BANKING
Lloyds is betting heavily on the UK consumer
The Times’ Miles Costello advises investors to stay away from Lloyds Banking Group because, despite its strengths and the likelihood it will continue to pay dividends, uncertainty about what impact Brexit will have on the financial sector means the prospects of a recovery in the price seem dim. “Lloyds is betting heavily on the UK consumer at an exceptionally tricky time, as household confidence hangs by a thread,” says Costello.
Santander under fire over handling of PPI claims
Santander UK has been accused of cutting professional claims management companies out of its communications with customers in an attempt to reduce the amount it pays out to victims of PPI mis-selling.
PRIVATE EQUITY
Lady Cobham snubs talks with Advent
Lady Cobham has repeated her call for the Government to review Advent International’s attempt to buy Cobham asserting that the firm “'will never be a long-term strategic owner” of the defence group. The widow of former boss Sir Michael Cobham rejected a meeting with Advent saying it was “highly unlikely to change my view.”
Private equity lifts business and pension funds
The BVCA’s Tim Hames dismisses criticism of private equity, pointing out that nearly 50% of gross return comes from “strategic and operational improvement” – one reason why investors keep coming back.
INTERNATIONAL
Banker belittled by colleagues wins £4m sexism case
BNP Paribas has been successfully sued by City banker Stacey Macken who claimed sex discrimination for being paid less than a male colleague. A witch’s hat was left on her desk by male peers who had been out drinking while her boss would repeatedly bat her away when she tried to speak with him by saying: “Not now, Stacey.” Miss Macken, a development manager, sued for £4m, although the size of the settlement has yet to be determined.
Saudi Aramco selects banks for IPO
JPMorgan, HSBC and Morgan Stanley are among a group of local and international banks chosen by Saudi Aramco to handle its IPO. Others, including Bank of America Merrill Lynch, Citi, Credit Suisse and Goldman Sachs, are new to the process. Saudi banks taking part include National Commercial Bank and Samba.
Credit Suisse poaches top Deutsche Bank analyst to lead strategy
Credit Suisse has hired Deutsche Bank’s top European company analyst and adviser Kinner Lakhani, who will join the Swiss lender in Zurich this month as head of strategy and development.
Morgan Stanley warns on impact of ‘dramatically different’ rate environment
In an update on Morgan Stanley’s health, finance boss Jon Pruzan said net interest income will fall thanks to a “dramatically different” interest rate environment.
AUTOMOTIVE
No-deal will disrupt launch of Mini Electric
BMW has said a no-deal Brexit would result in its Mini factory in Cowley near Oxford closing for several weeks due to “logistics issues”. The disruption would be a blow to the launch of the Mini Electric, pre-orders for which had been better than expected.
CONSTRUCTION
Aberdeen bypass bites into Galliford Try
The delayed Aberdeen road project contributed to Galliford Try suffering a 27% slump in pre-tax profits for the 12 months to the end of June, down to £104.7m from £143.7m in 2018. Galliford, which has just restarted talks to sell its housebuilding arm Linden Homes to Bovis Homes for £1.1bn, also saw revenue slip 7.5% year on year to £2.71bn and its £98.2m cash position fall to a net debt pile of £56.6m. The £745m bypass Galliford built with Balfour Beatty, which is now up and running a year over schedule, cost Galliford £152m.
Crest Nicholson chairman named
Iain Ferguson has been appointed as non-executive chairman at housebuilder Crest Nicholson. The former Stobart chair's appointment comes as Peter Truscott, nabbed from rival Galliford Try, prepares to take the helm as Crest Nicholson chief executive this month.
FINANCIAL SERVICES
Hong Kong exchange make surprise bid for LSE
Hong Kong Exchanges and Clearing (HKEX) has proposed a £30bn tie-up with the London Stock Exchange (LSE). Subject to the LSE’s £22bn merger with financial data provider Refinitiv collapsing, HKEX chairman Laura Cha said the proposal was “a highly compelling strategic opportunity to create a global market infrastructure group, bringing together the largest and most significant financial centres in Asia and Europe”. Business secretary Andrea Leadsom said the bid could have security implications for the UK and the Government and regulators would be looking at the details closely. Jamil Anderlini says in the FT that the move is designed to shore Hong Kong up against moves by China to remove its special status. The FT’s Lex column suggests the approach in “uncompelling” as evidenced by the “feeble” 5% jump in LSE shares. If the deal was likely to succeed, shares should have jumped by the 23% premium offered, Lex adds.
