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Daily News Roundup: Monday, 22nd July 2019

Posted: 22nd July 2019


More bank closures in poor areas

Research by digital current account provider Pockit has found that banks are abandoning customers in poorer parts of England with high street branch closures happening at a faster rate than in wealthier areas. The research found that, on average, the most deprived 10% of local authorities have seen a decline of 31% in existing branches since 2010 - whereas the least deprived 10% have lost just 22% of their existing branches. Meanwhile, the cash machine network Link has reported that cash withdrawals fell by 8.7% in London during the first four months of 2019 compared with the same period last year. In contrast, withdrawals fell by 3.7% in north-east England, 4.7% in Northern Ireland and 4.9% in Yorkshire. John Howells, chief executive of Link, pledged to protect cash machines in areas where cash is still being used regularly.

Will Metro discard chairman?

The Times’ Katherine Griffiths discusses whether Metro Bank’s board will look to oust chairman Vernon Hill. The bank has suffered several recent setbacks, including a £900m accounting error, a share price collapse and investigations by the FCA and PRA. Ms Griffiths notes that a number of analysts believe a radical shake-up at the bank is required and potentially a sale to a larger player or a tie-up with a low-cost digital business. Meanwhile, Sky News reports that Metro is in talks to sell £500m of mortgages back to US hedge fund Cerberus in a bid to shore up its capital position. Metro Bank’s CEO Craig Donaldson revealed in May that the lender could sell loans to cope with the fallout from the accounting error, meaning it is unlikely to surprise the market.

McEwan set for NAB role

A number of papers follow up on the news that former RBS boss Ross McEwan has been appointed as the next CEO of National Australia Bank. John Cronin, a UK banks analyst at Goodbody, said his “deep restructuring experience and his proven ability to navigate choppy waters from a political standpoint” makes him an obvious pick to lead NAB into a new era. Meanwhile, the Sunday Telegraph reports that RBS is considering whether Mr McEwan deserves to be granted “good leaver” status, a decision that will affect a potential bonus pot of up to £8.7m in his final year. One source suggested that his new role at NAB could be a consideration because it is a rival to RBS.

StanChart considers asking Bill Winters to take pay cut

Standard Chartered’s largest shareholder, Temasek, has urged the bank to defuse tensions after CEO Bill Winters hit out at investors who voted against his pay package over his pension payout. The FT notes that Temasek’s intervention could push the bank’s board to consider asking Mr Winters to take a pay cut. Meanwhile, Martin Wheatley, the former boss of the FCA, has criticised bankers after Mr Winters spoke out against shareholders. Mr Wheatley said: “It is the bankers who are immature. Shareholders are trying to make a broader point: bankers are taking too much of the bank's returns in pay.”

Interest-only mortgages in decline

The number of interest-only mortgages has dropped by 50% since 2012, according to UK Finance. The number of interest-only mortgages fell from 2.5m in 2012 to 1.23m in 2018. The number of interest-only mortgages due to expire between 2019 and 2020 fell 40% from 217,000 to 126,000 during the same period. UK Finance says the figures, released last month, are evidence of a concerted effort by lenders to help borrowers who are still stuck in this type of home loan.

TSBs tech system still in need of 400 fixes

Debbie Crosbie, the new boss of TSB, has warned that the struggling lender must repair more than 400 problems with its IT system - just a year after its technology meltdown. Ms Crosbie also admitted that IT defects were taking their toll on branches, with staff in Glasgow having to deal with slower systems "three Mondays in a row".

Challenger banks apps top survey

Monzo and Starling have come top in a consumer survey of the best banking apps. Some 78% of consumers said Monzo’s app had good features and usability, while Starling scored 70%. Barclays was placed third, followed by Lloyds Bank, with NatWest in fifth place. M&S Bank was ranked worst, with only 4% of consumers saying it had lots of features and great usability.

Time to switch banks?

Felicity Hannah in the Independent argues that consumers should consider switching their bank accounts for better customer service and more innovative products. Flavia Alzetta, CEO of banking and payments solution provider Contis, said: “Established banks need to quickly embrace the innovations pioneered by challenger banks, which are fast changing the expectations of consumers. The winners will be the companies that listen to customers and deliver choice. High street banks need to listen and innovate, or die, and time is of the essence.”

Woodford invests in Atom

Neil Woodford has invested a further £10m in the struggling online bank Atom, despite the continued uncertainty over his own investment business. Spanish lender BBVA, the London-based Toscafund, and Perscitus, the family investment fund of venture capitalist Jon Moulton, have also ploughed more funding into the bank. The bank will use the fresh capital to kickstart growth and invest in its technology.

Probe demanded into Bradford & Bingley nationalisation

Members of the Bradford & Bingley Action group have written to the Tory leadership candidates urging them to launch a public inquiry into the events surrounding the nationalisation of Bradford & Bingley during the financial crisis. The action group believes they are entitled to compensation.

Varley refuses to give witness statement in £1.5bn Barclays case

John Varley, the former CEO of Barclays, has refused to give a witness statement as part of a lawsuit the bank is facing from financier Amanda Staveley.


Credit Suisse fails to recoup bankers bonus tax

Credit Suisse has failed in a legal attempt to recoup £240m it paid as part of the Labour government’s post-financial crash “super” tax on bankers’ bonuses. Officials for the Swiss bank said it was unlawful to impose a 50% tax on all bonuses of more than £25,000 between December 2009 and April 2010. However, Mrs Justice Falk dismissed the bank's claim. She ruled that the tax had been a "stop gap" and that its limited period was “a deliberate feature of the regime”.

