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Daily News Roundup: Thursday, 12th April 2018

Posted: 12th April 2018


Dombret: London will retain premier position

Andreas Dombret, a director of Germany’s Bundesbank, has insisted that the City of London will not lose its financial clout within Europe. He commented: “I believe that London will continue to stay the eminent financial centre of this region no matter how many bankers should move… I hear that there is quite some reluctance in the City of London for people to move. There is a big willingness to stay in London and some of those who have been asked to go would rather take a cheque and stay than move.” Despite concerns about whether the Square Mile will be fully incorporated into a Brexit trade deal, Mr Dombret said that German business is pushing for close ties to the UK. “For Germany, it is really important that the German companies, including the large companies that you all know, have access to this kind of financial services,” he said.

RBS faces political and business criticism

Following revelations that RBS plans to reduce its mobile banking services in several Scottish towns and villages, political and business leaders have criticised the lender. In some places the mobile unit’s visiting hours will be cut from 90 minutes per week to only 15. Colin Borland, of the Federation of Small Businesses, commented: “RBS made the argument that the impact of Scottish branch closures would be mitigated by smart ATMs and mobile van bank services. RBS looks again like it is trying to cut services that customers find valuable. This move also seems to clash with evidence RBS chiefs gave to MPs (Scottish affairs committee) in January, where they talked up investment in their mobile bank fleet.”

RBS fund could entrench incumbents

The £425m Capability and Innovation fund set up by RBS last year to satisfy competition requirements is supposed to finance grants to help "challenger banks and other financial services providers" diversify and develop their business current account offerings for SMEs. But Anne Boden, chief executive of Starling Bank, says in City AM that established players such as Santander, Clydesdale, and TSB are all signalling their intent to bid for some of the largest awards, threatening to undermine the goal of increasing competition away from the big four banks.

Tandem launches savings account

Digital-only challenger bank Tandem has launched a savings account. The top-paying savings account will offer an annual interest rate of 2.3%, towards the top end of the market. Chief executive market Ricky Knox has said a fresh round of capital raising will not be needed by the lender until the end of 2019.

Study finds that regulation costs investment banks £26bn annually

A report by the Association for Financial Markets in Europe (Afme) shows that post-crisis regulation has resulted in annual costs of $37bn (£26bn) on the capital markets activities of the largest investment banks, such as Goldman Sachs, JP Morgan, Barclays, and HSBC.


First Group rejects Apollo takeover offer

Apollo Management has launched a failed bid for First Group, with the target stating that the approach undervalued it. Shares in First Group closed up 7p, or 7.4%, at 101¾p.

Geotech sells 30% stake to Mobeus

Mobeus Equity Partners has paid £14m to Geotech for a 30% stake in the supplier to the High Speed 2 (HS2) rail project. The firm made £5m of revenue in 2017, with a goal of £12m this year.

Buyout funds eye European banks’ payment companies

Buyout funds are increasingly eyeing acquisitions of card and phone payments firms attached to EU banks. Recent deals include Friedman’s $5.3bn takeover of Nets in Denmark.


Radical changes ruled out by Deutsche Bank investment chief

Garth Ritchie, Deutsche Bank's new investment bank head, has said there will be no new strategy nor radical changes, but said some cuts in underperforming areas will be made.

Foreign owners pledge in China

China's central bank has announced that foreign financial firms will be permitted to take majority stakes in securities, fund management, futures and life insurance companies "within a few months".


Airbus opposes GKN sale to Melrose

Tom Enders, chief executive of Airbus, has said of the Melrose-GKN takeover saga: “We did not take a hard-nose decision yet, but we have concerns. It's clear our aviation business is a long-term business and private equity is relatively volatile, short term. We certainly prefer industrial investors who commit to the business on a longer-term scale than on a short-term scale.” Unite union's assistant general secretary for aerospace, Steve Turner, commented: “Airbus is GKN's single biggest customer whose close working relationship on major civil and defence aerospace projects sustains thousands of highly skilled jobs. Airbus's repeated warnings should have alarm bells ringing furiously in Whitehall and highlights the need for Business Secretary Greg Clark to call the bid in.”


