BANKING
City welcomes plan for bespoke finance deal
Philip Hammond is to unveil plans for a bespoke deal on financial services with the EU, in a key speech this week. The chancellor is expected to propose a system of mutual recognition in financial regulation - allowing UK and EU firms to trade freely, but crucially enabling Britain to set its own laws. An independent tribunal would be put in place to resolve any disputes. Miles Celic, chief executive of TheCityUK, said he would be “very pleased” if the plan was adopted, while Stephen Jones, chief executive of UK Finance, said “including an ambitious framework for trade in financial services in any future agreement is in the interests of both sides”.
RBS predicted to report a profit
City analysts are predicting that RBS will reveal a profit of £1.6bn, compared with a £7bn loss last year, when it reports its results on Friday. However, the news is not expected to be all good, with the bank still awaiting a potential multibillion-dollar fine from the US Department of Justice for misleading investors and selling them toxic mortgage bonds prior to the credit crunch. A deal with RBS has been held up by staff departures at the DOJ following the election of President Donald Trump.
Top four banking bosses paid £21m
The bosses of Britain’s big four banks will this week reveal their financial figures for 2017, as well as publishing annual reports disclosing pay details for senior staff on the day of their results. The Mail on Sunday notes that the CEOs of HSBC, Barclays, Lloyds and RBS were paid £21m in pay and benefits last year.
Rush for fixed-rate mortgages
According to new data, consumers are rushing to lock in fixed-rate mortgages amid expectation of another rise in the Bank of England’s base interest rate. The proportion of customers searching for fixed-rate mortgages on Experian's comparison site arm rose to over 67.4% in February, a jump from 60.3% in December.
New faces at Arbuthnot
Arbuthnot Latham has hired Dean Moore from Coutts and Co to head up its wealth planning business. The firm has also attracted staff from Shawbrook Bank, including Nick Ellis-Calcott as business transformation director.
SME investment can boost productivity
A report by Civitas says Britain should set up a state-backed investment bank to focus on small business lending as part of efforts to boost productivity. The thinktank argues that the creation of a "national investment bank" will address the "market failure" that has led to a lack of long-term investment in SMEs.
PRIVATE EQUITY
Tax reforms prompt PE upheaval
In response to Donald Trump’s tax reforms, the private equity firm KKR says it is considering converting its status from that of a partnership to a "C corporation" - a corporate-tax-paying firm. The Economist considers whether other partnerships will do the same.
INTERNATIONAL
IMF chief backs new European Monetary Fund
Christine Lagarde, head of the International Monetary Fund, has backed plans to transform the eurozone’s bailout fund into a European Monetary Fund independent of the IMF. Ms Lagarde indicated her support for the plans by saying the proposed European Monetary Fund could fill the need for an independent crisis management system for the region.
Citigroup increases pay package of chief by nearly 50%
Citigroup chief executive Michael Corbat has seen his pay package for 2017 increased by almost half to $23m. Dennis Kelleher, who runs the advocacy group Better Markets, described the pay increase as “indefensible”. Meanwhile, Lloyd Blankfein, the chief executive of Goldman Sachs, collected $24m in 2017, a rise of 9%. Mr Blankfein received a $2m salary as well as variable compensation consisting of $17.6m in performance-linked restricted stock and $4.4m in cash, the filing shows.
Niche operations gaining ground in mergers and acquisitions market
The Telegraph’s Lucy Burton explores how niche investment banking operations are beating the giants of Wall Street and the City of London to some of the largest mergers and acquisition deals. She notes how Canson Capital Partners, a three-month old London firm, is the lead adviser on Blackstone’s deal to acquire a 55% stake in Thomson Reuters financial data business.
Switzerland sets out guidelines to support initial coin offerings
Switzerland's Financial Market Supervisory Authority has outlined how it intends to apply existing rules to initial coin offerings. The move bucks the trend of global regulators cracking down on cryptocurrencies.
Citi sees rich pickings in targeting Asia’s ‘mass affluent’
Citigroup is preparing to introduce a number of new tools usually aimed at the super-rich to “mass affluent” clients in Asia with assets as low as $50,000.
AUTOMOTIVE
Ghosn asked to stay as Renault CEO
French car maker Renault has asked Carlos Ghosn to stay on as CEO for a further four years. Shareholders will vote on Mr Ghosn’s re-appointment at a meeting in June. If approved, he would also remain on as head of the Japanese-French alliance between Renault, Nissan and Mitsubishi.
Electric car use on the rise
New figures have revealed that second-hand electric cars are selling for more than they were bought for because of a rise in demand for green vehicles. Analysis from Cap HPI, the automotive data company, found that some models increased in value after being bought at one year old, accumulating 10,000 miles and then being resold 12 months later.
