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Daily News Roundup: Monday, 3rd December 2018

Posted: 3rd December 2018

BANKING

TSB set to keep branches

Richard Meddings, the chairman of TSB, has said in an interview with the Sunday Telegraph that plans to cut some of the bank’s 550 branches have been revised as the physical stores “made a real difference” to customers during its IT crisis. He said: “Our plans [for cutting branches] are different today to what they would have been if we had this meeting when I joined the board last October. But we didn't get given the best branch network when we left Lloyds so there will be some that will be closed, some will open, we'll invest in others.” Mr Meddings adds that TSB hopes to land a large slice of the £775m up for grabs from RBS, which is aimed at boosting competition in the business banking market. On the subject of TSB’s IT problems, Mr Meddings insists that the bank has succeeded in getting back up after its proverbial punch in the mouth. “We caused a lot of distress and inconvenience, and our obligation is to fix it - which we have largely done,” he states.

Consumers punish TSB for IT woes

A league table compiled by consumer group Which? has named TSB as the least favourite lender among consumers. The bank, which was beset by IT problems earlier this year, recorded a satisfaction score of 58%, making it joint bottom with the Bank of Ireland. Monzo topped the table, with a satisfaction score of 86%. It was followed by First Direct (85%), Nationwide (79%) and Metro Bank (76%). Gareth Shaw, a spokesman from Which?, said: “TSB's slump suggests customers felt outraged to have endured the prolonged IT issues.”

Italian banking crisis could spell doom for UK

The UK’s financial stability could be threatened by a fresh banking crisis in Italy, the Bank of England has warned, with risk modelling suggesting problems would move to French and German banks and then spread to the UK. Italian debt yields have risen amid political uncertainty while government debt is more than 130% of GDP. “Although direct UK banking exposures to Italy are low, if financial strains were to spread across the euro area, there could be a material risk to UK financial stability,” the Bank said.

Monzo boss defends overdraft scheme

Tom Blomfield, the CEO of Monzo, has defended the lender’s decision to allow customers to use their overdrafts to buy shares in the challenger bank. He said: “While we don't support using overdrafts to buy shares, we don't feel it's right for us to have a blanket ban. I don't support an attitude where your bank tells you what you can and can't do.”

Lenders slash rates in end-of-year bonanza

Borrowers looking to remortgage are being encouraged to move fast, as lenders have slashed rates to hit their annual sales targets. Barclays and TSB are among the high street giants offering cut-price deals to attract business before the year end. Others are using incentives, with a third of new mortgages now paying cashback. "It's a case of getting in quick," said Andrew Montlake of Coreco. “Many lenders will release good products for people able to apply and complete before the end of the year, but the clock is ticking.”

Tribunal would reduce access to credit

Writing in the Times, John Glen, the economic secretary to the Treasury and City minister, welcomes the announcement by UK Finance that the banking sector would set up an independent scheme to give small businesses the chance to resolve a past complaint with their lender. However, he argues that a new financial services tribunal to handle disputes between banks and small businesses would not be in the interest of business. It would lead to regulation of small business lending, something that would “likely result would be higher costs, fewer products and, ultimately, reduced access to credit for small businesses.”

Agius could be called to give evidence

Former Barclays chairman Marcus Agius has reportedly been questioned by the Serious Fraud Office leading to speculation that he could be called to give evidence at the criminal trial of four former executives over the bank's 2008 Qatari fundraisings. Meanwhile, the Times reports that Barclays reported suspicions of a new market manipulation scandal to the FCA earlier this year amid concerns that one of its bankers had been sharing confidential information with a banker at BNP Paribas. The banker involved has now left the industry, and the FCA has told both Barclays and BNP that they had done nothing to warrant further action by the regulator.

Oaknorth founder has lofty targets

The Times carries an interview with Rishi Khosla, the co-founder of Oaknorth, which aims to fill the dearth of credit available to SMEs. Khosla says the small business banking market was “broken” when Oaknorth entered the sector and lenders could no longer be bothered to “spend the time to understand their customers’ businesses”. He adds that Oaknorth has no plans to raise more cash and on its present business plan is fully funded.

RBS hit by allegations of cronyism

RBS is investigating allegations of cronyism after a whistleblower claimed the bank appointed a man to a top role on the basis that he is the friend of a senior staff member. The appointment reportedly infuriated colleagues, with one source within RBS saying: “It was another 'yes man' put in place for the project overall.”

Apps to track money

Lloyds, Halifax and Bank of Scotland are now using data from Google Maps to allow customers track where they have been spending their money. Lloyds said it was following in the footsteps of Monzo and Starling, adding that the facility would help customers to manage their money and spot fraud.

New service to help deaf customers

Barclays is set to launch a new service to help deaf or hard-of-hearing customers with their telephone banking. The service will alert the bank that the customer may be using a lipspeaker to do their talking. Once they have signed up to the service, hearing impaired customers can contact the bank by phone any day between 8am and 9pm.

