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Daily News Roundup: Monday, 13th January 2020

Posted: 13th January 2020

BANKING

Crosbie hopes Johnson will be more sympathetic to banks

An internal memo to staff from TSB chief Debbie Crosbie suggested Boris Johnson’s election victory was a “good outcome” for the financial services sector. She said the agenda set out by the new Government “does suggest that they're going to think much more sympathetically about a more considered view of regulation, particularly for mid-tier banks”. However, Conservative MP Kevin Hollinrake said: “If regulations are unwarranted they should be reviewed. But I think most of us, after what we've been through over the last ten years, will have great concerns about a lighter-touch regulatory system.” Separately, the bank has sparked speculation it is considering a fresh wave of job cuts to help save £100m. Meanwhile, chief risk officer Iain Laing has left TSB, replaced by chief audit officer Carlos Paz.

HSBC looks ahead to performance turnaround

The Sunday Times’ Emma Dunkley looks ahead to the challenges faced by HSBC as interim CEO Noel Quin and chairman Mark Tucker work through an overhaul burdened by an underperforming investment bank and strife in Hong Kong. Ms Dunkley suggests HSBC's private bank could be merged into its retail banking and wealth management division to cut costs. The paper also reports that the launch of a £1bn British business fund planned by HSBC and Chinese sovereign wealth giant China Investment Corporation has been delayed due to concerns over Huawei, the US–China trade war and Brexit. The fund is being managed by the London-based private equity firm Charterhouse Capital.

Banks could cut top rates under FCA plans

Some observers predict that banks will lower interest rates for savers across the board if FCA proposals to introduce default rates across all easy-access accounts come into force. Each bank would set its own single easy-access rate (Sear) which would have to apply to all accounts that were no longer available to new customers. Anna Bowes, a co-founder of the comparison website Savings Champion, said this could mean some of the top-paying savings rates could be withdrawn. But Laura Suter at AJ Bell said the measure would mean “the most vulnerable customers, who aren't as likely to shop around, should get a better deal.”

Interview: Sam Woods

The Sunday Telegraph interviews Sam Woods, the deputy governor of the Bank of England, who says the UK must continue to do everything it can to prevent a return to the “buccaneering ‘heads I win, tails you lose' culture that we had before the crisis”. Woods, who ran the BoE’s Prudential Regulation Authority for three years, indicates that as the Bank defends the reforms that have been put in place since 2008, “you may see more enforcement activity." He goes on to warn that any bankers hoping for a watering down of rules after Brexit will be disappointed, adding that he will defend the UK’s ring-fencing rules “to my last drop of blood.”

Dearth of mega-deals brings boutiques up against the big banks

Investment banking giants are touting for mandates on transactions that would normally be too small for them after a slowdown in mega-deals, the Telegraph reports. Boutique firms are seeing big banks encroach on the mid-cap market, but insiders say the likes of Goldman Sachs or JP Morgan limit client access to their star dealmakers, unlike boutique firms like Robey Warshaw where senior figures work with the client throughout the whole deal. The fear for some City workers, however, is that some big banks will buy up boutiques only to scrap them when the blockbuster deals return.

Small businesses wary of open banking

A survey by the Federation of Small Businesses has found that two-thirds of smaller firms would not consider sharing banking data with other financial service providers, with 40% thinking it is unsafe and 37% "unsure of the benefits" it could bring. The FSB said although such reticence is understandable, it was holding up progress in open banking and depriving those firms of the benefit of having invoices, cash flow, payroll, utilities and tax data in the same place.

Monzo co-founder steps down to farm alpacas

Monzo co-founder Paul Rippon has quit the bank to farm alpacas in Northumberland with his wife. Mr Rippon said: “At 48 years young I’ve been working in financial services for 27 years and working away from home for the last eight years. Building a fast-growing bank takes its toll and even reducing my [work hours] didn’t reduce the cognitive and emotional overload.”

