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Daily News Roundup: Monday, 20th August 2018

Posted: 20th August 2018


Strict EU regulations could force more banking jobs from City

Standard Chartered’s CEO for Europe and the Americas has warned that EU regulators are toughening their criteria when granting licences for bank subsidiaries to operate in the EU. Tracy Clarke said Standard Chartered has been waiting nearly nine months for EU officials to approve a banking licence that will turn its Frankfurt branch into a subsidiary. While dialogue with German regulators and the ECB has been “very constructive”, Mrs Clarke said they have become increasingly strict. The situation means banks may end up moving more jobs due to Brexit than originally planned, she added.

Women could hold both top jobs at RBS

Ewen Stevenson, Royal Bank of Scotland’s CFO, will leave the bank at the end of September, to be replaced in the interim by deputy CFO Katie Murray, who will be the first female CFO of a major UK bank. The news comes as the bank finalises a $4.9bn (£3.9bn) settlement with the US Department of Justice. There is also speculation over chief executive Ross McEwen, and John Cronin, banks analyst at Goodbody, said there was “no doubt that he would welcome a swifter departure to the extent a suitable replacement can be secured.” It is thought he may be replaced by head of commercial and private banking Alison Rose, which would see both posts occupied by women for the first time, while no woman has ever been chief executive of a FTSE 100 bank.

Bank scheme prevents £1.5m of fraud

More than £1.5m of fraud has been prevented in Scotland under the Banking Protocol scheme where bank staff alert police to potential victims. Bank workers contact police if a customer requests to withdraw or transfer a sum of money which appears unusual for them. Police Scotland said they had responded to around 250 calls and a number of arrests had been made. Meanwhile, the City of London Police and Lloyds Banking Group have announced a three-year partnership to combat economic crime. Lloyds' Brian Dilley said: “By working collaboratively under a public-private partnership, Lloyds Banking Group and City of London Police will be more effective in reducing the harm caused to our communities by criminals.”

“Open Banking” concerns raised

Britain’s biggest lenders have come under fire for their perceived slow take-up of so-called “Open Banking” reforms which are designed to spark a digital revolution in banking. Since its launch 63 firms have started using Open Banking, while the technology was used 1.2m times in June to securely share data, up from 720,000 the previous month. However, the take-up has fallen short of industry expectations, with digital lenders blaming their high street rivals for dragging their heels. Anne Boden, chief executive Starling Bank, said major lenders were falling behind because they could not see how to make money out of Open Banking. Ms Boden added that she had some sympathy for the major lenders, noting that they were using legacy technology.

Welham: Encourage banks to use more technology

Jason Welham, a member of the financial institutions group at Lazard, writes in the Telegraph that banks should be encouraged to branch out into a digital future. He suggests that rather than worrying about slowing or halting branch closures, we should be focused on what banks build in their place, to better serve customers who want the same services but may not need a branch.

Billionaire sues sovereign funds over RBS fees

Manx Capital, a vehicle controlled by leisure billionaire Trevor Hemmings which is managing a £200m claim against RBS on behalf of thousands of shareholders, has launched a High Court action against 18 institutions, including Kuwaiti and Singaporean sovereign wealth funds, accusing them of trying to “unjustly enrich” themselves through complex litigation related to RBS’s 2008 rights issue. Hemmings claims the companies have “intimated in correspondence that they are unwilling to meet their obligations” to pay their share of legal costs, and that this constitutes an attempt at “unjust enrichment.”

Shareholders raise red flags at Atlas Mara

Shareholder adviser groups Glass Lewis and ISS have raised concerns over corporate governance issues at Atlas Mara, a London-listed bank set up by former Barclays group CEO Bob Diamond to focus on Africa. The groups have recommended that investors vote against Diamond’s election as chairman because, as a co-founder of the firm, he cannot be considered independent. Both groups also oppose a number of non-executive directors, and a motion that would allow Atlas Mara to sell 15% of its shares without first offering them to existing investors.


Fintech start-up secures $7m

Previse, which uses AI to enable large firms to pay suppliers, has closed a $7m (£5.5m) series A funding round, led by Augmentum's listed fintech vehicle and Bessemer Venture Partners. Previse CEO Paul Christensen said the startup will use the funding to fuel its aggressive expansion and model growth.


Eurozone loan demand expected to rise

The European Central Bank’s quarterly survey of top Eurozone banks has found that demand for corporate and household loans is expected to increase further in the third quarter, while credit standards are also expected to ease. The ECB has bought €2.5trn of public and private bonds over the last three years to push down the cost of borrowing. The survey found that: “Banks' overall terms and conditions on new loans continued to ease across all loan categories in the second quarter of 2018, driven mainly by a narrowing of margins on average loans.”

