BoE: Financial system ready for worst case Brexit
The Bank of England’s Financial Policy Committee (FPC) has said that Britain’s banks and financial system are prepared for a “worst case disorderly Brexit”. However, the FPC warned there could still be disruption, particularly for borrowers from the EU. “Such disruption would primarily affect EU households and businesses, but it could amplify volatility or spill back to the UK in ways that cannot be fully anticipated or mitigated,” it said. "In a disorderly Brexit, demand for UK assets could be expected to fall sharply, depreciating sterling and tightening financial conditions for UK households and businesses through adjustments in equity prices and corporate and bank funding costs," it added.
Finance council agrees SME support charter
The first meeting of the finance council took place on Wednesday. Made up of representatives from banks, other finance providers, government, and business, the council was created following criticism that SMEs were not being offered enough support in the run up to Brexit. The council agreed to five pledges outlining how they will support SMEs, including promising to be open to lending. FSB policy and advocacy chairman Martin McTague commented: “While the sentiment behind this charter is very noble, the proof will be in the pudding,” adding: “Talk is often cheap. We need to see these kind words followed-up by actions in the present. We can’t live off kind promises for the future.”
Goldman Sachs sets up disaster recovery trading floor in WeWork space
Goldman Sachs has set up a trading floor in WeWork office space as part of a contingency plan in case of a disaster, according to City AM. The space comes on top of the US bank’s new 10-storey HQ in Farringdon.
First Direct cuts rates
First Direct’s cash Isa will pay out just 0.55% from mid-December, down from 0.85% while the bank’s “bonus savings” account will see interest reduced to 0.4%, down from 0.6%. The Standard’s Simon English says the cuts are a “poor show” from HSBC-owned First Direct.
Give Starling a whirl
City AM notes that Starling recently launched a web portal to help customers better manage their business accounts online.
Let’s hear it for female entrepreneurship
Writing in City AM, Barclays’ head of high growth and entrepreneurs, Juliet Rogan, says the number of female entrepreneurs is on the rise and their share of investment funding is increasing. “With the UK the start-up capital of Europe, with our companies attracting more venture capital than any other country on the continent,” says Rogan. “It's time to shout louder about the success of our entrepreneurs and inspire the next generation to follow in their footsteps.” Barclays is hosting its annual Entrepreneur Awards tonight.
VC backing of UK scale-ups surging
New research shows venture capital investment in fast-growing British businesses surged 19% in the third quarter to over £2.4bn, putting the UK on target to smash last year's record investment levels. Over £7.4bn was invested by VCs in UK scale-up firms during the first nine months of 2019, almost equalling the £7.6bn raised over the entirety of 2018.
Inmarsat takeover clears a major hurdle
The $3.4bn (£2.78bn) private equity takeover of Inmarsat is expected to be approved after UK regulators said they did not hold national security or market competition concerns. Apax Partners and Warburg Pincus are part of the acquiring group.
Ex-spy chief opposes Cobham deal
Former head of MI6 Sir John Sawers has said Cobham should not be sold to Advent International, telling a conference the company’s technology should be kept in the UK.
Are we cashing in state control?
The Telegraph considers the concerns raised by central banks all over the world that cryptocurrencies will remove them of the constitutional power that is embodied in cash. In Sweden, the Riksbank thinks the answer is a "Central Bank Digital Currency (CBDC)", otherwise known as an "e-krona". The Telegraph points out that some 40 countries are reported to be considering issuing digital state money and Mark Carney recently proposed the creation of a "Synthetic Hegemonic Currency" by a network of CBDCs. Dr Tatiana Cutts, at the LSE's department of law, comments: "The question of whether something will rival a state currency is a question of whether anything comes to trump our identity as citizens as we understand it now - which is about affiliation to territory. But it's possible that might change, that we might in future see ourselves as citizens of Google or Facebook."
African bank eyes float in boost to London IPO market
The African Export-Import Bank, better known as Afreximbank, said it is planning a $3bn (£2.4bn) float in the capital this year. The move is a boost to London’s IPO market which figures show is at its quietest for a decade.
Goldman mulls role with facial recognition firm
Goldman Sachs has put under review its role in the IPO of Chinese tech firm Megvii which has been blacklisted by the US for its alleged involvement in the repression of Muslim minorities.
Deutsche Bank board member faces likely veto by regulators
The ECB and BaFin have raised conflict of interest concerns over Deutsche Bank supervisory board member Jürg Zeltner’s other job as KBL CEO.
