BoE warns lenders over reporting
In a “Dear CEO” letter to Britain’s 40 largest banks and building societies, the Bank of England (BoE) has warned that lenders face potential investigations and fines if they do not improve the quality of their official reporting to the regulator. The BoE says it has uncovered errors and inconsistencies in information provided by lenders over their assets and liquidity. The letter, from Sarah Breeden, executive director for UK deposit takers supervision, and David Bailey, executive director for international banks supervision, says: “We expect firms to submit complete, timely and accurate regulatory returns. The integrity of regulatory reporting is the foundation of effective supervision.”
Rose set to simplify RBS
Alison Rose, the new CEO of Royal Bank of Scotland, has told staff she plans to simplify the bank, adding that "continuing to reduce the bad costs across the bank ... will be critical". Reducing certain costs, she added, will enable the bank to make further investment in technology. In her first speech to employees since replacing Ross McEwan, Ms Rose said RBS remains "too complex – we have too many processes and are too cumbersome". She added that the lender “will need to make tough choices". She also vowed to build a bank that is "more open, more accessible and more inclusive.”
Bank loan writedowns climb
RBS, Lloyds, HSBC and Barclays wrote off £1.76bn in loans between July and September, an increase on the £1.17bn in bad debt writedowns recorded in Q3 2018. Figures from the Insolvency Service show 4,355 firms were unable to pay their debts in the third quarter – a five-year high.
Joint bank accounts becoming obsolete
Research from market data firm Consumer Intelligence suggests joint bank accounts are becoming obsolete, with analysis showing that just 32% of people aged 25 to 34 share a joint account compared to almost half of over 65s. The poll of 1,511 savers found that 11% of those aged between 18 and 24 share a bank account. Overall, 39% of people currently have a joint account. Many of those who opt against sharing an account with a partner said they want to retain control of their finances, while others were concerned what would happen if their relationship ended and some said they were worried a shared account would cause tension if one account holder was monitoring the other’s spending.
Bank taxes up 50% in 5 years
A report from trade body UK Finance shows banks in the UK have paid almost £40bn in tax in the past year. The study also shows that across the banking industry, taxes paid have risen by 50% over the past five years.
RBS struggles to shed business accounts
RBS is behind schedule on a scheme to reduce its dominance of business banking, moving on just 18,000 of 120,000 businesses in the first seven months of the 18-month Incentivised Switching Scheme.
Data could help banks offer support
The Money and Mental Health Policy Institute (MMHPI) has suggested banks should do more to help customers avoid debt by monitoring accounts for signs of overspending – such as sudden drops in income, dramatic increases in spending, or persistent use of overdrafts.
Tax status shift boosts private equity firms
Share values at America’s biggest private equity firms have jumped since they renounced a tax-advantaged partnership structure, making it easier for mutual funds and index trackers to hold stock.
Advent looks to win approval for Cobham takeover
Advent has reportedly offered to ensure that only Britons are put in charge of sensitive Government contracts as part of concessions designed to win approval for its £4bn takeover of Cobham. Business Secretary Andrea Leadsom is due to consider the findings of an investigation of the takeover by the Competition and Markets Authority. The proposed deal has been backed by 93% of Cobham investors but concerns have been raised over whether the takeover could harm UK interests and endanger national security.
Carlyle eyes Arriva deal
Carlyle has entered into exclusive talks to buy public transport operator Arriva Group in a deal worth £2.2bn. A potential deal for Arriva, which runs rail franchises including Northern and London Overground and operates buses across Britain, comes after Deutsche Bahn, Arriva's German parent group, began to explore the possibility of selling or floating the company.
ECB warned over bond-buying
Analysts have warned European Central Bank president Christine Lagarde that its quantitative easing programme (QE) risks causing significant damage to stock markets. Bank of America Merrill Lynch (BoAML) has warned that prolonged QE will see companies turn to debt, rather than issuing stocks, for their funding needs. BoAML voiced concern over the decline of stock markets, with the number of listed companies falling by around a quarter in the EU over the last decade. BoAML said fewer listings mean the number of companies releasing detailed results would fall, giving investors “a less reliable pulse on the economy”.
Malaysia rejects 1MDB compensation offer
Malaysia has rejected a “less than $2bn” offer from Goldman Sachs over the 1MDB scandal, with Prime Minister Mahathir Mohamad demanding $7.5bn in compensation for losses incurred. Mr Mahathir says his government has reached out Deutsche Bank and UBS regarding their involvement with 1MDB.
