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Daily News Roundup: Thursday, 11th January 2018

Posted: 11th January 2018

BANKING

PM aims to calm City’s Brexit fears

Theresa May is to meet with executives from HSBC, Barclays, Goldman Sachs, Aviva and Prudential today in an bid to reassure the City it will be protected in a Brexit trade deal. The meeting comes amid growing concern financial services could be left out of a trade deal, leading to thousands of City job losses. Meanwhile Nicky Morgan, chairwoman of the Treasury committee, has urged Brexit Secretary David Davis to publish a paper on the future of the financial sector and services after Brexit, a call backed by the City of London, the Law Society of England and London First. Separately, Philip Hammond has not ruled out paying to gain market access for financial services after Brexit. Asked during a trip to Berlin whether the UK would be prepared to pay for access, the Chancellor said: “We will talk about all of these things.” The question comes after reports that Germany would demand “substantial” payments to EU budgets in exchange for market access after Brexit.

Online banking overtakes branch use

New research shows online banking has overtaken visiting branches for the first time. The study by UBS found 52% of all consumer transactions are now done online, making it the primary method of banking. The figure was 33% two years earlier. The number of transactions conducted in branches has fallen from 48% to 34% over the same period. UBS said the accelerating trend would lead to further rounds of branch closures. A separate survey by the bank of 86 global lenders found 73% were likely to shutter branches, while 83% are planning to reduce in-branch staff numbers.

Morgan Stanley upgrades RBS

Analysts at Morgan Stanley upgraded RBS yesterday after the US investment bank said it had the potential to return more capital to shareholders. RBS is expected to post its first full-year profit since the financial crisis next month.

PRIVATE EQUITY

Norway’s $1.1tn oil fund seeks to invest in private equity

Norway's $1.1tn oil fund, the world's largest sovereign wealth fund, has recommended it be allowed to invest in private equity, in what the FT says would be a significant change in strategy.

VCT raises record sum

Investors have poured a record £200m into the Octopus Titan fund, the biggest sum raised in one go by a VCT, taking its total value to more than £600m.

INTERNATIONAL

Canada to introduce new bank capital rules

Canada’s banking regulator is to introduce new capital rules that will enable the country's banks to move faster towards adopting proposals set by global regulators. The Office of the Superintendent of Financial Institutions said it would replace the current capital output floor used by Canada's banks with the more risk-sensitive Basel 2 floor, calibrated at 75%.

Greek banks ask for more time to build capital

The ECB has been asked by Greek banks to allow them a few years for their capital strengthening, should such a requirement arise from a marginally negative result for one or more lenders after this spring's stress tests. In the coming weeks, the ECB will inform the managers of domestic lenders of the stress tests' macroeconomic parameters.

MPS leverages bad debt data

Monte dei Paschi di Siena, Intesa Sanpaolo and Banco BPM shares made hefty gains on Wednesday after data confirmed a slow fall in Italian lenders' bad debts. Bank of Italy data showed a 6.4% annual decline in defaulted loans held by lenders, compared with a yearly drop of 5.5% in October.

AUTOMOTIVE

Unite challenges PSA over Vauxhall plant closure

Unite general secretary Len McCluskey is to warn Peugeot-owner PSA that any efforts to close its Vauxhall plant in Ellesmere Port will knock its sales in the UK.

CONSTRUCTION

Taylor Wimpey reports solid performance for 2017

Taylor Wimpey has reported 5% growth in home completions, which hit 14,541 in 2017, up from 13,881 in 2016. The group said the average selling price on private completions increased by 3% to £296,000 from £286,000. The house builder said its order book was valued at £1.6bn at the end of 2017, and “ended the year in a robust position”, with net cash of £512m. The firm said it will report results in line with expectations for the 2017 financial year, along with an improved operating profit margin of 21.2%.

Ministers plan for Carillion collapse

The Government has reportedly made contingency plans for the potential collapse of Carillion, Britain's second biggest construction company, which has 20,000 UK staff and a contract for work on the HS2 rail link. The company was holding talks with its creditors yesterday to persuade them to back a rescue plan.

Housebuilding supports falling UK construction output

UK construction output shrank for the sixth quarter in a row in the three months to November, according to the ONS, contracting by 2%, its largest fall since August 2012. Housebuilding was the only area where volumes increased, rising 0.8% during the three months.

FINANCIAL SERVICES

Page Group: No exodus from City

Steve Ingham, chief executive of Page Group, said that the recruiter had seen “no evidence” of City workers relocating to the continent as a result of Brexit. Mr Ingham also said he was uncertain that, even if a bank wanted to set up a big operation in a city such as Frankfurt, it would be able to do so. “The biggest issue is the supply and demand of the staff you need. I don't think there'd be enough candidates to do it ... It's not the easiest place to import skills given the need for German speakers,” Mr Ingham said. Meanwhile, a report from Morgan McKinley shows City vacancies fell 52% month-on-month in December - a much sharper decline compared to the near-30% drop experienced over the same periods in 2016 and 2015.

China moves to shutter bitcoin mines

The People’s Bank of China has reportedly asked local governments to control electricity supply to bitcoin mines as a first step to scale down bitcoin mining. Separately, digital currency Ethereum hit a high of $1,417 (over £1,035) on Wednesday, according to Coindesk's aggregate price.

Franklin Templeton halves Italy exposure pre-vote

Franklin Templeton has halved its holdings of Italian debt in its Franklin European Total Return Fund amid expected pre-election volatility. Italy will vote on March 4 in an election expected to produce a hung parliament, causing some concern among investors that it will cause instability and possible market turbulence.

FCA issues warning to spread-betting firms

The Financial Conduct Authority has said that most spread-betting businesses have failed to ensure that complex and risky financial products have been sold in the right way to the right people. The regulator warned operators to tighten their standards or risk facing a formal investigation.

MANUFACTURING

Manufacturing output at its highest for 10 years

UK manufacturing output has reached its highest level since February 2008 after recording its seventh consecutive month of growth in November. Renewable energy projects, boats, aeroplanes and cars for export helped make output 3.9% higher in the three months to November than in 2016. Industrial output rose by 0.4% in November.

UK boating industry buoyed

The UK's boat and yacht industry has seen revenues surge to their highest level since the financial crisis after the weaker pound helped drive up sales. Sales rose by 3.4% to £3.1bn in the year to April 2017, according to a report by lobby group British Marine, while overseas sales for UK marine manufacturers rose by 4.7% last year.

RETAIL

Sainsbury’s enjoys strong Christmas sales

Sainsbury’s has raised its profit guidance after reporting “record” sales during the Christmas week. The supermarket said total like-for-like sales over the 15 weeks to January 6th were up 1.1%, with a 2.3% rise in food sales, an 8.2% jump in online grocery sales, and a 7.3% sales increase at its convenience shops. General merchandise sales growth dropped by 1.4%. Total retail sales grew 1.2%, down from the 1.6% increase recorded a year earlier.

45

Carphone Warehouse fined £400,000 over data breach

Carphone Warehouse has been fined £400,000 by the ICO after a data breach in 2015. Hackers gained unauthorised access to the personal data of more than 3m customers and 1,000 employees during a cyber-attack. The retailer said it accepts the ICO's findings, and apologised for any distress it “may have caused”.

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