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Daily News Roundup: Monday, 2nd July 2018

Posted: 2nd July 2018


Big four banks plug pension deficits

Barclays, Lloyds, HSBC and RBS have eliminated their pension deficits for the first time in at least 17 years. High street lenders led the way as the collective pension funding gap of FTSE 100 defined benefit schemes fell by £22bn to £5bn over the past year, according to research by Barnett Waddingham.

Losses widen at Monzo

Monzo saw its losses widen last year after its banking ambitions led to a 336% surge in operational costs. It logged pre-tax losses of £33.1m in the year to February 2018, having widened from just £7.9m a year earlier. Monzo said this was primarily the result of a major rise in operating costs from £8m to £34.9m. CEO Tom Blomfield said he expected Monzo to reach the 1m customer milestone “in September or October”. He added that “more and more people” were switching to the bank, with more than 40% of new users depositing at least £500 every month.

Short-sellers bet against Metro Bank

Hedge funds managers have upped their bets against Metro Bank amid speculation that the lender will issue new shares in the coming months. According to figures collated by the financial data provider IHS Markit, 9.53% of Metro’s shares are now out on loan - up from 6.57% in January, and 4.56% a year ago.

Cash machines fee cut prompts fresh row

Debate over the future of ATMs in the UK has intensified ahead of a cut in the fee operators receive from banks. From yesterday, the fee paid each time a cash machine is used will be cut, with further reductions due each year until 2021. Link, which oversees cash machines, has argued that the move is vital for the sustainability of the network. It comes after consumer group Which? claimed that 300 ATMs are closing a month - analysis which is disputed by Link.

Why can’t Barclays escape from the shadow of its past?

Historian Philip Augur charts how Barclays has been unable to escape from the shadow of its investment bank. He argues that the investment bank has held Barclays’ share price back for 30 years and is a problem which the lender needs to resolve. Meanwhile, Standard & Poor’s has given Barclays a boost by stating that a shake-up in its strategy could damage the bank’s credit worthiness. S&P also criticised Sherborne Investors, the corporate vehicle owned by Edward Bramson, saying its intervention was an “additional constraint”.

HSBC launches ring-fenced UK bank

HSBC has become the last of Britain's big four banks to launch its ring-fenced UK bank, as it steps up growth plans. The entity has been launched under its first CEO, Ian Stuart.

Jones reflects on UK Finance at one year

The Times carries an interview with Stephen Jones, the boss of UK Finance. He believes the organisation, which was formed from six trade bodies, has been ambitious since its inception but also has been more thoughtful. He adds: “I think that has been appreciated by government, regulators and our members: I don’t think they want us to be loud brats.” He also notes that one of UK Finance’s biggest tasks has been fighting economic crime. The organisation has been working with the Home Office to formulate a better way to identify criminal transactions.

Profits perk up at Noble Grossart

Noble Grossart has reported that its pre-tax profits rose to £52.2m in the year to January, compared with £35.8m the year before, according to Companies House filings. Growth was driven by a £29m boost from sales of investments.


LDC backs MBO of Martin Audio

LDC, the private equity arm of Lloyds Banking Group, has backed the management buyout of Martin Audio, which makes speakers for gigs and concerts.


Deutsche Bank’s failure in US stress tests could harm strategic plan

Analysts have warned that Deutsche Bank’s failure in US stress tests could jeopardise its strategic plan to cut costs and reallocate assets from its American subsidiary to other businesses.

Rothschild branches settle naming dispute

French and Swiss banks owned by two branches of the Rothschild dynasty have agreed to end a dispute over the family name by promising that neither would ever call itself just “Rothschild”. It comes after Edmond de Rothschild, a Franco-Swiss private bank, had issued a cease-and-desist order to French bank Rothschild & Cie.

The reinvention of Société Générale’s investment bank

The FT examines the performance of Société Générale’s investment bank, with new boss Séverin Cabannes on a mission to reinvent the division around more than equities derivatives.

Swiss fund group GAM warns staff of ‘worst case’ Brexit

Fund management group GAM has warned its staff that it is preparing for a “worst case” Brexit, in which the UK would give up access to the single market and customs union.

China backs $15bn tech fund to compete with Japan’s SoftBank

London-based investment firm Centricus has partnered with Chinese firms China Merchants Group and SPF Group to launch a 100bn Chinese yuan (£11.47bn) fund to invest in technology companies.


GM warns against potential car tariffs

General Motors has added its voice to the chorus of companies and countries criticising proposed US tariffs on foreign cars and auto parts. The carmaker warned the tariffs “could lead to a smaller GM, a reduced presence at home and abroad and risk less - not more - US jobs.” GM also warned that the tariffs would hurt investment, undermining the US role in the global industry. Trade associations for the auto industry, as well as companies that include Toyota, BMW and Volvo also submitted comments in opposition to the tariffs.

Alphabet adds to transport bets with scooter deal

Alphabet has invested directly in scooter service Lime as part of a larger $300m funding round that already included Google Ventures.


Philippe Capron pulls out of the running to head Air France-KLM

Philippe Capron, the CFO of Veolia, has taken himself out of the running to take over as head of Air France-KLM. He also criticised the French state’s intervention in the process.