Lloyds staff face first bonus cut in four years

Lloyds Banking Group has warned staff to expect their first bonus cut in four years. A memo from the bank said numerous factors could lead to the payout being shrunk, including PPI claims and compensation for victims of fraud at the HBOS Reading branch.

PRIVATE EQUITY

KKR makes surprise £4bn bid for Viridor

US private equity firm KKR has leapt at Viridor after Pennon put its bin collection and incinerator arm up for sale. Morgan Stanley and Barclays are running the sale but so far had only taken informal soundings from prospective bidders. Pennon is the market leader in the energy-from-waste sector, where rubbish is burnt or composted to produce electricity or gas.

Insurance tycoon in talks to sell Lloyds broker

Peter Cullum is in talks with private equity firms about a possible £800m sale of his Lloyd's of London broker Global Risk Partners. US buyout firms Centrebridge and Apollo are involved in talks, according to sources, as are Apax and CVC Capital.

INTERNATIONAL

US bank share prices likely to lose momentum

Despite expected rises in Q4 earnings, the rally in US bank share prices at the tail end of 2019 is unsustainable, experts say, pointing to how discounted the stocks were at the beginning of the year.

Traders across Europe face up to the cost of failure

The European securities market is in for a shock when new rules come into force penalising late trades, the FT says, with many in the industry unaware of the regulation.

UBS names SocGen veteran and ex-RBC executive as board nominees

UBS has nominated Nathalie Rachou and Mark Hughes to replace David Sidwell and Isabelle Romy on its group supervisory board after the bank’s AGM in April.

AUTOMOTIVE

Geely in talks to pump cash into Aston Martin

Chinese auto giant Geely is considering taking a stake in Aston Martin. Those familiar with the issue said the talks may lead to a technology partnership rather than a full investment. Geely owns Volvo and Lotus and has a 10% stake in Daimler, which already sells some technology and engines to Aston Martin. Shares in the struggling luxury car maker rose 15% on news of a possible deal.

Rolls-Royce boss has contract extended

Rolls-Royce chief Torsten Müller-Ötvös has had his contract extended after the luxury car maker saw its sales rise 25% in 2019, boosted by demand for the company’s first SUV – the Cullinan. It is understood Mr Müller-Ötvös will stay at least two extra years.

Nissan executives step up planning for potential split from Renault

Senior executives at Nissan are contingency planning a split from Renault in engineering and manufacturing and changes to Nissan’s board as tensions within the alliance continue.

FINANCIAL SERVICES

FCA to probe fund supervisors

The Financial Conduct Authority (FCA) has launched a probe into authorised corporate directors (ACDs) – firms such as Link Fund Solutions and Smith & Williamson which are paid to ensure fund managers comply with regulations and governance standards. The move comes after Link was criticised over its supervision of Neil Woodford’s Equity Income fund. Smith & Williamson has admitted being questioned by the FCA, according to an FT report, which adds that some asset managers are considering moving the ACD function in-house. Meanwhile, Link has said savers in Woodford’s Equity Income Fund will have to wait until January 30 to receive their first payment. Separately, Labour has demanded an independent inquiry into the role of the Financial Conduct Authority in the collapse of Neil Woodford’s flagship fund and has said outgoing FCA chief Andrew Bailey should not take up his role at the Bank of England until that inquiry is completed. Finally, the CEO of Fidelity International, Anne Richards, has backed an overhaul of the rules governing investment funds, particularly around liquidity, following the collapse of Woodford Investment Management last year.

Hamish McRae: City can prosper out of the EU

Hamish McRae says in the Mail on Sunday that Mark Carney’s volte-face on Brexit makes sense considering 80% of London's financial services business is outside the EU. The Bank of England Governor said last week that the UK should not submit to EU regulatory alignment for the City. Mr McRae says the crucial point is that the City is extremely innovative and regulation could stifle this – the capital has the single largest global cluster of successful fintech companies and is poised to lead the way in a new era of financial services.