UniCredit plans to charge negative interest rates from 2020
UniCredit plans to charge customers to hold large deposits from 2020. The move is seen as an attempt to offset the ECB’s negative interest rates.
British Airways targets net-zero emissions
International Airlines Group is to offset carbon emissions for all British Airways domestic flights from next year. IAG aims to achieve net-zero carbon emissions by 2050 and is looking to link bonuses to reducing carbon emissions across the group.
New home demand falls
Brexit uncertainty has led to a steep drop in the demand for new homes, according to the Federation of Master Builders. Research from the FMB has revealed that consumer demand for new homes has fallen 8% over the last year to a six-year low.
Bank of England speaks out on Libra regulation
The Bank of England (BoE)’s Financial Policy Committee (FPC) has said in a policy statement that Facebook’s Libra cryptocurrency would have to satisfy strict regulatory criteria before any launch in Britain, as would other similar digital payment providers. It is seeking demonstrable resilience across the entire payment chain, and information to allow regulators to monitor payments. This comes as the EU announces it will propose a new law to apply to crypto-currencies such as Libra. Meanwhile, some 30 different blockchain firms and non-profit organisations plan to build their own permissionless version of Libra, dubbed OpenLibra.
Ratesetter starts to recover from loan scandal
Ratesetter, which links 56,000 ordinary investors with consumer and business borrowers, has reported a sharp drop in pre-tax losses as the peer-to-peer lender appears to recover from a toxic loan scandal. In 2017, Ratesetter was criticised after it admitted that it had used its own capital to prevent a big default hitting investors, undermining the principle of P2P. CEO and founder Rhydian Lewis says the firm’s conservative lending approach will pay off with a profit expected next year.
Prudential ruling affects hundreds of thousands of policyholders
The Standard features a report on how lifetime annuities providers can transfer customers to other providers, whose rates and reputations may differ from the original provider’s. Some 370,000 Prudential customers faced this situation after the firm sold an annuity book to Rothesay Life in a £12bn deal. Hymans Robertson’s Michael Abramson, an insurance veteran, remarked: “The whole industry was taken by surprise,” while Charlie Finch, a pension consultant at LCP, said he had never before seen an annuity transfer declined.
Checkout.com expands to new London HQ
Online payments start-up Checkout.com is set to triple its office space with a new 63,000 square feet location in Old Street and hire 100 new members of staff. The firm reported a 60% rise in European revenue to $74.8m (£61.2m), driven by a 150% increase in the volume of payments processed.
Stripe: parallel lines
The FT’s Lex says US fintech Stripe is going into small business lending partly because profits from payments are likely to dwindle as the market becomes more competitive.
LEISURE & HOSPITALITY
GVC lifts outlook on rising over-the-counter gambling in shops
Ladbrokes and Gala Coral owner GVC upgraded its earnings forecast for the second time this year, as online and over-the-counter betting offset a hit from a crackdown on gaming machines. Although overall retail revenue in the three months to September 30 was down 18%, over-the-counter wagers had increased 7%.
Fears brewing over Greene King pubs
The Telegraph says concerns are brewing over the future of Greene King’s 3,000 pubs after shareholders approved a £4.6bn takeover by investment firm CK Asset. There are fears that CK Asset could sell off sites or convert them for other uses such as flats.
Thomas Cook’s shops bought by Hays Travel
Hays Travel has bought all 555 Thomas Cook shops in a move that could save 2,500 jobs. Hays has 190 shops, 1,900 staff, and last year had sales of £379m, reporting profits of £10m.
Bamford in talks with Wrightbus
Jo Bamford, a member of the family behind JCB, has entered negotiations to buy bus maker Wrightbus a fortnight after the company entered administration.
MEDIA & ENTERTAINMENT
BT chief urges rivals not to jeopardise his business
A broadband partnership between Sky and Virgin Media would significantly threaten BT’s Openreach business, its CEO Philip Jansen has warned. He suggested a three-way deal could better serve all parties' interests and deliver a nationwide broadband upgrade more quickly.
Property owners count cost of retail turmoil
A decline in the valuation of Britain's shops, shopping centres and retail parks accelerated in September, as retail property values fell by 1.7% - the sharpest monthly fall since December last year. Valuations were dragged down by shopping centres, which fell by 2.6%, and retail warehouses, which dropped by 1.8%.