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Daily News Roundup: Thursday, 14th March 2019

Posted: 14th March 2019

BANKING

Basel panel tells banks to adopt cryptoasset safeguards

Financial regulators, including both the Basel Committee on Banking Supervision and the Bank for International Settlements, have again warned banks that cryptoassets pose significant financial stability risks. Guidance from the committee suggests that banks that acquire crypto assets must conduct thorough due diligence, strengthen governance and risk management, publicly disclose any exposure and inform supervisory authorities of any actual or planned crypto asset connection.

Vulnerable hit hardest by bank closures

Charles Randell, chairman of the Financial Conduct Authority, has said that the closure of bank branches hurts the most vulnerable and hammers small businesses. He was speaking after FCA research found that the areas that lose bank branches typically have higher unemployment and poverty than average, leaving the poorest hardest hit. Mr Randell said: “This wonderful life of online banking and mobile payments is cold comfort if you can't do these things. Many of these people are on low incomes. Having to pay to access cash disproportionately affects those who are least able to afford it. Cash is also disproportionately used by older people. Where branches close, we don't see any increase in mobile banking among the over-60s.”

£27bn bill to save banks

The Office for Budget Responsibility has estimated that taxpayers have lost £27.3bn as a result of the Treasury rescuing banks during the financial crisis. The Treasury spent £136.6bn back in 2008 to take over parts of Bradford & Bingley and Northern Rock, while also pumping money into Lloyds and RBS.

INTERNATIONAL

Brookfield buys Oaktree stake

Brookfield Asset Management has agreed to buy 62% of US alternative asset management company Oaktree Capital for an estimated $4.7bn. The combined companies will have around $475bn of assets under management and $2.5bn of annual fee related revenue, creating one of the world's biggest alternative asset managers.

Edmond de Rothschild to take its Swiss bank private

Clearing the way for acquisitions, the Edmond de Rothschild Group has announced plans to delist its Swiss bank from the Zurich exchange and take it private.

AVIATION

Boeing grounds entire 737 Max fleet

Boeing has grounded its entire global fleet of 737 Max aircraft after investigators uncovered new evidence at the scene of the fatal Ethiopian Airlines crash. The US plane-maker said it would suspend all 371 of the aircraft. The Federal Aviation Administration said fresh evidence as well as newly refined satellite data prompted the decision to temporarily ban the jets.

CONSTRUCTION

Balfour Beatty defies construction woes

Balfour Beatty has lifted its full-year dividend by one third, to 4.8p per share, after posting a rise in annual profits and a healthy balance sheet. Though 2018 revenues fell by around 5%, to £7.8bn, pre-tax profits rose by a similar margin, to £123m, and the firm shed over 40% in gross debt in the year. Its order book at the end of 2018 was up over 10% on last year - at £12.6bn.

FINANCIAL SERVICES

EU clinches deal on derivatives

European Union governments and lawmakers have agreed new rules that could force large foreign clearing houses with operations in the bloc to relocate to the bloc if they want to continue servicing their EU clients. The new rules would apply to large US security houses, such as CME and ICE, and British clearing firms after Britain leaves the EU, with the strictest relocation provisions likely to hit LCH. Valdis Dombrovskis, the EU commission vice-president responsible for financial services, said that the rules were a natural reaction to “the departure of the largest EU financial centre”.

UK asset managers lead exodus

Bloomberg profiles a report from London-based think-tank New Financial which identified 269 UK-based financial firms that have reacted to Brexit by setting up new hubs, moving staff or rebasing assets elsewhere in the EU. Asset managers have been the most proactive in establishing non-UK offices from which to do business, with many having chosen Dublin for their base in the EU. New Financial said it had identified £65bn of portfolio funds that have already been transferred out of the UK.

Strong Provident restores dividend

Provident Financial, which is currently battling a takeover offer from Non Standard Finance, has restored its dividend, of 10p per share, after implementing a turnaround plan. In its full-year results to the end of December last year, the doorstep lender revealed that that adjusted profit before tax increased by 82.3% to £153.5m, while statutory profit before tax rose 161.3% to £90.7m - up from a loss of £147.9m the prior year.

Standard Life Aberdeen rearranges boardroom

Keith Skeoch has become the sole chief executive of Standard Life Aberdeen, leaving Martin Gilbert, the former boss of Aberdeen Asset Management, as vice-chairman. Standard Life Aberdeen reported that profits were flat at £860m, with outflows of almost £41bn last year. Funds under management overall fell from £608bn to £551bn.

Prudential shifts £37bn to Luxembourg

Prudential has moved £37bn in customer assets to Luxembourg ahead of Brexit. The insurer revealed that it had spent £27m in preparing for Brexit, which included setting up an operation in the EU hub.

One in three asset management firms could disappear, says Invesco chief

Amid the M&A boom, Invesco chief executive Martin Flanagan has warned that one third of the asset management sector could be pushed out of business over the next five years.

REAL ESTATE

House prices set to slip

House prices are expected to fall towards the end of the year, according to estimates from the Office for Budget Responsibility. It said that average prices will drop by 0.3% in the fourth quarter of 2019. Growth is expected to return in the second quarter of 2020, to 0.9%, but will remain well below the previously forecast figure of 3.1%.

RETAIL

Carphone Warehouse fined over mis-selling

Carphone Warehouse has been fined £29.1m by the Financial Conduct Authority, over the mis-selling of its “Geek Squad” insurance and technical support product. The regulator found that the company, now part of the merged Dixons Carphone group, failed to train staff properly to give “suitable advice” to customers buying Geek Squad mobile phone insurance – of which punters bought more than £444.7m worth.

Sports Direct offers Debenhams new loan

Sports Direct has offered Debenhams a £150m interest-free loan, on the condition that Mike Ashley is given the chief executive role at the department store chain and Sports Direct is given a 5% share issue. This would give Sports Direct a 35% holding in the business.

ECONOMY

Hammond pledges ‘deal dividend’

In his spring statement, the Chancellor has pledged to spend a £26.6bn Brexit war chest to boost the economy, if MPs voted to leave the EU with a deal. He vowed to free up more money to help end austerity in a so-called “deal dividend”. Philip Hammond added that tax cuts and spending rises would depend on a smooth Brexit, adding that a disorderly Brexit would deal a “significant” blow to economic activity in the short term. The latest figures from the Office for Budget Responsibility (OBR) forecast that the UK economy will grow at the slowest pace since the financial crisis this year. The OBR cut its 2019 growth forecast to 1.2%, the weakest growth rate since 2009. That is a significant cut from the 1.6% expansion predicted by the Government’s economic watchdog last October.

OTHER

MPs vote to reject no-deal Brexit

MPs have voted to reject leaving the EU without a withdrawal agreement. Theresa May said there was a “clear majority” against a no-deal Brexit but the “legal default” was that the UK would leave without a deal on 29 March if no deal is reached. MPs will now get a vote on delaying Brexit, said Mrs May. That vote will take place today, and if it is passed - and the EU agrees to it - the UK will not leave the EU as planned on 29 March. The Government motion was passed by 321 votes to 278, a majority of 43, reinforcing the message that MPs do not want to leave without a deal. MPs also voted by 374 to 164 to reject a plan to delay the UK's departure from the EU until 22 May 2019, so that there can be what its supporters call a “managed no-deal” Brexit.

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