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Daily News Roundup: Monday, 30th September 2019

Posted: 30th September 2019


RBS urged to end fossil fuel investments

The Royal Bank of Scotland has been urged by more than 30 third-sector groups, including Greenpeace, Friends of the Earth and Christian Aid, to be a "climate change leader" by formally closing the door on financing coal and oil companies. The groups say although the bank’s investment in fossil fuels is negligible, new CEO Alison Rose could position RBS as the climate leader in the banking sector by ending the bank's fossil fuel financing entirely. Elsewhere, Actor and model Lily Cole has backed calls for UK banks to change the way they invest. Ms Cole says she opened an account with ethical bank Triodos because she “didn't want to be accidentally investing in the arms trade and fossil fuel industry.”

Monzo’s long road to profitability

The Telegraph’s James Cook considers Monzo’s recent travails - withdrawing its membership plans and scrapping plans to issue expensive metal cards. The question over whether challenger banks like Monzo can make a profit remains, says Cook, but models that have attracted customers to competitors such as Revolut and Curve mean there’s hope yet for Monzo, if it can formulate an improved subscription product. The Mail’s Jill Treanor says when it comes to investing in challenger banks there are fewer options than there used to be but they all have exposure to the UK economy in common. And along with traditional banks, are grappling with low interest rates.

Metro Bank chairman in new plea to investors

Vernon Hill, founder of Metro, has been calling round investors trying to convince them to take a stake amid mounting concern over its finances following a failed appeal to the debt market. The Sunday Times reports that activist investors are circling with a view to taking a stake or picking off parts of the business. Elsewhere, the FT reports on how new entrants like Metro are being hampered in their attempts to break the stranglehold of the big four due to capital requirements, while larger entities are burdened by ringfencing rules.

Sainsbury’s mortgage prisoners on the horizon

The Times reports on how Sainsbury’s Bank customers could become mortgage prisoners when their deals run out. The company stopped offering mortgages this week meaning if a mortgage holder's financial circumstances change so that they are unable to remortgage with another lender, they will be stuck on the banks' 4.49% standard variable rate (SVR). The move by Sainsbury's Bank comes after Tesco stopped offering mortgages in May. It sold its mortgage portfolio to Lloyds Banking Group in September.

Microsoft warns banks they must boost AI skills

Microsoft has warned banks that they need to educate staff about new AI technology in order to improve mortgage and loan decision making. Clare Barclay, the UK chief operating officer of Microsoft, said AI can potentially make the banking industry “much more inclusive in its provision of mortgages and loans, and financial decision making,'' but there is a risk it could introduce errors into that process.

HSBC begins search for new CEO

HSBC is understood to have appointed headhunter Egon Zehnder to search for a new chief executive after the departure of John Flint. The shortlist of external candidates includes Citigroup’s head of global consumer banking, Stephen Bird, and Stephen Hester, chief executive of the insurer RSA, who previously led Royal Bank of Scotland.

Currensea card launch due in new year

Currensea is in talks with venture capital groups about raising funds to kickstart its growth. The fintech firm has worked with MasterCard to develop a card that is linked directly to its customers' bank accounts, which they can use to make purchases or withdraw money overseas.


How to share in private equity success

The Mail on Sunday’s Sally Hamilton says investors keen to get in on the profits made by private equity firms, particularly now companies are waiting longer before going public, should look at private equity-focused investment trusts. Ryan Hughes of broker AJ Bell points to 3i, Standard Life Private Equity, Pantheon Ventures and HarbourVest as interesting prospects. But Jason Hollands, of wealth manager Tilney, warns of high fund costs and greater risks.

AMS sweetens Osram offer in race against buyout groups

Austrian sensor maker AMS has boosted its takeover offer for German lighting group Osram as it seeks to fight off private equity rival Bain Capital, which is working with Advent International.

Peter Flavel: ‘It’s not venture capital, it’s patient capital’

The FT interviews Coutts CEO Peter Flavel, who talks about how the bank brings together clients and companies they wish to invest in and mentor, describing it as patient capital.


Wells Fargo poaches BNY Mellon chief Charles Scharf for top job

Charles Scharf has been named the new boss of Wells Fargo ending a six-month search prompted by the bank’s fake accounts scandal. The Bank of New York Mellon CEO is set to take the reins on October 21st. The FT’s Lex says Scharf is a fitting choice to revive the bank’s reputation as a main street lender and improve government and regulatory relationships.

Thiam backed amid spying scandal

Credit Suisse’s board is backing CEO Tidjane Thiam as the lender battles to save its reputation after it spied on its outgoing head of wealth management, Iqbal Khan, who was heading to rival UBS. Two key backers, Harris Associates and Eminence Capital have also come to the bank’s defence.

Hong Kong banks failing to support staff

BNP Paribas is among the companies being criticised in Hong Kong for abandoning staff who support the former British colony’s pro-democracy movement. BNP lawyer Jason Ng was forced to quit after he criticised pro-Beijing counterdemonstrators. Campaigner Joshua Wong accused BNP and other firms of bowing to pressure from China's Communist leadership when they should be giving support to staff.

Ulster Bank’s computer says no to negative rates

The FT reports that Ulster Bank is unable to pass on negative interest rates to corporate clients because its IT system wasn’t set up to charge for deposits. It means the RBS-owned lender must absorb the cost of negative interest rates itself.

