Uncertainty over fraud reimbursement
Uncertainty remains over whether victims of bank fraud will be reimbursed, with payment providers disputing how to fund the losses. A number of banks and payment providers, including Barclays, RBS and HSBC, last year agreed to a code that would see “blameless” victims being automatically reimbursed, but a fund set up to repay customers could run dry as members have failed to agree on a long-term reimbursement solution. The scheme, due to end in January, has been extended to March 31, and payment scheme operator Pay.UK has said there remains “no industry consensus” on how to refund victims. Proposals such as a transaction fee on online payments and an industry-wide fraud insurance policy have all been rejected. Stephen Jones, chief executive of UK Finance, comments: “We must all work together to create a sustainable funding solution”.
Wall Street banks face reporting probes
The Prudential Regulation Authority (PRA) is to investigate a number of Wall Street banks in regard to concerns of widespread financial reporting failures. The regulator is commissioning reports on data being supplied by companies including Goldman Sachs and Morgan Stanley, with the UK operations of Bank of America Merrill Lynch and Scotiabank also expected to be subject to the Section 166 reports, with are set to be conducted by a number of accountancy firms.
Risky mortgages rise
Banks competing for customers are cutting rates on riskier mortgages, with data from Moneyfacts showing rates on 95% mortgages dropping to an average of 3.24% on two-year fixes. This is close to the record low of 3.23%. Bank of England figures show the proportion of mortgages at or above 90% loan-to-value rose to 5.9% in Q3 2019 - the percentage highest since the fourth quarter of 2008. Sam Woods, chief executive of the Bank’s Prudential Regulation Authority, said last May that there had been a "significant increase" in lenders looking to offer higher-risk mortgages and that the regulator should be "watching them like a hawk".
IT glitch hits banks
An IT failure meant some Clydesdale and Yorkshire bank customers’ wages and other payments failed to arrive in their accounts on Friday. Parent company Virgin Money says it has launched a “full investigation” into an issue that reportedly centred on an incorrect processing date on a Bacs file. The problem arose just days after Halifax and Bank of Scotland customers were unable to gain access to their accounts online and via mobile apps for a period on New Year’s Day because of an IT failure.
HSBC sees investment banking fees fall
HSBC suffered the biggest plunge in investment banking fees in the City last year. It received income of more than $212m for work on M&A deals last year, down from $377m the previous year. This reduced its share of the overall UK total from 6% in 2018 to just under 4% last year. Goldman Sachs and Barclays took the top spots for total earnings, raking in $377m and $361m in fees respectively.
Lloyds lines up £18bn in loans
Lloyds Bank has committed to lending £18bn to UK businesses over the course of 2020, with the money to be lent to companies across a spectrum spanning micro-businesses to large multinationals.
Banks’ currency services hit by Travelex attack
Travel money services for banks including Sainsbury's Bank, Barclays, Tesco Bank and HSBC subsidiary First Direct have been affected after foreign currency seller Travelex took its site offline to deal with a cyber-attack on New Year's Eve.
Starling takes flight in Ireland
Starling is preparing to launch an international bank in Dublin, enabling it to offer current accounts across the EU after Brexit. The digital lender applied for an Irish banking licence last year and new subsidiary Starling International plans to provide banking services in the EU and offer current accounts in France, Germany and Holland.
Private equity giants vow to show their ESG credentials in 2020
Private equity fund managers KKR and TPG will report on the environmental, social and governance impacts of their investments, having signed up to principles set out by the World Bank’s International Finance Corporation.
VC investment fell in 2019
Analysis by PitchBook shows global venture capital investment fell in 2019, from $302bn the year before to $258bn. The number of deals also declined slightly, falling from 22,807 to 21,723.
Credit Suisse plots share buyback
Credit Suisse expects to buy back at least 1bn Swiss francs ($1.0bn) worth of shares through 2020. The bank repurchased nearly 80m shares on a second trading line on SIX Swiss Exchange for a total of just over 1bn francs in 2019.
Commerzbank ups Comdirect stake
Commerzbank has purchased a block of shares in Comdirect from Petrus Advisers, taking its holding of the online brokerage to over 90%. Martin Zielke, Commerzbank's chief executive, said the sale was an "important step to quickly and efficiently execute the integration of our successful direct banking subsidiary".
Electric car sales race, while diesels stall
Analysis by the Society of Motor Manufacturers and Traders shows that sales of electric vehicles rose by 144% in 2019, while sales of diesel vehicles fell 21.8%. Overall, sales of new cars were down by around 2.35 in 2019, totalling 2.3m units. The Society of Motor Manufacturers and Traders expects new car sales to fall again in 2020, with a decline of 1.6% expected by 2021.
Construction sector declines ‘sharply’
Britain’s construction sector declined “sharply” last month amid subdued demand and political uncertainty. The Markit/CIPS UK construction purchasing managers' index reported its eighth consecutive month of decline. A reading of 44.4 was a slump from 45.3 in November, with anything under 50 signalling contraction.
Bovis acquisition creates top five housebuilder
UK housebuilder Bovis Homes will become a top five housebuilder following the acquisition of two Galliford Try businesses for £1.1bn. Galliford Try’s chief executive Graham Prothero will become the new company’s chief operating officer.