Airbus takes majority stake in Bombardier’s C Series

Airbus has officially taken a 50.01% stake in Bombardier’s C Series small airliner. Airbus’s move will help the C Series avoid US import levies.


Brexit deadlock blamed for weaker growth

A new report from the CBI has suggested that financial services firms have seen growth weaken, with little sign of improvement on the horizon, because of the ongoing uncertainty around the Brexit negotiations and slow wage rises holding back the economy. The survey of 100 firms found that four more firms were doing less business in the last quarter. The number was down on last month when a net balance of 22 firms said business volumes were up. Optimism about the economy was slightly up, with 21% of firms more positive about the overall business situation compared with three months ago - 25% of businesses said they were less optimistic. The research also revealed that a third of banks said they were “not so confident” of implementing Brexit plans by March.

Beale set to step down

Dame Inga Beale is set to step down as chief executive of Lloyd’s of London. She will leave her post next year, and the insurance market said that it had begun a search for her successor. Lloyd's chairman Bruce Carnegie-Brown said: “In her five years at Lloyd's, Inga has set in motion a series of changes aimed at modernising the market and making it more efficient and inclusive.” Meanwhile, Ms Beale has told the Sunday Times that she is seeking another full-time executive role when she steps down.

‘Brexit hedge’ needed to inspire business

Adam Marshall, director general of the British Chambers of Commerce, says the government is not doing enough to reassure businesses concerned by Brexit. He warns that ministers seem to be adopting a “business as usual” approach to the economy at precisely the time when a more activist approach is needed most. Mr Marshall calls on the prime minister and the chancellor to use the resources of the state to create a “Brexit hedge” – boosting public investment in infrastructure and creating big new incentives to “crowd in” business investment.

‘Big three’ fire first shot as CMA finalises report

Mercer, Aon and Willis have said, ahead of a report into the investment consultancy market, that the UK’s antitrust body has so far shown little evidence of a lack of competition.

Brexit risks trillions worth of contracts

Contracts worth trillions of pounds between UK and EU banks remain at risk of collapse when Britain leaves the bloc, after Brussels' failure to implement protective legislation, the Bank of England has warned.


CVC-led consortium to buy majority stake in Recordati pharma business

A consortium led by CVC has agreed to acquire the holding company that owns 51.8% of Italian pharmaceutical firm Recordati. The deal is valued at €3.03bn.


Casual Dining Group agrees equity swap

Casual Dining Group has orchestrated a debt-for-equity swap with its lenders in a bid to cut its weighty interest bill. Under the deal, worth an estimated £150m, KKR and Pemberton Asset Management will take shares in the company in exchange for writing off some debts.

Great Rail Journeys sold

Great Rail Journeys, which runs escorted railway holidays, is being sold by ECI to Duke Street in an estimated £100m deal.


Evening Standard to record £10m loss

The Evening Standard newspaper is set to record a loss of £10m for the year ending September 2017. The Standard’s loss - £9.98m - comes after a recorded profit of £2.2m in the previous year, representing a £12m swing into the red.

Brexit could see broadcaster exodus

The Mail on Sunday claims that over 6,000 British broadcasting jobs are at risk from Brexit, as broadcasters fear losing their ability to transmit their channels across the EU from the UK under 'country of origin' rules.


Government plans longer tenancies for renters

A minimum tenancy term of three years would be introduced under Government proposals to give people renting homes in England more security. Figures show 80% of tenants currently have contracts of six or 12 months and ministers say longer agreements would allow them to put down more roots. They add tenants would be able to leave earlier under the plans, as a six-month “break clause” would replace the traditional one or two-month notice period, while landlords would get more financial security, as longer tenancies would help them avoid costly periods searching for tenants.

Emoov bids for Countrywide merger

Online property firm Emoov is looking to merge with Countrywide, Britain’s biggest estate agent, which last week posted its second profit warning of the year. Emoov founder Russell Quirk said: “Countrywide is on its knees. They have to do something.” Countrywide has not responded to the proposals.


Blackstone looks to offload Ideal World

Blackstone is set to sell off the Ideal World home shopping channel for less than half the price it paid for the business. The private equity firm has appointed advisers to find a buyer quickly for the channel's parent company Ideal Shopping Direct.


Q1 growth revised up

The UK's economic growth has been revised up for the first quarter of the year, from 0.1% to 0.2%. The ONS attributed the upgrade to “later construction data and significantly improved methods for measuring the sector”. Separate data from the ONS showed that the key services sector grew by 0.3% in April, the fastest monthly rate since last November. Household spending increased by 0.2% over the quarter and the household savings ratio fell from 4.5% to 4.1% - the third-lowest quarterly ratio since records began in 1963. Business investment shrank by 0.4% - worse than the previous estimate of a 0.2% contraction.

BoE’s Cunliffe warns of painful outlook

Bank of England deputy governor Sir Jon Cunliffe has warned that a cocktail of risks is stirring in the global economy that could be damaging for Brexit Britain. Escalating trade wars, strains in emerging markets and a rising possibility of a Chinese credit crisis could combine into a “painful” experience for the British economy, he told the Sunday Times.

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