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Daily News Roundup: Monday, 9th March 2020

Posted: 9th March 2020

BANKING

ECB warns banks that hackers may exploit coronavirus focus

The European Central Bank (ECB) has written to financial institutions warning that cyberattacks may increase as criminal look to take advantage of chaos caused by coronavirus. Andrea Enria, chair of the ECB supervisory board, warned: “Banks could be challenged in their operational capabilities in affected areas should employees be unable to perform their usual tasks.” The letter said that as well as cyberattacks, increased cyber-security related fraud targeting both customers and banks was possible. A "potential higher reliance on remote banking" could also put companies' IT systems under strain, Mr Enria added.

Virgin Money ends foreign currency fees for debit cards

Virgin Money has scrapped foreign currency fees for customers using debit cards overseas. Previously, users had been charged 3.75% on cash withdrawals and 2.75% on foreign currency purchases, with a minimum charge of £1.50 per transaction. Starling Bank offers the same no-fee service, with Metro Bank offering free transactions in Europe but not worldwide, while Monzo and Revolut allow free payments abroad but charge 2% if more than £200 is withdrawn in cash.

FCA reopens probe into Barclays' Qatar funding

The Financial Conduct Authority (FCA) has reportedly reopened its investigation into Barclays’ funding deal with Qatar during the financial crisis. The FCA probe was shelved when the Serious Fraud Office (SFO) announced criminal charges against former senior Barclays bankers in 2017, but is said to have been revived after the SFO failed to secure criminal convictions.

Monzo boss: No Open Banking benefit

Monzo founder Tom Blomfield says efforts to implement Open Banking have had no positive impact on innovation in the banking sector. He said: “The positive effect of Open Banking on innovation has been nil,” adding that he knows of no businesses based on Open Banking in Europe.

Bank to offer gamblers counselling

Gambling addicts are being offered psychological counselling in branches of NatWest, with the bank expanding an initiative following a pilot scheme after it was found that a number of customers spend a large portion of their income on online betting. Research using anonymised data on 750,000 account-holders' spending habits found one in ten were gamblers, with these spending more than a quarter of their incomes on gambling on average.

Fresh management to help deliver Metro’s new strategy

The Times reports on the departure of more senior figures from Metro Bank with the paper’s Katherine Griffiths citing sources who say the new leadership team wants to move on from tenure of former CEO Craig Donaldson.

Revolut to seek UK banking licence

Revolut is preparing to apply for a UK banking licence, with sources saying it will try to secure it by the end of the year.

Société Générale sends staff home

Friday saw more than 50 staff at Société Générale's London office work from home as a precautionary measure against the spread of coronavirus.

PRIVATE EQUITY

A spotlight on VCTs

Mark Atherton weighs the pros and cons of venture capital trusts (VCTs), saying they have been increasingly drawing wealthy investors who fear further clampdowns on pension tax relief. Noting that £731m was invested in such schemes last year, compared to £269m in 2012/13, he notes that VCTs allow investments exceeding the £40,000 allowance that basic-rate and higher-rate taxpayers can put into their pension and the £10,000 that some top-rate taxpayers are restricted to.

INTERNATIONAL

RBI seizes Yes Bank

The Reserve Bank of India (RBI) has seized control of Yes Bank, India's fifth biggest private lender, replacing its board and temporarily restricting withdrawals. Yes Bank shares fell as much as 80% on Friday as the RBI said it was trying to work out a rescue plan to avoid any systemic risk to the economy. It has asked State Bank of India, the country's largest state-owned bank, to help with a revival plan for Yes Bank.

Dimon best-paid bank boss again

JP Morgan boss Jamie Dimon will be Wall Street's best-paid banking chief for a fifth year in a row. He will take home £24.1m for 2019, an increase on 2018’s £23.7m. JP Morgan has said Mr Dimon's pay, which includes a fixed £1.2m salary and £3.8m annual bonus, is largely tied to his performance.

UBS ends offshore drilling support

UBS has ended support for offshore drilling in the Arctic amid efforts to tackle climate change. Banks including Wells Fargo, Goldman Sachs and JPMorgan Chase have also announced similar policy shifts.

Lebanon set to default for first time as foreign currency reserves dive

The Lebanese government is preparing for negotiations with its creditors as the country struggles with debts of more than $90bn, equivalent to about 170% of GDP.

State bank quarantines bank notes

The Bank of Korea is quarantining banknotes for two weeks to remove any traces of coronavirus.

AUTOMOTIVE

Nissan presses ahead with £400m plan for Sunderland

Nissan is pushing ahead with its £400m plan to build its new Qashqai sports utility vehicle at its Sunderland factory, revealing a £52m production press in preparation for the new model, due to roll off the production line in 2021. Meanwhile, analysts have suggested that the coronavirus is threatening to wipe out 35% of Nissan’s annual profits, putting is alliance with Renault under serious financial strain.

