BoE warns challengers over stress test weaknesses
The Bank of England has discovered widespread weaknesses among the UK’s challenger banks, with stress tests revealing new lenders are cutting corners in their pursuit of growth. Melanie Beaman, a director of the banks, building societies and credit union supervision unit at the Prudential Regulatory Authority, has written to the chief executives of 20 challenger banks, ordering them to raise their standards and to adjust “overly optimistic” risk models. Ms Beaman wrote: “Our findings warrant a more general reminder of the importance for all firms to ensure their governance and risk management capabilities remain aligned with their business model risk profile and appetite.”
Credit Suisse sues taxman for hitting bankers’ bonuses
Credit Suisse is taking HMRC to court in a bid to recoup at least £239m it paid in the former Labour government’s super-tax on bankers’ bonuses. The Swiss bank is arguing that the so-called bank payroll tax was “unfair” and punished banks whose bonus payouts fell between December 2009 and April 2010.
Metro branches out
Metro Bank will open a new branch in north London this week after raising £375m from investors last month. The branch in Enfield, which will open on Friday, will be the bank's 67th in total. Metro is also planning openings in Manchester and Liverpool as one of the first steps towards opening 30 in the north by 2025.
Santander considers carers’ cards
More banks could introduce carers' cards, which limit cash withdrawals and restrict certain types of spending, in an attempt to stop cashpoint fraud. It comes after a cancer patient had £16,000 withdrawn from his bank account over the course of two months before his death. The patient's bank, Santander, is now considering introducing new products to give carers controlled access to the finances of the person they are looking after. Barclays is the only bank which currently offers such facilities.
Fintechs scoop £25m from RBS competition fund
Five fintech firms have each been awarded £5m from the Royal Bank of Scotland competition fund. The awards for Codat, Fluidly, Form3, Funding Options and Swoop Finance were given out in Pool D of the £775m fund, which was focussed on the commercialisation of fintech.
Deadline for PPI claims looms
The Financial Conduct Authority is launching a final call for PPI compensation, ahead of the August 29 deadline for claims. More than £35.3bn has so far been claimed and banks are said to have put another £10bn aside for the final few months.
Alawwal merger boost for RBS
The completion of a merger between Alawwal Bank and Saudi British Bank will lead to Royal Bank of Scotland shedding £4.7bn of risk-weighted assets and boost its core capital, RBS has said.
Industry body signs up JP Morgan
JP Morgan has become the latest financial services group to join the Scottish Investment Operations (SIO), which represents members that collectively employ more than 5,000 people in Scotland.
Analysts expect CYBG cost-cutting
CYBG has its capital markets day in London on Wednesday, with analysts predicting the owner of Clydesdale Bank, Yorkshire Bank and Virgin Money could unveil more cost-cutting plans.
Buyout giants vie for Arriva
Brookfield, Goldman Sachs and I Squared Capital are vying to take control of CrossCountry and Northern rail operator Arriva, as its owner Deutsche Bahn seeks to raise billions in an auction to pay down a €20bn (£17.8bn) debt mountain.
Deutsche Bank to set up €50bn ‘bad bank’ as part of overhaul
Deutsche Bank is planning to create a so-called bad bank to hold tens of billions of euros of assets, as chief executive Christian Sewing shifts the lender away from investment banking.
UBS puts chief economist on leave amid ‘pig’ row
UBS has placed chief economist Paul Donovan on leave after a comment he made about swine fever in China was interpreted as a racist slur. Chinese financial group Haitong International suspended business with the Swiss bank following Mr Donovan’s remarks.
Bank cyber defence testing set for shake-up
US regulators could adopt a cross-agency approach to testing banks against attacks that could crash payments networks, replacing the existing regime whereby different regulators examine different parts of the same institution.
Facebook hires British bank lobbyist ahead of cryptocurrency launch
Ed Bowles, Standard Chartered’s European head of corporate and public affairs, will join Facebook in September as the social network prepares to launch its own digital currency and other financial services.
Eurozone banks still piling up bad loans
The European Central Bank's Andrea Enria has warned that eurozone banks are still seeing a "high" number of loans go unpaid and borrowers declare default despite years of economic growth.