Alt-Fi - a vital source of cash for start-ups

Peter Evans examines the evolution of crowdfunding in the Sunday Times, suggesting a string of business failures have hardened attitudes to platforms such as Crowdcube and Seedrs, and saying that successes should not be forgotten. Andrew Whelan, chief executive of GLI Finance, says his concern is that should the UK be forced into a recession the alternative finance industry will suffer from more bankruptcies and defaults. However, a recession could also create more demand as banks tighten up lending, he adds.

Biggest asset managers attacked over role in climate change

Shareholders have filed resolutions at BlackRock, Vanguard, JPMorgan and T Rowe Price ahead of the 2020 AGM season, calling for the asset managers to review their voting policies on climate change issues.

Asset managers compete in ‘frenzy’ to gain China foothold

China will open its fund market to foreign investment houses this year and is set to overtake the UK as the world’s second-largest fund management hub, after the US, in 2021.

Vanguard smashes through $6tn assets barrier

Vanguard’s AUM have risen past the $6tn milestone for the first time after investor inflows hit $268bn in 2019 – 16.5% up on the year before.

TradingView moves to London

Fintech firm TradingView has moved its HQ from New York to London. The firm raised $37m in funding in 2018, led by American venture capital firm Insight Partners.

HEALTHCARE

UK biotech boom continues with €240m deal

Exscientia, a biotech company spun out from Dundee University, has signed a €240m (£204m) tie-up with Germany-based Bayer. Exscientia's system AI system automatically analyses patients' genetic data and finds molecules that could be used in new medication. The deal comes as investor interest in the UK biotech sector continues to boom.

Ex-Goldman tech specialist moves into medical AI

Former Goldman Sachs technologist, finance boss and securities division co-head Marty Chavez has joined the board of Paige, a New York-based company that is using AI to track cancer.

LEISURE & HOSPITALITY

Credit card ban looms for bookmakers

The gambling industry is expecting its regulator to enforce curbs or a full ban on the use of credit cards for betting amid concerns over problem gambling. Labour MP Carolyn Harris says she would also like to see banks refusing to allow people to gamble with their overdrafts.

MEDIA & ENTERTAINMENT

Former banker hopes for revival of local journalism

Former Goldman Sachs banker Karl Hancock is to hire dozens of journalists in towns hit by newspaper closures in an attempt to fill a growing gap in local coverage. The Nub News network aims to hire reporters serving 700 communities across Britain and will rely on a sponsorship-driven revenue model rather than Google Ads.

ITV holds talks with BT over Champions League rights

ITV is reported to be talking with BT about buying the broadcast rights to Champions League football matches after losing out when they were auctioned in November, when BT spent £1.2bn retaining the rights.

BBC plans to move two-thirds of jobs outside London

Plans outlined by Tony Hall, the director-general of the BBC, could see around 3,000 jobs moved from London to the UK’s regions by 2027.

REAL ESTATE

New IPSX exchange to list first property

A new stock exchange that allows investors to buy and sell shares in individual assets is set to list its first property. The Mailbox in Birmingham will test investor appetite on IPSX, the first regulated exchange dedicated to commercial property. Shareholders in IPSX include British Land and Moorfield Group.

Hammerson under pressure from short sellers

Hammerson has come under attack from short sellers who predict the shopping centre landlord suffered from a rough Christmas on the High Street.

RETAIL

John Lewis bonus scheme in danger

Paula Nickolds is set to receive a payoff of £750,000 after her sudden departure from the John Lewis Partnership, amid major turmoil at the retail group. The department store chain is expected to report £30m in profit for the year to the end of January, which would represent only a quarter of the reported profit in the previous year.

ECONOMY

Another BoE rate setter backs a cut

Gertjan Vlieghe, an external member of the Bank of England’s Monetary Policy Committee, has joined Silvana Tenreyro, another policy setter, in saying that a cut in the cost of borrowing may be required if economic data fails to improve. The Bank’s next decision on interest rates is due on 30th January. George Buckley, chief UK and European economist at Nomura, said the chances of a rate cut by the middle of the year implied by interest rate futures were virtually 50-50.

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