Treasury the ‘biggest barrier to pensions policy’
Former pensions minister Sir Steve Webb has described the Treasury as a “barrier to pensions policy”, saying it is “shocking” that it has resisted reforms that would boost pension savings but would require upfront tax relief on individuals’ income. Sir Steve, a director of policy at Royal London, commented: “It is shocking that the biggest barrier to pension policy is the Treasury. Because every time you put a pound in a pension, they miss out on some tax today.” A Treasury spokesman told the Telegraph: “We want people to save into a pension for their future … We restrict tax relief available for the highest earners to get the balance right between encouraging saving and managing government finances.”
Bailey’s BoE challenges
City AM’s Harry Robertson looks at the issues that new Bank of England (BoE) governor Andrew Bailey, who will take over the position from Mark Carney in March, will have to tackle. Phil Smeaton, chief investment officer at investment firm Sanlam UK, says “tackling the economic challenges of a departure from the EU is still the top priority” for the BOE, while Paul Dales, chief economist at Capital Economics, said “some innovation” is likely to be needed, noting the possibility of monetary policy being “very different” at the end of Mr Bailey’s tenure than at the start.
Gap in FCA’s register leaves door open for scammers
A year-long gap in the Financial Conduct Authority’s (FCA) register of approved financial advisers has left pensioners and investors susceptible to scams. While the regulator’s Financial Services Register enables savers to check whether firms and advisers are reputable, it has stopped updating the status of about 25,000 advisers ahead of the launch of a new directory at the end of the year. With the FCA only updating records on the current register for advice firm owners, employed advisers will not be monitored or updated. This means advisers could leave a reputable company to operate fraudulently on their own, while scammers could also impersonate retired advisers.
Carney: Britain cannot afford another financial crisis
Bank of England Governor Mark Carney has warned that Britain cannot afford to deal with another global financial crisis. He said: “We have a financial sector that is 10 times the size of GDP … we cannot afford another crisis with the knock-on effects to UK GDP.” National Audit Office analysis of the crisis caused by the 2007 credit crunch shows that UK taxpayers ended up providing £1.2trn-worth of bailouts, loans and guarantees to support the financial system
Numis bosses AIM for £18m
Alex Ham and Ross Mitchinson, the co-CEOs of stockbroker Numis, are poised to become the best-paid chief executives on AIM next year, with bonuses set to see them make £9m each in September 2021. These are expected to be the biggest bonuses on the junior stock market since RAB Capital chief Philip Richards collected £14.3m from the hedge fund in 2007.
Mini-bonds cannot be advertised on any websites after the Financial Conduct Authority (FCA) introduced a blanket ban. Despite the ban, which came into force on January 1, the Telegraph says a Google search for terms including "fixed-rate bonds" and "high-return investments" on January 2 saw some mini-bonds still appear as promoted results - potentially in breach of the new rules.
Trussle founder and CEO quits
Co-founder of online mortgage broker Trussle, Ishaan Malhi, has stepped down as chief executive with immediate effect. Chairman Simon Williams will temporarily take over running the group until a replacement is found.
Illumina and Pacific Biosciences call off merger
DNA sequencing company Illumina has called off a $1.2bn merger with Pacific Biosciences, citing uncertainty over regulatory approval following scrutiny from the Competition and Markets Authority and the Federal Trade Commission.
LEISURE AND HOSPITALITY
Thousands of restaurant jobs lost in 2019
More than 11,000 restaurant workers lost their jobs in 2019, as an array of major chains were forced to close their doors. The figure is 8% higher than it was in 2018, although the number of restaurants that closed fell from 1,188 in 2018 to 922 in 2019. The Centre for Retail Research said independent eateries suffered the most in 2019, with 585 shutting down. Despite the closures, restaurant numbers are still up by 16% compared with 2010.
MEDIA AND ENTERTAINMENT
News Corp to sell ad platform Unruly
Rupert Murdoch’s News Corp is to sell video advertising company Unruly to advertising technology firm Tremor. The deal will contain a provision for Tremor to become News Corp’s video partner for its newspapers.
House prices up 1.4% in December
December saw a 1.4% year-on-year increase in house prices, which is the first time in a year prices have risen by more than 1%. Nationwide said that December prices climbed 0.1% on a monthly basis, taking the average house price to £215,282. The report also shows that raising a deposit of 20% would take up the entire pre-tax annual income of a typical earner.
Debenhams makes start on 22 store closures
Debenhams is due to close 19 department stores this month, resulting in 660 job losses. The retailer announced last year that 22 stores would close as part of a CVA designed to reduce its £225m rent bill.
Consumers pay off £100m credit in November
UK consumers have made net repayments on their credit cards for the first time in almost seven years, Bank of England data shows. Borrowers repaid about £100m in November, marking the first monthly fall in credit card debts since July 2013. The figures show that the annual growth rate in unsecured consumer lending dropped to 5.7% from 6.1% in October, while the total amount borrowed in November dipped to £600m. Despite the fall in credit card debt, the total amount owed is £72.1bn.
50m plastic notes replaced
Data suggests that almost 50m plastic £5 and £10 notes worth a total of £360m have had to be replaced by the Bank of England (BoE) due to wear and damage. The BoE said the damage to the plastic notes was "consistent with the general wear" expected for bank notes.