Monday, 17th September 2018
Nationwide investing £1.3bn in tech
Nationwide is to spend an extra £1.3bn on technology, taking the total budget for its IT overhaul over the next five years to £4.1bn as it looks to deliver improvements in online services. This will see it move toward greater use of AI and “simplify its technology estate and build new technology platforms to enable growth and diversification, and drive forward digital, data and analytic strategies". Chief executive Joe Garner said customers “want a combination of human service on the high street and digital convenience." The building society, which has also launched a new £50m fintech investment fund, will create between 750 and 1,000 tech roles and launch a new technology hub. Elsewhere, Santander is set to build a new technology hub in Milton Keynes, representing an investment of £150m. The facility will house over 5,000 staff and is expected to open in 2022 if a planning application is given the green light.
Cass a ‘missed opportunity’
The Current Account Switch Service, launched five years ago yesterday, has been dubbed a failure. Figures show that 69,235 people used the service during July - down more than 17% on the same month last year. In the course of last year it was used 931,956 times, marking the first year in which it was used less than 1m times. James Daley, managing director of consumer group Fairer Finance, said: "Cass has been a failure and a missed opportunity.”
NAO: Government should detail RBS bill
The National Audit Office says ministers should detail how much the bailout of Royal Bank of Scotland will cost taxpayers. In a report, the body said: “The Treasury should record and communicate the full financial cost of the intervention. This should include the initial cost of the intervention, any payouts to government, for example, dividends, financing cost associated with the intervention and costs related to the sale."
Cheque plan sees quicker clearing
A new system that will be implemented before the end of the year will mean cheques clear within a day. The revamp will see banks process images of cheques rather than send the physical items to a central clearing centre. Barclays, HSBC, Santander, Lloyds and RBS - plus Nationwide and Yorkshire building societies – are among those which have signed up to the industry initiative, originally agreed in 2013. Cheque & Credit Clearing Company research shows that 405m cheques were processed last year, 15% less than the previous year, and the number is expected to fall to 253m by 2024.
Size warning over banks
OECD chief Angel Gurría believes that a decade on from Lehman Brothers' collapsing, “the 'too big to fail' syndrome appears to still be there.” “The banks are becoming very large - there's mergers, absorption of smaller banks". Xavier Rolet, a former head of the London Stock Exchange and an ex-Lehman Brothers executive, said: "If you look at the bigger picture, major crises have always come from the same source - our inability to measure, monitor, control, manage leverage, i.e. debt in the banking industry."
Financial sector remains an impenetrable black box
Despite being 10 years on from the financial crisis, the FT’s Jonathan Ford says the financial statements of banks continue to be opaque, leaving investors in the dark.
Government and banks link on anti-fraud drive
The Government is working alongside banks on an anti-fraud initiative, with Stephen Jones, boss of UK Finance and a former Santander finance chief, understood to have been lined up to head a panel of experts to tackle the problem. It is noted that while banks stopped £1.4bn of fraud last year, customers still lost almost £1bn.
A digital decade
Analysis of the banking sector in the decade since Lehman Brothers collapsed suggests there has been a technological revolution. Between 2010 and 2017 the number of branches fell from about 14,800 to 9,690 while UK Finance figures show the number of online banking customers has risen from 26m to 38m.
Credit card borrowing jumps
Figures show that credit card customers withdrew £1.27bn from cash machines between May and July – a £90m increase on the same period in 2017.
Wrong cheque book used for a year
A Lloyds customer has questioned security measures at the bank after it was found that his wife had been inadvertently using his cheque book for 12 months without being stopped by the fraud team.
Firm sued over printer deal
HIG Capital is being sued by corporate finance house Moorgate Capital over an unpaid £1m fee. It claims HIG reneged on a promise to pay for help with the acquisition of printing firm Bezier. It says HIG’s then managing director Paul Canning offered Nick Mockett, a Moorgate financier who produced a briefing paper on Bezier and introduced HIG to its management, a £1m fee - but declined to pay when HIG went ahead with the deal.
Deutsche to shift more assets and ring-fence UK unit after Brexit
Deutsche Bank has been forced to put plans in place to shift around 75% of its estimated €600bn balance sheet back home to comply with rules for branches in a “third country”.
President questions rate rise
Turkish president Recep Tayyip Erdogan has criticised the country’s central bank for raising interest rates from 17.75% to 24% in a bid to stem a currency crisis.
ING to assess $600bn loan portfolio based on climate impact
ING is to assess its lending portfolio based on climate impact, and will urge businesses that do not conform with the goals of the Paris climate agreement to act.
Association of German Banks boss notes Brexit threat
Andreas Krautscheid, managing director of the Association of German Banks, has warned of “threats of turmoil on the European capital markets” in the event of a chaotic Brexit.
Korean state-owned bank eyes London site
The state-owned Industrial Bank of Korea is believed to have offered £182m to buy One Poultry, an office building close to the Bank of England. It is said to be working with asset manager Hana Financial Group on a deal for the site, which is currently owned by a property firm spun out from Perella Weinberg.
