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Daily News Roundup: Monday, 8th July 2019

Posted: 8th July 2019


Police lack resources in white-collar fraud fight

Anthony Stansfeld, police commissioner for Thames Valley, has suggested that white-collar criminals can act with impunity in Britain because police forces do not have the resources to tackle them. Criticising the UK’s ability to tackle fraudsters, particularly those linked with the City of London, Mr Stansfeld said: “You've got to the stage where the system doesn't think white-collar fraud is a crime.” He called on the Treasury to provide a £1bn pot to fight fraud and for fraud investigations to be centralised in a handful of regional centres so that forces can better co-ordinate their efforts. He added that FCA fines which currently go to the Treasury should be returned to the investigating police forces.

Compensation scheme likely to be backdated until 2000

The Sunday Times reports that the Dispute Resolution Scheme, which is backed by seven of Britain’s biggest banks, is likely to hear cases stretching back as far as 2000. The scheme, which was supposed to only accept complaints dated back to 2008, is being established to review historic cases for companies too big for the Financial Ombudsman Service, but lacking the financial resources to pursue claims through the courts.

Time for shared bank branches

Writing in the Mail on Sunday, Derek French, the former director of the campaign for community banking services, argues that shared bank branches, which preferably are staffed and offer cash services, are the future of banking. He explains that by combining banking services in one building, a branch becomes more cost effective as the supporting banks share any rental and business rate costs. There is also increased customer traffic as a result of the branch being shared.

HBOS fraud victims given payout hope

The Times reports that an independent review, headed by Sir Ross Cranston, into the compensation scheme being run by Lloyds into the £1bn HBOS Reading branch fraud may pay out victims more than expected. Sir Ross said that his findings could have “implications” that may require the revision of compensation decisions.

CYBG rethinks bonuses

Insiders have suggested that bosses at CYBG are considering changing bonus plans for executives to appease shareholders. According to the Telegraph, one person close to the bank said: “’The plan’ is to say: ‘These are the targets we've put in place for executives, are you comfortable?’” The call to top investors coincides with CYBG's first US investor roadshow in two years, which kicks off today.

Digital banks seek to turn popularity into profits

The FT examines how digital banks such as Monzo, N26 and Revolut are moving away from traditional lending models to build more sustainable revenues. Meanwhile, the Telegraph’s James Cook and Matthew Field examine whether we are at peak fintech, or it is just the start of the financial revolution. Figures from PitchBook show that so far this year, Britain’s fintechs have raised $1.3bn putting them on track for a record year. However, there are fewer deals going through. In 2017, there were 239, in 2018 there were 226, while so far in 2019 there have only been 87.

Metro Bank execs press chairman Vernon Hill to outline leaving date

According to the FT, senior executives at Metro Bank have been pushing Vernon Hill to outline when he will step down as chairman amid concerns about potential regulatory action.

Revolut lines up Sherwood

Online bank Revolut is poised to appoint Michael Sherwood, who ran Goldman Sachs’s European division until 2017, to its board. He will join as a non-executive director.

Banks hit by wave of last-minute PPI claim inquiries

According to industry figures, banks have been hit by a surge in the number of customers trying to win compensation more mis-sold PPI, ahead of a deadline next month.


Deutsche Bank confirms plans to cut 18,000 jobs

Deutsche Bank has confirmed that it will cut 18,000 jobs over three years as part of a radical reorganisation of the bank. Deutsche has yet to specify exactly where jobs will be lost. The German lender will also report a second quarter loss of €2.8bn to partly pay for the shake-up, which will significantly shrink its investment banking business. CEO Christian Sewing commented: “This is a restart for Deutsche Bank... In refocusing the bank around our clients, we are returning to our roots and to what once made us one of the leading banks in the world.” Under the plan, the bank wants to make cost savings of €17bn by 2022. It is also creating a new unit to manage assets that belong to businesses it no longer wants. Separately, Garth Ritchie, the head of Deutsche Bank’s investment banking, has stepped down. Deutsche said he was leaving by mutual consent, with chairman Paul Achleitner saying he had helped Deutsche “weather an extremely challenging period”.

Wells Fargo’s Irish unit fined

Wells Fargo's Irish subsidiary WFBI has been fined €5.9m over regulatory reporting breaches, the second-largest fine ever handed down by Ireland's Central Bank.

Natixis fund management boss defends model after H2O crisis

Jean Raby, chief executive of Natixis Investment Managers, has denied that H2O, a London-based fund manager that it owns half of, is suffering from a liquidity crisis.

Indian lender PNB alleges $556m fraud by steelmaker

India’s state-run lender Punjab National Bank has disclosed a Rs38bn ($556m) fraud, relating to the non-performing assets of insolvent Indian firm Bhushan Power & Steel Ltd.


