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Daily News Roundup: Monday, 16th July 2018

Posted: 16th July 2018


CYBG may have to sweeten bid

Analysts at Keefe, Bruyette & Woods (KBW) have suggested that CYBG may have to sweeten its £1.7bn offer for Virgin Money after regulators upgraded the target firm's balance sheet. The Bank of England upgraded Virgin Money's core capital ratio - a key measure of a bank's resilience - by more than 250 basis points to around 16% earlier this month. It was prompted by a reappraisal of the strength of Virgin Money's mortgage book. KBW said the upgrade made an “excellent deal” for CYBG look even better.

Challenger banks’ dismay at delay over funds

Challenger banks have expressed frustration over months of delays to a £775m fund which is meant to boost competition, with firms being left out of pocket and in the dark over the application process. Smaller banks - such as Metro, Starling, TSB and CYBG - have been scrambling to prepare bids for the funding, which will come from RBS as part of conditions attached to its Government bailout. However, although the application process was supposed to start in the first half of 2018, lenders have yet to be given any further clarity on how to even apply. Anne Boden, chief executive and founder of digital bank Starling, commented: “We will see further consolidation unless something is done about it. We are still waiting for the RBS remedies fund to be distributed.”

Goldman Sachs to fill new London HQ

US investment bank Goldman Sachs plans to fill its £1bn London headquarters, despite starting to move around 500 City bankers to the EU due to Brexit. All but half a floor of the 10-storey, under-construction “groundscraper” on Farringdon Road will be filled even after bankers move in from three older properties nearby next year, it is understood.

West Brom leads on meaningful votes

The Mail on Sunday’s Jeff Prestridge praises the West Bromwich Building Society for its efforts to make the annual vote on directors' remuneration more meaningful. The building society has said eligible customers will be able to participate in a 'binding' vote on the society's future remuneration policy this year.

Banks’ approach to risk data is deeply inadequate

Charles Taylor outlines in the FT his concerns about banks’ current approach to risk data and says the threat of cyber-attacks adds urgency to the need for comprehensive management.


US banks unveil profits

Citigroup has reported a 16% increase in profit, which rose to $4.4bn (£3.3bn) in the second quarter. Revenues increased 2% year-on-year to $18.5bn (£14bn), driven by efficiency improvements. Meanwhile, JP Morgan has revealed that it earned a record £6.3bn profit, up 18% on the previous year. Revenues at the US bank climbed by 6% to £21.6bn. Wells Fargo brought some gloom to the sector as a series of mis-selling scandals led the bank to set aside a further $1.1bn to cover customer refunds and additional tax. Wells Fargo’s second-quarter profit of $4.8bn was down 12% on the same period last year, and below analysts’ expectations as revenue dipped 3.1% to $21.6bn.

French banks win savings account case against ECB

French banks have won a landmark court victory against the European Central Bank, giving them an exemption from holding capital against customer deposits parked with a state-owned fund.

US bankers warn on commercial property risks

US banks have warned about growing risks in commercial real estate. Executives have said they are refusing to sign off on many deals due to the market overheating.

Tencent and Alipay set to lose $1bn in revenue from payment rules

Tencent and Alipay are set to lose around $1bn in combined annual revenue because of new central bank rules which ban online financial businesses from investing customer funds.

China development banks expand links with foreign lenders

Officials have said that the China Development Bank and the Export-Import Bank of China are looking for greater partnerships with overseas financial institutions to spread the funding burden.

Hong Kong launches blockchain-based trade finance

The Hong Kong Monetary Authority is to launch a blockchain-backed trade finance platform which will link up with 21 banks, including HSBC and Standard Chartered.


Telit offloads automotive division

Telit Communications has agreed to sell its automotive division to Chinese company TUS International for $105m (£80m), in a move it said would "significantly" reduce its debt.


Boeing concerned about US-China trade row

Dennis Muilenburg, the boss of Boeing, has raised concerns about the potential damage of the growing US-China trade row. He said he was concerned that tariffs could push up costs for aircraft manufacturers. Meanwhile, Boeing has said it will not decide until next year whether to launch a new middle-market aeroplane.

