BANKING
SME tribunal system snubbed by MPs
The Treasury is set to reject calls from MPs and the Financial Conduct Authority for a tribunal system to settle disputes between SMEs and banks. Officials concluded that it would be too expensive and could restrict access to credit. The chancellor suggested instead that a beefed-up Financial Ombudsman Service would be enough to deal with problems between SMEs and their lenders. MPs on the Treasury Committee had also called for the regulation of commercial loans to prevent a repeat of the abuse of tens of thousands of companies by lenders that occurred following the financial crisis, but City minister John Glen has said the Government agrees with the conclusions of a report commissioned by the banking industry, which warned that a tribunal system would be “expensive for government and for participants”. However, the call for a tribunal has been backed by the Commons' Treasury Select Committee, whose chair, Nicky Morgan, said: “The Treasury is yet to put forward a compelling argument as to why it does not support the tribunal proposal.”
Bester: Co-op bank not for sale
Andrew Bester, the CEO of Co-op Bank, has insisted he has no intention of selling the bank, despite rumours. He said he is not interested in a “quick fix” for the lender’s recent difficulties: "We're not looking 'to do a deal'. It's really about a multi-year transformation, it isn't about 'let's sell the business'." The ethical lender agreed a £700m rescue deal with its US hedge fund owners last year after failing to find a buyer and posted its first operating profit in five years last week.
“Victory for common sense” will save ATMs
The government will issue rebates going back eight years to businesses which have been paying business rates on cash machines situated on outside walls of their premises. The Appeal Court ruled that the tax, introduced in 2010, should be cut following a challenge by Cardtronics Europe, Sainsbury’s, Tesco and the Co-operative. The refunds are understood to be worth as much as £500m nationwide.
Post Office partners with Starling Bank
The Post Office has signed an agreement with Starling Bank amid concerns over branch closures and falling numbers of free ATMs in remote areas. From today, the online-only bank will partner with the Post Office to allow customers living in areas without any bank branches to deposit and withdraw cash. The UK has lost 53% of bank branches since 1989. Starling Bank has secured £10m of new investment from hedge fund manager Harald McPike to kick off an £80m funding round to help it take on other fin-tech start-ups.
War games prepare banks for cyber attacks
The Bank of England has hosted a sector-wide day of cyber war games for the Treasury, UK Finance and around 40 financial institutions. The exercise was designed to test the resilience of banks in response to a major cyber incident, and encourage them to strengthen security measures.
Barclays shareholder slams Bramson plans
James Lowen, manager of JO Hambro UK Equity Income, has criticised activist investor Edward Bramson for calling for the markets division of Barclays to be scaled back, saying the demands came “at a very odd time” and would most likely leave the bank "snatching defeat from the jaws of victory" as investment banking returns improved. Following months of disputes Barclays CEO Jes Staley and chairman John McFarlane are due to meet with Bramson.
Credit Suisse escapes criminal action over $2bn Mozambique scandal
The FCA has opted to drop its criminal investigation into Credit Suisse over the disappearance of $2bn of loans to Mozambique to set up a state fishing operation.
PRIVATE EQUITY
Red Kite shuts Tamarisk Fund
Conservative Party treasurer Michael Farmer has closed one of his hedge funds and moved staff to London from Bermuda as part of a major overhaul. Red Kite has reportedly closed the Tamarisk Fund, from which a group of staff plans to set up a new fund next year. A spokesman said: "The restructuring process was designed to consolidate regulatory oversight of 'Red Kite's' businesses, and is now complete."
Asset-managers call for bond market transparency
Members of the Investment Association have called for increased clarity in the bond market, saying transparency is being hindered by the poor availability of data. Investment Association director of investment and capital markets Galina Dimitrova said: "Asset managers are concerned that the poor availability of data in the bond market is undermining transparency,” adding that a “well-functioning” bond market is “essential to allow companies to borrow more affordably, enabling economic growth and the creation of jobs.”
Star fund manager dumps £1.4bn shares
Investment manager Neil Woodford has shaken the market by ditching £1.4bn of shares in the last six months to raise funds as unhappy investors withdraw cash from his funds. He has sold large stakes in companies including Forterra, Hostelworld and Horizon Discovery. Woodford's sell-off has contributed to a fall in the value of his largest Equity Income Fund, which was worth £5.3bn at the end of last week, compared with £10.7bn in summer 2017.
INTERNATIONAL
France to challenge UK for gold status
The Banque de France has enlisted the help of JP Morgan so it can shake up France’s gold industry in a bid to re-emerge as a challenger to the City of London in the global bullion market. France’s regeneration of its gold credentials has long been on the cards, but it has likely been accelerated by President Macron’s open ambitions to siphon off some of London’s trading strength after Brexit.
