RBS chairman defends bailout
Sir Howard Davies, the chairman of RBS, has defended the £45bn bailout of the bank following the financial crisis, despite it being a near certainty that taxpayers will make a significant loss on the rescue. Sir Howard said the move was justified “to save the UK financial system from collapse”, adding that it should not be viewed “as a financial investment”. He did suggest that the bank could use up to £4bn of surplus capital to pay out a special one-off dividend to shareholders. Sir Howard also argued that banks are safer now than in 2008 after increasing their capital buffers, but warned against “pushing risks into the shadows”. He said that risky credit was now being supplied by under-regulated nonbanks such as online start-ups, peer-to-peer lenders and asset managers. “I worry about new institutions and instruments - I worry about cryptocurrencies and some of the new fintech ventures,” he said. Meanwhile, Lord Macpherson of Earl’s Court has said that Labour’s plan to use RBS as a conduit for state-supported lending to SMEs would be a mistake. He commented: “It won't end well. I do worry about extending the role of the state into banking.”
Free ATMs closing at record rate
Cash machine network co-ordinator Link has provided figures showing that more than 250 free-to-use ATMs are disappearing a month as operators shut unprofitable ones. There are around 53,000 free machines in the UK - but the number is shrinking at a record rate as people use less cash. The Payment Systems Regulator is cracking down on the closures and asking for more network protection. Managing director Hannah Nixon said: “The requirements we intend to place on Link will help ensure that Link achieves their commitment to protecting the geographic spread of free-to-use ATMs across the UK.”
Lloyds closes more branches
Lloyds Banking Group is to close a further 15 branches as it presses ahead with plans to streamline the business. A Lloyds spokesman said: “These branch closures are in response to changing customer behaviour and the reduced number of transactions being made in branches. All branches announced for closure have a Post Office less than half a mile away, so customers can still access their banking locally.”
Coutts will only feel small impact from Brexit
Coutts CEO Peter Flavel has said that Brexit will have little impact on the private bank or its customers. He said the majority of the bank's wealthy clients were UK-based, with smaller numbers coming from Europe. Mr Flavel added that Coutts also serves 20,000 entrepreneurs who “don’t wait around for politicians to make decisions”.
Carlyle and Investindustrial set up designer brands joint venture
Private equity firms Carlyle and Investindustrial have set up a joint venture to pursue deals in the luxury interior design sector.
EU proposes new powers to tackle money-laundering
The European Commission has proposed that the European Banking Authority should actively enforce anti-money laundering supervision across member states. Under the plans, the EBA would be able to order national regulators to investigate breaches and specify remedies such as sanctions. If national regulators failed to act, the EBA would have the power to step in “to address decisions directly” to banks.
Deutsche Bank mulls restructuring plan
Deutsche Bank is considering an overhaul to loosen the ties between its retail and investment banks. According to people with knowledge of the matter, the German bank is examining creating a holding company structure, a step that would give it more flexibility to strike merger deals, as it seeks to regain its footing following several years of heavy losses and multi-billion-dollar penalties. Deutsche Bank has also restricted travel for junior and mid-level investment bankers in a bid to cut costs.
Jamie Dimon hands over more responsibilities to top lieutenants
Jamie Dimon, the chief executive of JP Morgan, has handed over more responsibilities to his two most senior executives, co-presidents Gordon Smith and Daniel Pinto. Mr Dimon has also suggested that he could beat President Trump in an election. He later clarified that he would not be declaring his candidacy.
Former Goldman commodities traders launch own fund
Three former executives from Goldman Sachs’ commodities division are to launch their own fund called Quantix Commodities.
Dyson electric car plant site complicated by trade war
Jim Rowan, Dyson’s global CEO, has said that the global trade war will complicate where the company will build its first electric vehicle plant.
No deal Brexit would not halt flights for long – O’Leary
Michael O’ Leary, the boss of Ryanair, has downplayed the prospect of prolonged flight chaos under a no-deal Brexit. He reiterated his view that flights would be grounded at the end of March in the event that London and Brussels failed to reach an accord, but added: “I don't believe that a no-flight scenario will last for more than a couple of days or a couple of weeks; because I think politically, it is unassailable.”
Pilot shortage hitting elite fliers
Seventy per cent of private jet buyers struggle to find pilots and crew to operate the plane, according to London-based Colibri Aircraft, up from 20% five years ago. European airlines face a shortage of 95,000 pilots by 2034, according to UK flight recruiter AeroProfessional.