LAPFF signals opposition to Ryanair
The Local Authority Pension Fund Forum (LAPFF) is recommending that its members vote against the re-election of Ryanair chairman David Bonderman at the company's AGM next week. The LAPFF is also calling for votes to be cast against the company's annual report and accounts. Investors are concerned over Ryanair's treatment of workers.
Investec to spin off asset management arm
Investec plans to split off its asset management arm, saying spinning off Investec Asset Management will "simplify the group". The division, which has £109bn in assets under management, would be listed on the London Stock Exchange with a secondary listing on the Johannesburg Stock Exchange. The listing, which comes on the back of a strategic review carried out by joint chief executives designate Fani Titi and Hendrik du Toit, is expected to be completed in the next nine or ten months.
Welby’s Wonga consortium to consider loans bid
The Archbishop of Canterbury is exploring how the Church of England could lead a not-for-profit rescue effort for the £400m Wonga loan book after the payday lender collapsed last month. The move follows a plea from Frank Field last week for Wonga's administrators to delay making any deal with private companies circling the assets while the church considers what it can do.
Former PPF chief to chair new company
Lawrence Churchill, who has chaired the Pension Protection Fund and National Employment Savings Trust, is set to be named chairman of Clara-Pensions, which will seek to consolidate traditional pension schemes.
JPMorgan joins Exeter university to set up financial services apprenticeships
JPMorgan is launching a financial services apprenticeship programme in partnership with the University of Exeter’s business school. It will use apprenticeship levy funding to offer MBA studies for would-be bankers.
LEISURE & HOSPITALITY
Record sales and profits for Wetherspoons
Wetherspoons has reported record annual sales and profits. Like-for-like sales, which exclude new pubs, rose 5% in the year to 29 July, while pre-tax profits were up 4.3% to £107.2m. On the increasing costs the business faced, boss Tim Martin suggested like-for-like sales would have to go up by 4% to cover costs.
Currency pains for British Steel
British Steel has announced it is to cut 400 of its 5,000 global staff blaming a weak pound and euro for driving up costs. The company employs 4,000 people at its Scunthorpe plant and has sites in Teesside, Cumbria and North Yorkshire. It has not yet been confirmed which locations will lose staff. Elsewhere in the sector, Tata said it had begun a £50m investment programme to extend the working life of one of the blast furnaces at its Port Talbot site.
MEDIA & ENTERTAINMENT
ITV watching Big Brother maker
ITV is considering a takeover of £3bn valued production company Endemol Shine, which is behind shows including Big Brother and Masterchef. The company is being sold by private equity firm Apollo and 21st Century Fox.
Lenders lure BTL investors
The proportion of homes sold to landlords has reached the lowest level since January 2010, according to Hamptons International. In August 9.9% of sold homes were bought by landlords, compared with an average of 17.6% in the year until April 2016, when a stamp duty surcharge on the purchase of additional homes was introduced. Landlords are now being offered more attractive deals on BTL mortgages, and there are also a record number of mortgages for first-time landlords.
Food sales and Nisa deal drive up Co-op profits
The Co-Operative Group has seen an 86% rise in first-half profit, with strong food sales across its supermarkets and the £143m acquisition of the Nisa convenience chain driving the increase. Pre-tax profit across the mutual hit £26m in the 26 weeks to July 7, compared to £14m in the first half of 2017.
Insurers pull supplier cover at Paperchase
Paperchase’s credit insurers have pulled cover for suppliers on the back of concerns over the company’s finances. Euler Hermes is no longer offering cover for new contracts, while Coface and Atradius are understood to have adjusted their terms. The Telegraph reports that while cover has been cut for new contracts, it remains in place for existing agreements with suppliers.
Private equity to give rugby a try
Private equity firms seeking gains from untapped broadcasting income in sport have been talking to the Guinness Pro14 board about investing in the rugby tournament. The Guardian notes that last week Premiership Rugby rejected a £500m takeover bid from CVC.
FIFA considers transfer rethink
FIFA and its president, Gianni Infantino, are planning to push for significant changes to football’s $6.5bn a year transfer system. Proposals suggest reform that would address contracting players; concerns over the role of agents; and alleged dubious financial practices. An internal FIFA report details plans for a new central clearinghouse responsible for processing payments for cross-border transfers. It would also see commission paid to agents capped at 5% a player's total salary or the transfer fee.
BCC warns of “snail’s pace” growth
The British Chambers of Commerce has warned that GDP growth will slow to “a snail’s pace” this year due to uncertainty over Britain’s future relationship with the EU. The business trade body cut its outlook to 1.1% from 1.3% and lowered its sights for 2019 from 1.4% to 1.3% in its latest quarterly update. The downgrades are driven by a weaker outlook for trade and investment. Exporters face more subdued growth over continued Brexit uncertainty and slower growth in key markets, the BCC says, while the high upfront cost of doing business in the UK and the ongoing uncertainty over the UK's future relationship with the EU are expected to continue to stifle business investment.
Carney predicts £16bn bounce to UK economy from Chequers Brexit deal
The FT has learned that during his presentation to ministers on Brexit, BoE governor Mark Carney said the PM’s Chequers plan would boost the UK economy by £16bn if they were accepted by the EU.
BoE tech troubles
Sun research show that Bank of England staff have lost 81 mobile phones, 26 laptops and five tablets since the start of last year.