BANKING
Banks warned over text message verification
Banks have come under fire from the National Fraud Intelligence Bureau (NFIB) and mobile phone network EE for their reliance on SMS for two-factor authentication. They say the security measure is easily circumvented by the use of so-called Sim swapping. Phillip Keating, senior crime reviewer at the NFIB, said that he agreed with the findings of a report from the FBI, which highlighted text messages as a weak link in the banks' security chain. Other means of meeting EU requirements for a “second factor” of identification include phone calls, card readers and codes sent by email. The Sunday Times notes that Monzo is among the challenger banks which exclusively use encrypted passwords sent over wi-fi. Separately, fraud experts have criticised Apple and Google for allowing SpoofCard on their stores. The app lets users "spoof" their caller ID - allowing them to pretend they are calling from a bank or another safe number.
Barclays boosts case for investment banking after strong results
Barclays reported a strong set of results on Friday with pre-tax profits at the corporate and investment bank jumping to £882m in Q3, an increase of 77% compared with the same period last year. Income was up 18% to £2.6bn. CEO Jes Staley said the results support the strategy of maintaining the group’s presence in global investment banking. However, the investment bank’s performance was overshadowed by a £1.4bn charge for compensating UK consumers who were mis-sold payment protection insurance. The charge dragged the group to a net loss of £292m. Its return on tangible equity for the quarter was minus 2.4%.
TSB plans cost-cutting moves
Sabadell‘s third-quarter results on Friday showed restructuring costs had helped push TSB back into a €9m pre-tax loss in the nine months to September, but the bank “continues to regain its business momentum”, Sabadell said, pointing to growth in customer deposits and lending. The bank’s new executive team is looking to put last year’s IT migration crisis behind it under new CEO Debbie Crosbie. Meanwhile, Suresh Viswanathan, TSB’s new chief operating officer, indicated work would begin immediately on reducing costs with a detailed strategic plan due to be outlined next month.
Lloyds profits holed by late PPI claims
Lloyds Banking Group will unveil weak quarterly results this week with the consensus view that the bank will turn a modest profit of £163m for the third quarter. Lloyds is expected to announce a fresh hit of up to £1.8bn from the PPI scandal, bringing its total PPI provision to almost £22bn. Last week Royal Bank of Scotland set aside £900m for PPI while Barclays set aside £1.4bn. HSBC will announce results today, followed by Santander on Wednesday and Lloyds on Thursday.
Loyalty to banks is costing homeowners
Britain’s banks have been accused of exploiting their customers' loyalty after analysis revealed many withhold their best deals for new customers. Figures published by UK Finance revealed that, in the worst cases, loyalty is costing hundreds of pounds a year in additional interest payments. There has also been an increase in the number of so-called product transfers in the past year, which allow customers to secure a new deal with their current lender and avoid the hassle of switching. About 292,500 transfers were carried out in the second quarter of 2019, up 7.3% year-on-year.
HSBC and Standard Chartered vulnerable to Hong Kong turmoil
The Mail’s Ruth Sunderland considers how the turmoil in Hong Kong could affect profits at HSBC and Standard Chartered, which both report third-quarter figures this week. HSBC’s UK business will likely be hit by Brexit uncertainty, low interest rates, a bill for PPI mis-selling and competition from challenger banks. Although Standard Chartered does not have a UK high street operation, it has also warned it will be hit by the wider impact of Brexit.
PRIVATE EQUITY
Hedge fund bets £70m on Cobham deal
Hedge fund Westchester Capital has built up a 1.8% stake in Cobham in a £70m bet its sale to Advent will go through. The Competition and Markets Authority is due to rule on the acquisition on Tuesday. Meanwhile, the Cobham family, which owns about 1.5% of the shares, is thought to have contacted lawyers last week with a view to pursuing a legal challenge should the deal be approved.
US private equity bids for UK companies switch to dollars
The FT reports that US private equity groups buying UK-listed companies have started paying in dollars rather than pounds in an effort to protect them from Brexit-related swings in sterling.
INTERNATIONAL
Banks battle fresh Libor claims
Barclays, Lloyds and HSBC are among the British banks urging US courts to dismiss a multibillion-dollar Libor claim. The Telegraph has seen court papers claiming that 18 banks – including RBS, Deutsche Bank, UBS, JP Morgan, Bank of America and Citigroup artificially set low rates “to the detriment of investors in financial instruments”. The non-US banks accused of rigging the rate argue they are not subject to US jurisdiction in this case.
Lazard names Jean-Louis Girodolle new investment banking chief
Jean-Louis Girodolle has been named Lazard’s new CEO of investment banking in France, effective immediately. Mr Girodolle joined Lazard in 2007 and replaces longstanding head of France Matthieu Pigasse.
AUTOMOTIVE
Surge in China sales helps JLR back to profit
An increase of sales to China and its continued cost-cutting programme helped Jaguar Land Rover return to profitability in the three months to September. Worldwide sales reached £6.1bn, a rise of 8% on the same period in the previous year while pre-tax profits hit £156m against a loss of £90m a year earlier.
