BANKING
Morgan warns banks over IT failures
Nicky Morgan, chairwoman of the Treasury Select Committee, has warned that financial regulators and politicians will take a tougher line on banks over IT failures because branch closures have forced customers to move online. Ms Morgan said being left without internet banking access was as disruptive as “turning on the tap and not getting any water” for consumers. Ms Morgan also stressed that as more and more customers moved online, banks had to ensure that non-digital customers and cash users “must not be left behind”. Meanwhile, the Bank of England’s Financial Policy Committee is developing a new framework which will outline what it expects financial companies to deliver in the wake of a cyber-attack or major IT failure. Lyndon Nelson, the deputy chief executive of the BoE’s Prudential Regulation Authority, added that banks will need to regularly test their approaches to incidents, and have contingency plans in place for the resumption of critical functions.
Bank of Ireland to increase lending
Bank of Ireland is planning to increase the size of its loan book and invest in front-end technology as part of efforts to improve profitability and efficiency, CEO Francesca McDonagh said at the firm’s investor day. The bank expects to increase its lending by around 20% over three years, with 65% of that growth in Ireland and 35% internationally. It is targeting a return on tangible equity (ROTE) of above 10% by 2021 compared with 6.9% in 2017. The bank will invest €250m in changes to its business model, including increasing the proportion of customer-facing staff and closing 28 service centres this year. As a result, Bank of Ireland expects to reduce its cost base by €200m in 2021, and achieve a cost income ratio of around 50% in 2021, compared with around 65% in 2017.
BBB seeds new £2.5bn patient capital investment fund
The British Business Bank (BBB) has launched a £2.5bn programme with £400m of seed capital as part of an effort to match the US in creating the next generation of “unicorn” firms. The newly launched British Patient Capital (BCP), which will be a subsidiary of the government-owned BBB, will invest alongside private firms, aiming to enable £7.5bn in investment into UK start-ups as part of a plan announced by chancellor Philip Hammond in October.
FCA investigation of HBOS delayed by further cache of evidence
The Financial Conduct Authority has had to delay its investigation of HBOS after only recently being made aware of “extensive further information” in the case.
PRIVATE EQUITY
Blackstone raises $9.4bn for Asia-focused real estate investments
Blackstone has raised around $9.4bn for two new funds - the largest-ever fund dedicated to real estate investments in Asia as well as its first private equity fund for the region. The private equity group raised $7.1bn for what it called its second regional "opportunistic" real estate fund. "The size of this fund...gives us flexibility to pursue a range of opportunities and commit capital with speed and scale," said Ken Caplan, global co-head of Blackstone Real Estate.
INTERNATIONAL
Dutch payments group Adyen valued at $12bn
The Dutch payments firm Adyen has secured a €12bn (£10.57bn) valuation on its first day of trading on Amsterdam’s Euronext exchange. The firm, which provides backend payment services for online transactions, saw its share price leap from its €240 listing price on Tuesday to reach €455 at the close yesterday. Adyen has seen payment volumes grow significantly, creating a European rival to US giant PayPal with around €108bn in transactions in the year ending 2017.
ECB looks through trading books of banks
The European Central Bank has been taking a closer look at the trading books of BNP Paribas, Deutsche Bank and Société Générale, according to sources. The ECB reportedly asked the banks to provide information on how they value bonds, stocks and derivatives on their trading books.
Royal Bank of Canada warns on Big Tech threat to banking
Dave McKay, the CEO of the Royal Bank of Canada, has said his bank must diversify beyond financial services to remain relevant as big technology groups move into its markets.
Fannie Mae to sell $6.2bn of mortgage loans
The US government-backed mortgage agency Fannie Mae is looking to sell a portfolio of 27,000 loans totalling $6.2bn. The latest deal is the agency’s seventh sale of re-performing loans.
Foreign banks push US Federal Reserve to relax capital rules
Foreign banks in the US have called on the Federal Reserve to relax rules around the amount of capital they must hold.
ING moves back into insurance with Axa tie-up
ING has announced a multi-country bancassurance deal with AXA. The partnership is designed to provide a new form of digital insurance to ING’s Dutch customers.
AUTOMOTIVE
Car firms face Brexit extinction
CBI president Paul Dreschler had warned that sections of the UK car industry face extinction unless the UK stays in the EU customs union. Mr Dreschler also said there was “zero evidence” that trade deals outside the EU would provide any economic benefit to Britain. “If we do not have a customs union, there are sectors of manufacturing society in the UK which risk becoming extinct,” Mr Dreschler said. “Be in no doubt, that is the reality.”
