BANKING
Customers face wait over PPI claims
The Financial Conduct Authority (FCA) has warned that bank customers who lodged complaints over the mis-selling of PPI may have to wait until next summer for a final response. The regulator said that the last-minute flood of claims means that firms will now “not be able to meet their normal complaint handling times”. It has been estimated by the FCA that roughly £36bn in compensation has been paid out so far, with the typical payout amounting to £2,000. Lenders including Lloyds, Royal Bank of Scotland and Barclays have set aside hundreds of millions of pounds extra to cover late claims, with think-tank New City Agenda predicting in August that the final PPI bill would pass £50bn.
Metro urged to turn to veteran
Metro Bank is reportedly under pressure from the Bank of England (BoE) to hire an industry veteran as its next chairman, with BoE regulators said to be taking a keen interest in who replaces Metro founder Vernon Hill due to concerns in how the bank has been run in the past. The Telegraph considers the appeal of the role, noting that regulators are investigating an accounting error at Metro, while Mr Hill has suggested that he would consider taking the business off the stock market. The paper names Allied Irish Bank chairman Richard Pym, Co-op Bank's former chief executive Liam Coleman and Benny Higgins, the former boss of Tesco Bank, among potential candidates with the required experience.
Welsh savers hit by poor connections
Analysis by the Welsh Assembly's economy, infrastructure and skills committee suggests poor internet connections and phone signal is preventing a number of people in the country from switching to internet banking. The study shows that almost nine in ten personal banking customers are negatively affected by branch closures, with a quarter of these saying "better Wi-Fi and/or internet connectivity" would help.
PRIVATE EQUITY
Buyout groups form teams to look at bids
Blackstone and Carlyle had joined up for a potential bid for Thyssenkrupp's lifts business, as have Advent International, Cinven and the Abu Dhabi Investment Authority.
KKR promotes senior partners
KKR has revealed that six of its most senior partners will share the leadership of its private equity operations in the Americas, Europe and Asia-Pacific. The firm has promoted Pete Stavros and Nate Taylor to co-head its private equity unit in the Americas, while Mattia Caprioli and Philipp Freise will take the helm of the private equity business in Europe and Hiro Hirano and Ashish Shastry will do the same in Asia Pacific.
INTERNATIONAL
BofA beats estimates
Bank of America has beaten estimates for quarterly profit as it earned more in advisory fees and grew its loan book. The US bank took a small hit on its spread and reported a 4 basis-point decrease in its interest margin to 2.41% for the third quarter. But a 5% growth in overall loans helped it overcome the impact of lower rates. Revenue from investment banking fees jumped 40%, while revenue from consumer banking - its biggest business - rose 3% to $9.7bn. The bank's net interest income also came in higher at $12.34bn, accounting for more than half of its total revenue.
China central bank pours unexpected Rmb200bn into lenders
China's central bank, the People's Bank of China, has made an unexpected Rmb200bn ($28bn) injection into the banking system.
Hong Kong’s rich open foreign bank accounts amid unrest
Unrest is driving wealthy Hong Kong residents to open accounts in other financial centres, with UBS, HSBC, Pictet and Credit Suisse among banks seeing an increase in Hong Kong customers opening overseas accounts.
HSBC France to leave Paris HQ
HSBC France is reportedly moving out of its Paris HQ as its parent company looks to sell retail operations in the country. HSBC France sold its headquarters at 103 avenue Champs Elysees, and a building in front of it at 15 rue Vernet, to Qatari investors back in 2009, and has rented it since then. The buildings house a total of around 1,700-1,800 employees.
AVIATION
Thomas Cook liquidators secure bids for airport slots
Thomas Cook’s liquidators have secured bids from several large carriers after launching an auction of dozens of UK airport slots. The sale has drawn interest from British Airways parent company International Airlines Group, with Easyjet, Virgin Atlantic and Wizz Air also putting in bids for the slots. The auction has to be completed by the middle of November for legal reasons, giving a four-week period between initial bids and final sales.
CONSTRUCTION
Barratt’s sales rise
Housebuilder Barratt completed 3,252 homes in the 15 weeks to 13 October, up 14% on last year, and announced that its forward order book rose to 12,963 units from 12,903 a year earlier. However, the value of the homes fell 2.4% to £3.07bn as the average price agreed for the homes it is due to build has fallen to £236,800 from around £243,900.
FINANCIAL SERVICES
Relocations rise ahead of Brexit
A report from think-tank New Financial shows that more than 330 financial firms have relocated parts of their business ahead of Brexit, with the number of banks and financial services companies moving staff to new entities in the EU up by 23% since a previous report, which was released in March. The study shows that Dublin has been the biggest beneficiary, with 115 firms choosing the Irish capital. Despite the moves, the report suggests London will remain the dominant financial centre for Europe for the foreseeable future. It says: “Firms are keen to keep as much of their business in London as possible and even the biggest relocations represent a maximum of 10% of the headcount at individual firms.”