EU regulators monitor big tech’s financial services foray
European financial regulators are discussing whether to step up their supervision of big technology companies, following recent moves into financial services by groups such as Amazon and Google.
Former Morgan Stanley banker is frontrunner to chair Noble
Former Morgan Stanley banker Ian Potter is believed to be the top contender to become the new chairman of Hong-Kong commodity trader Noble Group.
Simple takes Amazon executive
The BBVA backed US digital bank Simple has poached Amazon’s David Hijirida as its new CEO, in a rare example of talent moving from tech to finance, and not vice-versa.
HSBC plots return to Brazil as new chief targets growth
Three years after selling off Banco Bradesco HSBC is planning to re-establish its presence in Brazil, as CEO John Flint plans to put the bank into “growth mode”.
FINANCIAL SERVICES
London should remain clearing capital
Sadiq Khan will today urge the EU to make guarantees regarding access to London’s clearing market post-Brexit. Around 80% of euro-denominated derivatives, stocks and bonds are cleared in London. EU-based firms have derivative contracts worth a notional £69 trillion with UK central clearing counterparties. EC vice president Valdis Dombrovskis recently signalled that London’s clearing houses would continue to be recognised after Brexit, but only for a limited period and only if Britain adheres to EU regulatory and supervisory standards. The Mayor of London will today warn that temporary reassurances will not suffice.
Prohibition orders on rise
The FCA banned 23 individuals from working in the financial services sector in 2017/18, up from 18 in 2016/17, according to City law firm RPC. The regulator spent £300,000 in legal fees and 4,777 man hours on one case against a director, showing how far it is willing to go to clean up the market. The extension of the Senior Managers and Certification Regime to all financial services companies could see prohibition orders rise again in coming years.
Pension industry facing mis-selling claims
Britain’s pension industry could be faced with thousands of claims from people mis-sold unconventional investments, following a landmark court ruling. A judicial review has upheld a ruling by the financial ombudsman that pension providers are required to confirm that investments are genuine and appropriate - or face payouts to clients for lost savings. Some savers have been ruined by investing in high-risk or fraudulent schemes.
Softbank fund considers UK fintech unicorns
British financial tech start-ups Revolut and Oaknorth have held talks with Softbank's $100bn Vision Fund about a potential investment at their next funding rounds. Such a backing would be a major boost to London’s fintech sector ahead of Brexit.
Financial firms facing Brexit ‘nightmare’
New lord mayor of city of London Peter Estlin has warned that unless a Brexit deal is reached by Christmas, financial services firms will face an administrative "nightmare". The former Barclays executive said that despite recent signs that the Prime Minister was close to negotiating an agreement with EU authorities, a "huge amount" of anxiety remained in the Square Mile.
UK pension transfers blocked after High Court ruling
Pension transfers for thousands of savers are being blocked as schemes are equalised for men and women, following a landmark legal ruling last month concerning the Lloyds Banking Group scheme.
LEISURE AND HOSPITALITY
GBK closures get green light
Plans by Gourmet Burger Kitchen to close 17 of its 80 restaurants as part of a major restructure have been approved by the firm’s creditors, casting doubts over 250 jobs. GBK, which employs around 2,000 people, is struggling against tough competition and, like many retailers, steep fixed costs.
REAL ESTATE
Nested raises £120m in latest funding round
Nested - an online estate agent allowing homeowners to buy their next property chain-free by providing a cash advance - has raised £120m from backers including Spotify, and Revolut. The agent offers movers an advance worth up to 94% of the value of the property they are selling so they can pay cash for their new one. They then pay the rest of the value when their old home sells. The firm has now raised a total of £165m in three years.
RETAIL
More House of Fraser stores on brink
Sports Direct founder Mike Ashley is preparing to close as many as 39 House of Fraser stores after he could not get landlords to agree to his terms. In September he secured terms on just 20 of House of Fraser’s 59 outlets, although only a few have been closed since. Ashley has been operating the stores on licences that allow him to give landlords two months' notice.
ECONOMY
Fastest economic growth for two years
The ONS has said Britain’s economy grew by 0.6% in the three months to September, the highest quarterly growth figure since the fourth quarter of 2016, when the economy grew 0.7%. The data was boosted by warm weather, with July performance proving particularly strong. However, a separate monthly figure for September showed zero growth, the same as August. Business investment has also contracted for three quarters in a row.
OTHER
Businesses planning to microchip staff
The Sunday Telegraph reports that British companies are planning to microchip their employees in order to stop staff from accessing sensitive areas of the business. Biohax, a Swedish tech firm, has revealed it is in talks with a number of UK legal and financial services firms to implant workers with human chip devices. One prospective client is believed to be a major global auditing firm with "hundreds of thousands of employees".