Technology will strengthen America’s biggest retail banks
The Economist says a combination of digitisation and the opening of new branches could see the biggest US banks taking market share away from regional lenders.
Berkeley profit expected to fall
Berkeley Group is forecast to reveal a drop in full year profit when it reports results on Wednesday. Analysts predict the housebuilder will post a pre-tax profit for the year to the end of April of around £702m, down from £935m last year.
Housebuilder blames Help To Buy for market weakness
Taylor Wimpey’s chief executive says the government’s Help to Buy scheme has fuelled the recent weakness in the UK’s housing market, by acting as an ‘accelerant’ for house price growth.
Hargreaves under scrutiny as Woodford trust’s shares slide
The Sunday Times claims that Hargreaves Lansdown secretly raised concerns about Neil Woodford’s flagship equity income fund more than two years ago - but continued to recommend it as a top fund to its 1.1m customers. Meanwhile, the FT reports that Hargreaves chief executive Chris Hill is forgoing his bonus of as much as £2.1m until Woodford's troubles are resolved. Shares in Woodford’s Patient Capital Trust have now lost a fifth of their value since the fund manager blocked investors’ access to his flagship equity income fund, hitting a record low of 58p on Friday. Separately, the Times notes that Lindsell Train, an investment firm championed by Hargreaves, holds an 11% stake in the fund supermarket, raising concerns over possible conflicts of interest.
Reassure float could open the way to more closed books
Reassure will be partially floated by Swiss Re on the London Stock Exchange next month with a value of about £3.6bn. It is aiming to raise new capital so that it can compete in the multibillion-pound market of buying books of life insurance business that are no longer open to new customers.
The heavy cost of policing financial services
Paul Lewis in the FT highlights that the UK spends nearly £2bn a year on enforcing financial regulations, fining those who break them, and compensating those who have been cheated.
Saga of decline raises fears of cheap takeover
Saga’s biggest investors fear the insurer and tour operator is at risk of being sold "on the cheap" if its shares continue to slide. One top five investor said private equity firms may be circling in the hope of capitalising on its recent woes.
Former Sainsbury’s boss backs Rezolve
Former Sainsbury's boss Justin King has taken a stake in mobile payments company Rezolve and will serve as an adviser to the tech start-up.
Amazon seeks to revive its faltering loans business
Amazon is stepping up hiring at its Amazon Lending business, after growth of its loan book slowed to 2.6% last year.
Tenth of British adults now own a second home
A report by the Resolution Foundation has found property wealth in Britain from second homes has risen by more than 50% over the past two decades, from around £610bn in 2001 to £941bn. The number of British adults in families who have wealth from properties additional to their own home has also risen by more than 50% over the period to reach 5.5m - around one in 10 of the UK population.
Bank of mum and dad set to hand out £6.3bn in loans
A survey by Legal and General and the Centre for Economics and Business Research (Cebr) suggests parents will hand out £6.3bn worth of loans this year in a bid to help their children get on the property ladder. It found that parents are expected to be involved in more than a quarter of a million (259,400) property purchases this year.
Business investment expected to contract
The British Chambers of Commerce (BCC) has forecast 1.3% growth for the UK economy in 2019, up marginally from the 1.2% it predicted earlier, due to what it described as "exceptionally rapid stock-building early in the year". However, the BCC has downgraded its growth forecast for 2020 to 1% from 1.3% and to 1.2% from 1.4% in 2021 as the unwinding of historically-high inventory levels coupled with weaker business investment weigh on economic activity.
Rising fuel costs drive up inflation
Figures due out this week are expected to show inflation climbed further above the Bank of England’s 2% target in May, driven by rising petrol prices. City economists expect an inflation rate of 2.2% for the month, up from 2.1% in April.
BoE staff given unconscious bias training
Bank of England officials are receiving “unconscious bias training” to screen out inbuilt prejudices before interviewing job applicants. Mark Carney revealed that managers were being sent one the courses as one way to stamp out a tendency in the central bank towards “homogeneity”.