BANKING
IT costs hit TSB
Profits at TSB, owned by Sabadell, fell last year after IT costs increased as the lender prepares to migrate the last of its customers to a new computer system later this year. Pre-tax profits fell £19.3m to £162.7m in 2017, mainly due to a £122m increase in outsourcing fees paid to Lloyds for using its former parent’s IT platform. The results came as the bank said it planned a £30m cash windfall for its approximate 7,000 employees, a £2m rise on the award the previous year. TSB added that lending rose just under 5% to £30.9bn and customer deposits were up 3.9% at £30.5bn.
Citi to retain UK staff after Brexit
US bank Citi is planning to keep the majority of its 9,000-strong workforce in the UK, regardless of how Brexit talks develop. The bank said it plans to bolster its EU operations with an extra 150 staff, but through a hiring spree rather than by shifting British employees to the Continent.
Lenders slash mortgage costs
A number of lenders, including NatWest, Barclays, First Direct and HSBC have cut their prices for mortgage deals. The average cost of a five-year fixed-rate mortgage is now 2.85%, down from 2.86% two weeks ago and 2.92% this time last year, according to the data firm Moneyfacts. Mortgage brokers attribute the fall in rates to banks and building societies raising their lending targets for this year, combined with more lenient lending criteria.
British Business Bank to support £100m in loans to SMEs
The British Business Bank has announced it will provide up to £100m in funding for loans to SMEs affected by the collapse of Carillion. The backing aims to enable smaller firms which may have suffered losses from the Carillion failure to access cheaper finance. Business secretary Greg Clark said: “We want to signal very clearly to small and medium-sized businesses who were owed money by Carillion that they will be supported to continue trading.”
Bitcoin ban for Lloyds’ customers
Lloyds Banking Group customers will not be permitted to buy Bitcoin with their credit cards from today over fears the bank could be left picking up huge losses. The cryptocurrency has fallen 57% since December to less than £6,000 and Lloyds's decision follows several of the biggest US banks banning credit card payments last week. Customers will still be able to buy digital currencies with debit cards.
UBS announces regional expansion plans
UBS plans to double its wealth management team in Scotland within two years and recruit new staff in Newcastle, Leeds, Manchester and the south-west of England to better serve the growing number of wealthy individuals in the UK regions. The move follows regional launches by Julius Baer and Tilney last year.
Co-operative Bank names new chairman
The Co-operative Bank has named Bob Dench, the chairman of Paragon Group, as its new chairman. He will join the board on March 14 and take over from Dennis Holt, who is retiring in May. Welcoming Mr Dench, the Co-op’s CEO Liam Coleman said the bank still has “much to do” after last year’s recapitalisation.
Positive outcome over RBS branch closures expected
Ian Blackford, the leader of the SNP at Westminster, has said he expects a “positive” outcome following talks with RBS officials over plans to close dozens of bank branches. Mr Blackford said he had been encouraged by the positive nature of talks that he held with the bank over the last few weeks. The Scottish affairs committee has also held talks with RBS over the planned closures.
Banks must warn customers about overdraft risk
Under new rules being imposed on the banking industry by the CMA, banks will be forced to warn customers if they face slipping into an overdraft. The rules will apply with immediate effect to new customers and will be extended to existing customers over the next month.
Surge in dealmaking could indicate bubble
Global mergers and acquisition activity enjoyed the strongest start to a year since 2000 with £259bn worth of deals announced globally last month. The value of targeted mergers and acquisitions in the UK jumped to $21bn, a third higher than a year ago, Dealogic statistics revealed.
PRIVATE EQUITY
UK venture capital firms collect £1bn of Chinese investment
Two UK venture capital firms – Eight Great Technologies and Future Planet Capital – have collected more than £1bn of funding commitments from Chinese investors to help back UK technology companies.
Embrace technology or face ‘treadmill to oblivion’, says report
A new report has suggested that hedge funds and private equity firms are on a “treadmill to oblivion” unless they embrace technology such as blockchain and AI.
INTERNATIONAL
Deutsche Bank posts loss of €497m
Deutsche Bank has reported a loss of €497m for 2017, worse than the loss of €290m forecast by economists polled by Reuters. The German bank was hit by a drop in investment bank revenue, as well as US tax reform, which prompted a non-cash tax charge of €1.4bn. Revenue slipped 12% during the year to €26.4bn, and hit its lowest level in seven years in the fourth quarter, dropping 19% year on year to €5.7bn. Reflecting on the results, the FT’s Lex questions whether Deutsche Bank should close its investment banking division.
Wells Fargo hit with heavy sanctions over bogus accounts scandal
The Federal Reserve has ordered Wells Fargo to halt its growth, citing “widespread consumer abuses and other compliance breakdowns” at the bank. The Fed said that the bank was barred from growing beyond its size at the end of 2017 until it has satisfied the Fed that it has improved its compliance and governance policies. The bank must submit a plan within 60 days outlining how it plans to address the Fed’s concerns.
China fines 19 banks over loan fraud
The China Banking Regulatory Commission has imposed fines of 52.5m yuan ($8.36m) on 19 banks in the north-western province of Shaanxi and the central province of Henan over a 19bn yuan ($3bn) pledged loan fraud. The regulator said criminals illegally pledged gold of low purity to obtain loans from banks, including branches of large state lenders Industrial and Commercial Bank of China and Postal Savings Bank of China.
MUFG’s Q3 profit slides as overseas growth costs bite
Mitsubishi UFJ Financial Group has posted a 20% drop in quarterly profit due to a surge in costs related to its overseas growth push. The bank posted a net profit of 236.5bn yen ($2.16bn) for the October-December period.
