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Daily News Roundup: Monday, 19th August 2019

Posted: 19th August 2019

BANKING

Standard Chartered faces fine over sanctions breaches

The Treasury is preparing to fine Standard Chartered for failing to prevent sanctions breaches, with the Office of Financial Sanctions Implementation (OFSI) notifying the bank that it intends to impose a penalty of more than £10m in the coming weeks. The bank has already been fined over £800m this year following US and UK probes into alleged breaches of sanctions against Iran. In April, the Financial Conduct Authority imposed a £102m fine on Standard Chartered after it found “serious and sustained shortcomings” in its anti-money laundering controls. This was the second largest fine the watchdog has ever handed out for money laundering. In the US‎, the Department of Justice imposed a fine of $480m and the New York County District Attorney's Office imposed a fine of more than $292m.

FCA ban on ex-Barclays Wealth COO lifted

The Financial Conduct Authority’s (FCA) decision to ban Andrew Tinney, a former chief operating officer of Barclays Wealth, from working in the financial services industry has been overturned. Mr Tinney quit the bank after being accused of concealing a dossier into working conditions, with it claimed that he hid the existence of the report from senior managers. The Upper Tribunal said that while Mr Tinney’s conduct “failed to meet the required standard of integrity”, it ruled that a public censure was sufficient punishment.

Chancellor urged to use RBS dividend for SME redress scheme

The SME Alliance has written to Chancellor Sajid Javid calling on him to use a £1bn Royal Bank of Scotland dividend to fund a compensation service for small companies mistreated by the banking industry. The organisation, which represents SMEs that are in dispute with financiers, has called for "tangible support" from the Treasury for the business banking resolution service, which is being set up by seven big banks and is due to be launched this year. It will be aimed at companies that are too large to access the Financial Ombudsman Service but are unable to afford court action to pursue claims.

£17bn spent on cards in May

Figures from UK Finance show that consumers spent almost £17bn on credit cards in May, a year-on-year increase of 2.3%. May saw almost 300m transactions conducted with 62m credit cards, a 6.5% increase on May 2018. With Bank of England analysis showing that the average family owes £3,900 on cards - with the total up by two-fifths since 2009 - Rachel Springhall of Moneyfacts said: “Not only are consumers spending more using their credit cards but outstanding debt is rising too.”

Daily Mail, Page: 47

RBS hides data breach

Highly sensitive personal data has been left in a former NatWest employee's home since 2009 because the bank has been unable to reach an agreement on the safe return of the information. Royal Bank of Scotland, NatWest’s owner, has not alerted affected customers to the serious data breach as it does not know exactly what information remains in the possession of the former employee, although it is suggested it could consist of account and sort codes, credit card details and account histories.

Barclays offers Brexit clinics for SMEs

Barclays is to host a series of "Brexit clinics" in October and November, with the sessions designed to help its SME customers after Britain's departure from the EU. The clinics will address issues such as cash flow and working capital, exporting, supply chain management, labour and protecting businesses against fraud. SMEs will also be given advice on how to utilise data and technology to boost efficiency.

Staycations hit by ATM struggles

Research from the Post Office shows that 57% of people taking a UK-based holiday have struggled to find a bank or ATM. Nearly a fifth (18%) said this had happened in the past six months, while 53% of respondents said they had visited a UK retailer which only accepted cash payments during the past year.

Silicon Valley is eating the banks’ lunch

The FT’s Tom Braithwaite looks at the growth of digital banks and the impact on traditional lenders, saying that while banks are falling behind “the battle is far from over”.

PRIVATE EQUITY

Permira in advanced talks to take Cogital stake

Permira is in advanced talks to buy a minority stake in Cogital, a move which would value the firm at around £1bn.

Former KKR partner in CVC talks

Former KKR partner Dominic Murphy is in talks to join CVC Capital Partners. He left KKR in 2017 to set up 8C Capital but abandoned the fund's first £910m fundraising when his co-founder left to re-join KKR.

INTERNATIONAL

Trump held conference call with big bank CEOs

A source has revealed that President Donald Trump last week held a conference with the heads of three large Wall Street banks. Following a previously scheduled meeting at the Treasury Department, Jamie Dimon of JPMorgan Chase, Bank of America´s Brian Moynihan and Citigroup´s Michael Corbat discussed the economy and financial markets with Mr Trump on a day that saw all three major US indexes close down roughly 3% amid ongoing concerns about the global economy.

SoftBank plans to lend employees $20bn to invest in new fund

Japan's SoftBank is reportedly planning to lend up to $20bn to its employees, including CEO Masayoshi Son, to buy stakes in its second Vision Fund. The government of Kazakhstan is expected to make a contribution of about $3bn while banks such as Goldman Sachs, Standard Chartered and Mitsubishi UFJ Financial Group have also indicated they are willing to invest several hundred million dollars each.

