's pension freedoms. Under new plans, savers will be shown how much they can "safely" take from their pension without running out, and those who ignore the warning and withdraw large chunks of money will be asked to tick a disclaimer box to confirm that they understand the risks involved.

Sharp rise in disputes over UK financial watchdog’s penalties

The number of referrals to the FCA’s independent arbitration panel increased to 476 in 2017, up from just 289 in 2016.

Brussels warns UK asset managers of post-Brexit shutout

The European Commission has written to asset managers to warn of “legal repercussions that need to be considered” in the event of Britain exiting the EU without concluding a withdrawal agreement.

UK attorney-general backs more funding for fraud office

Attorney-general Jeremy Wright has backed more funding for the SFO to help it recruit top lawyers and reduce its reliance on “blockbuster funding” for handling big cases.

ETF market smashes through $5tn barrier after record month

Net new inflows into exchange traded funds and products reached $105.7bn in January, a record monthly inflow that follows four consecutive years of record breaking inflows into ETFs.

European executives expect Brexit continuity

Despite political uncertainty, European businesses still believe a ‘soft Brexit’ involving little change to existing arrangements may yet take place, according to a survey by FTI Consulting.


Four Seasons secures lifeline

Four Seasons has secured £70m in funding from H/2 Capital Partners, as well as an extension to a deadline to refinance its business.


Amex Global Business Travel buys Hogg Robinson for £410m

American Express Global Business Travel is to take over Hogg Robinson in a deal worth up to £410m. Shares in Hogg Robinson rose nearly 50% to £116p following the announcement.

Deliveroo may float next year

Deliveroo is evaluating its strategic options regarding an IPO in either London or New York next year. Revenues at the food delivery company increased by more than 600% in 2016, to £128m, with losses rising to almost £130m, from £30m a year earlier.


Hostile bid for GKN a security risk, congressman says

GKN’s attempts to fight off hostile suitor Melrose have received a boost after US congressman Neal Dunn called for the deal to be blocked on national security grounds. Meanwhile, the Sunday Times reports that GKN is expected to offer a mammoth cash return to shareholders this week in an effort to repel Melrose’s approach.


Crunch talks held with Interserve lenders

Outsourcer Interserve has presented a rescue plan to lenders including Barclays, Lloyds, RBS, MUFG, Sabadell and HSBC as it attempts to secure fresh funding, following the recent demise of Carillion.


Nationwide warns of slowing market

Nationwide has revealed that it has seen a dip in mortgage lending and warns that the housing market is showing signs of slowing down. The building society saw £4.7bn of net lending to home buyers in the fourth quarter of 2017, a 43% decline on the £8.2bn lent in Q4 2016. Nationwide chief executive Joe Garner said he expected house prices to be “broadly flat in 2018” or show “a marginal gain of around 1%”. Separately, lenders have reported increasing demand for mortgages that allow parents to help their children on to the property ladder without incurring a stamp duty surcharge intended for second homeowners.

Britain has 768k £1m homes

Britain has 768,553 homes valued at £1m or more, analysis by Zoopla shows, with the figure accounting for 2.7% of the nation’s housing stock. The figure is 143,476 up on August 2016, marking a 22.95% increase. Of the total, 430,720 of the properties are in London.

BTL investment dips 80% in 2 years

Figures from the Intermediary Mortgage Lenders Association (IMLA) show that net investment in buy-to-let property fell from £25bn in 2015 to £5bn in 2017.

OnTheMarket fails to shine on Aim debut

OnTheMarket’s debut on London’s junior market saw shares dip 9% to 148p after being issued at 165p. This gives the firm a market cap of almost £90m.


Toys R Us battles for survival

The UK arm of Toys R Us is reportedly seeking £120m from investors ahead of crucial payments deadlines at the end of the month. It is understood that potential buyers would have to provide £50m immediately to pay off the consortium of bank lenders that have provided financing to its US parent company, which entered bankruptcy protection in September.

Rothschild to advise HoF on debt refinancing

Rothschild has been appointed by House of Fraser to advise the department store chain on the refinancing of £225m of its £390m debt package, maturing in July 2019. Its remaining £165m publicly traded bond matures in 2020. The move comes less than a month after owner Sanpower took the unusual step of reasserting its support for the retailer.


Brexit pushed down business investment, says BoE

Analysis by the Bank of England shows businesses spent as much as £7.7bn less on new factories and equipment in the year after the EU referendum because of Brexit uncertainty. The survey of 1,200 companies, published with the Bank’s quarterly inflation report last week, suggests corporate investment was about 3%-4% lower in the 12 months to June 2017 than it would have been - a loss of between £5.7bn and £7.7bn.

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