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Daily News Roundup: Monday 22nd January 2018

Posted: 22nd January 2018

BANKING

McGuinness: Brexit not as bad as feared

The City of London's policy chief, Catherine McGuinness, has said the UK’s financial services industry will not suffer as badly as first feared from Brexit following agreement between negotiators last month to move on to trade talks. Job losses will be at the lower end of estimates, she said, while greater understanding from Theresa May's government on the City’s position also brightened the outlook. Ms McGuinness added that the Bank of England's offer last month to allow European bank branches in London to avoid a costly conversion into subsidiaries was an indication that Britain would remain open to foreign investment.

Look beyond Brexit urges City minister

The new City minister John Glen has used his first meeting with Square Mile firms to urge bank chiefs to "look beyond" Brexit and focus on London's strengths in fintech and "green finance". Following the meeting, the Treasury said: “The Economic Secretary updated the CFOs on the latest progress made in the Brexit negotiations, including the UK's aim to agree an implementation period as soon as possible, and invited them to share their insight. He also invited the CFOs to look beyond the UK's exit from the European Union, reiterating the UK's leading position in the markets of the future, such as Green Finance and Fintech.”

Banks called to account over “Open Banking”

Britain’s biggest banks have been accused of “scaremongering” about changes which have been introduced under the so-called “Open Banking” reforms. The big banks and consumer groups have warned that the changes could increase the risk of customers falling prey to scams. However, digital lender Monzo said the big banks were “digging their heels in” by not embracing the reforms.

SMEs move to cash over card fee costs

Many corner shops and small businesses are putting up “cash only” signs after EU rules banning charges on credit card payments came into force last week. Shopkeepers say they still face charges from card providers and cannot afford the extra costs. Large purchases are also affected, with car dealers saying some people will end up taking car finance deals if they can't use a credit card.

Hedge fund makes $1bn bet on Barclays rebound

US hedge fund Tiger Global has invested more than $1bn in Barclays in a vote of confidence in CEO Jes Staley’s plans to turn the bank around.

Monzo to phase out popular prepaid cards by April

Monzo is scrapping all of its pre-paid cards in favour of its current account debit cards by April.

PRIVATE EQUITY

Hungry funds look to switch to active equity

A survey by BlackRock has revealed that a quarter of the world's biggest pension funds, insurers and endowments plan to increase their allocation to active equity products.

Carlyle’s $2.5bn fund to cast net across the globe

US private equity firm Carlyle is to raise a $2.5bn fund to buy oil and gas assets outside North America.

INTERNATIONAL

US banks suffer 20% jump in credit card losses

JPMorgan Chase, Citigroup, Bank of America and Wells Fargo took a combined $12.5bn hit from soured card loans last year, about $2bn more than a year ago, recent results for the US retail banks show.

Moscow creates bank to help it avoid US sanctions

Russia’s central bank has said that Promsvyazbank, the country’s largest bank by assets, will become a “special-purpose bank for serving military-industrial-complex businesses”.

CONSTRUCTION

Support for Carillion victims a “sticking plaster” solution

Mike Cherry, policy chairman of the Federation of Small Businesses, has said help offered by banks to businesses owed money by failed outsourcing giant Carillion will be no more than a "sticking plaster" solution. The support would "probably" not be enough for many businesses and self-employed contractors, he said. Mr Cherry added that Carillion's collapse highlighted the problem of late payments, which should be stopped "as a matter of urgency".

FINANCIAL SERVICES

Cryptocurrency market to boost City jobs

Hiring in the City this year is set to be boosted by the boom in Bitcoin and the “increasing need for blockchain and cryptocurrency” expertise, according to Morgan McKinley. “Many banks believe that blockchain technology holds great potential to optimise parts of the clearing and settlements process,” the recruiter said. “Aside from the potential need for a support network, there will also be a need for technology specialists, namely blockchain developers.” Separately, agricultural commodities trader Louis Dreyfus Company and a group of financing banks have completed the first agricultural deal using blockchain.