JLR announces electric car investment

Jaguar Land Rover (JLR) is investing hundreds of millions of pounds to build a range of electric vehicles at its Castle Bromwich plant in Birmingham. JLR says the move will help secure the jobs of 2,700 workers at the plant. The news follows January's announcement, when the firm said it would cut 4,500 jobs, with the majority coming from the UK. That followed 1,500 jobs lost in 2018. The investment decision by JLR appears to contradict previous warnings by the firm that investment in the UK would be threatened by Brexit, and in particular a no-deal scenario.


Boeing loses order for 737 Max aircraft

Flyadeal, the low-cost Saudi Arabian airline, has cancelled an order for 30 Boeing 737 Max aircraft. The decision follows the crashes of two 737 Max jets, the first in Indonesia in October followed by one in Ethiopia in March, which killed 346 people.


Hargreaves Lansdown removes Lindsell Train from Wealth 50 list

Hargreaves Lansdown has revealed that it will remove the £7.2bn Lindsell Train UK Equity and the £8.7bn Lindsell Train Global Equity funds from its Wealth 50 list at the end of July. The investment platform said it continues to have high conviction in the funds but the decision was taken to “protect the interests of our clients and shareholders [and] the independence of our investment process”, due to the fact both Lindsell Train funds invest in Hargreaves Lansdown and the investment “could grow further”.

Woodford savers could be locked out until Christmas

City analysts have speculated that savers may be unable to get their money back from fund manager Neil Woodford until Christmas. Withdrawals from his Equity Income fund were blocked last month because he ran out of ready cash to pay back investors who wanted to leave the fund. Darius McDermott, an analyst at Chelsea Financial Services, warned that it could take up to six months before the Equity Income fund reopens because Mr Woodford's risky bets will be so hard to unpick.


Marston’s mulls sale of Pitcher & Piano

City sources have said that Marston’s is weighing up a sale of the Pitcher & Piano pub chain for up to £30m. Sapient Corporate Finance, a deals advisory firm, is believed to be working on a deal.


Minister ramps up efforts to find buyer for British Steel

Business Secretary Greg Clark has met companies in India and China as a part of efforts to find bidders for British Steel.


Mobile phone switch could make it easier for fraudsters

Cybersecurity experts have warned that a new “text-to-switch” scheme introduced by Ofcom to make it easier for customers to switch mobile phone provider will also make it “amazingly simple” for people to commit fraud. Richard De Vere, a consultant at The AntiSocial Engineer, said that the new scheme, which allows people to switch mobile phone networks with a single text message, could give rise to new forms of “SIM swapping” fraud.


UK house prices rise 5.7%

Halifax’s latest house price index has revealed that UK house prices rose by 5.7% on an annual basis month in June, taking the average UK house price to £237,110. That compares to May’s £237,837, when Halifax recorded an annual growth rate of 5.2% – the best in two years until Friday’s figures. The data compares to Nationwide’s annual growth rate of just 0.5% in June and Office for National Statistics data of 1.4% growth for April.


Supermarket did not tell CMA probe of online ambitions

Questions have been raised as to how rigorous the Competition and Markets Authority (CMA) investigation into the proposed tie-up between Sainsbury’s and Asda was, with it revealed that Co-op failed to detail the scale of its online ambitions to the watchdog. Sainsbury’s and Asda had demanded the CMA ensure rivals “provide accurate information” but Co-op told the watchdog in February that it had no definitive plans to enter the online arena, before launching an online grocery website a month later.


Carney: No-deal a risk to the economy

Bank of England Governor Mark Carney has warned that a no-deal Brexit poses a considerable risk to Britain’s economy, telling the Economist that when there’s a major change “it’s always better to have a period of transition.” On how a no-deal exit from the EU would impact upon the banking sector, Mr Carney said: “It’s in many respects an unprecedented situation. But we’re ready for it in terms of the financial sector... and we have tools to adjust in either direction as appropriate.”

Stagnant productivity ‘costs workers £5,000 a year’

Katherine Kent, head of productivity at the Office for National Statistics (ONS), has said that the UK’s productivity puzzle is costing private sector workers an estimated £5,000 a year on average in lost income. She explained that lower output per worker since the financial crisis had translated into “sluggish wage growth”. The ONS said productivity in the first quarter of 2019 was 18.5% below its pre-downturn trend.


Mental health matters with finances

Charities have called on banks, insurers and utility companies to assist customers with mental health conditions better. The Times notes that Lloyds is testing some new standards, which include training staff about mental health problems and where they can refer customers if they need further support.

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