Hong Kong crisis: investor targets Standard Chartered and HSBC
Steve Eisman’s newly formed Absolute Alpha Fund has taken out short positions against Standard Chartered and HSBC arguing that the crisis in Hong Kong could get much worse and have “ramifications for the global economy”. The two banks both have a focus on Hong Kong. Mr Eisman has also revealed he doesn’t own shares in any European bank and that he is unlikely to for a while.
Staley to meet Bramson for showdown
Barclays CEO Jes Staley is to meet with Edward Bramson this week to try to persuade the activist investor to sell his 5.5% stake. It will be the first time since the corporate raider’s failed bid to secure a seat on the bank’s board that the pair meet. Bramson has been trying to persuade Staley to scale back its investment bank, but Staley insists Barclays should retain an investment banking arm alongside its retail and corporate banking interests.
Banks target remortgage customers with slew of products
With more than £26bn worth of mortgage deals due to mature next month, lenders are competing hard for remortgage customers, the Times reports. This has seen a flurry of new loans made available, the majority of which are for those with deposits or equity of between 20% and 25%. Brokers add that lenders are also coming out with bespoke mortgage ranges offering a far greater degree of criteria flexibility.
First Direct drops fee as competition heats up
Online and mobile bank First Direct has scrapped the £10-a-month fee for its current account saying that most customers did not pay anyway. It was waived for the first six months after opening an account, and also for people who paid in at least £1,000 a month or had an average balance of £1,000. The move was also likely made due to increased competition from fee-free digital alternatives.
Santander winds down asset finance arm
Spanish bank Santander is reversing out of its £800m asset finance arm in the UK to divert resources elsewhere. Santander UK said it expects to stop offering new asset finance from the end of this year and will shrink its loan book as existing customers clear their debts.
Nationwide suffers extra £50m PPI hit
A last-minute surge in PPI complaints cost Nationwide an extra £50m, bringing its total liability for the scandal to about £490m. The building society is the latest lender to be hit by a higher than anticipated volume of complaints. Lloyds recently set aside up to £1.8bn more and Barclays up to £1.6bn.
Halifax launches zero-deposit mortgage for first time buyers
Halifax has launched zero-deposit mortgages for first time buyers provided a family member contributes 10% of the property price from their own savings. Halifax will pay 2.5% interest on the family member’s loan which will be available to withdraw after three years.
Sainsbury’s explores a sale of its mortgage book
Sainsbury’s Bank is in talks with advisers about a possible disposal of its mortgage book as the supermarket chain looks to overhaul its loss-making banking business. It is thought the mortgage business could fetch £1.3bn if the grocer finds a buyer.
Maltby to chair Allica
Challenger bank Allica, originally called CivilisedBank, has appointed former Lloyds banker John Maltby as its chairman as it prepares to launch banking services for small businesses.
Metro Bank reduces exposure to corporate lending
Metro Bank is allowing commercial customers to pay off loans early as the challenger bank looks to shift its lending towards residential property.
PE acquisitions dip 12%
Data from law firm Mayer Brown shows that the number of private equity acquisitions of UK businesses has fallen 12%, from 311 in 2017/18 to 274 in 2018/19. The value of deals climbed 37% in the period, hitting £30.9bn. Perry Yam, Mayer Brown’s corporate co-head, said: “Private equity funds have significant capital to deploy, but Brexit has certainly increased caution among some.”
Advent International is poised to win over Cobham investors
Advent International is poised to win its £4bn takeover of Cobham with 75% of shareholders supporting the bid ahead of today’s vote. Campaigners have urged ministers to intervene, voicing national security concerns.
Private equity groups returns are not as stellar as they seem
Jonathan Ford in the FT considers the “startlingly good” returns reported in private equity, saying questions remain over “whether they present the most realistic picture of what is going on.”
Citigroup’s credit card risk questioned
Citigroup has denied lending irresponsibly after concerns were raised that the bank is over-indexed to credit cards. The New York-based lender is the third-largest card issuer by payments and offers the longest interest-free period on the market with one of its cards at 21 months. Wells Fargo analyst Mike Mayo said: "We are worrying every day about what could go wrong." But Citigroup spokeswoman Elizabeth Fogarty said: "We diligently monitor market and environmental conditions on a continuous basis and will make adjustments as needed.”
Draghi faces chorus of criticism over fresh stimulus
Critics of Mario Draghi’s stimulus package have said the eurozone economy was simply not suffering enough to justify the use of such unconventional policy measures. The ECB president unveiled a raft of measures on Thursday - cutting interest rates deeper into negative territory and restarting QE at €20bn a month – but Dutch governor Klaas Knot said the QE was “disproportionate” while Austria’s central bank governor Robert Holzmann said the interest rate cut to minus 0.5% was “not sustainable”.
Malta urged to do more to fight money laundering
Moneyval, a pan-European monitoring group, has said Malta needs to do more to tackle financial crime. It made 58 recommendations which Maltese government ministers vowed to implement.