RBC whistleblower protections under FCA scrutiny

The Royal Bank of Canada’s whistleblower protections are being scrutinised by the FCA, with a number of staff claiming to have been dismissed without due process after highlighting legal and compliance problems.

Beijing orders banks to boost lending to exporters

China’s banking regulator has called on banks to boost lending to infrastructure projects and exporters as the government looks to bolster economic confidence.

Global equity market shrinks as buybacks surge

The FT reports that the global equity market is shrinking at the fastest pace in 20 years, as share buybacks dwarf the volume of firms going public, issuing new stock, or selling convertible debt.


Ford pins slump on Brexit

Ford has blamed Brexit for a $971m fall in 2017 profits at the company's European operations in 2017 - $600m of this was down to the fall in the value of sterling since the referendum. Ford warned it is prepared to “take whatever action is needed” to keep its European business profitable. Ford said another factor in the downturn is “growing anti-diesel sentiment” across Europe.


Evans asked to help with Prudential split

Mike Evans, an insurance industry veteran, has been approached to play a key role in the £45bn split of Prudential into two separately listed FTSE 100 companies. Mr Evans is being considered to take on the chairmanship of M&G Prudential before its demerger from its parent company in 2020, and is seen by Prudential’s board as being suitable to oversee the split. Mr Evans gained his insurance experience as COO of Skandia UK, and served as a non-executive director of Esure.

Revolut faces backlash over lock-outs

Revolut, the UK’s fastest-growing fintech company, has received a string of complaints after a number of users had their accounts suddenly blocked due to suspicions of money laundering. According to messages seen by the Sunday Times, blocked customers have been asked to submit payslips and P60 forms, with customers who are on holiday and using Revolut’s app for foreign exchange crying foul. One customer who has been locked out of his account for nine days has made a complaint to the Financial Ombudsman, and Revolut has now said it is looking into its customer communications.

Esure CEO search delayed

The Telegraph reports that the search for Esure’s next chief executive has been delayed by the company’s agreement to be taken over by Bain Capital for £1.2bn. Sir Peter Wood, the firm's founder, said two candidates had been shortlisted before Bain's executives approached him in April to discuss a deal.

Asset managers draw up plans for hard EU exit

According to research from Liquidnet, the UK trading venue, nearly two-thirds of asset managers are preparing for a “hard” Brexit scenario of the UK leaving the single market and customs union.

Mifid II impact on small and mid-cap brokers fuels consolidation talk

The FT notes that the impact of Mifid II on small and mid-cap brokers has begun to fuel talk of consolidation across the industry.

Blue-chip funds caught out by Turkish turmoil

Funds run by Fidelity and Goldman Sachs are among those caught out by the country’s currency crisis. Funds run by the firms had 6.9% and 7.8% weighting to Turkish debt respectively at the end of June.


Novo Nordisk buys UK university biotech spin-out Ziylo

Danish firm Novo Nordisk, the world’s largest manufacturer of diabetes medicines, has acquired UK biotech spin-out Ziylo, in a deal both parties say could be worth more than $800m if key milestones are met.


UK slips down manufacturing league table

Figures from the EEF show that Britain’s manufacturing industry has fallen to ninth in the world below France. China kept the top spot ahead of the US and Japan. The EEF said the UK’s manufacturing industry was “punching above its weight” and was of vital importance to the UK’s economic health. The trade body added that productivity growth remained strong.


Swap ‘broken’ business rates for land value tax, urges Cable

Lib Dem leader Sir Vince Cable, is calling for the business rates system to be replaced by a land value tax. Sir Vince said: “Business rates were a badly designed policy to begin with and have become an unacceptable drag on our economy. They are a tax on productive investment at a time of chronically weak productivity growth, and a burden on high streets adapting to the rise of online retail. By only taxing land and not the productive capital above it, this reform would remove a major disincentive to investment, boosting productivity and contributing to a necessary revival in UK industry.”


Jack Wills works with adviser

Private equity veteran Rob Templeman, who helped to strike buyout deals for Homebase, Halfords and Debenhams in the early 2000s, has been drafted in as an adviser to Jack Wills, reports the Times’ Oliver Shah. BlueGem, the investment firm that owns 60% of Jack Wills, is in the process of pushing out co-founder Peter Williams, Mr Shah notes.


Bosses fear Brexit economic fallout

The Institute of Directors has found that business leaders’ confidence in the UK economy has fallen to its lowest level of the year so far, as fears grow about the impact of a potential chaotic Brexit. The IoD’s monthly tracker found that 16% more bosses on balance had a pessimistic view of the UK’s economic prospects compared to an optimistic view. Uncertainty around trading with the EU concerned 44% of bosses, just below the UK’s general economic conditions at 47%. Tej Parikh, senior economist at the IoD, urged policymakers to “stay wary of the fragility of business confidence”.

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