Woodford fund suspended
Savers have been blocked from pulling their investments from Neil Woodford’s Income Focus Fund by corporate supervisor Link, which has placed the fund under a rolling 28-day suspension, matching terms applied to the Woodford Equity Income Fund earlier this year. Link, which has said it will update investors within the next two weeks on plans for the fund, said a suspension is in the best interests of investors. Mr Woodford will continue as the fund’s manager on an interim basis and is expect to continue charging management fees for as long as it remains suspended, as he did on the Equity Income fund.
LME to hike fees
Trading and clearing fees are to be raised by the London Metal Exchange for the first time in five years. The exchange has said it will raise fees by 8% at the start of next year, as its owner, Hong Kong Exchanges and Clearing (HKEX), looks to regain some of its investment. Matthew Chamberlain, LME CEO, said: “Since our fee recalibration exercise in 2017, where we implemented significant discounts, we have begun to invest in a number of key areas of the business, which – along with inflationary impact – has led, in our view, to a fair and proportionate new fee schedule.”
City experts attack low rates addiction
The FT looks at loose monetary policy, with central banks criticised by some commentators who have voiced concern over efforts to tackle a decline in equity and bond markets.
HEALTHCARE
Healx secures $56m funding
Cambridge-based health tech firm Healx has secured $56m ($44m) in Series B funding, a cash injection that will be used to launch a new accelerator programme to find treatments for rare diseases. Healx deploys artificial intelligence to help speed up the drug discovery process, which can take more than a decade under the traditional model. The firm has outlined a plan to advance 100 rare disease treatments towards the clinic by 2025.
LEISURE AND HOSPITALITY
National Express wins Moroccan business
National Express has secured a €1bn (£869m) contract to run a bus service in Casablanca, nearly doubling its business in Morocco. The 15-year contract has been awarded to the bus operator’s Spanish and Moroccan division Alsa, which will start next month with the deployment of 400 buses, increasing to 700 in 2020.
REAL ESTATE
House prices edge up
Property values in Britain increased 1.3% in the year to August 2019, Office for National Statistics data shows, despite the continued uncertainty surround the UK’s departure from the European Union. The average UK house price was £235,000, up £3,000 on a year earlier. London saw prices slide 1.4% annually, closely followed by the South East where they fell 0.6%, although the areas remain the most expensive in the country to purchase a property, at an average of £473,000 and £326,000 respectively. Growth was strongest in Wales, increasing 4.5% to an average of £168,000; in Scotland sale prices grew 1.6% to £155,000, in Northern Ireland they were up by 3.5% to £137,000, and values rose 1.1% in England, to £168,000.
RETAIL
Asos profits fall 68%
Profits at Asos have plunged after warehouse problems led to what the online fashion retailer said was a "disappointing" year. Pre-tax profits dropped 68% to £33.1m in the year to August 31st, the company attributing the fall to its expansion in the EU and US being “more challenging than we foresaw”. It added: “With the benefit of hindsight, we were not adequately prepared for the additional complexities of planning and trading across our expanded warehouse footprint. It is also clear that our internal capabilities had not kept pace with this growth and change in complexity”. Nevertheless, revenues ticked up 13% to £2.73bn, with UK sales rising 15% and international sales up 11%.
ECONOMY
CPI remains steady in September
Data from the Office for National Statistics shows that the consumer prices index (CPI) held steady at 1.7% in September. This comes despite analysts predicting a modest rise in the inflation rate. The figures mean families are better off because pay packets are growing much faster than prices, with average wages up by 3.8% in the 12 months to August. With next year’s business rate increase based on September’s CPI, accountants say the latest inflation reading means a rise in business rate costs worth a total £536m.
IMF warns of debt crisis
The International Monetary Fund (IMF) has warned of a $19trn corporate debt mountain, with its global financial stability report saying that in eight major economies, debt at risk - or money owed by companies that cannot cover the interest payments with profits - would hit $19trn in the next downturn – 40% of the total amount owed by businesses. The report warns that the debt is not held by banks but in the shadow banking sector, which is made up of insurers, pension funds and asset managers. Tobias Adrian, the IMF's financial counsellor, said: “Vulnerabilities 'in the shadow banks' are now elevated in 80% of economies, as measured by GDP. This is similar to what we have seen at the height of the global financial crisis.”
Think-tank: Economy £69bn smaller due to Brexit turmoil
The Centre for European Reform (CER) says Brexit uncertainty and disruption has left the economy £69bn smaller, saying the vote to leave the EU means the economy is 2.9% down on the level it would have been otherwise. John Springford, deputy director of the CER, comments: “We have seen a substantial loss of output as a result of slower growth, and the hit to investment is storing up trouble for the future.” The think-tank’s Cost of Brexit report suggests that devaluation of the pound since the Brexit vote “has yet to translate to the big gains in exports some Brexiteers hoped for”.