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Daily News Roundup: Monday, 25th June 2018

Posted: 25th June 2018


Higgins to advise on Scottish National Investment Bank

Benny Higgins, the former chief executive of Tesco Bank, has been appointed as a strategic adviser for the creation of the planned Scottish National Investment Bank. Mr Higgins was asked to draw up a blueprint for the new institution last year by First Minister Nicola Sturgeon. He will oversee the formation of the organisation, which is expected to start operating in 2020, deciding on its operating model, setting its risk appetite and hiring staff. Mr Higgins said that, “if it is done well”, the organisation can “make a big difference” to Scotland’s economy.

MPs urge probe into HBOS Reading fraud

MPs on the All Party Parliamentary Group (APPG) on Fair Business Banking are calling for the Serious Fraud Office and National Crime Agency to investigate how Lloyds Banking Group handled the fraud at its HBOS Reading unit. The APPG will also write to Financial Reporting Council CEO Stephen Haddrill, urging an investigation into the KPMG audit of HBOS in February 2008, which gave the bank a clean bill of health only two months before it hit financial difficulty.

Nationwide customers urged to vote against executive pay

Nationwide customers are being urged by the Building Societies Members Association to vote against the pay levels of the board's executives at next month's annual general meeting. Nationwide said on Friday that it was essential to have the “right people with the right skills and experience to run a safe and sustainable society” at the top of the organisation.

Sainsburys Bank glitch affects thousands

Many Sainsbury's Bank credit card customers have complained of problems with online banking after an IT upgrade. The issue was compounded by a telephone systems failure which left customers unable to contact the bank. Sainsbury's said it was not aware of any credit card payment or transaction issues.

TSB seeks control over own IT system

Following the IT issues that left millions of customers unable to access their money, TSB is planning to bring oversight of its IT system back in-house. Chief executive Paul Pester wrote in a letter to the Treasury select committee earlier this month that “TSB is now discussing with the group how TSB might 'in source' its IT infrastructure... and manage it directly… Our current view is that this could provide a more reliable service to TSB customers.”

IT venture dealt blow by merger

Former Barclays executive turned IT entrepreneur Antony Jenkins may lose his deal to build a new IT platform for Virgin Money now that the bank is merging with CYBG. Mr Jenkins' firm 10x Future Technologies is likely to see its services dispensed with following the merger, according to sources. Meanwhile, it is believed that the CYBG/Virgin deal could start a wave of mergers and acquisitions in the sector.

EU ‘data iceberg’ warning

Technology entrepreneur David Richards has warned that firms including banks are facing huge issues relating to customer data after General Data Protection Regulation came into effect last month. The chief executive of data firm WANdisco commented: “Everybody was planning for it but now I think there's an ‘Oh My God’ moment. We've got this perfect intersection of GDPR and Brexit colliding and that will force the issue sooner rather than later”.


Hands wins battle over care home blunder

Terra Firma boss Guy Hands has won a court battle with H/2, the US hedge fund lender to his care homes operator Four Seasons, after a judge agreed that an error resulted in 24 care homes being wrongly included in bond security documents.

Terra Firma a contender in IWG race

Terra Firma has made an all-cash takeover proposal for serviced office group IWG, which operates flexible shared offices that could rival WeWork.

Decrease in sales of private equity-owned firms

Sales of private equity-owned firms have seen their steepest fall in Britain since the 2016 Brexit vote, with business confidence waning.


BIS releases sobering annual report

The international financial system is vulnerable to rising borrowing costs with global debt ratios at record levels and governments low on room for manoeuvre, according to the annual report from the Bank of International Settlements. The BIS said world debt has risen from 179% of GDP on the eve of the financial crisis to 217%, and while banks are better capitalised, the risk has shifted to pension funds, insurers, and asset managers. Any reversal in our fortunes could be “quick and sharp”, the report said.

Commerzbank experiments with AI

With Mifid II regulations forcing banks to cut research costs, Commerzbank is trialling artificial intelligence technology to see if it can write basic research notes.

Irish financial watchdog criticised

Judge Karen O'Connor has criticised Ireland's Financial Regulator and its "inaction, weakness and ineptitude", following its failure to take action over a €7.2bn fraud at Anglo Irish Bank.


