RBS finalising plans for bonus pot of £305m for 2019
Sky News reports that RBS is set to pay out a reduced bonus pot of £305m for 2019. It would be the lowest pot since its bailout more than ten years ago. A City analyst said the cut was likely to reflect weaker performance in RBS's NatWest Markets business as well as the group's smaller overall workforce. The £2,000 cap on cash bonuses at RBS, which has been imposed for the last decade, will remain in place, according to a source close to the bank. Meanwhile, the Sunday Times reports that CEO Alison Rose is to based solely in London, even though the bank is headquartered in Edinburgh. RBS said: “Our chief executive is based in London and travels to other locations including Edinburgh.”
Board members call for new chief search at Lloyds
Lloyds Banking Group board members are urging a search for fresh leadership at the bank to replace António Horta-Osório, calling for a focus on the internal culture of the lender. This comes as the firm searches for a chairman to replace Lord Blackwell. Possible candidates for chief executive include Alison Brittain, chief executive of Whitbread, Andrew Bester, Lloyds’ former head of commercial banking who now runs the Co-operative Bank, and Mark Bailie, of Royal Bank of Scotland's digital bank Bo.
TSB prepares to launch short-term loans
TSB is looking at introducing short-term loans to lure borrowers away from payday lenders. Chief executive Debbie Crosby said she wants to target customers who find themselves dipping into their overdrafts with a new range of borrowing deals. Ms Crosbie said: “Overdrafts are great for emergency borrowing. But frankly for borrowing over a longer period of time - which is when these products get expensive - we would really want to work with our customers to give them different solutions.”
Growth in housing market leads to more mortgage approvals
Bank of England figures have revealed that mortgage approvals have reached their highest level in almost two and a half years, with the number approved for house purchase in December increasing to 67,241 from 65,514 a month earlier. The value of mortgage lending meanwhile was up by £4.55bn, compared with an average of £4.2bn over the previous six months.
Savers advised to maintain more than one account
In the wake of a series of technological problems suffered by lenders in 2019, account holders are being advised to hold more than one current account, with over 75% banking with only one provider. A survey by Which? found that customers could be left unable to make card payments in the event of a wide-scale failure, like the one which took place at Visa in summer 2018. This comes as Nationwide customers were unable to transfer money or pay bills yesterday, with all attempted payments being held in a queue.
FCA orders lenders to stop increasing charges for unarranged borrowing
Jessie Hewitson, writing in the Times, comments on the Financial Conduct Authority ordering banks such as HSBC, Nationwide and TSB to stop charging higher amounts on unarranged borrowing. She notes that people’s savings give banks the "funding benefit" of “having access to cash that is almost free, thanks to terrible interest rates, which they then lend to mortgage customers at higher rates.”
Brexit forces Revolut payments shift
Revolut is set to shift responsibility for its European payments from London to Ireland and Lithuania after Brexit. New CEO Richard Davies also said the company will open credit offerings for the first time later this year. “Strategically for Europe we are moving to a three-target licensed entity model,” he said.
Marcus scraps plan for Isas with Nutmeg
Goldman Sachs’ retail banking arm Marcus will target more cash savings products after abandoning plans for the launch of a stocks and shares Isa in the UK.
Banks shunning Travelex
High street banks are still not offering foreign exchange facilities a month after Travelex suffered a cyber-attack. The ransomware attack on New Year's Eve crippled Travelex leaving the firm unable to offer many travel money services.
Government needs to invest in SMEs
Keith Morgan, the CEO of the British Business Bank, says that the government should invest more in SME businesses if it wants to deliver on its promise of “levelling up” all parts of the UK.
Google backer bets on UK tech
Sequoia Capital, the Silicon Valley-based venture capital firm, is planning to open a London office this year, according to industry sources. The source said that the firm was “spending more and more time in London to form a strategy on how to better serve the European market”. Sequoia has invested in more than 250 businesses that now have a market value of $3.3trn.
Doomsday stress test to be strengthened in EU
European banks’ resilience is to be tested against severe post-Brexit economic conditions by the European Banking Authority, with central banks struggling to raise interest rates since the global financial crisis. This comes as new data shows that the last quarter saw the eurozone economy almost stall as a result of an unexpected shrinkage of the French and Italian economies. Large lenders across the EU expecting to have greater capital requirements, with an estimate by the European Banking Authority that another €135bn would be necessary to ensure compliance with Basel IV regulations.
Credit Suisse freezes investment bank bonus pool
Credit Suisse has frozen its investment bank bonus pool for the second successive year, after trading revenues were offset by declines in its advisory and capital markets business. Meanwhile, Swiss newspaper Sonntagszeitung has claimed that Credit Suisse conducted espionage against Greenpeace.
Global dealmaking gets off to sluggish start in 2020
Global dealmaking has experienced its slowest start in seven years in 2020, according to data provider Refinitiv, with January marking the quietest month for takeovers since April 2013.
Aston Martin shares leap as Stroll leads rescue deal
Struggling luxury UK carmaker Aston Martin has announced plans to raise emergency funding worth £500m. A consortium led by billionaire Lawrence Stroll will put in £182m, with the rest of the money coming from existing investors. Mr Stroll partly owns the Racing Point Formula 1 team, which will be branded Aston Martin from 2021 under the deal. According to the FT, Aston Martin’s board opted for the deal from Mr Stroll’s consortium ahead of a rival offer from Geely.
Nissan drafts plan to double down on UK under hard Brexit
The FT reports that car giant Nissan is drawing up plans to move its entire European operations into Britain if Brexit leads to tariffs with the EU.
