RBS profits double
Royal Bank of Scotland has reported profits of £1.62bn for 2018, more than double the £752m it made a year earlier. The bank said its underlying performance allowed it to pay a special dividend on top of the ordinary award which, when measured against the Treasury’s stake, meaning that £977m would return to the public purse. RBS chief Ross McEwan called the results “a good performance in the face of economic and political uncertainty”. He added that the UK economy faced “a heightened level of uncertainty related to ongoing Brexit negotiations”. Mr McEwan said: “Larger corporations are pausing on their investments. And this cannot be good for the economy long-term because those large corporations then employ smaller businesses and individuals.” RBS said NatWest had lent or approved £1.9bn to UK businesses to deal with Brexit (out of a possible £3bn). This could be to stockpile, find new suppliers or to secure trade financing.
Customers most satisfied with Metro Bank
An official survey of customer satisfaction with their banks has placed Metro Bank at the top, with 83% of the bank’s personal customers saying they would recommend its services to their family and friends. The Royal Bank of Scotland was bottom of the 16 banks on the list. It scored poorly on services in branches and had a customer satisfaction score of 47%. Andrea Coscelli, chief executive of the Competition and Markets Authority, which published the results, said: “If people are unhappy with the customer service they are currently getting, I would encourage them to look at the results and think about switching to a better performing bank.”
Victims of bank transfer scams to be reimbursed
A group of UK banks have agreed to compensate victims of “authorised push payment fraud” - where customers are tricked into switching money into accounts controlled by criminals. The banks had been resistant to provide refunds in cases where neither they nor the customer was to blame because the transactions were authorised by customers, but Stephen Jones, head of trade body UK Finance, now says they will offer compensation.
City awaits banking results
Barclays is expected to post a £1.7bn net profit and raise its defences against corporate raider Ed Bramson when it reports full-year results on Thursday. Analysts believe the bank bounced back into profit last year due to cost cutting, fewer loan defaults and an improvement from its investment bank. Meanwhile, HSBC is tipped to post a rise in annual profits of 26.7% to £10.7bn. Lloyds is also expected to report an increase in profits of £4.2bn, up 39.1% on last year.
Lloyds Banking Group names new CFO
Lloyds Banking Group has hired senior Morgan Stanley banker William Chalmers as its new chief financial officer. Mr Chalmers will replace George Culmer in June this year subject to regulatory approvals. He is currently co-head of Morgan Stanley's Global Financial Institutions Group, having joined in 2000 from rival JPMorgan.
Oaknorth boss not fazed by criticism
The Sunday Times carries an interview with Rishi Khosla, the boss of challenger bank OakNorth. Unlike many of its peers OakNorth is profitable and in 2017 made £10.6m before tax. The bank also claims to have lent more than $3.7bn without a single default – or even late payment – leading some market watchers to question whether the bank is too good to be true. Khosla says he is not fazed by criticism of the bank: “We're a regulated bank. We operate to that standard. Our accounts are audited by a real auditor. We give regulatory returns on a regular basis.”
Boden plots path for Starling
Anne Boden, the founder of Starling Bank, is interviewed in the Mail on Sunday. Ms Boden says she launched Starling because she was unable to fix the old system of banking. She adds that by keeping Starling’s costs low – the bank does not have any branches – the business should break even by 2020. She also aims to pitch Starling as a mainstream bank for customers across the UK, and not just digital-savvy millennials in London.
Former Barclays chairman due in court
Marcus Agius is expected to appear as a witness in court this week at the criminal trial of four former executives over the bank’s 2008 Qatari fundraising. The former Barclays chairman will be answering questions about the bank’s £11.8bn bail-out during the financial crisis. Meanwhile, the FT reports that Barclays considered a £500m cash injection from Russia during the financial crisis. Separately, it has emerged that Tiger Global has offloaded its entire holding in Barclays dealing a blow to the bank’s efforts to win support for its turnaround plan.
Banks rebuilding costs total £30bn
Analysis by the Mail on Sunday has revealed that banks have spent more than £30bn reshaping their businesses in the wake of the financial crisis. RBS has spent more than £14bn as it pared back its investment banking division and sold assets to comply with the conditions of its bailout set by the EU.
Behold the giants, the vast new buyout funds of private equity
The FT’s Chris Flood examines how private equity managers are looking to create a new breed of mega-funds that is redefining the boundaries of the industry.
Chinese bank lending rises to record as stimulus boosts credit flow
New figures have shown that renminbi bank loans rose to Rmb3.57trn ($527bn) last month, the largest amount ever in a single month. Meanwhile, Beijing is looking to introduce new rules to prevent abuses by the country’s “bad banks”, such as disguised corporate lending or enabling commercial banks to avoid regulatory requirements.
Global spending on cards set to reach $45tn by 2023
Analysis by RBR, a retail banking consultancy, suggests that the value of card payments will reach $45trn by 2023. Some 50% of the global card expenditure takes place in Asia Pacific.
China’s HNA cuts stake in Deutsche Bank again
China’s HNA has reduced its stake by nearly a fifth in Deutsche Bank to 6.3%. The move is the latest in a recent series of retreats by the Chinese group.