The illusion of UK bank capital strength

Jonathan Ford writes in the FT that the illusion of UK bank capital strength is not clear cut, as the bank’s leverage ratios tell a different story.

INTERNATIONAL

Deutsche reaches all-time low

Shares in Deutsche Bank have reached an all-time low as traders offloaded the stock amid more raids by police investigating money laundering. The stock fell by as much as 3% in Frankfurt, as inquiries into the Panama Papers leak continued. The FT reports that the investigation is focusing on two executives in compliance and wealth management.

Vatican joins EU financial system

The Vatican has been granted approval to join the European banking system that harmonises electronic payments across the continent. With the endorsement of the European Council, the Vatican City State and Holy See have been included in the Single Euro Payments Area, known as Sepa.

Goldman eyes monitoring of high-risk staff after 1MDB

Goldman Sachs is considering introducing a surveillance programme to monitor high risk employees in the wake of the 1MDB scandal. The bank is keen to show officials that lessons have been learnt.

AUTOMOTIVE

Electric car sales suffer from high prices

New research has found that poor sales of electric cars are undermining the government’s efforts to cut toxic roadside emissions. Figures show that sales of electric cars increased by 7% in 2017/18 compared with a year earlier, with only 878 more cars being sold. The rate of growth dropped from 21% the year before. In total, 13,586 electric cars were sold in the year to the end of June, representing 0.6% of all new vehicles on British roads.

AVIATION

Wow Air fortunes take another dramatic turn

US private equity firm Indigo Partners has agreed to invest in Wow Air, a day after rival Icelandair abandoned its takeover plan of the airline.

Flybe terminates maintenance contract

Flybe, the struggling regional airline, has terminated a contract with Monarch Aircraft Engineering, which is controlled by Greybull, the private equity firm that owned Monarch at the time of its collapse last year.

CONSTRUCTION

Kier launches emergency rights issue

Construction group Kier has launched a £264m emergency rights issue after warning that lenders were seeking to cut their exposure to the UK building sector. Keir said that the proceeds of the rights issue will go towards reducing debt and strengthening its balance sheet. Shares in the firm dropped by 32.5% to 508p following the announcement.

FINANCIAL SERVICES

Aberdeen launches new fund

Aberdeen Standard has launched a new fund - The Global Sustainability Trust – which it hopes will feed the growing appetite for social and environmental impact investing. The trust has an initial target of £200m - money which it will use to invest in companies that align with the United Nations' sustainable development goals.

Berliand in line to chair TP ICAP

According to the Sunday Times, TP ICAP has chosen to appoint Richard Berliand, a former JP Morgan banker, as its next chairman. He will replace Rupert Robson who is stepping down.

HEALTHCARE

British home care group saved by last-ditch sale

Allied Healthcare has been acquired by Health Care Resourcing Group for an undisclosed amount. The CQC has said previously that Allied Healthcare was facing bankruptcy.

LEISURE AND HOSPITALITY

Marriott hack hits 500m Starwood guests

The records of 500m customers of the hotel group Marriott International have been involved in a data breach. The hotel chain said the guest reservation database of its Starwood division had been compromised by an unauthorised party. Marriott said it was alerted by an internal security tool that somebody was attempting to access the Starwood database. After investigating, it discovered that an “unauthorised party had copied and encrypted information”.

MANUFACTURING

Trade war and Brexit depress growth

The EEF has warned that fears over Brexit, slowing global growth and protectionist trade policies are hitting Britain’s manufacturing industry. The EEF said that “while output and orders remain positive” there had been a clear deceleration in recent months. The employers’ group cut its growth forecasts for next year from 0.5% to 0.3%.

REAL ESTATE

UK house price growth edges up

UK house prices rose by 1.9% in the year to November, up from a five-year low of 1.6% in October according to Nationwide. On a monthly basis, prices were up 0.3% to £214,044, but the lender said Brexit uncertainty has left the property market “relatively subdued”.

RETAIL

Ashley purchases new Intu property

Despite vowing to pull all 17 of his Sports Direct, House of Fraser and other stores out of Intu’s malls after failing to agree rent reductions, Mike Ashley has bought the long leasehold of the vacated BHS department store, which is at the landlord’s Derby site. Intu sold the former BHS site along with two other freehold properties near its Nottingham and Merry Hill shopping centres in the West Midlands for a combined £25.25m. Mr Ashley had claimed his planned boycott will cost Intu £25m per year in lost rent but Intu insiders have said it will be a fraction of that.

ECONOMY

Tax burden reaches 50-year high

The tax paid by British households and businesses has reached 34.6% of GDP, according to data analysed by the TaxPayers’ Alliance. The figure compares with 32.7% in 2015 and 28.5% in 1993. The Alliance proposes cutting the burden to 29.9% of GDP through the abolition of CGT, IHT, air passenger duty and stamp duty, and halving national insurance and cutting income tax.

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