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Daily News Roundup: Monday, 15th July 2019

Posted: 15th July 2019

BANKING

JP Morgan set for major hiring spree in the City

Despite having warned that Brexit would lead to job losses, JP Morgan is about to embark on a major hiring spree in the City. The US investment bank is setting up 75-strong team that will target small businesses across Europe following a similar move by Goldman Sachs. A JP Morgan spokesman said that the decision to hire a new team “is independent of the firm’s Brexit plans”.

MPs unimpressed by Lloyds’ Post Office advice

Lloyds has been criticised for telling customers to use Post Offices for their everyday banking amid further branch closures. Seven more branch closures have been scheduled by the bank for 2019, taking the total this year to 97. Lloyds said all closing branches “have a post office nearby” which meant customers could “still access their banking locally.” But MPs said Lloyds’ justification was “disingenuous” because Post Offices can only provide a limited range of services.

Fintech rivals face-off in battle for business accounts

The Sunday Telegraph looks at what it describes as the “bitter feud” between Starling Bank and fellow digital start-up Monzo, whose chief executive Tom Blomfield was a co-founder of Starling. It notes that despite both companies pursuing different approaches in recent years, they are set to compete more closely in future, with Monzo preparing to take on Starling directly with its own business accounts. Meanwhile, it has emerged that Julian Sawyer, Starling’s head of banking services, has departed the lender, making him the third executive to leave Starling in the space of seven months.

Martin Gilbert set to assume chair of Revolut

Revolut is close to appointing Standard Life Aberdeen co-chief executive Martin Gilbert as its new chairman, as the digital bank aims to strengthen governance ahead of an upcoming fundraising.

CYBG’s executive pay review set to shut out ordinary investors

The FT’s Neil Collins notes that Clydesdale and Yorkshire Bank’s proposed review of executive pay will only consult institutional shareholders, rather than individuals “with their own cash on the line.” Separately, the Sunday Times reports that CYBG has forged a tie-up with comparison site GoCompare to provide an energy-switching service through its app-based "B" account.

Deutsche executives given dressing down over suit-fitting

Deutsche Bank boss Christian Sewing has personally reprimanded two executives in the bank’s London office after they arranged to be measured for luxury suits on the day hundreds of staff were fired.

Santander brews up first UK work café

Santander is introducing its global "work cafe" chain to Britain with a site in Leeds. The initiative - offering small businesses and entrepreneurs free co-working spaces and banking facilities - will bring to life a former bank branch that was closed at the end of June last year.

PRIVATE EQUITY

Private equity’s infrastructure focus has little social value

The FT’s Jonathan Ford questions whether pension funds are really extracting superior and diversified returns from the ownership of infrastructure assets.

INTERNATIONAL

Deutsche Bank’s retreat leaves US rivals out in front

The Sunday Telegraph’s Lucy Burton says Deutsche Bank’s U-turn on its global ambitions is a key moment in the war between European banks and their US rivals, which have swallowed up market share across the continent. She says the German bank’s slashing of 18,000 jobs and its decision to close its global equities business means there is no obvious European competitor to the likes of Goldman Sachs. Elsewhere, Ben Marlow asserts in the Sunday Telegraph that the public’s still-raw memory of the financial crisis means the travails of Deutsche workers are unlikely to garner much sympathy. Meanwhile, sources have said TSB chairman Richard Meddings is planning to step down from the board of Deutsche later this year. Lastly, the Times reports that Deutsche’s art collection - boasting more than 55,000 pieces - looks set to be virtually unscathed by the bank's €3bn restructuring.

Trump attacks Facebook’s cryptocurrency

President Trump has poured scorn on Facebook’s new digital currency Libra, claiming that it would have “little standing or dependability”. Following the internet giant’s unveiling of Libra, the president wrote on Twitter: "If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks.”

French financial regulator wants more flexible market rules

Robert Ophèle, chairman of France’s Financial Markets Regulator, is calling for more flexibility around how European countries implement market rules in light of Brexit.

AUTOMOTIVE

VW and Ford join forces on self-driving and electric cars

Volkswagen and Ford have said they will work together on developing self-driving and electric cars in an attempt to reduce costs on new technologies. VW plans to invest $2.6bn (£2.1bn) in Ford's self-driving unit, which is valued at $7bn.

