HSBC intensifies pivot to Asia with job moves and US exit
HSBC is expected to outline plans to accelerate growth in Asia this week defying critics who believe the bank should steer away from Beijing’s orbit. Top executives are being moved from London to Hong Kong while its US retail operation is being scrapped and further expansion in Singapore planned. Greg Guyett, co-head of global banking and markets, Nuno Matos, chief executive of wealth and personal banking, and Barry O’Byrne, chief executive of global commercial banking are among those thought to be relocating to Hong Kong, a move the FT asserts will mean almost all of HSBC’s global revenue will be run out of Hong Kong. In the UK, the bank has been lambasted for backing Beijing’s controversial security law, which criminalises anti-government movements. But one HSBC executive tells the FT: “The job for [HSBC chairman] Mark Tucker is 80% politics and 20% business at the moment. The Chinese have the potential to destroy them.”
NatWest sets aside £3.2bn to cover bad loans
NatWest Group saw a pre-tax loss of £351m and set aside £3.2bn for bad loans last year. After tax and payments to certain bondholders, the net loss for the bank is £753m. The bonus pool for NatWest bankers has been cut by 33%, leaving staff to share £206m. The bank also announced that it will resume making dividend payments to shareholders due to its healthy capital cushion, paying £364m a year. The Bank of England told banks to halt payouts to shareholders during the pandemic but said the payments could resume in December. Meanwhile, NatWest announced that it would close down its Ulster Bank business in the Republic of Ireland. NatWest chief executive Alison Rose said: “It has become clear Ulster Bank will not be able to generate sustainable long terms returns for our shareholders.” Allied Irish Banks has entered a non-binding agreement to buy around €4bn of corporate and commercial loans from NatWest’s Irish outfit.
20 Barclays execs earn more than CEO
A number of Barclays executives earned more than CEO Jes Staley last year after he took a £2m total pay cut. The bank’s annual report shows that three employees were paid more than £6m, while eight were paid between £5m and £6m and ten earning £4m-£5m. Mr Staley’s total pay fell 32% to £4.01m after his annual bonus halved from £1.6m to £843,000. The median UK employee at the bank saw a 7% increase in fixed pay, while annual bonuses fell 16%. The total bonus pot for Barclays staff rose 6% last year to £1.6bn.
Lloyds profits expected to fall by nearly 80%
Lloyds is expected to announce an 80% fall in profits when the bank reports its 2020 results this week, with impairments thought to have escalated to £4.7bn across the financial year. It would lead the bank to a pre-tax profit of £905m, a reduction from £4.4bn a year earlier. Nevertheless, shareholders are hoping for a 1p dividend.
Europe’s investment bankers fend off bleak backdrop to scoop up bonuses
A strong year for trading and dealmaking means European investment bankers are set to see higher bonuses while the impact of the pandemic sees payouts for staff in other divisions cut or cancelled.
UniCredit banker moonlighted as adviser to ex-Wirecard boss
It has been revealed that UniCredit investment banker Jana Hecker moonlighted as a financial adviser to the CEO of payments firm Wirecard, which collapsed following revelations of accounting fraud.
Car firm’s cash drive pays off
Connected car start-up Wejo has raised $29m in borrowing that may be converted to shares from investors, adding to $13m raised last year.
Economy will lose £18bn unless travel restrictions are lifted
MP’s have warned that the UK economy will lose £18bn if the current restrictions on international travel extend into the summer, with the All Party Group on the Future of Aviation urging ministers to set a clear timetable for opening up travel – as well as deliver a comprehensive financial support package for the industry.
Dozens of Boeing 777 aircraft grounded after engine failure
The US Federal Aviation Administration has ordered inspections of the Boeing 777 planes with Pratt & Whitney PW4000 engines after an engine failure on a United Airlines flight caused debris to be strewn across a Denver suburb.
City calls for post-Brexit boost for financial sector
City firms are calling on the Government to develop an ambitious strategy to boost exports of financial services. The proposals have been drawn up by UK Finance with input from bodies including the Association of British Insurers and the Investment Association. They are urging ministers to cut red tape, lower taxes and make it easier for finance professionals from abroad to work in the UK. The report also says new trade agreements should be used to unlock market access for financial services in markets such as Japan and the US. The move comes amid concern over a lack of agreement for financial services being secured in Brexit talks, making it harder for UK financial firms to do business in the EU.
Around 1,000 EU finance firms expected to open offices in the UK
Financial Conduct Authority records obtained by financial consultancy Bovill show roughly 1,000 European Union finance firms are expected to open their first offices in the UK after losing their passporting rights because of Brexit. The firms “were operating on a services passport prior to Brexit, which means they did not have a permanent office in the UK,” said Ed O’Bree, partner at Bovill. “These firms are therefore likely to invest in real estate and professional services advice as they set up a UK office for the first time.”
Law firm prepares class action against Link
Litigation firm Harcus Parker has amassed more than 6,000 investors to sue Link Financial Services, the supervisor company which shuttered Neil Woodford’s £3.7bn Equity Income fund in 2019. The firm’s plans could see fund manager Mr Woodford appear as a witness to help investors’ attempts to claw their money back. Harcus Parker will argue that Link failed to properly check that the fund was able to meet withdrawal requests and will say it did not properly assess the value of some of the private companies Woodford backed.