Banc de Binary settles charges

Banc de Binary has paid €300,000 to the government of Cyprus to settle charges brought by the country's Securities & Exchange Commission.

China to introduce market-driven lending rate

China's central bank is set to replace its key lending rate with a more market-driven benchmark, linking the loan prime rate to the one-year medium-term lending facility.

AVIATION

Airline boss tenders resignation

Rupert Hogg, Cathay Pacific's British chief executive, tendered his resignation to the board after protests in Hong Kong led to a plunge in the airline's share price, as has chief customer and commercial officer Paul Loo. This came as the carrier came under intense pressure from the Chinese authorities to rein in employees who supported the demonstrators. Chairman and former chief executive, John Slosar, said the airline thinks it is “time to put a new management team in place who can reset confidence and lead the airline to new heights."

FINANCIAL SERVICES

Cost of financial advice can vary

Research for the Sunday Times has revealed that getting financial advice could cost consumers an extra £4,500 if they opt for the most expensive rather than the cheapest adviser. The consumer group Which? asked 108 financial advisers how much they would charge people in various scenarios, from inquiries from young parents to soon-to-be pensioners. In one scenario, a woman approaching retirement and wanting advice on drawing an income was quoted £500 for advice by the cheapest adviser — and £5,000 by the most expensive. Nearly 70% of the advisers surveyed said charges were calculated in proportion to the amount of money they were asked to manage. Six in 10 said they charged a flat fee, while 6% charged on an hourly basis.

Whitehall’s No-deal Brexit plan revealed

Government documents detailing no-deal Brexit planning have been leaked. Compiled this month by the Cabinet Office under the codename Operation Yellowhammer, the dossier suggests “some UK cross-border financial services will be disrupted.” Analysts expect immediate problems to occur because October 31 is a Thursday and banks and other financial institutions will have to switch to new systems for reporting transactions midweek - rather than over a weekend. The City will also have to contend with dramatic shifts in the price of sterling and other assets. There is also uncertainty as to whether British lenders would be able to continue serving European customers afterwards. A Treasury insider said: “A lot of the preparation that financial services companies have made is to disinvest, and to move staff to Frankfurt and Paris to continue serving EU clients.”

Wealth managers in merger talks

Tilney, which was bought by private equity firm Permira from Deutsche Bank five years ago, is in negotiations with Smith & Williamson over a merger that, by the amount of assets under its control, would create a top-five player in the investment market.

MANUFACTURING

Ataer set to buy British Steel

The Government has named Ataer Holding as the preferred bidder for British Steel. Business Secretary Andrea Leadsom said Ataer is a “suitable buyer”, with a deal being negotiated that is reported to offer financial support of £300m from the Treasury. Ataer, an arm of Turkey’s military pension fund Oyak, owns almost 49% of Turkey’s biggest steel group, Erdemir.

REAL ESTATE

Prices fall and sales climb

Figures from Rightmove show that the average property asking price fell 1%, or nearly £3,200, to £305,500 in the month to August 10. This follows a 0.2% fall in the previous month. While prices dipped, sales have reached their highest point since 2015, with the number of agreed sales up by 6.1% year-on-year.

RETAIL

Labour plans to tackle ‘retail apocalypse’

Labour leader Jeremy Corbyn has unveiled proposals which he says will help Britain’s “struggling” high streets. He said he wanted to give councils powers to reopen shops in premises left vacant for more than a year. Mr Corbyn also said empty shops should be given to start-up business and community projects in an effort to reverse a “retail apocalypse”. Mike Cherry, national chairman at the Federation Of Small Businesses, said: “While finding new ways to reopen closed shops is positive, this is after the fact they have shut.”

ECONOMY

Think tank: Higher pension age would boost the economy

The Centre for Social Justice think tank has suggested that the state pension age should be raised to 75 within the next 16 years to help boost the economy. While the state pension age is set to increase to 67 by 2028 and to 68 by 2046, the organisation believes it should climb to 70 by 2028 and 75 by 2035. In its report, Ageing Confidently: Supporting an ageing workforce, the think tank says evidence suggests the UK is "not responding to the needs and potential" of an ageing workforce, with hundreds of thousands of people aged 50 to 64 seen as "economically inactive". The report says that by getting more people aged 55 to 64 to start work, out-of-work benefit costs would be drastically reduced and boost GDP by approximately 9% - around £182bn.

Analyst in recession warning

Nomura analyst Masanari Takada believes a global recession is inevitable unless the US ends its trade war with China, the Federal Reserve drastically cuts rates or several governments boost their economies in unison by the end of the month. He suggests that only these can prevent markets taking a downturn that would make recession “essentially self-fulfilling”.

OTHER

£1k note expected to sell for £30k

A £1,000 banknote which entered distribution in November 1936 is expected to sell for £30,000 when it goes under the hammer on September 12. The note, which is signed by Kenneth O. Peppiatt - Chief Cashier of the Bank of England from 1934 to 1949 – marks the last time such a high value note was issued.

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