Bank bosses warned over consumer debt
The Bank of England has written to bank bosses, warning them to “remain vigilant” about the heightened risks linked to rising consumer debt levels. The warning comes after a review from the Prudential Regulation Authority found executives were receiving inadequate information and might be missing warning signs along the way. The PRA explained that some companies' risk committees “do not routinely receive sufficient standardised MI 'management information' on consumer credit to recognise when a shift in asset quality or portfolio performance is taking place”. In its letter, the BoE said: “Our main finding concerns weakness in management information and governance.”
The Times, Page: 46 Independent I, Page: 38 Daily Mail, Page: 71
RBS defends closures decision
In an appearance before the Commons Scottish Affairs Committee yesterday, RBS bosses refused to reconsider 62 branch closures planned for Scotland. MPs said the response to the closures has been “overwhelmingly negative”, with customers in rural areas feeling particularly let down. RBS officials insisted the bank was responding to changes in customer behaviour, including increased use of online banking. Ian Blackford, the SNP's leader at Westminster, said the government’s Access to Banking Code may have to be improved to stop banks from pulling out of rural communities. He added that RBS could be “forced” to change its mind on the closures, saying: “Why did we save RBS if they are to be allowed to walk away from these responsibilities? The government have got to hold them to account.”
Deutsche Bank to move fewer London jobs than expected after Brexit
Deutsche Bank has said it expects far fewer staff than some had expected to move from London to the continent following Brexit. Stefan Hoops, the head of Deutsche Bank’s capital market division, said: “Not thousands will move from London, but rather hundreds.” London will remain Deutsche Bank’s trading hub, and most traders will continue to be based there, even over a long period, Hoops added. While the bank has never been specific about how many jobs may leave London following Brexit, a senior official said last year that up to 4,000 may be affected.
Standard Chartered creates new technology team
Standard Chartered has established a business unit to invest in financial technology and promote innovation. Dubbed SC Ventures, it will have internal consultants to solve problems with technology and a team to sponsor and oversee disruptive technology ventures owned by the bank. Michael Gorriz, group chief information officer, commented: “As new technology continues to play an ever more important role in banking, there is a huge opportunity for us to promote more innovation.”
Barclays to cut investment banking jobs
City AM reports that Barclays is set to cut up to 100 jobs from its investment bank this week. Most of the redundancies will be concentrated at the managing director and director levels, although some more junior bankers will also lose their jobs. Meanwhile, the Times reveals that MPs are seeking answers from regulators and the trustees of Barclays’ pension fund over plans to shift responsibility for paying £42bn of pensions from the entire bank to the investment banking arm.
SocGen told to pay back €2.2bn tax credit
Société Générale says it will fight an order from French tax authorities to hand back a €2.2bn tax credit that the bank obtained after losing $4.9bn through a rogue trading scandal. SocGen was allowed to deduct rogue-trading losses from the profits it registered in the following years, but tax inspectors have now written to the bank telling it to give the money back.
US banks hit by tax changes
Goldman Sachs has posted a quarterly loss of $1.93bn, its first in six years, after a $4.4bn hit from the Trump administration’s tax overhaul. Meanwhile, Bank of America has posted a $2.4bn profit, despite taking a $1.9bn charge related to the new US tax code.
Most new cars to be electric in 12 years, government says
The government has said that 60% of new cars must be electric by 2030 if greenhouse gas targets are to be met. Committee on Climate Change chairman Lord Deben said: "If you're running a big fossil fuel company, you have to start thinking about the realities of when, not if, because it is not if any longer, we use a lot less fossil fuels."
Banks urged to protect small firms amid Carillion crisis
Business Secretary Greg Clark has called on banks and other lenders to avoid pulling the plug on small firms affected by the collapse of Carillion. Mr Clark chaired a meeting yesterday with representatives of high street lenders and the British Business Bank, where he asked them to ensure that “they are in contact with customers impacted, that they have in place the advice and support needed and that any individual cases are escalated and dealt with sympathetically, swiftly and appropriately”. Separately, the Standard's Jim Armitage argues that banks were right to be wary of Carillion. “Why, if the banks were clearly fretting about their exposure to the business, did the government keep rewarding it with more taxpayer-funded contracts?” he says. James Moore in the Independent adds that the banks are not to blame for Carillion’s collapse. He says that instead of criticising RBS for a lack of support, the bank should be taken to task for being too generous with Carillion.
