BANKING
JP Morgan to launch consumer services in the UK
The US banking giant JP Morgan Chase is to launch a range of consumer products in the UK. Using the Chase brand, the bank is likely to offer savings and current accounts, as well as a range of open banking services and loan products in a move that could spark a new price war among lenders, Sky News suggests. It is currently unclear whether the bank plans to enter the highly competitive UK mortgage market, but City watchers will be keen to see what digital offering JPMorgan brings considering its involvement with 10x Future Technologies and rumours last year of work on a secret digital banking project in London. The FT reports that Clive Adamson, former head of supervision at the FCA, has been asked to chair the new business.
Banks need to reduce internet outages
The Sunday Times reports on the frequency of IT failures suffered by banks and building societies over the last year, with Royal Bank of Scotland and Santander reporting the highest number of meltdowns at 15 each. HSBC and First Direct reported 14 incidents, as did Virgin Money, Clydesdale Bank and Yorkshire Bank. Monzo, M&S Bank, Metro Bank, Nationwide and Coventry Building Society reported no internet banking problems while M&S Bank and Starling performed the best, reporting zero serious incidents with internet, mobile or telephone services during the year. Venkatesh Varadarajan from Infosys Consulting commented: “As we move to a cashless society and a tech-first financial world, banks need to buck up their ideas and improve their technology.”
Banks ready to introduce name-check system
The UK’s six largest banking groups have until March 31 to introduce a new system to alert customers to potential bank transfer fraud. Barclays, HSBC, Lloyds, Nationwide Building Society, RBS and Santander, say they are on target to roll out the scheme that will warn account holders if the name of the person they want to pay does not match that on the recipient’s account. The rules apply to Chaps payments, and “faster payments”, but not to direct debits or savings accounts. Data from UK Finance shows that in the first half of 2019 customers lost more than £207.5m from payments they made to fraudsters, up from £148.2m in the first half of 2018.
Barclays could be fined over spy software
Barclays could be fined up to £865m by the Information Commissioner’s Office (ICO) after using spy software on its employees. Privacy lawyers said the lender could be hit with a fine of up to 4% of its worldwide turnover of £21.6bn if it is found to have breached data protection laws. Barclays removed the software after a backlash last week over the use of technology to monitor staff.
Jean Pierre Mustier rules himself out of HSBC role
Shares in UniCredit fell nearly 4% on Friday amid rumours HSBC was to poach its CEO Jean Pierre Mustier, who has turned the Italian bank around, but Mr Mustier has now ruled himself out. Separately, HSBC has warned that it could face a credit rating downgrade if officials cannot stop the spread of coronavirus in China.
Big lenders slash jobs as they struggle against digital rivals
The Sunday Times looks at how digital banks are at an advantage over high street behemoths which are under pressure to deliver better outcomes for customers while struggling with high costs. The rise in technology has enabled big banks to slash staff numbers but they still have cumbersome and expensive legacy systems. Starling Bank’s CEO Anne Boden doubts big operators have the agility to “build and maintain digital systems that are both resilient and fully responsive to customer needs”.
Pace of digital bank expansion is slowing
New research shows growth in customers signing up to digital banks slowed by 20% in the second half of 2019, from 170% in the first half to 150%, while average deposits at lenders such as Monzo, Revolut and Starling Bank slipped by a quarter from £350 to £260. Collectively, digital banks had 19.6m customers at the end of the year.
Legislation may be needed to prevent death of cash
Treasury officials are considering introducing a law requiring banks with a certain amount of deposits to offer cash services to protect the widespread availability of banknotes. UK Finance has predicted that fewer than 10% of transactions will be in cash within a decade, but around 30% of the public do not use online banking.
Revolut apologises after account freezing error
Revolut has come under fire for freezing the accounts of French firm Priorité Energie for six weeks without explanation. The digital bank has previously admitted that its expansion impacted on compliance and customer services.
UK’s top pension scheme tackles Barclays on climate change
The UK’s largest pension fund, Nest, has called on Barclays to present a “clear and robust plan” to phase out the financing of fossil fuel companies that are not aligned with the Paris Agreement.
PRIVATE EQUITY
Cash rolls in to UK's fintech sector
Data released today show British fintech companies attracted £37.4bn ($48.5bn) of investment in 2019, up 91% from a year earlier, while the number of deals in the UK reached a six-year high. The UK accounted for half of the top 10 deals across Europe and netted more than 80% of the continent's record-setting total of $58bn. Eileen Burbidge, partner at Passion Capital, comments: "The UK is currently the leading fintech hub in the world, thanks to extensive financial services experience, digital technology talent, and progressive regulators and policy makers supportive of increasing and accelerating innovation in such a crucial sector."
SoftBank urged to return Alibaba riches
Activist hedge fund Elliott is leading calls for SoftBank to sell shares in Alibaba and return some of the profits to shareholders. SoftBank founder Masayoshi Son did not rule out selling Alibaba shares last week.
Private equity outpaced by roaring stocks
A new report reveals how private equity returns have fallen behind those of stocks in the US during the past decade – the first ten-year period during which this has happened.
Venture funds race for capital stokes fears of overheating
The FT reports that venture capital groups are accelerating their fundraising and seeking more money from investors, adding to concerns about overheating in private markets.
