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Daily News Roundup: Monday, 9th December 2019

Posted: 9th December 2019


Banks target gig economy workers

High street banks are preparing to roll out risky mortgages and loans to millions of gig economy workers, the Mail on Sunday reports, with experts such as Baroness Altmann warning the moves could recreate the conditions that led to the financial crash ten years ago. Banks say they are working on new ways to assess the creditworthiness of customers with unpredictable incomes in order to offer loans safely, chiefly through technology measuring the risk associated with spending patterns. RBS is planning an expansion of its digital bank Mettle to sell loans and accounting products to freelancers and sole traders while HSBC has made it easier for workers on zero-hour contracts to get a mortgage by relaxing its rules for people not in full-time work. James Daley, managing director at Fairer Finance, said: “There are more and more people who are working with uncertain incomes, and I don't think they should be shut out of the world of credit because they are not in a salaried role at a company.”

Banks in overdraft fee rethink

M&S Bank and First Direct customers are set to see interest payments on overdrafts rise to 39.9% in March, with the banks following HSBC and Nationwide in increasing rates. First Direct current account customers currently pay 15.9% EAR on arranged overdrafts of over £250, or a £5 daily charge if they go into their unarranged overdraft. These fees are to be replaced with the blanket rate, with several banks making switches due to Financial Conduct Authority rules designed to cap how much borrowers pay in overdraft fees. M&S Bank is increasing its zero interest overdraft buffer for arranged overdrafts from £100 to £250.

Digital bank risks breaking small business loan pledge

The Sunday Times’ Emma Dunkley reports that Starling Bank committed to making almost £1bn of loans within five years as a condition of winning funding from a £775m pot set aside by Royal Bank of Scotland but has so far lent less than 1% of the amount it promised to small businesses, raising questions over whether it can meet its target by 2023.

Lenders expected to pass bank stress test

Analysts say they expect the Bank of England to give the UK's biggest lenders a clean bill of health next week when it publishes the results of its latest stress tests. Investec’s Ian Gordon said: "I expect all the banks to pass without any issues and for the Bank of England to say that they need to be prudent and make sure their respective risk appetites are OK."

Mortgage prisoners stuck with sky-high interest

So-called mortgage prisoners are paying £126m a year in extra interest to banks and hedge funds, according to analysis of official data by the Times. Homeowners trapped in expensive mortgage deals pay an average of £1,000 a year more on home loans than borrowers who can switch lenders, according to FCA figures.

Banks warned of SMS scam

Banks have been warned not to use text messages to send codes that allow customers to transfer cash, with the cybersecurity branch of GCHQ saying using SMS messages to verify payments is putting people's money at risk from sim swapping scams.

Goldman in new push for Marcus

Goldman Sachs is to launch a cash Isa and joint savings account in the UK under its Marcus brand. The bank launched its savings account in August last year and has so far brought in more than £12bn in deposits.

First Direct founder joins Dashly

The founder of First Direct, Mike Harris, has joined the board of mortgage fintech start-up Dashly as chairman.


Venture capital swarms to London fintechs

William Russell, the lord mayor of London, writes in City AM on how London alone has seen a record year so far of venture capital-led fintech investment, with more expected, particularly from US investors. Russell says the City of London Corporation is set to lead a delegation of British VC representatives to San Francisco to build relationships directly between US and UK investors.

3i to sell projects portfolio

Investment firm 3i Infrastructure it to sell its projects portfolio in Britain to a range of buyers, including funds managed by Dalmore, Semperian and Innisfree, for around £194m. Chairman Richard Laing said a review of the role of operational projects in its portfolio concluded that it was in shareholders’ best interests to sell the assets. A 3i Infrastructure spokeswoman said the sale was not related to Brexit or political uncertainty.

Private equity: the bottom line benefits from gender diversity

Oliver Gottschal, professor of strategy and business policy at HEC Paris, says the business school’s research proves that diversity produces higher returns for PE firms and a lower risk of failure.


Deutsche reaches settlement as prosecutors drop criminal investigation

Deutsche Bank has reached a €15m settlement over shortcomings in money-laundering controls. This came as German prosecutors announced they have dropped a criminal investigation into suspected tax evasion at a former Deutsche unit in the Virgin Islands. Deutsche Bank spokesman Joerg Eigendorf said prosecutors have not found any instances of criminal misconduct on the part of Deutsche Bank employees.

UK investors owed billions in Swiss PPI scandal

HMRC could miss out on a windfall of nearly £2bn due to around 200,000 investors failing to make claims from a long-running Swiss banking scandal, lawyers have warned. In 2012 Swiss courts ruled that banks in the country had been unlawfully charging hidden fees on savers and ordered them to return the cash, in echoes of the UK's PPI scandal. But a deadline has been set for the end of this year, and around £4.68bn remains unclaimed by investors in the UK, according to litigation funding firm Liti-Link.

Goldman plans to bring wealth management to the masses

Goldman Sachs will offer digital wealth management services to individuals with as little as $5,000 from next year. The robo adviser service will be rolled out via United Capital, the wealth management firm Goldman bought in May.