Commerzbank sets sights on joining wave of EU mergers

Commerzbank boss Martin Zielke said on Friday he wanted the group to play an active role in the consolidation of Europe’s financial sector but refused to say whether German lender will be suitor or target.

Barclays pays $6.3m to settle hiring claims

Barclays has agreed to pay about $6.3m to settle charges by the US Securities and Exchange Commission that it illegally hired relatives and friends of foreign government officials in the Asia-Pacific region to help to win or retain investment banking business.

Draghi backs calls for fiscal union to bolster eurozone

The outgoing European Central Bank president Mario Draghi has backed calls for a common eurozone budget in order to strengthen the economic and monetary union.


Leadsom unveils £1bn fund to boost car industry

Andrea Leadsom has announced plans to invest up to £1bn in the car industry to accelerate the shift towards electric vehicles and reduce carbon emissions. However, the Business Secretary said the industry would have to adjust its just in time business model after Brexit.


Woodford on the brink of exit as trust results loom

The latest writedowns at Woodford Patient Capital Trust (WPCT) have led to renewed calls for Neil Woodford to be replaced, with some also calling for the board to go. WPCT reports half-year results today. Elsewhere, the Sunday Telegraph reports that Hargreaves Lansdown is among the investment platforms working with Link Fund Solutions to ensure it can cope with demand when the Woodford Equity Income fund suspension is lifted in December.

McGuinness: Tories must fight to avoid no-deal

City of London Corporation chairman Catherine McGuinness has called on the Conservatives to "do all that they can to avoid a disorderly exit, working with their fellow parliamentarians and the EU, so that the industry can have both clarity and security". Separately, the FCA has widened the pool of open-ended property funds subject to daily checks amid growing fears about a no-deal Brexit.

London ranks top for green finance

The global green finance index has put London top in the world for green finance again. The index, produced by consultancy Z/Yen in partnership with Finance Watch, puts Western European cities in the top five spots. However, London’s position is under threat partly because the UK has not yet issued a sovereign green bond.

Under-siege Burford faces lawsuit from co-founder

Burford Capital faces a lawsuit from founding executive Selvyn Seidel who claims he is owed £97m for cases he originated. Seidel’s claim comes amid criticism of Burford’s accounting practices and governance by short seller Muddy Waters.


ProFactor Pharma gets £2m injection

Edinburgh biotech company ProFactor Pharma has sealed £2m in a funding round led by the investment syndicate Kelvin Capital and supported by Ingenza and the Scottish Investment Bank. The cash injection will advance the treatment of haemophilia.

Zantac sales suspended at CVS over cancer fears

US retailer CVS has become the latest to suspend the sale of a heartburn drug being investigated for links to cancer. It follows concern in several countries over the presence of impurities in Zantac and other ranitidine products.


Prezzo boss tries to turn the tables

The Sunday Times says Karen Jones, executive chair of Prezzo, faces a tough task to turn things around at the restaurant chain. She was brought in by TPG to help turn around the struggling business. Latest company accounts are expected to reveal a 25.7% fall in sales to £157.2m last year, although losses are expected to have narrowed from £65.7m in 2017 to £29.7m.

Itsu loses £6m despite sales growth

Sushi chain Itsu lost £6m last year despite boosting sales by 10%. Pre-tax losses narrowed from £8.9m in 2017 after sales rose to £116.6m. Itsu blamed the cost of expansion in America and France for the losses and says it is profitable “at store level”.

Luxury travel outfit sees sales jump

Secret Escapes has revealed a 66% jump in sales and the acquisition of LateRooms' intellectual property after the booking website collapsed last month. The group reported sales of £121.2m last year, up from £73.2m in 2017. Losses narrowed from £14.2m to £10m.


Bulgarian telecoms group Vivacom eyed in buyout battle

United Group, owned by BC Partners and KKR, and Providence Equity Partners have launched indicative bids for Bulgarian telecoms Vivacom.


Countrywide founder joins pub start-up

The founder of Countrywide and Rightmove is to chair a start-up that helps pubs offer rooms above the bar to overnight guests. Harry Hill will join the board of Stay in a Pub, which lists rooms at both independent pubs and chains such as Fuller's and Wetherspoons.


Upmarket welly-maker up for sale

Marwyn Value Investors has taken a £15.5m hit on Wellington boot-maker Le Chameau after writing down the brand. Financo, a boutique investment bank, has been hired to find a buyer for the 92-year-old firm.


Business saw drop in activity in Q3

The CBI’s latest growth indicator shows that a balance of 6% of companies across services and manufacturing reported a drop in sales or output volumes in the three months to September. For the three months to December, a balance of 16% expect falling volumes. Meanwhile, a survey by Lloyds Bank found optimism in the economy fell to a balance of -10 this month, its worst level since before the referendum. Finally, a study by Santander reveals that 35% of businesses have made no plans for Brexit.

Continued Brexit uncertainty could lead to interest rate cut

Bank of England MPC member Michael Saunders has suggested interest rates could be cut even if a no-deal Brexit is avoided. Speaking at a business event in Barnsley, Mr Saunders said if high Brexit uncertainties persisted UK growth would continue to be depressed, in which case it “probably will be appropriate to maintain an expansionary monetary policy stance and perhaps to loosen further.”

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