JPMorgan cuts risk with $130bn switch into bonds
JPMorgan Chase has cut the amount of loans it holds while increasing its bond portfolio by 50% by moving more than $130bn of excess cash into long-dated bonds.
UBS could double wealth business profit
Tom Naratil, UBS’ co-head of wealth management, says the group could double the profit it makes from its American wealth management arm within a decade, even with fewer staff. He suggested that profit could be boosted by encouraging customers to use more lucrative services where the wealth manager takes more control of a client's investments.
Danske Bank cuts profit guidance and downgrades outlook
Danske Bank has cut its profit guidance, saying investments in digitalisation and anti-money laundering controls would depress its return on equity in 2020 to 5% to 6%.
Deutsche Bank shakes up management
Deutsche Bank has promoted Fabrizio Campelli to chief transformation officer. He will manage the bank's transformation processes and its workforce, tasks previously shared by several managers.
Fund managers face crackdown after Woodford scandal
Asset management companies have been warned by depositary companies, such as Northern Trust, that their funds could be suspended and wound up if they do not dump riskier stocks in the wake of the collapse of Woodford Investment Management. According to the Sunday Times, depositary companies are telling asset managers that funds can no longer be suspended for more than three months. Meanwhile, the Financial Conduct Authority has grilled Way Fund Managers about the suspension of two of its funds. The funds, which have about £35m of assets between them, have been frozen due to exposure to illiquid stocks.
Litigation firms to bankroll investor fight against Woodford
Litigation funding firm Augusta has said that it is in talks with several law firms seeking redress after the collapse of Neil Woodford’s investment firm. This comes after it last week emerged that Slater & Gordon and Leigh Day have both received enquiries from investors about kick-starting legal action against Woodford and his main backer Hargreaves Lansdown.
More than 40 investment trusts have no women on boards
Analysis of 303 closed-ended funds by Investec shows that 14% have no women on their boards, with Schroder European Real Estate and BlackRock Income among the 43 with all-male boards.
Google agrees deal for Fitbit
Fitness device marker Fitbit is being acquired by Google for $2.1bn (£1.6bn). The move will allow Google to expand into the market for fitness trackers and smart watches. The transaction is expected to be completed in 2020, pending approval by the board and regulators.
Picture 'remains bleak' for manufacturing
Stockpiling ahead of the aborted Halloween Brexit deadline briefly gave manufacturing a bit of a boost in October, "but the underlying picture remains bleak" says Samuel Tombs, chief UK economist for Pantheon Macroeconomics. He adds that the volume of new orders indicated by the survey "points to the resumption of sharp falls in production ahead." Manufacturing activity fell slightly last month from September, according to a closely watched survey. The sector scored 49.6 last month, on the IHS Markit/CIPS purchasing managers' index where anything below 50 is considered a contraction, putting it above September's reading of 48.3.
MEDIA AND ENTERTAINMENT
Martin Sorrell lifts S4 stake
Executive chairman Sir Martin Sorrell has bought nearly 9m shares in digital advertising and marketing company S4 Capital for £12.7m, taking his holding to 55.4m shares.
Mortgage rates dip 10%
Average mortgage rates have fallen by 10% in the past year, with buyers benefiting from increased competition among lenders. Buyers with small deposits have been given the biggest boost, with rates for those holding a 5% deposit as low as 2.59%, with Newcastle Building Society offering this rate on a two-year fix with fees of £763 and HSBC offering a two-year fee-free deal at 2.69%. Research by Moneyfacts shows that the average five-year fixed-rate mortgage with a small deposit fell from 4% to 3.6% last year, while the average two-year rate dropped from 3.63% to 3.27%.
Closures on the cards at Clintons
Clintons, the greetings card and gift chain, is to hold meetings with landlords to discuss store closures and rent cuts. The retailer has 330 stores, but is looking to use a CVA to cut costs. It has written to landlords to invite them to discussions, raising the prospect of dozens of stores being shut in the coming months, according to sources.
BoE expected to hold rates
The Bank of England’s (BoE) Monetary Policy Committee is expected to hold interest rates at 0.75% this week, with policymakers unlikely to make a change before the general election. Uncertainty over who will be in charge of the BoE is also believed to be a factor in any decision to hold rates, with the committee waiting to hear who will succeed BoE governor Mark Carney, who is due to leave on January 31.
The latest Business Barometer from Lloyds Bank Commercial Banking shows confidence rose by 4 points to 6% in October – although the figure remains well short of the long-term average of 24%.