Labour set to back £2bn extension of financial transaction tax plans
Shadow chancellor John McDonnell has backed a proposal to expand the planned 0.5% financial transactions tax on share trading to interbank foreign exchange deals and commodities as well as related derivatives such as foreign exchange swaps. Total revenues from the tax would be an estimated £4.7bn a year. The stamp duty on share trading raised £3.5bn in 2017-18. Sadiq Khan, London's Labour mayor, has described FTTs as "madness" and warned such taxes could drive away business to "other parts of the world where there is no financial transaction tax". But Mr McDonnell said, "a comprehensive financial transactions tax can raise revenue for our under-resourced public services, improve the resilience of financial markets, and ensure that finance serves the people and the wider economy."
UK remains second largest investment management hub in the world
The UK retained its ranking as the second largest investment management hub in the world behind the US last year, although the total amount of assets under management (AUM) by Investment Association (IA) members remained unchanged at £7.7trn. Investment managers in the UK managed 37% of all assets managed in Europe, according to the IA's survey. "Against economic and political headwinds, the UK investment management industry has been resilient and remains a domestic and international success story," said IA chief executive Chris Cummings.
FCA launches no-deal helpline
The Financial Conduct Authority has set up a helpline for UK financial services firms to help them prepare for a no-deal Brexit. Nausicaa Delfas, an executive director at the FCA, said: "We expect firms to ensure they are ready if there is a no deal. If firms haven't finalised their preparations, there is a risk they could be impacted."
Facebook applies for Libra license in Switzerland
Facebook’s cryptocurrency project Libra is planning to apply for a payments licence from Switzerland’s Financial Market Supervisory Authority. “We are engaging in constructive dialogue with FINMA and are encouraged to see a feasible pathway for an open-source blockchain network to become a regulated, low-friction, high-security payment system,” said Dante Disparte, head of policy and communications at Libra, which has now submitted a request for a ruling to clarify the regulatory status of the new currency.
Oakley reveals solid first half
Oakley Capital Investments has posted a total net asset value of £651m for the first half, up 14% since the end of last year. The investment firm also reported a total shareholder return for the first half of 33% and that the fair value of its underlying portfolio companies grew 25% on a like-for-like basis.
Sorrell to step down from Man Group
Man Group president Jonathan Sorrell, son of WPP founder Sir Martin Sorrell, has stood down as an executive director from the world’s largest listed hedge fund ahead of moving to a new employer. Ian Livingston, the FTSE 250 group’s chairman, is also considering stepping down.
HEALTHCARE
Four Seasons to be taken over by H/2 Capital Partners
Four Seasons is to be taken over by H/2 Capital Partners for an estimated £400m. The US hedge fund owns much of the chain’s £730m debt and is understood to have agreed to acquire around 185 of the group’s freehold sites. Sources said the agreement would involve the fund offering a financial guarantee to secure the running of the remaining 135 care homes until a sale process for those sites has concluded.
MEDIA & ENTERTAINMENT
Rapid expansion dents Sorrell’s S4 earnings
S4 Capital's rapid expansion has resulted in a decline in earnings for the first half, as Sir Martin Sorrell’s new digital-first advertising company spent heavily on acquisitions and staff expansion. S4 Capital’s revenue rose 42% to £88m in the six months to the end of June, while gross profit increased 44% to £70m and net debt reduced by half to roughly £20m, though it posted a pre-tax loss of £8.5m, largely due to its multiplying headcount, which increased more than 60% at the end of the period.
Apple to undercut Netflix's streaming ambitions
Apple's new Apple TV Plus service will launch on November 1 at £4.99 per month, less than the cost of a Netflix subscription. Apple also indicated that customers who buy an iPhone, iPad or Mac will be given a free one-year subscription for Apple TV Plus.
REAL ESTATE
MJ Hudson commits to larger London HQ
Brushing aside Brexit concerns, MJ Hudson has committed to larger offices in London. The asset management consultancy signed with landlord The Mercers’ Estate for a new 17,000 square feet London HQ at 1-3 Frederick’s Place. Matthew Hudson, chief executive of MJ Hudson said: “The asset management industry is experiencing both flux and opportunity, and London is, and should remain, its pre-eminent global location.”
RETAIL
Ashley bats off investor concern as pressure to find auditor mounts
Sports Direct shareholders have registered unhappiness with founder Mike Ashley, with almost a quarter voting against his re-election as CEO at the company’s AGM yesterday. The company is still without an auditor and now has a week to appoint one before being obliged to ask the government to do, so or risk delisting.