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Daily News Roundup: Monday, 5th March 2018

Posted: 5th March 2018


EU banker bonus cap could stay

The Times claims that the City could still be bound by the EU cap on bonuses after Brexit, ahead of a speech from the Chancellor this week setting out the UK’s future financial relationship with Brussels. A Whitehall source refused to rule out participation in the bonus scheme after Brexit, and said that the issue of the cap was to be negotiated with the EU. Continuing to observe the cap could help to ensure better market access for UK financial services companies. The Times notes that the development is likely to anger senior bankers who want to abolish the bonus restrictions.

US investment banks still bet on London

Leading US investment banks are still planning to hire far more people in London than anywhere else in Europe, indicating they expect that the City will remain their main regional hub for the time being at least. At the end of February, JPMorgan, Morgan Stanley, Citigroup, Bank of America Merrill Lynch and Goldman Sachs had a total of 1,544 postings for jobs in Britain open on their websites. In contrast, total vacancies available in Dublin, Frankfurt and Paris stood at less than 200 for the five banks.

TSB employees demand IT bonuses are scrapped

A group representing 4,000 employees at TSB has written to Dame Sandra Dawson, chairwoman of the bank's remuneration committee, demanding the bank scrap bonuses for senior management after it delayed a restructuring of its IT system. A two-month delay to moving TSB’s system over from Lloyds Bank cost parent company £70m, the group says. A TSB spokeswoman said it did not understand why the group had written its letter as the committee had already decided to defer bonuses. The Times’ Katherine Griffiths says management should be paid their bonuses for the year in which they complete the IT work, but not for a period when they failed to get it done.

Barclays has 369 employees earning more than £1m per year

New figures have revealed that Barclays paid 369 staff more than £1m each last year, with four of them earning more than £6m. According to the analysis by the Mail on Sunday, Barclays, RBS, Lloyds and HSBC paid almost 1,000 bankers more than €1m (£880,000). Barclays said 61% of those earning more than £1m were based in the US, 32% in Britain and 7% in the rest of the world. Meanwhile, the paper also reports that HSBC’s former boss Stuart Gulliver will be paid £2.6m by the bank and could also pick up a £1m bonus for working on 'key strategic projects' this year.

Carney calls for crackdown on crypto-currencies

Bank of England governor Mark Carney has warned that crypto-currencies such as Bitcoin should be regulated to crack down on illegal activities such as money laundering and terrorism-financing. His warning comes amid growing efforts around the world to bring bitcoin under the control of central banks and governments, amid fears that investors will lose money. Bitcoin's value hit almost $20,000 (£14,500) before Christmas, then crashed by more than half early this year. It has since recovered to nearly $11,000.

Trust being placed in banks

A study by CYBG has found that people around the UK overwhelmingly trust banks when it comes to their personal data. CYBG found that younger people (18-24-year-olds) have the highest level of confidence in banks. More than half of this age group trust banks to keep their personal data safe. Elsewhere, Mark Curran, director of payments and open banking at CYBG, writes in City AM that open banking is a test of trust for financial firms. He says the biggest obstacle will be consumer confidence.

Nationwide launches Isa with market-beating rate

Nationwide has become the first high-street bank or building society to launch a market-leading cash Isa. The Loyalty Single Access Isa pays a variable rate of 1.4%, beating Charter Savings Bank's 95-day notice Isa.

Libor conspirator escapes with fine

Guillaume Adolph, a former trader with Deutsche Bank who was named as a conspirator during the Libor-rigging trial of Tom Hayes, has reached a settlement with the FCA to close its investigation into him.


Private equity backed listings underperforming IPO market

New research from Dealogic has found that shares floated by private equity firms lag behind other stock market debutants. When Fevertree Drinks' 1,800% share price surge is taken out of the Dealogic figures, private equity-floated companies' share prices have risen an average of 21.5%, compared to 25.5% by normal IPOs.


Bankia chairman opens door to consolidation

José Ignacio Goirigolzarri, the chairman of Bankia, has suggested that his bank would be the “perfect fit” with its main domestic rivals, raising the prospect of further consolidation in the sector.


Parts maker offloaded

Endless has sold its stake in car parts manufacturer Brabant Alucast for €53m (£47m) to New York-listed Shiloh Industries.


Airlines sign flight connection deal

Ryanair and IAG's Aer Lingus have signed a co-operation agreement to offer connecting flights on each other’s services. In a first for Ryanair, Europe’s largest budget airline will feed passengers from some of its European routes onto its Irish rival's transatlantic services, while Aer Lingus will connect onto Ryanair services to various European destinations.


Interserve plans further job cuts as it fights bankruptcy fears

Interserve, the UK-based government contractor, is planning to cut 1,500 jobs as it looks to stave off bankruptcy. The company is hoping that its lenders will provide emergency funding to keep it solvent.


Leaving City out of deal will harm EU economies, warns PM

Theresa May has warned the EU that refusing to include financial services in a trade deal after Brexit would “hurt” its own economies. The warning comes amid speculation that the EU will offer the UK a "Canada-style" trade deal only, threatening an exodus of financial services firms from the City, with a dramatic loss of tax revenue. The PM pointed out that London was “the world's most significant financial centre” supplying "more than £1.1trn of cross-border lending to the rest of the EU”.