Finance chiefs warn on Big Tech’s shift to banking
European finance chiefs have expressed concern that Big Tech’s move into banking is threatening financial stability, and say that US and Chinese tech groups should face the same regulation as banks.
Canada approves first blockchain ETF fund
A blockchain ETF fund has received approval from the Ontario Securities Commission to launch on the Toronto Stock Exchange next week. Harvest Portfolio said the fund will provide Canadian investors with an opportunity to invest into the blockchain tech sector.
AUTOMOTIVE
Ghosn set to remain as Renault boss
Renault is set to reappoint Carlos Ghosn as its chief executive, despite expectations he would step down in June. The carmaker is also planning to name a permanent deputy, as it looks to reshuffle its leadership team.
AVIATION
IAG: Heathrow expansion needs greater competition
International Airlines Group, the owner of British Airways, has called for an end to Heathrow’s “monopoly” on the airport’s terminal, suggesting that competition between third operators would lower costs for passengers. IAG claims that the move would also create a new source of funding for the airport’s infrastructure projects, whereas its current investments are funded through debt.
CONSTRUCTION
Carillion workers set to lose jobs
The Official Receiver to Carillion has said that 377 staff will be made redundant as a result of the collapse of the construction firm last month. The receiver also revealed that it had found new employment for 919 staff, who will transfer to other companies. Carillion had employed 43,000 people, including around 20,000 in the UK. Since it collapsed last month, a number of companies have said they will take over contracts and projects that they had previously worked on with the now defunct construction and services business.
Construction stagnates in January
The IHS Markit construction PMI declined to 50.2 in January from 52.2 in December, falling short of analyst forecasts which had predicted a reading of 52. Duncan Brock of the Chartered Institute of Procurement and Supply said the “meagre” results were driven by a “surprisingly poor show” from the housing sector, which saw its worst performance since July 2016.
FINANCIAL SERVICES
BoE deputy warns against ‘bonfire of the regulations’ after Brexit
Sam Woods, the deputy governor of the Bank of England, has warned against a “bonfire of the regulations” after Brexit. He said that Britain must resist the temptation to debase its regulations after withdrawal from the European Union and insisted that standards would remain “at least as high as those we have today”.
UK’s financial services exports jump to £96m
Figures released by TheCityUK have revealed that Britain’s exports in financial and professional services rose by 15.8% from £82.6bn to £95.7bn in 2016. London topped the list for financial exports. Financial exports from the capital totalled £46.6bn in 2016, growing 17.7% from £39.7bn in 2015. The south east’s exports grew 10% from £10.5bn to £11.6bn, making it the second highest contributor.
Salaries in financial services to remain flat
A report from Robert Walters has predicted that salary growth in financial services will remain largely flat this year. However, cyber security and regulatory specialists are expected to command increases amid rising demand. Robert Walters is forecasting a salary rise of 6% for risk specialists in the capital.
Pension industry agrees “anachronistic” RPI should be phased out
Key figures in the pension industry, including Steve Webb, director of policy at Royal London, have backed a call from BoE governor Mark Carney to replace the Retail Price Index (RPI) with the Consumer Price Index (CPI) on new index-linked bonds.
Cabot reconsidering flotation
Encore Capital Group, a US listed debt collector, and private equity group JC Flowers are considering a flotation of Cabot Credit Management, three months after they were forced to cancel a stock market listing.
LEISURE AND HOSPITALITY
Activist investor wants Whitbread to spill cash
Activist hedge fund Sachem Head is pushing for Whitbread to dispose of its Costa Coffee chain, embark on a sale and leaseback of its Premier Inn hotel estate, and ramp up its debt in order to hand investors more cash. Whitbread is expected to reject the proposal.
MANUFACTURING
Labour calls for block on £7bn hostile takeover of GKN
The shadow business secretary, Rebecca Long-Bailey, has written to Greg Clark, the business secretary, urging him to prevent the £7bn takeover of GKN by Melrose on grounds of national security.
Private equity jostles to clinch Akzo chemicals arm
The FT reports that Carlyle, a consortium of Advent and Bain, Apollo and the German chemicals producer Lanxess are all interested in buying Dutch paint maker Akzo Nobel’s chemicals unit.
MEDIA AND ENTERTAINMENT
Vodafone in talks to buy Liberty Global’s European assets
Vodafone has said it is in talks to buy some European assets owned by Liberty Global. The talks concern assets in markets where the firms overlap, including Germany, Czech Republic, and Hungary. Vodafone said the talks were not about a merger with Liberty and there was “no certainty” the deal would go through.
PROFESSIONAL SERVICES
Capita warned over poor governance, shareholder says
Capita shareholder Royal London Asset Management has hit out at the outsourcing giant, claiming it had privately raised concerns over poor corporate governance at the company for years. Royal London pointed to Capita’s small board primarily comprised of management insiders and a pay policy which excluded losses from the calculations on executives’ pay.
REAL ESTATE
Facebook ready to sign for new London HQ
Facebook is reportedly close to signing a deal for a new British headquarters at the King's Cross redevelopment in London. The tech giant is understood to be finalising outline terms with King's Cross Central, majority-owned by the AustralianSuper pension fund.
RETAIL
House of Fraser facing cash squeeze
House of Fraser is facing a squeeze on its finance after a leading credit insurer decided to stop offering cover to some of the retailer’s suppliers. A source close to House of Fraser said that only one of the big credit insurers had withdrawn cover, and that the decision had been taken a month ago.
ECONOMY
Forecast upgrades lead to rate rise predictions
Analysts are predicting another interest rate hike from the Bank of England in May, with growth forecasts this week expected to be upgraded. Alan Clarke, at Scotiabank said: “I think we’ll see a hawkish tone - a step towards the next interest rate hike.”