BANKING
MPs call for moratorium on banks chasing SMEs
MP Kevin Hollinrake, who co-chairs the All-Party Parliamentary Group (APPG) on Fair Business Banking, has written to the Financial Conduct Authority requesting a moratorium that would prevent banks and debt collectors from chasing small firms through the courts if they are waiting for complaints against lenders to be examined. The APPG estimates that around 60,000 entrepreneurs may have legitimate compensation claims against banks under a dispute resolution scheme run by UK Finance which is due to launch in September. The scheme will deal with cases where small-business bosses believe they are due compensation due to the way banks have treated them, and will probe instances dating back to 2008.
Transactions charge could fund fraud payouts
The Telegraph reports that banks are lobbying to introduce charges on the vast majority of money transfers to fund payouts for victims of bank transfer fraud. As part of the drafting of a voluntary code of practice on refunds, the biggest banks and building societies have agreed to pay blameless victims from the end of May until the end of the year. A consultation on the code suggested that a charge on transactions could be a long-term solution.
Metro Bank risks losing grant over unrealistic targets
Analysts have warned “unrealistic” growth targets have put Metro Bank at risk of losing a £120m funding award. The bank's growth target - to secure 8.3% of the business current account market by 2025 - was a key part of its pitch for the grant funding from Banking Competition Remedies, which has the power to claw back the money if banks fail to meet their pledges. Meanwhile, the Times’ Katherine Griffiths looks at how the accounting error revealed by Metro Bank in January has provided ammunition for the lender’s critics.
TSB owner blamed for IT meltdown
The Sunday Times reports that last April’s botched switchover of TSB customers’ online accounts came after the IT division of its Spanish owner Sabadell breached its contracts with the challenger bank. Sabadell ordered its subsidiary Sabis to build and test new technology for TSB’s upgrade. However, Sabis suffered a “series of issues” and failed to deliver on crucial aspects of the contracts, say sources close to TSB’s board.
RBS customers sold vulnerable security software
Up to 50,000 Royal Bank of Scotland customers have been put at risk of cyber attack after being recommended flawed security software. Since January, the banking group has begun to offer its business banking customers a product called Thor Foresight Enterprise free of charge. Heimdal Security sells it as "next generation protection" against cyber threats. But security researchers uncovered a flaw in it that made customers less secure. The bug has now been fixed.
RBS under pressure from small investors over governance
Royal Bank of Scotland will hold a vote at next month’s annual meeting on whether to create a committee of shareholder representatives to regularly meet the board and executives. Separately, it has emerged that RBS is aiming to wind down the remainder of about £1bn in ‘lender option borrower option’ loans held by local authorities across the country. Campaigners have welcomed the move amid criticisms that high payments have diverted cash from council services.
Digital revolution could leave over-55s behind
Research by Accenture suggests that older people and those on low incomes risk being “left behind” as banks devote more of their attention to digital payments. The survey of 3,000 consumers found 74% of those aged 55-plus never use mobile banking apps, while the figure for low-income earners was 57%. In addition, in both these categories, 26% of those surveyed said they never used online banking via a computer.
Fall in bank loans to small firms
Bank lending to smaller companies has fallen in more than half of the country in the past year, according to research by Hadrian's Wall Capital. The debt adviser found that 74 of 132 postal areas of Britain saw falls in the value of bank loans to SMEs.
Taxman demands share of JP Morgan bonuses
HMRC has demanded a multimillion-pound share of bonus payments awarded to JP Morgan bankers before the 2008 crash. Bankers were given more than £2bn in bonuses in the form of tax-free loans from an offshore trust, but now face demands for income tax and national insurance of nearly 60% under the government's controversial loan charge.
PRIVATE EQUITY
Maven closes debut buyout fund
Maven Capital Partners has closed its debut management buyout fund at £100m. The fund targets management buyout opportunities in UK companies with an enterprise value of £10m to £40m. Meanwhile, growth capital investment firm VGC Partners has closed its second fund at more than £50m.
Omers launches London-based venture fund
Canadian pension fund Omers has launched a €300m (£257m) European venture fund based in London.
INTERNATIONAL
Deutsche bosses double pay
Garth Ritchie, head of Deutsche Bank’s investment bank, saw his pay more than double to €8.6m last year, while chief executive Christian Sewing also doubled his pay to €7m. In total 643 staff were paid at least €1m for the year - fewer millionaires than in 2017 but more than double the number in 2016. Meanwhile, top managers at Deutsche Bank have been banned from selling any stock they own in the lender while discussions about a merger with Commerzbank are continuing.