Poll reveals ‘good progress’ on inappropriate behaviour at Lloyd’s
An internal survey of more than 6,000 Lloyd's of London workers has found that 13% of respondents had observed excessive alcohol consumption between October 2019 and October 2020. The report also shows that 4% had witnessed sexual harassment and 15% had seen colleagues turn a blind eye to inappropriate behaviour. The figures are all down on last year’s internal survey findings, with Lloyd's chief executive John Neal saying this points to "good progress". It is noted however that the figures may have been skewed by pandemic-related restrictions and lockdowns.
Invesco in the doghouse
Invesco has eleven poorly performing “dog funds”, holding £9bn of people’s savings, in the latest Spot the Dog list of underperforming funds from BestInvest. The investment platform identified 119 ‘dogs’ that hold a total of almost £50bn.The list features fifteen funds which hold more than £1bn of investor money, including funds managed by JPMorgan, Schroders, St. James’s Place, M&G, and Hargreaves Lansdown.
Savers hit by toxic £1.5bn scheme
Investors could face a severe financial hit after placing their money into German Property Group, a toxic investment scheme that later collapsed. A document written by insolvency administrators says the German Property Group, into which backers pumped more than £1.5bn, "gradually developed into a pyramid scheme".
Lloyd's to catalogue goods to identify slave trade links
Insurance market Lloyd's of London is to catalogue over 3,000 items acquired over more than 300 years to identify any connections with the slave trade. John Neal, chief executive of Lloyd’s, says it aims to make the catalogue public by the end of the year, before deciding what to do with artefacts relating to slavery.
Carney joins Stripe board
The former Governor of the Bank of England, Mark Carney, has joined the board of US payments processing business Stripe. Mr Carney’s appointment comes days after it was reported that the business is in talks to raise new funding at a $100bn valuation.
Factory output edges down amid Brexit trade delays
Factories have warned that Brexit trade frictions are beginning to bite, despite the UK and eurozone economies showing signs of stabilising from their latest lockdown slumps. The purchasing managers' index pointed to output steadying in February, with services activity recovering to a four-month high. However, manufacturers reported some of the worst supply chain disruption on record as global shipping delays and trade frictions from Brexit hold back the sector.
Quarter of house buyers not happy with location
One in four homeowners regrets having brought a property in the area where they live. Research by First Mortgage found that 51% said they had little choice in the locality they wanted to live, while 28% chose to live where they did to develop their property. The survey of 1,400 homeowners showed that for a third of buyers, familiarity of the area is most important when searching for a new home. Affordability (33%) and proximity to family (32%) come in just behind as reasons for choosing a certain area to live.
Segro celebrates rising demand for warehouses
Segro has benefited from changing consumer habits during the pandemic, which has led to a record rise in demand for warehouse space. The firm said that it had secured £79.9m of new annual rental income in 2020, up 18.3% on the previous year.
Retail sales slip 8%
Retail sales across the UK fell 8% month-on-month and almost 6% year-on-year in January, with the latest coronavirus-related restrictions delivering a decline that exceeded analysts’ forecasts of a 3% fall – although the slide was not as steep as the 22% fall seen in the initial lockdown last April. The data from the Office for National Statistics reveals that online spending accounted for a record 35.2% of sales last month, up from 29.6% in December and 19.5% in January 2020.
Arcadia pension fund had £510m hole
Sir Philip Green’s Arcadia retail empire had a pension deficit of £510m when the business collapsed in November. Previous estimates had suggested the pension fund had a shortfall of around £350m. Meanwhile, a 2019 deal between Sir Philip Green and Arcadia Group's pension trustees is set to save the schemes from a bailout. The agreement granted trustees partial security over a £327m loan, with this repaid when Asos bought the Topshop, Topman and Miss Selfridge brands from administration. The sell-off triggered a payout to the pension fund.
Last-minute loan blow for clubs
The Treasury has set out clauses for a £100m Bank of England-backed bail-out loan for football’s Championship, with the rescue package seemingly dependent on demands that could curb bonuses, new contracts or wage rises.
Government borrowing hits January record
Government borrowing hit £8.8bn last month due to the cost of the nation’s coronavirus-related spending. The figure marks the highest January reading since records began almost 30 years ago and sees the first time in ten years that borrowing in the first month of the year has outweighed the total pulled in via tax and other income. The Office for National Statistics report shows that Government borrowing for this financial year stands at £270.6bn, £222bn more than a year ago, with the Office for Budget Responsibility having estimated that borrowing could reach £393.5bn by the end of the financial year in March. The increase in borrowing has seen the national debt climb to £2.11trn, with the UK's overall debt now at 97.6% of GDP.
BoE faces tension over stimulus options if recovery disappoints
The FT reports on a potential conflict between Bank of England policymakers over whether the central bank should expand its quantitative easing programme or take the plunge on negative interest rates.