AVIATION
Airlines reveal pay gaps
The gender pay gap at Tui's UK airlines business is wider than at rival EasyJet, according to a new report. Women at Tui Airways UK earn almost 57% less per hour on average than male staff. This compares to EasyJet, where its female staff are paid 51.7% less on average than male employees.
CONSTRUCTION
Investors consider suing Carillion
Evidence submitted to a parliamentary inquiry into the collapse of Carillion has revealed that one investor is considering suing the company, and believes that management should be investigated. Meanwhile, Iain Withers in the Sunday Telegraph reports that the big four banks are expected to announce a further wave of write-downs this week as they count the cost of losses on loans to collapsed builder Carillion. Elsewhere, Stephen Jones, chief executive of UK Finance, writes in City AM that the Carillion collapse must be a catalyst for change on the SME finance scene. He says that steps are needed to improve transparency and strengthen the dialogue between banks and small businesses. More must also be done to ensure that SMEs understand the terms of their lending agreements when they first borrow, and that complaints are handled as well as they can be.
FINANCIAL SERVICES
Standard Life Aberdeen poised to reveal £30bn of outflows
Analysts at RBC have warned that Standard Life Aberdeen will report £30.3bn worth of net outflows for 2017, when it updates the market on Friday. The development comes after Lloyds Banking Group opted to terminate its contract with Standard Life Aberdeen to manage £109bn of assets. Iain Dey in the Sunday Times suggests that Lloyds’ decision to withdraw its contract with Standard Life Aberdeen arose after negotiations between a merger between Lloyds' Scottish Widows subsidiary and Standard Life's pensions and assurance business fell apart in mid-December.
Workplace pension committees ineffective
Independent governance committees charged with safeguarding the interests of millions of UK workplace pension savers are failing to perform their core responsibilities, according to research by ShareAction.
Pension deficits halve
Over £50bn has been wiped from the deficits of Britain's "final salary" pension funds over the past month alone. Figures from the Pension Protection Fund show that the combined deficit of Britain's nearly 6,000 schemes fell from £104bn to £51bn at the end of January.
Hiscox cleared of breaching data protection laws
Hiscox has been cleared of breaching data protection laws in its handling of a claim about the loss of a £30,000 Swiss luxury watch.
LEISURE AND HOSPITALITY
ITC hunts for acquisitions
ITC, the luxury holidays group, is looking for bolt-on acquisitions as part of its expansion plans. CEO Jennifer Atkinson says she wants to expand the firm into Europe and other English speaking markets. NorthEdge Capital, ITC’s owner, will provide the funding.
ISS urges Johnson to check out
ISS is advising investors in Elegant Hotels to oppose the re-election of serial entrepreneur Luke Johnson to the board. The advisory group believes Mr Johnson, who is Elegant’s largest shareholder, cannot be effective on the board because of his sprawling business interests.
MANUFACTURING
GKN to plug pension hole
GKN is preparing to put in a one-off lump sum of at least £150m into its pension scheme as it battles a £7.4bn hostile takeover bid from Melrose. The scheme, which includes the savings of 32,000 workers, has a deficit of £700m.
REAL ESTATE
Rent gap grows 44%
Failure to get on the property ladder is now costing young professionals almost £1,000 a year as the "rent gap" widens. New data from Halifax found that the average cost of buying a three-bed home in the UK was £75 a month less than renting at £679 in December 2017, compared to average monthly rent of £754. The gap has climbed to its highest in four years, up 44% from last year’s £623 saving to £900 a year, the study found.
Hughes joins student housing company
RBS director Penny Hughes is joining the board of IQ Student Accommodation as chairman.
RETAIL
UK retail sales lower than expected
Figures from the ONS have revealed that British retailers have had their worst start to the year since 2013, with annual growth in sales slowing to 1.6% in January compared with 2.3% in the same month last year. Economists had predicted a rise of 2.5%. Food sales fell by 0.9% on the year, while the sports equipment, games and toys category increased by 10.9%.
Alchemy Partners circles New Look
Alchemy Partners is reportedly eyeing New Look as the fashion retailer struggles amid falling sales and the loss of insurance cover to its suppliers. According to the Sunday Times, Alchemy is understood to be considering buying into New Look’s bonds, some of which were trading at less than 20p in the pound last week.
ECONOMY
Government on track to beat borrowing
Figures due this week from the ONS are expected to show the government is on track to beat borrowing targets for the financial year. Strong corporation and income tax receipts will show the Exchequer was in surplus to the tune of £9.5bn, £100m more than in January 2017. In conjunction with spending cuts and the resilience of the economy, this should result in government borrowing for the 2017/18 financial year coming in under the OBR’s £49.9bn forecast.
OTHER
Rush to spend old £10 notes
More than £2bn worth of old-style £10 notes remain in circulation less than a fortnight before they are no longer accepted in UK shops. The Bank of England said the withdrawal rate is "broadly as expected" ahead of the March 1 deadline, at which point the paper £10 note will cease to be legal tender.