Nationwide reports dip in profits
Nationwide Building Society has reported a 12% drop in first-quarter profits and warned of “intense competition” and a subdued housing market in the months ahead. The lender said statutory pre-tax profits fell to £281m in the three months to June 30, from £322m over the same period last year. Deposits climbed £4.2bn higher thanks to high demand for Isa savings accounts, up from growth of £1.3bn a year earlier. Boss Joe Garner criticised rivals for luring customers with high savings rates, then lowering them over time. He said: “A lot of competitors put out attractive introductory savings rates, build balances and then reduce them.”
Co-op Bank loses third finance chief in three years
The Co-op Bank’s chief financial and restructuring officer, Tom Wood, is to stand down. Mr Wood took up the job last September, replacing John Worth, who himself had only been in the role for a year. The lender said Mr Wood was standing down after “significant progress” had been made restructuring the bank over the past year.
Banks set to profit from PPI despite claims
Industry sources have suggested that banks are still set to profit from selling payment protection insurance (PPI), despite having to set aside £40bn to cover mis-selling claims. According to data from the FCA, so far £31.5bn has been repaid to the customers of banks, credit card companies, building societies and other firms that sold PPI. The deadline for claims is August 29th next year.
Barclays plays straight bat to Bramson
Rosamund Urwin in the Sunday Times profiles Edward Bramson’s demands at Barclays after taking a 5% stake in the bank. Bramson reportedly wants to slim down Barclays’ investment bank and pay out the surplus capital but has yet to gain much traction. Urwin notes that the bank is currently enjoying a period of calm and there appears to be little appetite among shareholders for change.
Report blames banks for speeding up high street decline
A survey commissioned by the Nottingham Building Society has blamed bank branch closures for exacerbating the decline of the high street. Some 46% of shop owners claimed the loss of a local bank in the last three years has negatively impacted their business, and almost a quarter of respondents said bank closures had contributed to them going out of business within the last five years. A separate study by the mutual has predicted a further 2,400 banks could close, putting 12,000 jobs at risk.
Card and account fraud rises
New figures from Comparethemarket have revealed that almost 5m people had money stolen from their bank or credit card last year, at a cost of around £840 each. More than a quarter of frauds took place online last year and 27% of victims don’t know or remember how they were hacked.
Analysing banking shares
The Times’ Annabelle Williams focuses on the banking sector and whether there is value to be had in investing in bank shares. She says it is vital to be stock-specific when choosing bank shares. Russ Mould, the investment director of AJ Bell, recommends RBS and Standard Chartered because “arguably, they are cheap”.
Big UK banks wade back into wealth management
The FT examines how Britain’s biggest banks are moving back into wealth management as the sector hunts for areas of growth after years of restructuring and regulatory issues.
TSB can finally offer remortgaging — three months after IT upgrade
TSB is set to offer its customers the option to remortgage this week, almost three months later than planned following a bungled IT upgrade.
Private equity spending pace slows to 10-year low
An analysis of figures from 1,000 institutional investors has found that buyout groups accessed just 1% of capital in the last quarter of 2017.
KKR steps up India presence with stake in Ramky Enviro
KKR has said that it will acquire a 60% stake in Ramky Enviro, an Indian environmental solution provider, for $530m.
ECB concerns grow over EU banks’ Turkey exposure as lira slides
The European Central Bank has expressed concerns about the exposure of some euro zone banks to Turkey following the lira’s plunge, according to the FT. Data from the Bank of International Settlements indicates that Spanish and French banks are most vulnerable to Turkish borrowers. Shares in BBVA and Unicredit, banks exposed to the debt, plunged more than 5% in intraday trade on Friday as the sector suffered heavy losses.
Ineos chooses Germany to develop Land Rover Defender successor
Jim Ratcliffe, the founder of Ineos, has chosen German companies to develop his successor to the Land Rover Defender, which was retired by Jaguar Land Rover in 2014.
Musk sued following proposal to take Tesla private
Elon Musk and Tesla are being sued by investors following his announcement that he plans to take the electric car firm private. Two lawsuits were filed in the days after Mr Musk announced that he might take Tesla private in a record $72bn transaction.
Ryanair faces more upheaval
The president of the European Cockpit Association (ECA) has suggested that Polish pilots want to be “part of the movement” against Ryanair. The low-cost carrier has already signalled its intention to transfer a fifth of its Irish fleet to Poland – a country with limited pilot union representation. The ECA is concerned Ryanair may expand the plans by relocating more of its fleet to bases such as Poland, Romania, Bulgaria, Latvia, Lithuania and Estonia that have “limited union coverage”.