Goldman’s bankers are left waiting on the ‘platform’

Tom Braithwaite in the FT reflects on last week’s earnings call from Goldman Sachs which saw the bank emphasise technology. He says it makes sense but electronic rivals have a lead.

The day Deutsche Bank’s boss decided on a radical solution

The FT focuses on the background to Deutsche Bank’s CEO Christian Sewing’s decision to overhaul the bank and axe vast lossmaking swaths of its investment bank.

JPMorgan launches shareholder activism analytics tool

JPMorgan has launched a new shareholder activism tool which aims to predict how investors seeking change will influence other company shareholders.


Wizz Air passengers urged to change passwords

Wizz Air has advised 3.4m customers to change their passwords, amid growing fears the airline may have been the victim of a cyber-attack. However, Wizz Air said the advice was due to a technical glitch and was not linked to a cyber-attack.

BA suspends flights to Cairo

British Airways has suspended all flights to Cairo for seven days as part of a review of security arrangements.


HS2 costs set to rise

An internal review has suggested that the HS2 high-speed rail project will cost up to £30bn more than expected – raising fresh questions over whether the new PM will axe the project. HS2’s chairman, Allan Cook, has reportedly told the Department for Transport that the final bill for building the network is likely to be between £70bn and £85bn – not the £56bn which has been budgeted.


Complaints submitted to FCA double

The number of complaints submitted to the Financial Conduct Authority (FCA) almost doubled last year, with 1,075 complaints in 2018/19, a 92% jump on the 557 received in 2017/18. The bulk of the increase centres on complaints about London Capital & Finance and the Collateral Companies, with matters related to the firms drawing 550 complaints from investors.

FCA admits flaws in its register

The FCA has conceded that consumers have been left baffled by its industry register, which is supposed to help them identify and avoid rogue financial firms. The Telegraph notes that in some cases, individuals have lost thousands of pounds after relying on information on the register which turned out to be incorrect. Jonathan Davidson, the watchdog's director of supervision, said that the layout of the register and the terminology used had made it difficult to understand. He added that this often caused confusion when firms were licensed to offer only certain financial services.

Close Brothers reports rise in loan book

Close Brothers Group has reported a 5.1% rise in its loan book this year on the back of strong lending in its banking division, but flagged low trading volumes at Winterflood Securities, its broking division. The banking firm said its loan book stood at £7.6bn with commercial delivering good growth across the portfolio.

Fintech firm plans float

Fintech firm R8 is planning to float on the London Stock Exchange in September, according to CEO Jonathan Rowland. R8 was spun out from business lender Redwood Bank in 2017 and controls a number financial tech start-ups such as JGOO, an online and mobile payments platform, and cryptocurrency firm Mode.


AstraZeneca in cancer drug lift

Astra Zeneca is expected to report strong sales of its new cancer drugs when it reports quarterly results this week. Analysts expect the company to report sales of £5.6bn for April to June, its second quarter, up from £5.2bn in the same period last year.


Mishcon explores IPO options

London law firm Mishcon de Reya has reportedly begun preparations for a flotation or stake sale valuing the firm at several hundred million pounds. Mishcon is looking to hire bankers in the coming months to explore its options, a source told Sky News.


Think-tank proposes stamp duty rethink

Think-tank Onward has suggested that stamp duty on homes worth more than £500,000 should be halved to help older homeowners sell larger homes, opening up more property to families. The plans, set to be considered by Conservative leadership frontrunner Boris Johnson, could also see the levy scrapped on all homes under £500,000. The cost of the reforms, estimated at £3.3bn, would be covered by taxes on non-UK resident buyers, vacant homes and people buying second homes.


Bidding war looms for Jack Wills

Phillip Day, the CEO and owner of The Edinburgh Woollen Mill Group, has reportedly tabled an offer for Jack Wills and is understood to be competing with fashion brand Crew Clothing, Homebase-owner Hilco and the Swedish billionaire Johan Eliasch.

Liberty changes hands

Blue-Gem Capital is reportedly selling its near 40% stake in London’s Liberty department store to a consortium led by Glendower Capital. The deal is said to value the UK retailer at about £300m.


QE has dragged us into politics, admits Bank of England

Andrew Hauser, executive director for markets at the Bank of England, has said that quantitative easing programmes since the financial crisis are dragging central banks into the political sphere and blurring policy lines. He believes that QE has made central banks' relationships with governments “more complicated” and “fuzzied” the divide.


Young women opting to keep finances separate

A survey by Netwealth of nearly 4,000 British women has found that of those aged between 16 and 34, nearly a third, 31%, opted against sharing financial assets with their significant other. Meanwhile, only around a quarter of those aged over 55 (26%) opted not to share their wealth. Charlotte Ransom, CEO of Netwealth, said the shift had been prompted by “the backdrop of later-in-life marriages, higher divorce rates and increased financial earnings”. Separate research has found that more than 60% of the UK’s wealth is expected to be in the hands of women by 2025. Lisa Francis, CEO of Barclays Private Bank, UK and Ireland, said: “Reports show that women are outliving men. They are often the family matriarchs, being left with significant wealth.”

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