Pilotless planes preparing for take-off

A study by UBS has suggested that pilotless passenger plans could take to the skies within seven years despite public concerns over the technology. The bank said that one-pilot planes will be in the air by 2022, with fully autonomous passenger and cargo jets following three years later. Separately, Rolls-Royce has designed a propulsion system for a flying taxi which it says could take to the skies as soon as early next decade.


French expect to lure City jobs

France has claimed that Britain's blueprint for its future relationship with the European Union will lead to an exodus of City jobs. It comes after the government’s watered-down proposals on financial services drew criticism from groups including the City of London Corporation and Inga Beale, chief executive of Lloyd’s of London. Bruno Le Maire, the French finance minister, said that he was “confident that we will have more relocation announcements in the coming months”.

French central bank presses UK fintechs

The French Central Bank has asked British payment providers and digital finance companies that have French customers what their Brexit contingency plans are.

London and Dublin in talks over access to Ireland-domiciled funds

Regulators in London and Dublin have begun talks over an agreement to ensure that British investors can access funds which are domiciled in Ireland after Brexit.

UK car insurance prices drop 11% in a year

According to research from Confused and Willis Towers Watson, the average car insurance premium fell by 11% in the year to the end of June, to £752.


Gaucho races to pay £1m tax bill

Argentinian restaurant group Gaucho is facing administration unless it can settle a £1m-plus tax bill. The company was understood to be considering three final potential rescue deals before a late-night deadline for the bill by HMRC.

Carlyle abandons bid to seize control of Prezzo

Carlyle has abandoned an attempt to seize control of Prezzo, the restaurant chain, after a dispute with its existing owner, TPG Capital, threatened to erupt into legal action.

C&C completes refinancing

Brewing company C&C Group has completed the refinancing of its banking facilities. They will comprise a five-year multi-currency facility of €450m (£343m), and a three-year term loan of €150m.


Brits fail to research mortgages

According to a new survey, Brits spend more time shopping around for a holiday or a new car than a mortgage. Consumers typically spend five days searching for a holiday and six picking their car, but only 3.6 days on choosing a mortgage, credit report provider Noddle found. Meanwhile, one in four accept their first offer of a mortgage, which can cost them an extra £3,000 a year. And as a result, one in six are now stuck with a home loan that they are not happy with.

New rules on equity release ‘could raise mortgage prices’

Insurers warn that new rules proposed by the Prudential Regulation Authority, which would increase the amount of capital they have to hold against equity release mortgages, could drive up prices for customers.


The Works launches £100m London float

The Works has unveiled plans to float on the London Stock Exchange later this month with a valuation of £100m. The offer price has been set at 160p per share and dealings are expected to start on 19 July. The retailer, which sells stationery, arts and crafts materials, toys and books, has annual sales of more than £160m. It was bought out of administration in 2008 by Endless for around £17m.

Debenhams facing cash crunch

Debenhams is facing a cash crunch after one of the leading credit insurers, Euler Hermes, tightened terms for its suppliers. Rival credit insurers Atradius and Coface are also said to have refused to cover new shipments in recent days, according to the Sunday Times. Debenhams said it had a "healthy balance sheet" and that it maintained “a regular and constructive dialogue with credit insurers”.

Shoppers face new Visa checks

Visa has said customers will need to use a one-time pass code texted to their phone to complete many online purchases. The new code will replace the system which uses a “Verified by Visa” password to confirm online transactions.


No rush to hike rates, says Cunliffe

Bank of England Deputy Governor Sir Jon Cunliffe has signalled that he is unlikely to vote for an interest rate rise at next month’s policy meeting, arguing that policymakers should react slowly to signs of recovery in uncertain times. He told business leaders: “"We may still be underestimating supply in the labour market. This implies a bias to needing a little more confirmation at each stage that the supply side is evolving as we have forecast - a somewhat higher burden of proof that I hope will diminish as we learn more.”


Female executive numbers flatlining

FTSE 100 companies are facing an acute shortage of female executives ready to step up to chair their boards, after repeatedly failing to increase the number of women holding the most senior jobs. According to a report to be released this week by the Cranfield School of Management, only 9.7% of executives on FTSE 100 boards are women - the fourth consecutive year in which the figure has flatlined. The overall percentage of women on FTSE 100 boards increased to 29% last month, from 27.7% in October, but was driven by women being appointed to non-executive roles, rather than promotions to the executive ranks.

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