AVIATION

TPR opens talks with Flybe pension trustees

The Pensions Regulator (TPR) has opened urgent talks with pension trustees of failed airline Flybe, amid fears that the fund’s members face a financial hit as retirees are not protected by the pension lifeboat. The British Regional Airlines Group pension schemes is registered in the Isle of Man, not the UK, meaning members are not entitled to payments from the Pension Protection Fund – a scheme that steps in to shore up collapsed companies' schemes. Some £170m of benefits are owed to 1,350 members, a 2018 valuation suggests.

FINANCIAL SERVICES

Woodford in talks with investors as he plots comeback

Neil Woodford and a number of colleagues from Woodford Investment Management are in talks with investors about acquiring a number of his former investments. Some of the companies in question include BenevolentAI, Rutherford Health and Immunocore, according to a report from Sky News. Woodford has also reportedly floated the possibility of creating a new fund to manage dozens of new holdings in London-listed companies.

Gender pay gap rises at financial firms

Of the financial and insurance firms that have reported their gender pay gap so far this year, the disparity between pay for men and women has risen to an average of 23.1%, from 22.2% two years ago. Across all employees and sectors, the ONS estimates the gap is 17.3%. Analysis of financial firms shows the average gender pay gap for bonuses is 37.7%, up from 35.3% two years ago.

FCA takes tougher approach to senior managers

Data obtained by employment law firm Fox & Partners show the number of interviews conducted by the Financial Conduct Authority (FCA) to vet staff proposed for senior roles at financial services firms jumped 27% to 233 in 2018.

Ricci to lead Panmure Gordon

Bob Diamond has appointed investment banker Rich Ricci, his former right-hand at Barclays, as chief executive of stockbroker Panmure Gordon. Mr Ricci ran Barclays capital business when Mr Diamond was CEO of Barclays.

Smart wallet firm gains new backers

Paradigm has joined Index Ventures, Creandum and Firstminute Capital as an investor in digital wallet startup Argent, leading a $12m (£9.2m) funding round. Paradigm is a crypto-fund backed by Sequoia Capital.

Collaboration, not competition, will ensure prosperity

Writing in City AM, William Russell, the Lord Mayor of London, hails the creation of 400 new jobs by Starling Bank in Cardiff and highlights how the City Corporation's UK Partnerships Strategy seeks to encourage collaboration across the UK, rather than competition, to ensure the country’s prosperity as it leaves the EU.

Terry Smith blasts platforms for fuelling illusion of fund liquidity

Fund manager Terry Smith has criticised fund supermarkets, such as Hargreaves Lansdown, for putting investors at risk. He said there were propagating a myth of instant liquidity.

Prudential plots US stake sale

Prudential is set to unveil plans to either float or sell a stake in Jackson, its US business, following pressure from Third Point, run by activist investor Dan Loeb.

Value of M&A in asset management sector plunges to $13.5bn

According to new research from Piper Sandler, the value of mergers and acquisitions in the asset management sector fell by half to $13.5bn last year.

HEALTHCARE

Break-up begins at Four Seasons

Care home operator Four Seasons is being broken up with the sale of a group of hospitals for up to £100m.

Britain’s biggest mental healthcare provider to be sold for £1bn

The Priory Group is set to be sold for almost £1bn after its American owner Acadia Healthcare confirmed it had received “multiple” initial bids.

MEDIA AND ENTERTAINMENT

Bidders circle M&C Saatchi

M&C Saatchi is being targeted by private equity firms and hedge funds including Dbay Advisors. The advertising company hit trouble in December reporting an £11.6m black hole and a serous profit warning.

REAL ESTATE

House prices hit new high but coronavirus impact looms

Figures from Halifax show that house prices hit a record in February, with prices up 0.3% to a new high of £240,677. On a quarterly basis, house price inflation hit 2.9%, while year-on-year values saw a 2.8% increase. Halifax managing director, Russell Galley, said: “The UK housing market has remained steady heading into early spring. The sustained level of buyer and seller activity is strong compared to recent years, with positive employment conditions and a competitive mortgage market continuing to support demand.” However, he noted that a number of risks threaten the market, including the potential impact of coronavirus.

ECONOMY

Public inflation expectations hit joint three-year low

A poll from YouGov and bank Citi show that the public’s expectations for inflation in the coming 12 months eased in February, hitting the joint-lowest level in three years. Year-ahead inflation expectations fell to 2.3% last month, from 2.5% in January, while expectations for inflation over the coming five to 10 years fell to 3.0% from 3.1%.

Oil prices plummet after Saudi Arabia slashes prices

Oil prices fell by as much as 30% on Sunday evening after Saudi Arabia decided to raise production and offer deep discounts for its crude. Brent crude dropped from $45 a barrel to $31.52 - one of the biggest one-day drops in its history. The move by Saudi Arabia comes after OPEC talks with Russia failed to produce an agreement on production cuts.

OTHER

Chancellor will protect access to cash

Chancellor Rishi Sunak is set to detail new laws designed to preserve coins and banknotes in a bid to slow moves toward a cashless society. He will use his Budget to protect access to cash so as to support isolated villages and older people hit by the disappearance of thousands of free ATMs and bank branches. The Treasury will begin talks with regulators and the banking industry to develop new laws, working with the Bank of England, Financial Conduct Authority and the Payment Systems Regulator.

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