FINANCIAL SERVICES
IT failings left customers “cashless and cutoff”
MPs on the Treasury select committee have called for levies on big banks to pay for better regulation of their IT systems. Steve Baker, who led the Treasury committee inquiry, said: “The number of IT failures that have occurred in the financial services sector, including TSB, Visa and Barclays, and the harm caused to consumers is unacceptable. For too long, financial institutions issue hollow words after their systems have failed, which is of no help to customers left cashless and cutoff.”
Proportion of women in senior positions almost unchanged
Despite a push by the financial services industry to increase the proportion of women in senior roles the Financial Conduct Authority says the number of women in senior roles has barely changed in 15 years. Just 17% of senior roles are filled by women, almost the same as in 2005, but there had been more improvement at some of the biggest banks. the FCA added. Investment management had the highest proportion of women with 26% in senor roles while brokerages had only 5%. The FCA said the overall picture was “sobering”. A spokesman for UK Finance said: “Firms recognise the importance of having a fair and inclusive workplace. However, there is still clearly more work to be done.”
QuickQuid owner collapses into administration
Payday lender QuickQuid is folding after its owner, Enova, failed to reach agreement with the UK’s financial ombudsman over how many customers it should compensate over past loans. CashEuroNet UK, which operates the QuickQuid and On Stride brands, stopped lending after Grant Thornton was appointed as its administrator on Friday. Payday lenders have been struggling after the Financial Conduct Authority imposed affordability checks and capped payday loan charges in 2014.
Havisham and Salesforce acquire stake in Snoop
Havisham, the investment vehicle owned by Lord Brownlow, has bought a £5m share in Snoop – the tech start-up founded by ex-Virgin Money chief executive Dame Jayne-Anne Gadhia. Snoop is designed to exploit open banking to automatically transfer consumers to better utility and financial services deals. Salesforce Ventures also pitched in with funding.
European equity funds net large inflows
European equity funds enjoyed inflows of $300m (£234m) in the week to Wednesday, their highest since February 2018, according to Bank of America Merrill Lynch, who said the change indicated investors had become less bearish about the global outlook. Globally, equity funds saw outflows of $3.8bn over the period.
UK regulator under fire over £12bn annuity deal
The Prudential Regulation Authority has been criticised for approving the transfer of annuities from long-established insurers to newer specialist rivals after the High Court in August blocked a £12bn transfer from Prudential to Rothesay Life.
Online brokerages scramble to recover from gruelling fee war
The decision by Charles Schwab to scrap commissions to US stock trades is a smart move - hurting rivals more reliant on the fees and laying down a challenge to no-cost newcomers.
HEALTHCARE
Priory to be split ahead of sale
Priory’s American owner Acadia is considering plans to split the health and social care provider into two or more parts ahead of a planned sale. CapVest is among the private equity investors weighing a potential bid for Priory’s social care operations, according to the Telegraph, but Priory’s troubled health division is more likely to end up in the hands of a medical services provider.
MEDIA & ENTERTAINMENT
Telegraph newspapers put up for sale
The Barclay brothers have put the Daily and Sunday Telegraph newspapers up for sale as the family reviews its investments. Telegraph newspapers recently said that its operating profits had fallen from £16.3m in 2017 to £3.1m last year as revenues slipped by £7m to £271m. The brothers could also put Shop Direct up for sale.
REAL ESTATE
Investment bond to help property deals
Aberdeen-based Maven Capital has launched an investment vehicle aimed at providing funds to support UK property. Maven Bonds has been designed to provide investors with the chance to diversify their investment portfolio while earning annual tax-free returns of up to 7.75%. The initiative was launched by Maven Capital Partners in conjunction with fintech firm Growth Capital Ventures (GCV). It aims to raise up to £7m from the initial bond offer with minimum investments starting at £1,000.
RETAIL
John Lewis aims to grow personal finance arm
The John Lewis Partnership has been ramping up its marketing of personal finance services as it seeks new sources of income to counter recent losses at John Lewis and Waitrose and £2.4bn debts.
Investment fund builds stake in Morrisons
Silchester International Investors has doubled its stake in Morrisons to 10.4%, worth £480m, thereby becoming the second largest shareholder in the supermarket. It comes amid speculation that Morrisons could be a takeover target after a decline in its share price.
ECONOMY
ONS admits £1.5bn public finances error
The ONS has said that the UK budget deficit is as much as £1.5bn less than what had been previously reported after a statistical error. A year-to-date budget deficit of £40.3bn, excluding public-sector banks, was reported earlier this week. The ONS now says there was “an error in the measurement of local government social benefits.”
OTHER
Walters on Labour: Bankers will just leave
Harriet Dennys interviews Robert Walters in the Mail on Sunday. Walters, whose headhunting firm is worth £12.5m, says workers are “sitting on their hands” as they wait for a resolution to the Brexit negotiations. But his biggest concern is a potential Corbyn-led Labour government. A ban on bankers' bonuses would hurt his UK business, he says. Labour “would be a massive negative for the country,” he adds. “People will just leave.”