Lookers blames Brexit for profit warning

Car dealership Lookers suffered a 30% fall in value on Friday after issuing a profits warning. It said weaker margins will push first-half profits down by 25%, to about £32m, and full-year figures will also fall below forecasts.

CONSTRUCTION

Nationwide to build village

Nationwide Building Society has won planning permission to construct one of the first garden villages since the 1920s. The building society has pledged £50m to regenerate a brownfield site in Swindon by building 239 homes.

FINANCIAL SERVICES

FCA fines soar to £320m in six months

The Financial Conduct Authority imposed 10 fines worth a total of £319.2m in the first half of 2019 – more than the total for the previous three full years combined. The biggest fine so far was the £102m imposed on Standard Chartered in April for anti-money laundering failings that breached sanctions against Iran. The increased activity comes as the regulator faces mounting pressure to protect customers of the financial services industry.

Service eases burden for grieving families

A service that reduces the number of phone calls grieving families have to make when dealing with the financial affairs of late relatives is to be expanded to include more financial services companies. The Death Notification Service scheme, run by Equiniti, aims to ease the burden on people who have lost a loved one. The expansion comes after a trial involving the big five high street banks and Nationwide Building Society.

Hiscox buffeted by storms and accounting errors

Hiscox issued an unscheduled trading statement on Friday saying first-half pre-tax profits would be within the $150m to $170m range. Consensus analyst forecasts had been for about $220m. The insurer warned that claims from natural disasters were higher than expected and that it faces an extra tax bill of $60m because of accounting errors.

Bank of England intervention in funds debate attracts ire

The Investment Company Institute has said the Bank of England’s recent criticism of open-ended investment funds, in light of the Woodford affair, demonstrated “poor understanding” of the situation.

HEALTHCARE

Glaxo banks on new chairman

Glaxosmithkline is poised to appoint HSBC’s deputy chairman Jonathan Symonds as its new chairman, as it prepares itself for a break-up.

LEISURE AND HOSPITALITY

Thomas Cook close to £750m refinancing deal

Thomas Cook is in advanced talks about a £750m refinancing with banks and its largest shareholder, Fosun. The 178-year-old company said that the proposed deal would give Fosun Tourism Group a controlling stake in its core packaged-tour business and a minority interest in its airline business. The business will also be split in two to avoid breaching European Union rules on airline ownership.

AB InBev scraps IPO plan

Anheuser-Busch InBev has scrapped plans to spin off its Asian arm, which was set to be the largest initial public offering of the year. The world’s biggest brewer said the decision was due to “several factors, including the prevailing market conditions.”

MEDIA AND ENTERTAINMENT

Kantar sale confirmed

WPP will return £1bn to shareholders after agreeing to offload 60% of Kantar to Bain Capital in a deal valuing the London-based division at £3.2bn.

REAL ESTATE

Thousands of borrowers face falling into negative equity

Figures from the Bank of England show thousands of house buyers have taken out risky mortgages which could increase the risk of falling into negative equity. Almost one in five mortgages lent in the first quarter of 2019 - covering 38,000 people - was given to a borrower who paid a deposit of under 10%. If lending continues as its current rate, it means that more than 100,000 such home loans will be issued this year. According to the Mail, it means that growing numbers of borrowers are now exposed to a sharp fall in property prices which could wipe out all their equity.

Property prices dip in July

Asking prices for residential property have fallen for the first time in a year, according to the latest monthly survey by Rightmove. The online property group found that property prices have dipped by 0.2% in July after a 0.3% rise in June.

Broker Habito poised to offer buy-to-let mortgages

Online mortgage broker Habito has announced it will move beyond the rental lending market with mortgages for residential purchasers and buy-to-let loans for limited companies.

ECONOMY

No-deal Brexit could see rates slashed close to zero

A senior Bank of England official has said interest rates could be cut to almost zero if Britain leaves the EU without a deal in October. Gertjan Vlieghe suggested borrowing costs would then stay at rock bottom for a prolonged period as policymakers wait for the economy to adjust to the change. Mr Vlieghe also said the BoE should adopt a more transparent approach by publishing a regular forecast of the likely future path for interest rates.

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