BMW warns over Brexit uncertainty

BMW has joined Airbus in warning that a continued lack of clarity over the UK’s future relationship with the EU could harm business.


Bricklayers needed

A government report has found that some 15,000 bricklayers are needed in order for building targets of 300,000 houses a year to be met. So-called "identikit" private housing estates are being blamed for the slow rate of construction, as prices are depressed by developers releasing too many similarly-styled houses on the market at the same time. However, despite claims of “land banking”, no evidence of this practice was found. Meanwhile, government housing adviser Sir Oliver Letwin, who is carrying out a major review for the Prime Minister, has warned that the slow provision of new power lines and transport links is delaying home-building by “years and years”.

Housebuilders’ shares fall by £3.6bn

The ten biggest builders in Britain have seen a combined £3.6bn decrease in the past fortnight, increasing fears that the housing market is heading towards a downturn. Clyde Lewis, an analyst at broker Peel Hunt, commented: “There is a fear that interest rate rises could be on the way… With the housebuilders it looks like we are fairly close to the top of the cycle”.

Collapse of Carillion must lead to change

The collapse of contractor Carillion in January must change the way supply chains are treated, the Federation of Small Businesses has said.


German asset managers demand 'unhindered access' to City

The German Investment Funds Association (BVI) has called for “proper and unobstructed” access to London investment services after Brexit, stating that clearing and trading facilities infrastructure is inadequate on the continent. The BVI said the third-country regime for investment companies after Brexit should be “thoroughly redesigned” and that there should no restrictions on institutional investors getting advice from third country financial services companies.

Toys R Us staff treatment a concern for KKR investors

The treatment of staff at bankrupt retailer Toys R Us has angered investors in KKR, with one US state investment board suspending new capital commitments to the firm.


Costa Coffee questions for Whitbread

When the group reports on first-quarter trading on Wednesday, Alison Brittain of Whitbread will face an enquiry about the firm's plans for Costa Coffee after it said earlier this year that it would split off the chain and list it as a separate entity.


BT’s Italian arm to be offloaded

BT has appointed Credit Suisse to explore a sale of BT Italia as it initiates what is expected to be a phased scaling-back of international operations by outsourcing arm Global Services.


New fears of reckless lending as risky mortgages increase

More than 100,000 high-risk mortgages were agreed by banks and building societies in 2017, an increase of 15% that could increase fears about irresponsible lending. These types of loans are defined as being 4.5 times a person's income or more, a practice which could see customers struggle to repay the mortgages if interest rates rose faster than expected.

Buy-to-let landlords stop millions from buying homes

A new report by Conservative MP Neil O'Brien has found that over 2m families have been prevented from buying their own homes as a result of landlords acquiring properties to rent out. The report calls for the abolition of tax relief for landlords and a clampdown on overseas buyers, alongside an increase in housebuilding.

Alexa aids mortgage seekers

Prospective house buyers looking for a mortgage can now ask Alexa, Amazon's voice-controlled virtual helper. UKMortgages, an app jointly owned by major banking groups that scans the market for deals, has been extended to allow voice recognition. Alexa gives the product details verbally after users first answer simple questions like how much they want to borrow.


Creditors back House of Fraser CVA

House of Fraser’s creditors have approved a CVA that will see it close 31 of its 59 UK stores, including its flagship store on London’s Oxford Street, and reduce the rents on 10 other outlets. The move, which will put 6,000 jobs in jeopardy, secured the backing of more than 75% of the retailer’s creditors. Approval of the CVA opens the door for Hamleys owner C.banner to push on with buying a 51% stake in House of Fraser.

Possible Poundworld lifeline

Chris Edwards, founder of Poundworld, is attempting to win support from the chain’s main lender Santander to buy back 186 of the chain’s stores from administrators, a move which could save 3,000 jobs.


Britain more exposed to China than thought

Britain's financial links to Hong Kong make the UK economy more exposed to a downturn in China, Bank of England analysis has asserted. The ties to Hong Kong and Britain’s links with the eurozone, which does more trade with China, means the risk a Chinese recession poses to the UK is around 50% bigger than previously thought.

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