Galliford Try defiantly building profits
After a challenging start to the year - hit by bad weather and the Carillion collapse, Galliford Try’s pre-tax profits rose 145% in the year to the end of June, from £58.7m to £143.7m. Group revenue rose 10% year on year to £2.9bn. The group took a £20m hit on the Aberdeen bypass venture, which it had been jointly contracted to build with Carillion, taking the firm’s losses on the project to £45m for the full financial year.
Barclays backs £1bn fund to boost builders
A £1bn fund designed to boost house building and offer finance to smaller building firms has been announced. Barclays is providing £875m, while Homes England will contribute £125m. John McFarlane, Barclays' chairman, said: “There is a vital need to build more good quality homes across the country. This £1bn fund is about helping to do exactly that.”
Brexit costs London global financial centre crown
Brexit has allowed New York to overtake London as the world’s top financial centre, according to the latest the Global Financial Centres Index, which pegs Hong Kong in third place, followed by Zurich, Frankfurt, Vienna, Milan and Amsterdam. “These centres may be the main beneficiaries of the uncertainty caused by Brexit,” the Index said.
Money flows into UK
The Investment Association has said that assets worth £9.1trn are now being managed by fund houses, hedge funds and private equity firms in the UK – a rise of 12% in the last year. The IA added that money from overseas clients had increased by a fifth during 2017 while the amount coming in from European investors increased by 29%.
Cyber-attacks pose big risk
Mark Carney, the Bank of England governor, has warned that cyber-attacks and high levels of household debt are two of the biggest risks facing the UK’s financial services sector. In an interview to mark the tenth anniversary of the collapse of Lehman Brothers, he pinpointed two more major risks: a no-deal Brexit and sky-high levels of debt supporting the Chinese economy.
Prudential signs up to FinTech Scotland
FinTech Scotland has signed up Prudential UK as its latest “strategic partner”. The Pru said it was committed to playing a leading role in the development of digital financial services in Scotland and across the UK.
Carlyle acquires Sedgwick
Carlyle Group has acquired US insurance claims provider Sedgwick for $6.7bn (£5.1bn). Equity capital for the investment will come from Carlyle Partners VII, an $18.5bn fund.
MEDIA AND ENTERTAINMENT
Sorrell outlines expansion plans
Sir Martin Sorrell has outlined plans to expand his new venture S4 Capital after it starts trading later this month. Sorrell said S4 had ambitions to provide: “global, multi-national, regional, local clients and influencer-driven millennial brands with new age digital marketing services”.
Remortgaging surged in July
Remortgaging spiked to its highest level in more than a decade in July, according to data from UK Finance, with around 46,900 new homeowner remortgages completed - up 23.1% compared with the same month last year. Total remortgaging deals worth £8.7bn were completed in the month. First-time buyer mortgages completed in July edged up 1%, to 31,400, with the average loan standing at £145,000. Around 14,700 new buy-to-let remortgages were completed in the month, marking a 7.3% increase on July 2017.
IWG finance boss moves on
IWG has said that Dominik de Daniel, its finance and operations chief, is stepping down to “pursue other opportunities”. Shares in IWG lost a quarter of their value last month after the company decided to end talks with potential suitors.
N Brown boss to step down
Angela Spindler, the CEO of N Brown, will step down at the end of September, three months after announcing plans to close all of its stores and move online. Matt Davies, chairman of N Brown, said: “We recognise that now is an appropriate time to search for a new leader who can take the business forward through the next phase of its development.”
Brown: World is sleepwalking into new financial crisis
The former PM Gordon Brown has warned that the world is sleepwalking into a new financial crisis, because it has failed to remedy the causes of the financial crash of ten years ago. When asked by the Guardian to assess the risks of a repeat of the events in 2008, Mr Brown said: “We are in danger of sleepwalking into a future crisis. There is going to have to be a severe awakening to the escalation of risks, but we are in a leaderless world.” He added that there was less scope to reduce interest rates than was the case a decade ago, no evidence that finance ministries would be allowed to cut taxes or increase public spending, and no guarantee that China would be as active in providing stimulus.
Wages yet to reach pre-crash levels
Annual wages have failed to recover since the financial crash, according to the Institute for Fiscal Studies. The institute's analysis shows median annual earnings were £23,327 last year, 3.2% lower than in 2008 when the average wage was £24,088. People in their 20s and 30s have been hit hardest. People in their thirties are the worst hit in terms of pay, with median earnings 7% lower than in 2008, while pay for those in their twenties is 5% lower.