Small business lender critical of competition fund
Christoph Rieche, the co-founder of Iwoca - which lends to small businesses – has criticised plans for a £775m banking competition fund, saying that worthwhile challengers are being sidelined by an unfair application process. In a letter to Lord Cromwell, the chairman of the Banking Competition Remedies, he said the fund structure seems unfair to non-bank lenders. Mr Rieche explained: “None of the challenger banks has a track record in lending to micro and small businesses... Innovative nonbank lenders do but are eligible for only up to £60m under the scheme, which represents a small fraction of the total.”
London hiring confidence remains strongest in UK
According to data from recruitment firm Morgan McKinley, the number of job seekers in London’s financial services industry surged in July as starting salaries rose by 17%. The number of those looking for a job in the financial services sector in July increased 21% month-on-month. The snapshot comes as a new report from the Chartered Institute of Personnel and Development shows that the net employment balance (the difference between the proportion of employers who expect to increase staff levels versus those who expect to decrease staff levels) is at 31 in London, the highest in the country.
MarketInvoice looking to strike deals
The online invoicing firm MarketInvoice is looking to strike deals with other high street banks after signing a partnership with Barclays. Founder Anil Stocker said the deal with Barclays would allow MarketInvoice to serve more SMEs. He added that he wants to expand MarketInvoice's offering to include vehicle and trade finance.
UK financial watchdog opens record number of cases
The FCA has opened a record number of cases, with a focus on financial crime. The watchdog has 504 investigations open as of April 1, compared with 410 last year.
Michael Spencer invests $40m in Europe-focused hedge fund
Michael Spencer, the chief executive of Nex Group, has invested $40m in Viewforth Partners, a European-focused hedge fund.
Chemring blast may cost £20m
Chemring has said that a fatal explosion at a flare factory in Somerset on Friday could hit profits by up to £20m. The company said it could not yet accurately establish the financial impact of the explosion. However, it said the group's 2018 full-year underlying operating profit was expected to be about £10m to £20m lower than previous expectations.
MEDIA AND ENTERTAINMENT
City advisers set to profit from Sky deal
The Mail on Sunday reports that City advisers are in line for £580m of fees as the takeover of Sky nears its climax. Advisers to 21st Century Fox will be paid as much as £242m for their work on a potential deal, while rival bidder Comcast is set to pay £243m to its advisers. Sky has also accrued £96m in fees.
IBM executive in race to succeed Sorrell
David Kenny, the senior vice president of IBM's cloud computing division, has entered the running to replace Sir Martin Sorrell as boss of WPP.
Number of first-time buyers hits 12-year high
The number of first-time buyers in Britain is at its highest for 12 years, despite the national average deposit being over £33,000. This is the third consecutive year that first-time buyer numbers have topped 150,000 in Britain, more than double the record low of 72,700 in the first half of 2009 following the financial crisis. First-time buyers now make up 51% of all mortgage applications, according to data from Halifax.
Stamp duty reform urged amid fall in transactions
Campaigners for stamp duty reform have claimed a recent drop in transactions is due to would-be buyers trying to avoid the levy. Government stamp duty figures for April to June showed the overall number of sales eligible for stamp duty had fallen 11% year on year. Mark Bogard, of the Family Building Society, said: “These figures show that we need an urgent re-think on housing policy. The market is gummed up and stamp duty is a major reason.”
Harwood plans float to capitalise on rental boom
Harwood Capital is planning a £175m float of part of its property arm to capitalise on demand for rented homes. Harwood Real Estate, which already manages around 2,250 rental homes, is understood to be considering an IPO on the main market in the coming weeks for its private rented sector division.
Economy picks up speed
Economic growth in the UK picked up in the three months to June as construction and services were lifted by the warmer weather, according to the ONS. The economy grew by 0.4% in the period, compared with a rate of 0.2% in the first quarter of the year. The services sector grew by 0.5%, its strongest performance since the end of 2016. Construction also rebounded, with growth of 0.9%. Chancellor Philip Hammond said: "We are pleased to see a recovery of the economy in the second quarter - a robust figure which points to the underlying fundamental strength of the British economy.”
Families feel the squeeze
City forecasters are predicting that the ONS will announce that inflation rose to 2.6% last month, while average pay climbed by 2.5% in the three months to June. Robert Wood, chief UK economist at Bank of America Merrill Lynch, comments: “Workers are still struggling to convert very low unemployment into higher wage growth. At the same time, energy bills are going up. It's a pincer movement.”
Goldman Sachs backs PM
Goldman Sachs has said it believes Theresa May will clinch an orderly Brexit. In a note to clients, the bank said: “Our own base case is for an orderly withdrawal, although the tail risks have admittedly increased. We see the UK and EU settling on a free trade deal covering goods but excluding most services.”