PFI projects cost UK billions
A report by the National Audit Office reveals taxpayers will pay nearly £200bn to contractors under private finance deals for at least 25 years. The research also found that recent PFI contracts for schools, hospitals and other facilities are between 2%-4% more expensive than other government borrowing, and involve significant additional fees.
Higher earners facing pensions shock
Tens of thousands of Britons could be hit with an unexpected tax bill following recent changes to the pensions system. Under rules introduced in the last tax year, people earning more than £150,000 are now restricted as to how much they can save into their pensions each year. But experts say the system is so confusing that many are likely to have inadvertently overpaid.
Majority of businesses want regulatory alignment after Brexit
Nicole Sykes, head of EU negotiations at the CBI, has said that a large number of companies want to maintain regulatory alignment with the EU, and see few benefits from divergence after Britain leaves the EU.
Thomas Cook teams up with Revolut
Thomas Cook has joined forces with fintech firm Revolut to launch a 'pay-per-day' travel insurance service which automatically provides users with medical cover by tracking their location through their mobile phones.
GKN turns down £7.4bn hostile takeover
Turnaround specialist Melrose Industries’ £7.4bn hostile takeover bid for car and plane part maker GKN has been rejected. Melrose stated that it could “deliver significantly greater benefits” to shareholders in GKN than the company could on its own, but GKN said that the offer “fundamentally undervalued” it.
MEDIA AND ENTERTAINMENT
Pearson shares fall despite higher profit expectations
Shares in Pearson fell yesterday despite signs that the education group’s turnaround plan is working and that profits will be at the top end of City expectations. Pearson said its profits for the year could reach £605m, the best that analysts were hoping for based on company guidance in October. However, underlying revenues dropped 2% due to a 4% decline in its North America business, which sent the company’s shares down 5.9% to 676p in early trading.
Odeon owner prepares for float
AMC Entertainment, the owner of Odeon, is close to naming banks as it prepares to float on the London Stock Exchange this summer. AMC is looking to offload shares in Odeon for around £500m while holding on to a controlling stake.
Big pay rises for junior accountants
Junior accountants will take home the biggest pay increases of any City roles during 2018, according to recruiter Robert Half. The firm’s analysis of the top 10 jobs for pay rises shows accountants with less than three years' experience will enjoy a 4.2% salary rise this year, beating finance directors and their more senior colleagues. Average salaries for accountants will rise by more than £10,000 to hit £65,750, the biggest increase in a list dominated by finance roles. CFOs will receive pay rises of 4%, along with senior financial controllers, the survey found.
RICS: Stamp duty cuts had little impact
Despite the November Budget seeing the abolition of stamp duty for first time buyers, almost nine in ten members of the RICS reported no increase in first-time buyer inquiries in December. Simon Rubinsohn, chief economist at RICS, said: "The initial feedback from the market doesn't suggest that the change in the stamp duty regime announced in the budget is going to have a material impact on activity.” The RICS poll of property firms saw 66% say the policy is unlikely to significantly increase first time buyer sales over the coming months. While only 12% said the duty cut would help boost activity, this rose to 28% in London.
Burberry UK sales lower, as tourist spend declines
Burberry has reported a 2% drop in third-quarter revenue, with like-for-like sales in its home market down by a “high single digit percentage”, as a strengthening pound persuaded high-spending tourists to purchase items outside of the UK. The fall was offset by growth in continental Europe and mainland China that helped it deliver total revenues of £719m, down 2% on the previous year but up 1% on an underlying basis.
Falling immigration to drive wage growth
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee, has said that record low unemployment may start to drive wage growth as companies find it harder to hire foreign workers amid Brexit talks. He said that easy access to foreign labour may have, until recently, limited “the extent to which pay growth responds to low UK unemployment”.
Bitcoin drops below $10,000
Bitcoin has traded below $10,000 for the first time since early December. The value of one bitcoin fell to $9,958 (£7,222) before making a slight recovery, according to a price index run by the news site Coindesk. However it later fell again, dipping just below $9,200. That represents a drop of more than 53% since it peaked close to $19,800 five weeks ago.