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Daily News Roundup: Monday, 25th February 2019

Posted: 25th February 2019

BANKING

Metro, Starling and ClearBank win RBS funds

Metro Bank has secured £120m from a fund paid for by Royal Bank of Scotland to promote competition in small business banking. The two other winners are digital banks Starling, which will receive £100m, and ClearBank, with £60m. More established players TSB, Co-op Bank and CYBG missed out on the awards. Details of the three winners’ submissions reveal assertions about how much they will grow. Metro is targeting an 8.3% share of the small business market by 2025. Starling says it will attract 8.8% of the market by 2023 and ClearBank, which is working with Tide, is aiming for 8% by 2023. All three winners have pledged to offer better service to small business customers. Stuart Chalmers, head of UK commercial banking at Accenture, said that the recent rankings by the Competition and Markets Authority on customer satisfaction may have played a part. Metro was ranked second for business customers after Handelsbanken, of Sweden. “It is an existing proof-point for quality of service,” he said.

Grimstone leaving Barclays

Sir Gerry Grimstone, chair of Barclays' corporate and investment bank, is to leave the bank’s board this week. His departure comes as Nigel Higgins prepares to take over as Barclays group chairman in May. Meanwhile, leading Barclays shareholder Richard Buxton, head of UK equities at Merian Global Investors, has branded the bank’s promise of share buybacks a “cheap shot”. He also said that the likely failure of Ed Bramson to secure election to Barclays’ board “should not be taken by the board as a ringing endorsement of their current strategy, leadership or execution.”

Banks’ PPI bill could total £44bn

Analysis by the Mail on Sunday suggests the PPI mis-selling scandal will have cost Britain’s biggest banks and building societies almost £44bn by the time payouts end later this year. Documents published over the past two weeks reveal that the amount set aside by large lenders to pay PPI redress has risen by £2.4bn in 12 months, with £40bn already set aside for compensation.

Coutts chief sees bright future

The Sunday Times interviews Coutts’ chief executive Peter Flavel, who says the bank’s main focus today is on entrepreneurs rather than “landed estates and the House of Lords.” This month, Coutts reported a 112% increase in operating profits to £303m for last year. Lending and deposits each rose by 6%, as did customer deposits, to £28.4bn.

Bank bosses collect £18m

New figures have revealed that the bosses of Britain’s biggest banks collected £17.9m between them last year as profits rose across the industry. The best-paid boss among the so-called Big Four High Street banks was Antonio Horta-Osório of Lloyds Banking Group. He pocketed £6.3m, down from £6.4m a year earlier.

Eyes on Metro after accounting error

Metro Bank is due to reveal its full-year results on Wednesday, just weeks after the bank admitted it had miscalculated the risk weighting of certain loans. Chief executive Craig Donaldson is expected to be investigated over the incident when the results are announced.

SMEs urged to contact banks over finance

UK Finance has urged SMEs to speak to their banks about extra finance as soon as possible, and to consider the impact of potential changes to trade arrangements in the event of a no-deal Brexit. The trade body said banks had the capacity to support firms “whatever the outcome”.

Oaknorth teams up with ClearBank

Oaknorth has joined forces with payments platform ClearBank to provide real-time loans to businesses across the country. Oaknorth said it would use ClearBank's digital payments platform and online banking services to enhance its offering and also grow its customer base.

PRIVATE EQUITY

Number of new tech start-ups rises

Data from Companies House shows that there was a 14% rise in the number of new tech companies launched in the UK in 2018. In total there were 11,864 software development and programming businesses incorporated in 2018, up from 10,394 companies the year before. London had the highest number of tech start-ups with 4,752, a rise of 14%. Last year, tech firms in London raised £1.8bn in venture funding and public listings, accounting for 72% of the UK’s £2.5bn total.

INTERNATIONAL

Fed says it will hold larger balance sheet in the long term

The Federal Reserve plans to hold a larger balance sheet in the long term than it did before the financial crisis, partly because commercial banks want to hold extra reserves.

SocGen could cut 1,500 jobs

According to reports, Société Générale could cut 1,500 jobs from its investment banking division as part of plans to save €500m.

Fired Barclays trader wins nearly £1m in compensation

A former top foreign exchange trader who was sacked by Barclays following a probe into “last look” trading has won nearly £1m in compensation from the bank.

Scor sues Barclays over botched takeover deal documents

Barclays has been sued by the French reinsurer Scor following the collapse of a takeover deal the bank was working on. Scor wants Barclays to hand back documents related to the takeover.