Deutsche Bank joins JPMorgan-led blockchain network
Deutsche Bank has signed up to the JP Morgan Chase-led Interbank Information Network, the financial services industry’s biggest blockchain project.
Financial sector optimism falls
A survey conducted by Lloyds Bank shows that the majority of executives at UK financial institutions are less optimistic about the economic outlook than they were a year ago. Around 60% expect UK economic growth to slow in the next 12 months, while two-thirds expect domestic growth in the coming year to be weaker than in other G7 countries. Some 55% believe growth in the financial services sector will deteriorate in the year ahead, up from 27% in 2018. Although 40% said they expected their own revenue to increase in the next year, this is down from 64% in 2018. More than half of firms polled said they are prepared for Brexit, with almost 60% ready for a no-deal with little or no transition period or further extension. Robina Barker Bennett, head of financial institutions at Lloyds, said: “Against a backdrop of ongoing global economic turbulence, it is unsurprising that sentiment among financial institutions towards the sector and the wider economy is lower than in previous years.”
FCA failed to warn investors of p2p lending ‘abuse’
The Financial Conduct Authority (FCA) failed to alert investors when it discovered an alteration to its public register gave the false impression that the business of peer-to-peer platform Collateral was regulated. FCA CEO Andrew Bailey said that Collateral drew in £3.8m of investors’ money following the discovery of a suspected abuse of the public record of regulated companies. The FCA spotted an issue in November 2017 but did not ask Collateral to “cease conducting regulated activities” and make the “correct position known to its customers” until the end of January 2018.
HKEX rebuffed by London Stock Exchange
The board of London Stock Exchange (LSEG) has "unanimously rejected" the £32bn approach by Hong Kong Exchanges and Clearing (HKEX) describing it as a "significant backward step". In a letter to the HKEX, the LSEG chairman, Don Robert, also indicated that the company's connections to the Hong Kong government would complicate matters and make approval “highly uncertain”. Meanwhile, the Financial Conduct Authority has signalled that the offer from HKEX would face tough regulatory hurdles, both in Britain and abroad. HKEX will meet with LSEG shareholders and regulators as it attempts to secure backing for the takeover.
LEISURE & HOSPITALITY
Wetherspoons serves up strong sales, but profits fall
JD Wetherspoon saw revenues rise 7.4% to £1.81bn in the year to the end of July, with like-for-like sales up 6.8%. However, the pub chain also reported a fall in operating margin from 7.8% to 7.3% and a 4.5% drop in profits before tax and exceptionals to £102.5m, the first fall since 2011.
Thomas Cook focused on rescue deal
Thomas Cook is hoping to secure a rescue deal and is understood to be in negotiations with bondholders over the approval of a takeover by Chinese firm Fosun Tourism. The deal needs the backing of three quarters of bondholders to succeed, with it suggested that some lenders could vote against the terms of the agreement. The travel firm said it is “focused on completing the transaction.”
Professional services 'turning a blind eye to dirty money'
Britain’s leading police chief on economic crimes has accused accountants and lawyers of turning a blind eye to organised crime gangs making millions from fraud. Karen Baxter, police national lead on economic crime, said some accountants and legal professionals were “complicit” or “complacent” in the laundering of “dirty” money and were undermining public trust in their professions.
House prices fall in September
House prices have bypassed their usual “autumn bounce”, falling in September for the first time since 2010, according to Rightmove. The average UK property price fell 0.2%, or £730, to £304,770, as the number of agreed sales dropped 5.5%.
High streets handed £95m boost
The government has announced that historic English shopping centres will benefit from a £95m regeneration fund. In all, 69 towns and cities will receive money, with projects aimed at turning disused buildings into shops, houses and community centres. The largest share of money, £21.1m, will go to the Midlands.
Wyevale pension pot goes to Aviva
Aviva is poised to take control of Wyevale Garden Centres' £50m pension fund after its owner Terra Firma sold off 145 stores.
BCC cuts growth forecast
The British Chambers of Commerce (BCC) has downgraded its forecast for economic growth. It expects the economy to grow by 1.2% this year and 0.8% in 2020 – having previously forecast growth of 1.3% and 1% respectively. Its GDP growth forecast of 1.2% for 2021 remains unchanged. The business group expects business investment to decline by 1.5% this year and by 0.1% in 2020. Its report said: "Relentless Brexit uncertainty and the diversion of resources by many businesses to guard against the chaos of a messy and disorderly Brexit, are expected to limit investment intentions over the forecast period."
Bank unlikely to raise rates
Despite last week's interest-rate cut by the European Central Bank (ECB) and the prospect of a further reduction in rates by America's Federal Reserve on Wednesday, the Bank of England is set to leave interest rates on hold this week. Fears of an imminent recession faded last week when figures revealed the economy grew by 0.3% in July. Economists think the Bank will put off rate rises due to weakness in Europe and the risk of a disruptive Brexit.