ING chief claims Dutch bonus rules hurting in race to lure bankers
ING chief executive Ralph Hamers has warned the Netherlands is likely to miss out in the race to win post-Brexit investment banking jobs because of its strict bonus rules.
Credit Suisse gives CEO 30% pay rise despite share price fall
Credit Suisse CEO Tidjane Thiam was awarded a 30% pay rise in 2018, taking home $12.8m after a cap on his pay was removed. This came despite stock dipping 38%.
Citigroup fires eight Hong Kong traders
Citigroup has fired eight traders from its Hong Kong trading desk, and suspended three others, after an internal investigation found that they had misled clients.
AUTOMOTIVE
Hyundai knocks back activist investor
Hyundai Motor investors have rejected a demand for the appointment of several new directors and a £4.7bn special dividend tabled by Elliott Advisers. The US hedge fund wanted a boardroom shake up to improve governance and accountability, with Hyundai having faced criticism over several matters, including claims minority investors are taken for granted.
Uber closes in on rival ride-hailer
Uber Technologies is finalising a deal to buy its Middle Eastern ride-hailing rival Careem Networks FZ in a transaction worth more than $3bn.
AVIATION
Indonesia drops Boeing order
Boeing has lost a $5bn order for its 737 Max jets in the wake of two disasters in five months. Garuda, Indonesia’s national airline, said that passengers’ fears of flying on a flawed jet had led it to back out of an order for 49 of the aircraft.
FINANCIAL SERVICES
Pressure mounts on P2P lenders
The Sunday Times says peer-to-peer lenders are reaching a critical juncture, as a stagnant economy and growing insolvencies hit the sector. It notes that one site, Lendy, ran into trouble last year following reports that two-thirds of its borrowers had failed to repay their loans on time. The level of personal insolvencies in the UK is now higher than during the aftermath of the financial crisis, with 115,000 people declared insolvent in 208 - 16% up on the previous year. This rise is also affecting the most established P2P lenders, with Zopa chief executive Jaidev Janardana saying there had been a 15% jump in the probability of a borrower defaulting.
Smaller firms less alert to invoice scams
More than four in 10 businesses in the UK are unaware of the risks posed by invoice fraud, according to a survey by UK Finance. There were 3,280 invoice and bank mandate scam cases involving businesses over 2018, costing firms almost £93m. Some £29.6m of the money lost to this type of fraud was returned to business customers, UK Finance said. Of the 1,500 firms surveyed, some 55% of sole traders were aware of the threat of invoice fraud, compared with 68% of small businesses and 84% of large businesses.
Lloyd’s of London takes aim at ‘laddish culture’
Lloyd’s of London is planning to tackle its “laddish” culture ahead of a major shake-up of the insurance market. An emergency meeting of senior brokers and underwriters will consider how to make it easier for workers to lodge complaints about sexual harassment and bullying, according to sources.
Provident Financial bolsters bid defences
Provident Financial has bolstered its board after a series of profit warnings and a fine from the watchdog last year. It has also urged shareholders to reject the £1.3bn hostile takeover bid from smaller rival Non-Standard Finance, calling it “financially flawed”.
Hedge fund launches fall to 18-year low
Figures from HFR show just 561 new hedge funds were launched in 2018, the lowest number since 2000, as untried managers struggled to attract capital.
REAL ESTATE
Non-EU investment in London commercial property soars
Non-EU investment in London commercial property soared by 75% in 2018. Buyers from outside of Europe racked up £8bn in purchases last year - almost 10 times the amount spent by their European counterparts, who spent £885m, representing a 68% fall on 2017. The market for commercial property in the City was “influenced by the UK’s political uncertainty and weakening of sterling”, said Lesley Males, Head of Research at Datscha.
Flat prices slower to rise
Flats are a better option than houses for first-time buyers wanting to get a foot on the property ladder, according to research by Gatehouse Bank. The price of flats is rising four times slower than that of semi-detached homes and the cost of buying a flat fell by more than 7% in some places in the last year.
ECONOMY
Hard Brexit could shrink exports by a fifth
An analysis of the government’s no-deal tariff plans suggests Britain’s exports would shrink by as much as a fifth under a hard Brexit. The study by Sussex University’s UK Trade Policy Observatory also estimates that manufacturing and agriculture output would fall by up to 11% as those industries faced new barriers to trade and increased competition from overseas.