McCarthy and Stone profits halved

Pre-tax profits at McCarthy and Stone have plummeted 52% in the first six months of the financial year, while revenues increased by only 1% to £239.6m and profits dropped to £10.5m from £21.8m in the same period last year. The UK retirement housebuilder said that lower levels of completions, the rise in building costs, and the subdued housing market contributed to the tough recent climate.

Vote for borrowing increase sought by Interserve

Construction and public services group Interserve is to call a meeting of shareholders as it seeks approval to increase borrowing limits and prevent the breaching of its banking covenants.


City scrambles to sever Russian ties

Following recent US sanctions announced against Russian businessmen and firms, companies in the City are severing ties with affected entities. The FCA is reviewing the impact of the sanctions for UK-listed companies. Despite not being placed on Washington’s blacklist, Sberbank has been one of the worst-hit stocks, seeing its share price fall more than 20% on Monday before a slight recovery.

Many tempted by cryptocurrencies

One in five people in the UK would consider investing in cryptocurrencies within the three years, according to research by Citigate Dewe Rogerson, which also said 19% thought cryptos would stabilise in the next three years. Phil Anderson, executive director at Citigate Dewe Rogerson, said many of the obstacles to cryptocurrency investment will be addressed in the coming months and years and that, assuming valuations continue to rise, many more investors will be attracted.


UK manufacturing output dips

The ONS has reported that UK manufacturing output dropped by 0.2% in February – the first dip in almost a year and down from revised growth of zero in January. Economists had forecast a 0.2% rise in industrial and manufacturing output for February. The ONS attributed the decline to falls in electrical appliance manufacturing and oil refining. Overall industrial output went up 0.1% in February, after a 1.3% rise the previous month. However, construction output dropped by 1.6% in February, on top of January’s 3.1% decline.


New mortgage enables parents to help children onto property ladder

The Post Office has launched the Family Link mortgage, which lets first-time buyers use the home of a close relative as collateral against their own house purchase. First-time buyers can borrow 100% of a property’s value by placing mortgages on two properties – a 90% mortgage on the home to be purchased and a 10% loan against the parental home.

Estate agents prepare for downturn

Estate agents and surveyors have warned that the housing market will likely remain subdued for some months, with further decreases in demand, sales, new stock and prices announced. It is believed that economic uncertainty since the Brexit vote, high stamp duty on the most expensive properties and extra taxes for buy-to-let landlords and second-home owners have contributed to the current depression in the industry.


Asos sales rise

Asos has revealed that group revenues rose 27% in the six months to February to £1.16bn. UK retail sales rose 22% to £414.5m, while total retail sales increased 27% to £1.13bn. Pre-tax profits rose 10% to £30m. CEO Nick Beighton said the results show “strong trading” at a time when the firm is making "substantial" investment in its future, with £230m-£250m earmarked for infrastructure spending in the current and upcoming two financial years.

Shop Direct jobs at risk

Shop Direct has warned that up to 2,000 jobs could be lost as part of plans to move its distribution operation to a new, more automated centre adjacent to the M1 in the East Midlands. Under the plans Shop Direct will wind down its fulfilment centres at Shaw and Little Hulton as well as its returns centre at Raven. The retailer, which owns Very and Littlewoods, stated that 1,177 permanent roles and 815 agency jobs could be lost as a result of the move.

Tesco turnaround sees profits rise

Tesco's turnaround under chief executive Dave Lewis has seen the supermarket report a 28.4% increase in underlying operating profits to £1.64bn for the year to 24 February. Personal finance arm Tesco Bank saw an increase in customer numbers of more than 4%, rising to 5.6m.


Competition and markets watchdog role for Tyrie

Former chairman of the Treasury select committee Andrew Tyrie has been appointed head of the Competition and Markets Authority (CMA). Business secretary Greg Clark noted: "Andrew Tyrie is a proven consumer champion and competition advocate", while Mr Tyrie commented: "Making markets work for the benefit of millions of people is what the CMA is all about. Competition can and should be put even closer to the centre of British economic life, reaching to every sector, rooting out monopoly and unfair trading practices, and enhancing Britain's global competitiveness." Meanwhile, the CMA is to launch an investigation into a £126.7m Trinity Mirror deal to buy a series of titles from Northern & Shell.

New top adviser hired by Bank of England governor

James Benford has been hired as the new private secretary to Mark Carney, governor of the Bank of England.

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