The Independent, Page: 6

Bad financial advisers should be struck off

The Financial Conduct Authority is coming under increasing pressure to crack down on independent financial advisers that leave savers nursing heavy losses while they liquidate and resurface as new firms. These so-called “phoenix firms” are suspected of choosing to close to avoid potential claims via the Financial Ombudsman Service, with savers looking at just £50,000 in maximum redress from the Financial Services Compensation Scheme (FSCS). The FSCS has ruled in favour of 55,515 people since April 2015, in cases in which a financial adviser has gone bust or voluntarily liquidated a firm, the Sunday Times reports.

Female candidates command a premium

City sources have told the Sunday Times that a shortage of women at the top of financial services is driving up wages as banks, insurers, stockbrokers and asset managers scramble to improve gender diversity. Brenda Trenowden, who chairs the 30% Club, says the small field of female candidates is a problem the industry has created for itself by failing to develop a pipeline of talent. The paper’s Rosamund Urwin says many financial services companies have failed to report their gender pay gap yet because the results are so bad. Fiona Hathorn, a former investment director for Old Mutual who is now managing director of Women on Boards UK, predicts that investment banks will publish gaps of well over 100%.

Equitable Life plans to hand back cash

Equitable Life is planning to give back hundreds of millions of pounds to customers who lost out when the insurer nearly collapsed. Almost 500,000 were owed cash due to mismanagement at the company in the 1980s and 1990s. Some policyholders lost life savings, while others died without getting compensation. The company has decided to pay compensation now in an attempt to settle disputes.

Asset managers told to pay back overcharged fees

A review of the asset management industry by the Financial Conduct Authority has resulted in managers voluntarily paying out £34m to investors who were overcharged on their funds. Investors were being charged for “active” fund management when in fact their fund was being “passively” run.

The Sunday Telegraph, Business, Page: 10

Pension funds told to explain how they’re mitigating climate change risks

Mary Creagh, the chairwoman of the parliamentary Environmental Audit Committee (EAC), has written to the top 25 pension funds in the UK to ask how they manage the risks that global warming poses to pension savings.

Rothesay Life leading bidder for £12bn book of annuities

Rothesay Life, backed by Blackstone, is emerging as the lead bidder to buy at least £10bn of UK annuities from Prudential, according to the FT.

European fund managers attract record €729bn from investors

Data from Broadridge has revealed that investors ploughed a record €729bn into funds sold across Europe in 2017.


Spire pledges to open fewer new hospitals

Spire Healthcare has pledged to open fewer new private hospitals and to return more cash to shareholders, after profits slumped 69% to £16.8m in 2017, on flat revenues of £931.7m.

Helping Hands preps for sale

Advisors have been hired to explore the potential £120m sale of Helping Hands, a business which provides nurses and carers for people with disabilities and conditions such as dementia.


Prezzo to close restaurants

Italian restaurant chain Prezzo is planning to close about a third of its outlets in an attempt to rescue the business. The chain will close 94 restaurants - including all 33 outlets in its TexMex chain Chimichanga - leaving the firm with 208 sites. The closures aim to repair Prezzo's financial position and allow it to continue trading.

Pub chain up for sale

Hawthorn Leisure, which owns 300 pubs in England and Scotland, has been put up for sale by its private equity owners, according to the Sunday Times. Revenues for Hawthorn, which makes its money by collecting rents from its leased and tenanted pubs — most of which are freehold — were £41.5m last year. A sale could value the business at between £115m and £135m.

Paddy Power finance chief goes

Paddy Power Betfair CFO Alex Gersh has announced his intention to leave the company just months after the surprise departure of chief executive Breon Corcoran.


Factories to drive growth in 2018

The EEF manufacturers’ organisation has upgraded its manufacturing outlook for 2018, with the sector now expected to grow by 2%, up from a forecast made just three months ago of 1.4%. Factory expansion will outpace the wider economy (1.5%) for a second year running, according to the EEF, and the industry remains confident despite concerns about Brexit and US President Trump’s threat to impose punitive tariffs on all steel and aluminium imports. A net balance of 18% of companies surveyed by the EEF said that they planned to increase investment to cope with rising demand. A balance of 21% of firms also intend to create more jobs.


Buyers urged to seek out low rates now

House buyers should take advantage of record low rates, as they will rise before the end of the year, according to one of Britain's biggest mortgage lenders. Leeds Building Society chief executive Peter Hill said that rates for borrowers were “as good as they will get”. He added that an increase in mortgage rates is inevitable, given that the Bank of England hiked the base rate in November.


Mothercare shares slide on profit downgrade

Shares in Mothercare slumped on Friday after the baby retailer warned that profits would disappoint, and the company revealed it has opened crunch talks with its lenders. The retailer, which issued a profit warning in January following dismal Christmas trading, said it expects adjusted pre-tax profit to come in at the lower end of the £1m to £5m range it had previously guided. Mothercare is also working with its lenders as it seeks “waivers of certain financial covenants”.


UK economy bounds into 2018

Official data this Friday is expected to show industrial production jumped 1.5% in January, reversing a 1.3% fall in December. The improvement in the UK economy at the beginning of the year includes a shrinking of the trade deficit from £4.9bn in December to £3.15bn. Ruth Gregory, of Capital Economics, says if global growth remains solid, “then UK export volumes could continue to grow at an annual rate of over 5% in 2018”. Additionally, a CBI membership survey found growth exceeded expectations in almost all British industries in the

Bank of England admits QE measures hit investment

A study by the Bank of England has confirmed that measures to boost the economy after the 2007 financial crisis harmed investment in the UK, as companies diverted cash to deal with pension deficits.


Most UK small businesses unprepared for new EU data rules

Fewer than one in 10 small businesses in Britain are fully prepared for the forthcoming GDPR rules on personal data, even though the changes are less than three months away.

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