Porsche buyers face Brexit request
Porsche has asked its British customers to sign a contract committing them to paying a surcharge of 10% of the purchase price if there is a no-deal Brexit. Cars made in Europe could attract tariffs of 10% if imported to the UK under the terms of the WTO. The Guardian notes that Porsche sold 12,500 cars in Britain in 2018, accounting for over a fifth of its global sales.
Flybmi ceases trading
British regional airline Flybmi has cancelled all its flights and filed for administration. The airline said it had been badly affected by rises in fuel and carbon costs and uncertainty over Brexit.
IAG faces cut to shareholders
Officials in Brussels have said that IAG, the owner of British Airways, must limit the number of UK shareholders it has after Brexit. Under EU rules, airlines must prove they are 50% EU-owned to have flying rights within the bloc.
Amey faces £200m to escape Birmingham PFI project
The Sunday Times reports that Amey is preparing to pay more than £200m to free itself from a botched 25-year PFI contract to repair roads in Birmingham. Terminating the deal would allow Ferrovial, the Spanish infrastructure group, to sell Amey.
Laing O’Rourke plans refinancing
Laing O'Rourke is close to a refinancing, according to reports. The company is expected to agree a deal with lenders, including HSBC, within days.
Investors call for Standard chief to quit
Pressure is mounting on Standard Life Aberdeen to shake up its management team after MUFG, its largest shareholder, offloaded its 6% stake in the financial services firm. Investors are said to be frustrated about the outflow of money from some of the company's most important funds, including Global Absolute Return Strategies. There are also concerns that tribal loyalties following on from the merger between Standard Life and Aberdeen Asset Management have held back its integration and progress with its strategy.
City warns of clearing threat
Industry experts have warned that the UK could lose some of its valuable clearing business to the US if the EU attempts to renege on G20 promises to avoid breaking up financial markets. Daniel Maguire, chief executive of the London Clearing House, which cleared over $1quadrillion-worth of contracts last year, said that a move from the EU to try to deny recognition to some third countries “flies in the face of G20 commitments”.
M&A activity in fund sector breaks 11-year record
Research by Sandler O’Neill, the US investment bank, has found that dealmaking in the asset management industry hit a record high in 2018.
LEISURE AND HOSPITALITY
Hotel firm struggles to recruit EU staff
Hotel group Millennium & Copthorne has said Brexit uncertainty is making it difficult for its London hotels to recruit EU workers. The luxury hotel chain said more than half of its workforce in London currently came from the EU. Chairman Kwek Leng Beng said that all hospitality businesses would “need to evolve and embrace” changes in the industry in order to remain relevant and profitable. The company reported profits of £106m last year, down 28% on the £147m in 2017.
Manufacturers spend £1bn on Brexit advice
Research from Source Global, a data provider, has found that manufacturers in Britain spent more than £1bn on consultants last year as businesses attempt to navigate the impact of Brexit. Manufacturers were the second biggest private sector buyers of consulting services. Financial services companies spent the most, at £2.6bn.
MEDIA AND ENTERTAINMENT
Buyout firms circle Kantar
Buyout funds TPG, Apax, Bain Capital and Cinven are reportedly interested in acquiring WPP’s data business Kantar, which is valued at between £2.6bn and £3.5bn. Goldman Sachs is advising WPP.
Citigroup makes offer to buy London skyscraper
Citigroup is in talks to acquire the 25 Canada Square tower in Canary Wharf from ACG Equity Partners. Citi has occupied the building since 2001, with 2,000 staff located there. The bank also has 4,000 staff in the neighbouring 33 Canada Square. It is understood that if the deal goes ahead, Citi staff will be moved gradually from 33 Canada Square back into 25 Canada Square, with space sublet to other businesses reclaimed.
Segro boosted by online shopping
Warehouse landlord Segro has raised a £451m development fund thanks to a strong year driven by the surge in online shopping. The firm also posted a double-digit profit rise in its full-year results, with pre-tax profit up 24% to £241.5m. Vacancy rates rose from 4% to 5.2%, while Segro's portfolio capital value grew 10.7%, which it said was driven by a 12% increase in the like-for-like value of its UK portfolio.
UK January retail sales jump faster than expected
UK retail sales grew at a faster rate than expected in January following a 0.7% contraction in December. The ONS said sales were up 1% on the previous month and 4.2% higher than in January last year - the biggest annual rise since December 2016.
Wage growth fastest in a decade
Official figures are this week set to show a 3.5% annual rise in the average weekly wage during the final quarter of 2018 - the fastest rate in more than a decade. Martin Beck, lead UK economist at Oxford Economics, commented: “There’s a bit of a paradox - it was a dismal performance from business investment, but that doesn't seem to have had much effect on hiring. Firms haven't been investing in capital equipment but taking on more workers is seen as a less risky option.”
Bank urged to choose ethnic minority figure
The Treasury has called on the Bank of England to choose an ethnic minority figure for its new £50 note. Robert Jenrick, the Exchequer Secretary, who has spoken in support of the Banknotes of Colour campaign, said: “The new £50 note should symbolise our values as a country.”