EU’s green light for NordLB rescue provokes backlash

The legality of the European Commission’s approval for the €3.6bn bailout of NordLB is being questioned with campaigners arguing the commission has misinterpreted state-aid rules for political reasons.


New Stansted Airport terminal plans paused

Stansted Airport has put its new £150m arrivals terminal on hold while it reviews the plans. Economic and political uncertainty, fresh demands from airlines, and delays in approval for further expansion are behind the rethink, bosses said.


Berkeley on track despite 30% profit fall

Housebuilder Berkeley Group saw its profit for the first half of 2019 fall 31%, from £401.2m in 2018 to £276.7m. Revenue nearly halved, dropping to £930.9m from £1.6bn in 2018. But the company said the reductions were expected as it had finished a number of developments acquired between 2009 and 2013, adding that the group remained on track for their six-year profit target of £3.3bn. The firm delivered 1,389 homes in the period, while average selling prices fell by nearly 13% to £644,000, which may be as a result of the group diversifying its portfolio away from London.


BoE prepares restrictions on fund withdrawals

The Bank of England is preparing new restrictions on investors withdrawing money from property funds after M&G and Prudential became the latest with hard-to-sell assets to block outflows last week. The Bank of England and the FCA are set to reveal proposals in a week’s time as fears rise that even well performing funds with strong liquidity positions could be gated due to a surge in redemptions. Elsewhere, the FT reports that nearly £57m was pulled from property funds on Thursday, the worst day all year for real estate fund outflows. The paper also reports that the FCA is investigating funds that have holdings in Neil Woodford's collapsed investment vehicle as it seeks to prevent the liquidity crisis from spiralling.

Regulators issue warning over Big Tech’s move into financial services

Global regulators could force Big Tech firms to share the data they have on financial services customers with banks and fintech firms to ensure financial stability, healthy competition and data privacy. The Financial Stability Board (FSB) has warned that the shift into financial services by companies such as Microsoft, Amazon, eBay, Baidu, Apple, Facebook, Google and Tencent needed "vigilant monitoring” and that rules requiring banks to share data may need to be replicated with Big Tech.

Police cuts hamper fraud prosecutions

A fall in the number of white collar fraud cases being prosecuted has been blamed on cuts to police, according to Thomson Reuters. Ministry of Justice figures show that there were 9,415 prosecutions in 2014 compared with 6,670 last year, while reported fraud and cyber offences across the UK rose by more than 8.5% to 693,418. Advances in financial services technology, such as crypto-assets, have complicated fraud cases. The report cites Europol figures showing up to £4bn is laundered across the EU annually using crypto-assets.

Phoenix snaps up ReAssure

Insurance consolidator Phoenix is to buy Swiss Re’s UK business ReAssure in a cash and shares deal. The deal unites Britain’s two largest buyers of historic insurance policies and makes Phoenix the UK’s fourth-largest insurer. Swiss Re and ReAssure’s minority shareholder MS&AD will receive £1.2bn in cash and a 28% stake in the enlarged group. Swiss Re and Japanese insurance company MS&AD will also get two board seats.

FCA fines hit highest level in four years

Fines issued by the Financial Conduct Authority have hit £391.8m - their highest level in four years – with a crackdown on mis-selling responsible for a large chunk of the rise.


CMA looks at Daily Mail’s i takeover

The Competition and Markets Authority (CMA) has served an initial enforcement order as it reviews the Daily Mail’s £50m takeover of the i newspaper, with the order forcing parent company DMGT to run the i independently ahead of a potential competition probe.


House prices climb in November

House prices increased at the fastest rate in seven months in November, Halifax data shows. Values were up 2.1% to an average of £234,625 in the year to November, exceeding the 0.9% year on year increase recorded in October. On a monthly basis, prices were up 1%, having dipped 0.1% the previous month. Halifax’s analysis show’s stronger yearly growth than other recent surveys, with Nationwide saying prices were up 0.8% year on year in November and Rightmove saying values were up 0.3%.

Grandparents dip into pensions to offer property help

Figures from the Financial Conduct Authority show that over-75s withdrew £247.5m from their pension savings in the year to April 2019, compared with £158.7m the previous year, largely to help their children and grandchildren to buy property.


Jessops calls in administrators

Jessops has called in administrators to its property arm, having been considering a restructure for several months. The camera retailer is thought to have called in administrators after failing to win backing from landlords for a CVA that would see store closures and rent reductions.


UK ready to take off, says buyout chief

Dan Zilberman, the European chief of buyout firm Warburg Pincus tells the Sunday Telegraph that his takeaway from talking to business is that a flood of business investment will wash into Britain after the election. Mr Zilberman also commented on the state of challenger banks, predicting a wave of consolidation “because on their own their business models are more than flawed.” He added: “There is nothing special about them and they are going to need more scale to push costs down. They are just smaller, less efficient versions of Barclays."

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