One in 10 drivers struggling with car loan bills

New research from the RAC has found that one in 10 drivers are struggling to afford the payments on their car loans. Experts said many customers were sold deals they do not fully understand, fuelling fears a soaring number of motorists could default on debts and trigger a financial crisis. Rachel Reeves, chairman of the Commons business, energy and industrial strategy committee, said: “Many people are struggling to pay off these loans and are at risk of being driven deeper into debt. The easy car finance offered by some lenders could be a ticking timebomb for the wider economy.”

Treasury told to relax EIS rules

Investors have called on the Treasury to loosen new rules on investing in so-called knowledge intensive companies claiming they are too tight. Investors can receive 30% in tax relief on investments of £2m after the limit on the enterprise investment scheme (EIS) was doubled in last year’s budget, but the business must spend heavily on R&D and create their own intellectual property. It also qualifies if more than 20% of its staff have master’s degrees or higher that are relevant to the industry they work in.

Telegram app to raise $2bn in cryptocurrency

Telegram, a "hack-proof" messaging app, is planning a $2bn cryptocurrency fundraising that will set a record for a so-called initial coin offering. The Sunday Times suggests that the fundraising will test investors’ enthusiasm for digital currencies after a market rout which has wiped out hundreds of billions of pounds in notional paper wealth.

Esure splits with chief executive as it seeks fresh direction

Esure CEO Stuart Vann has left the company. FD Darren Ogden is taking charge of the insurer while a permanent replacement is sought.

LEISURE AND HOSPITALITY

Airbnb drops bids for holiday operators

Airbnb has withdrawn from the bidding for brands including Hoseasons, James Villa Holidays and Cottages.com after they were put up for sale by Wyndham Worldwide Corporation. Sources said Airbnb was “evaluating a range of factors”. The Sunday Times notes that Blackstone, CVC Capital Partners and PAI Partners remain keen on the businesses.

Pub company to fight tenants’ freedoms

EI Group, previously known as Enterprise Inns, is taking a decision by the industry regulator that a contract the company had with a pub tenant was unfair to the High Court. New regulations introduced in 2016 require pub companies to permit tenants to buy beer from wherever they wish under a new contract, without being left worse off. EI says such agreements, known as “MRO” contracts, could hit profits by reducing its beer sales and wants the Pubs Code Adjudicator overruled.

MEDIA AND ENTERTAINMENT

Magazine publisher considers next move

Advisers have been hired by magazine publisher Ink to examine the possibility of a sale or float of the business. The company publishes inflight magazines for Thomas Cook, Virgin Atlantic and American Airlines and easyJet and is valued at between £60m and £70m.

REAL ESTATE

Santander launches follow-on rate

Santander has introduced a variable follow-on rate, to which a mortgage defaults when any fixed term deals end, at 3.25% above the Bank of England base rate, instead of being moved to the standard variable rate at 4.74%. Experts predict other lenders may follow suit, sparking the latest mortgage war.

RETAIL

New Look bondholders hire lawyers

Bondholders to New Look have drafted in restructuring lawyers to represent their interests amid concerns that the retailer will be forced into a costly financial overhaul. It is understood that Wall Street's most aggressive private equity and hedge funds have formed a powerful committee to protect their interests. The group includes Carlyle, Blackstone's credit division GSO, asset managers CQS and M&G Investments, investment firm Alcentra and distressed debt investor Avenue Capital Group.

Poundland on the block?

Several private equity firms have reportedly begun to circle Poundland amid expectations that Steinhoff, its South African owner, could be forced to sell the chain following an accounting scandal. Advent, Apax, Bain, Clayton Dubilier & Rice, CVC and KKR are monitoring the situation closely in case Steinhoff needs to raise additional cash.

ECONOMY

Analysts predict strong start to 2018

Economists are predicting positive GDP and employment figures for the final quarter of 2017, with economic growth expected to be 0.4% for Q4 pushing GDP up 1.8% for the year. Analysts also predict the jobless rate will stay at 4.3% and may even fall to as low as 4% in 2018.

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