AUTOMOTIVE

BMW and Daimler invest €1bn in joint venture

BMW and Daimler have unveiled a joint venture covering new-generation services such as driverless vehicles, ride-hailing, and pay-per-use cars. The firms are investing €1bn (£880m) in the project, which will also help drivers find parking and electric charge points.

CONSTRUCTION

Persimmon could lose Help to Buy contract

Persimmon could be stripped of its right to sell Help to Buy homes after allegations of poor standards and punitive hidden charges. Housing secretary James Brokenshire is reviewing the housebuilder’s participation in the government scheme, which accounted for half of the homes it built last year.

FINANCIAL SERVICES

NSF makes £1.3bn bid for Provident Financial

Sub-prime lender Non-Standard Finance (NSF) has made a £1.3bn takeover offer for doorstep lender Provident Financial. NSF boss John van Kuffeler, who was previously chief executive and chairman of Provident, said the deal would “create a market leader in non-standard finance”. NSF said the takeover was backed by more than 50% of Provident's shareholders, including fund manager Neil Woodford, Invesco and Marathon. The Times’ notes that NSF’s pay committee has blocked a £7m windfall for its founders should the sub-prime lender be successful in its bid for Provident.

Morgan Stanley tops fund house rankings amid ‘Brexit effect’

Research by FundCalibre has named Morgan Stanley as the fund group with the equity funds that most consistently outperform sector averages.

Aviva targets ex-Old Mutual finance head

Aviva is understood to have approached Old Mutual's former finance head Ingrid Johnson in its hunt for a new chief executive.

Transferwise to sell $200m stake

Digital payments processor TransferWise has appointed Goldman Sachs to sell about $200m (£153m) in new shares on behalf of existing investors.

Pensions industry welcomes FCA Brexit assurance

Representatives of the pension fund industry have welcomed reassurances from the FCA that there would be no disruption to their operations in the event of a no-deal Brexit.

UK life insurers brace for hit from pension superfunds

UK life insurance companies are facing a new threat from so-called pension superfunds which are looking to cut prices by 50% for defined benefit schemes.

MEDIA AND ENTERTAINMENT

DMGT could offload Euromoney stake

Daily Mail and General Trust is understood to be working on a sale of its 49% stake in Euromoney Institutional Investor, the publisher of financial titles including Euromoney magazine.

Pearson on track for growth

Academic publisher Pearson has reported an 18% rise in pre-tax profits to $498m in 2018. However, revenues at the FTSE 100 company fell 9% to $4.1bn due to disposals shrinking the size of the business.

REAL ESTATE

First-time buyers are taking out record amounts of debt

First-time buyers are being forced to take out loans of up to four times their salary, taking on record amounts of debt, experts have warned. More loans are now issued to first home seekers than any other type of buyer, according to research from Halifax. Figures from UK Finance show that buyers are stretching their budgets more than ever to get on the property ladder – borrowing a record 3.64 times their salary on average.

Hammerson revs up sell-offs

Hammerson is expected to unveil a more aggressive asset sell-off plan after activist investor Elliott Advisors increased its stake in the shopping centre owner. Hammerson wants to refocus its portfolio on prime shopping centres and discount outlets such as Bicester Village.

RETAIL

Walmart, Sainsbury’s weigh options after CMA blow

After the CMA advised against regulatory approval for Sainsbury’s £12bn merger with Asda, the latter’s owner Walmart is reportedly holding crisis talks with advisers over the supermarket’s future amid mounting speculation of a stock market listing or private equity buyout. Private equity giant KKR is amongst the parties said to be interested in making a bid for Asda.

ECONOMY

Service sector optimism falls

The service sector saw a sharp drop in optimism in the three months to February, while business volumes and profitability continued to fall, according to a Confederation of British Industry (CBI) survey. The quarterly report revealed that in the business and professional services sector, which includes accountancy, legal and marketing firms, optimism fell at the fastest pace since the financial crisis. In the consumer services sector sentiment deteriorated at the fastest pace since August 2016.

OTHER

City of London police collects £29m for insurers and banks

The Times reports that the City of London police has received almost £29m in funding from the Association of British Insurers and UK Finance over the past five years. The funding was used to run units to fight insurance fraud and card and payment crime. The industry groups said that consumers ultimately benefited from the police having extra resources to tackle financial scams.

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