Utility disruptor secures backing
ICAP founder Michael Spencer has joined Barclays Ventures in investing in Youtility, a tech start-up which aims to help people manage their utility suppliers and identify better deals.
INTERNATIONAL
Wells Fargo to pay $3bn for fake-accounts scandal
Wells Fargo has agreed a $3bn settlement with the Department of Justice and the SEC over the fake account scandal which emerged in 2016.
China reopens bond futures market to big local banks
China’s securities regulator is to run a pilot programme allowing the country’s five largest state-owned commercial banks to trade in domestic bond futures as regulators gradually open the market up.
Investment banking revenues fall to lowest since 2008
Revenue at the world’s 12 largest investment banks was down 4% year-on-year to the lowest level since 2008, with equities trading the weakest part of the business.
AVIATION
JetBlue signs loan linked to ESG goals
JetBlue has signed on to an industry-first credit facility set up by BNP Paribas that is priced according to its performance on environmental and social matters.
CONSTRUCTION
Big dividends predicted for housebuilders’ shareholders
Analysts at HSBC predict massive dividend payments for shareholders of Britain’s biggest housebuilders as profits continue to rise on the back of the Help to Buy scheme. The top nine housebuilders paid out £2.6bn in 2019 but this could rise to £3.6bn over the next five years, analysts said.
Keepmoat up for sale
TDR and Sun Capital, the private equity owners of Keepmoat Homes, are looking for a buyer willing to spend £500m, City sources have told the Mail.
FINANCIAL SERVICES
Chief cashier signals support for official cryptocurrency
The chief cashier of the Bank of England, Sarah John, has said it would be right for central banks to consider launching digital currencies to ensure “society still has a broad range of payments that it can use with confidence”. With the private sector streaking ahead with cryptocurrency developments such as Facebook’s Libra, Ms John said: “It is absolutely right that central banks think about whether a public sector or private sector would be best to provide a digital currency going forward.”
Allianz profits hit by rising corporate claims
A rise in the value of claims in the US and Australia has hit profits at Allianz which were down €600m, but CFO Giulio Terzariol said rising prices for insurance would compensate.
Marathon man brings new mindset to Aegon Asset Management
The FT interviews Bas NieuweWeme, the CEO of the asset management arm of Dutch insurer Aegon, who discusses the future of active strategies, fee pressures and global ambitions.
Banks risk being caught off-guard by climate change
A report by Oliver Wyman says the financial services industry is at risk of being caught off-guard by rising carbon taxes, which the consultancy says could push oil and gas firms to default on their debt.
LEISURE & HOSPITALITY
TRG to further slim leisure portfolio
The Restaurant Group is set to slim down its struggling casual dining brands, including Frankie & Benny's and Chiquito, with many sites in out-of-town retail parks in the line of fire. This week, CEO Andy Hornby is expected to unveil his first major strategy update since joining last year.
MANUFACTURING
Hornby looks to cement recovery
Hornby is looking to raise £15m from investors to bolster its finances as CEO Lyndon Davies cuts losses from £10.1m to £5.3m, tackles supply problems and ends discounting.
MEDIA & ENTERTAINMENT
The Sun records £68m loss
The Sun newspaper recorded a loss of £68m last year amid falling print sales and the £54m cost of phone-hacking claims against its parent company News Group Newspapers. The group’s Times and the Sunday Times newspapers have managed to grow revenue thanks to a decision to put them behind a paywall.
PROFESSIONAL SERVICES
Cordant in trouble over debt
Recruitment agency Cordant is scrambling to raise cash after one of its lenders denied a request to refinance a debt facility. The group's last available accounts show it made an operating loss of £12.2m.
REAL ESTATE
Hammerson exits retail park sector
Hammerson has announced it will sell its remaining nine out-of-town retail locations for £455m, as it focuses on cutting debt to offset the spate of UK retail store closures and rise of online sales. Seven of the retail parks will be sold to private equity firm Orion European Real Estate for £400m, while the other two have been sold for £55m.
RETAIL
Aquascutum in danger of collapse
Concerns have been raised over luxury brand Aquascutum after its auditors failed to sign it off as a going concern. Its Chinese owner Shandong Ruyi Technology Group is struggling to repay debts and Aquascutum has been taken to court by suppliers over unpaid invoices.
SPORT
Buyout group CVC steps up plans to reshape global rugby
CVC Capital Partners is hoping to finalise a £300m deal to acquire a roughly 14% stake in the Six Nations rugby tournament. The group has stakes in Pro14 and Premiership Rugby.
ECONOMY
Business surveys paint positive picture for Q1
The latest IHS Markit purchasing managers’ index indicates that the services, manufacturing and construction industries are all now expanding with a flash estimate putting the index at 53.3 - any score above 50 indicates growth. The figure is the joint-highest reading since September 2018 and above the 52.8 forecast by analysts.
OTHER
Campaigners want Thompson off BoE board
Climate change activists are seeking to embarrass the Bank of England into removing Dorothy Thompson from its board because she is the executive chair of Britain’s largest independent oil company, Tullow Oil. Groups such as Greenpeace, Friends of the Earth and Oil Change International say it is a conflict of interest for the Bank of England to have fossil fuel executives on its Court of Directors.