VW fined €1bn by German prosecutors
Volkswagen has been fined €1bn (£880m) by German prosecutors over its diesel emissions scandal. The Braunschweig public prosecutor found VW had sold more than 10m cars between mid-2007 and 2015 that had emissions-test-cheating software installed. VW chief executive Herbert Diess said by accepting the fine “Volkswagen takes responsibility for the diesel crisis.” “Further steps are necessary to restore trust in the company and the auto industry,” he added.
New CFO for General Motors
General Motors has named Dhivya Suryadevara as its new CFO. She replaces Chuck Stevens, who is retiring after more than four decades at the car maker.
AVIATION
Ryanair opens base at Southend
Ryanair is to open a new base at London Southend Airport from April 2019. The Irish airline expects to carry a million passengers annually from the Essex airport, largely to Spain and Italy.
FINANCIAL SERVICES
Brexit must not be a bar to mobility of professionals – Glen
The City minister John Glen has said that financial services professionals must be able to freely travel in and out of the UK after Brexit. Speaking to The City UK’s conference, he insisted that any deal Britain strikes with Brussels over its departure should preserve the "mobility of professionals" required to travel around the Continent. “It is in the interests of both sides that this exchange of talent continues at pace,” Mr Glen added. Meanwhile, Barclays’ chairman John McFarlane urged ministers to overhaul the economy by including services as well as goods in trade deals with the European Union and other leading markets. Labour’s shadow chancellor John McDonnell added at the same event that a Labour government would provide a stable policy-making environment for the City.
Fund founded by Rees-Mogg sets up post-Brexit vehicle in Dublin
Somerset Capital Management, which was co-founded by Jacob Rees-Mogg, has launched a fund in Dublin, as asset managers begin to worry about being cut off from European investors after Brexit.
Old Mutual predicts more break-ups
The CEO of Old Mutual, Bruce Hemphill, has predicted that more financial services companies will follow the example of his own firm and break themselves up. He said that the process was already happening, forced by the weight of tougher regulations since the 2008 crisis and investors' desire for returns.
Charles Stanley sees funds rise
Charles Stanley has reported that its pre-tax profits rose by 30% in the year to the end of March to £11.4m. Revenues were up 6.6% to £150.9m.
LEISURE AND HOSPITALITY
Gym Group acquires sites
The Gym Group has purchased 13 venues from Easygym for £20.6m in cash and an additional £4.1m payable when lease extensions are agreed on two sites.
MEDIA AND ENTERTAINMENT
Comcast bids for Murdoch’s Fox assets
Comcast has submitted another offer to buy parts of 21st Century Fox, after getting rebuffed last year in favour of Disney. Comcast said it has offered $65bn (£48.6bn) in cash for Fox's studios and international businesses. The bid sets up a fight with Disney, which announced its own plan to acquire Fox's businesses last year. Comcast said its proposal is “at least as favourable” to shareholders as Disney's offer.
REAL ESTATE
House prices reach record high
Figures from the ONS show that house prices have reached a record high in the UK, but that property inflation has slowed to its lowest level since March 2017. London house prices staged a surprise bounce in the month, rising 2.4%, with annual property inflation in the capital returning to positive territory at 1%. However, this is the lowest rate of growth for any of the UK regions. Prices of flats and maisonettes have been weakest over the past year - rising by just 1% in the 12 months to April, to £202,052, while the average price of a semi-detached house increased by the most, at 5.3%, to £315,000. The price of terraced homes rose by 4.7% to an average of £184,300 and detached homes were up 3.8% to £342,154.
RETAIL
Dixons Carphone discloses huge data breach
Dixons Carphone is investigating a massive data breach involving 5.9m payment cards and 1.2m personal data records. Some 5.8m of the cards affected had chip-and-pin protection to mitigate the harm arising from a data breach, although around 105,000 non-EU cards, which do not use the technology, were compromised. The hackers had tried to gain access to one of the processing systems of Currys PC World and Dixons Travel stores, the company said, adding that it had found no evidence that any of the cards had been used fraudulently following the breach.
ECONOMY
ONS: Rising fuel prices spur inflation in May
Inflation remained at 2.4% in May, according to the ONS, after its fall was halted by a sharp rise in fuel costs. The ONS said that fuel prices increased by the biggest monthly amount since January 2011, rising by 3.8%. Mike Hardie, head of inflation at the ONS said: “Recent large rises in the cost of crude oil have fed through to prices paid by consumers at the pump.” Inflation has been falling since November last year. The rise in oil prices also drove up raw material costs for companies, which jumped by 9.2%.