Airbus to pay €1bn in corruption settlement
Airbus is to pay nearly €1bn (£840m) to settle corruption cases with UK authorities. The deal follows a lengthy investigation by the Serious Fraud Office into the aircraft maker’s use of middlemen to secure plane deals. The settlement is part of a €3.6bn (£3bn) deal that also involves payments to US and French authorities.
Ferrovial to hold Heathrow stake
Ferrovial, the owner of Heathrow, has dismissed speculation that it is planning to offload a stake in the airport. A spokesman for Ferrovial said: “We are happy with our stake in Heathrow and the opportunities an expanded Heathrow presents for all stakeholders.”
FCA promotes own warnings in online search results
The Financial Conduct Authority (FCA) has spent £600,000 promoting its own warnings in internet search results after Google failed to stop rogue investment schemes being promoted ahead of "Isa season". The FCA's Jonathan Davidson commented: "We've been in a guerrilla war with unauthorised firms and fraudsters for years and they are constantly evolving," continuing: “I want Google to automatically reject adverts from scammers and misleading adverts of financial products. Genuine financial promotions should have to be authorised or they should be rejected.” A Google spokesman said the firm is working with the FCA and other bodies on a long-term solution to the issue.
SJP bows to pressure over perks
St. James’s Place has unveiled an overhaul of pay and perks in the wake of an investigation by the Sunday Times. The financial advice group told staff that new bonus structures and job titles would reward “the right behaviours” and go beyond recognising sales made in a single year. Speaking at an annual meeting last week, CEO Andrew Croft and managing director Ian Gascoigne explained that advisers will no longer have their pay based solely on sales, other factors such as charitable work, customer retention and qualifications will also be considered. So-called cliff-edge bonuses will be replaced, and job titles such as senior partner and associate partner will be reviewed.
Doubts emerge over the future of Wellesley Finance
Auditors have raised concerns about the future of Wellesley Finance, which has attracted about 6,500 savers to its high-risk, unregulated mini-bonds. Another £20m is invested by 2,300 customers of a separate but related company whose fortunes rely on the success of loans issued by Wellesley's business. The firm’s finances to the end of 2018, published last month, showed a loss of £10.2m compared with a £1.2m profit the previous year.
Britain will remain hotbed for fintech
Specialist technology bank LHV has said that Britain will keep its position as one of the world’s leading hubs for fintech companies despite Brexit. LHV said fintech would continue to flourish in the UK due to its large talent pool, access to finance and 65m population. Andres Kitter, head of LHV, added that the Financial Conduct Authority is business-friendly and willing to help fledgling financial groups. He said: “All of that makes a very strong argument for establishing your fintech here.”
Pension transfers reach £80bn in five years
A freedom of information request by Mercer has found that about 390,000 final salary pensions have been transferred since 2015. The actuarial consultant found that £80bn held in defined benefit schemes had been transferred in return for a cash value invested in a contribution-linked scheme.
Fintech firm raises $15m
Rimilla, a British-fintech firm which uses artificial intelligence to automate payments, has raised $15m from investors at it looks to expand. In 2019, the company helped automate the collection of £110bn ($145bn).
French could scupper British Steel deal
The sale of British Steel to Chinese firm Jingye could be scuppered by French intervention. Jingye agreed in November to buy the collapsed business for £50m and save about 4,000 jobs. However, the approval of the French government is required because British Steel has a plant in France that is considered a strategic national asset. The Anglo-French row centres on British Steel's plant in Hayange, which supplies the French railway network, including state-owned train operator SNCF.
Flexible office firms expand despite difficult market
Flexible office firms continued to grow throughout 2019, despite operating in an increasingly competitive market. Co-working office space providers grew their portfolios by 22% in the last year, with WeWork’s UK portfolio jumped 30% from £3.05bn to £3.95bn last year, as the firm expanded into new global markets.
French Connection abandons sale plans
French Connection has confirmed it is calling off plans to find a buyer, over a year after the fashion chain was put on the market. The company said it would now focus its attentions on its turnaround strategy, including growing its wholesale business in the United States, investing in its online platform, developing license arrangements and cutting costs.
Small high-street shops increasingly targeted by scammers
Mike Cherry, chairman of the Federation of Small Businesses, has said that one third of small businesses are affected by fraudulent payments every year, as specialist shops and independent traders reported fraud losses of £61m in the first six months of last year. This figure represents a 56% increase on the same period a year earlier.
Growth rebounds as Brexit fears subside
The CBI’s growth indicator has revealed that private-sector activity in Britain continued to decline in the three months to January, although at a slower pace than the previous three months. A balance of 16% of firms - those reporting a fall versus those recording a rise - said output fell in the November-January period, lower than the 20% negative balance in the August-October period. Consumer services fell at a slower pace, as did business and professional services. The CBI said: “UK economic growth looks set to improve gradually from 2020, on the assumption that Brexit uncertainty gradually lifts and global growth revives.”
Bankers using apprentice levy funds to boost CVs
Figures from the Department for Education show that almost 200 people started level 7 “senior investment/commercial banking professional” apprenticeships since 2018. The Daily Telegraph notes that banks enrolling staff on these training courses can draw up to £18,000 a year from the apprenticeship levy to fund the courses. As a result it means financial institutions have potentially used £3.5m of levy funds to pay for the level 7 apprenticeships - which the Government markets as the equivalent of a Master's degree.
Unions raise concerns over branch working conditions
Lloyds has reissued staff guidelines after one union raised concerns about working conditions across the chain as it shuts branches nationwide. Accord, which represents approximately 20,000 employees, said examples of staff complaints included demands that they work in their own time, while junior staff were being required to open and close branches.