Bank of England to test banks on climate threat
The Bank of England (BoE) is to test how banks and insurers can cope in the face of the economic shocks and market turmoil climate change could deliver. The tests will not carry a pass or fail mark, while individual firms will not be named in the results. The stress-testing, which will be the first of its kind to be carried out by a central bank, will measure firms’ resilience to three different climate change scenarios over a 30-year projection. The BoE will call on firms to identify the risks they face and the actions they expect to take in response, with the Bank to reveal the systemic threats facing the UK’s financial industry in H2 2021. The tests will examine “climate-driven financial risks” but not test or set capital requirements against the scenarios. The tests will cover the same UK banks subject to financial stress testing, including HSBC, Barclays, Lloyds, Royal Bank of Scotland, Santander UK, Nationwide and Standard Chartered. By 2021, CYBG - rebranded as Virgin Money - will also be included. About 39 insurers are expected be tested on their climate resilience. BoE governor Mark Carney said the tests represent a “pioneering exercise”.
New overdraft rules come into effect
New rules from the Financial Conduct Authority (FCA) which determine how overdrafts are displayed have been rolled out. Banks have been instructed to stop including overdrafts in funds marked as "available" to customers. Highlighting the thinking behind the change, FCA director Christopher Woolard told BBC Radio 4's Today programme: “Unfortunately too many people fall into the trap of believing that's their money rather than a debt.” The move, designed to stop people confusing their overdraft with the actual account balance, is part of an FCA drive that seeks to "fix a dysfunctional overdraft market".
Banks pledge extra funds for free ATMs
Banks have agreed to provide an additional £4m to fund new free-to-use cash machines across the UK. The project, which already had £1m in the pot, was launched in October, and already more than 2,700 requests for a cash dispenser have been made by communities, according to cash machine network Link. Communities can apply for a cash machine in their area through their MP or local council, or request help directly from Link for support for free access to cash.
Co-op owners sounding out buyers
The hedge fund owners of the Co-op Bank are reportedly seeking a buyer and have started holding talks with possible bidders, with several large banks said to be interested. Although a formal sale process has not yet begun, Goldman Sachs is reported to be helping to sound out buyers.
US sees record unicorn births
Analysis from market data firm CB Insights shows that US venture capital firms launched a record number of unicorns in 2019, with 66 venture capital-backed unicorns created so far. This exceeds the 58 created in 2018. Elsewhere, figures from Crunchbase show that China saw 21 unicorns created this year, a dip on 2018’s 58.
Blackstone acquires Hansteen for £500m
Blackstone has acquired warehouse owner Hansteen for £500m. The private equity firm wants Hansteen's warehouses for its own new logistics company Mileway, which is seeking to cash in on the online shopping and food delivery boom. There are hopes that the deal will be the start of a surge of foreign investment in British property after the Conservative election victory.
Sweden’s SEB faces sanctions threat in money-laundering probe
The Swedish financial supervisory authority, the country’s financial regulator, has opened a sanctions probe into SEB over a money-laundering scandal.
JPMorgan wins approval for majority-owned Chinese securities business
JPMorgan Chase has become the first US bank to gain approval for a majority-owned securities joint venture in China and will launch a majority-owned securities business in the country.
Dubai Islamic Bank acquires Noor
Dubai Islamic Bank (DIB) shareholders have approved the acquisition of Noor Bank. The move, which has been cleared by the Central Bank of the UAE, gives DIB total assets exceeding £57.2bn.
La Banque Postale eyes HSBC France’s retail activities
La Banque Postale, the banking arm of French mail operator La Poste, is exploring a bid for HSBC France's retail activities. It is working with Barclays ahead of an auction process set to start in 2020.
Fiat and Peugeot announce merger
Fiat Chrysler and Peugeot owner PSA have announced a £30bn merger that will create the world's fourth-largest carmaker. Fiat and Peugeot will have combined sales of €170bn and profit of €11bn. The merger will create annual savings of €3.7bn, with 80% of this achieved within four years at a one-off cost of €2.8bn. Peugeot boss Carlos Tavares will become chief executive, while John Elkann of Fiat will be the chairman.
Jaguar Land Rover saves Bowler from administration
Jaguar Land Rover has bought niche off-road car manufacturer Bowler out of administration, saving the jobs of Bowler’s 26 permanent staff. Founded in 1985, Bowler builds small numbers of hand-built vehicles for rallies and off-road racing.
Hedge funds ‘eavesdrop’ on BoE briefings
An investigation by the Times has found that hedge funds have been "eavesdropping" on the Bank of England's press conferences before they are officially broadcast. The Bank has discovered that a back-up feed of its press conferences was being sent by a third-party supplier to traders "who hope to profit by acting on the governor's comments before the rest of the world." The Bank said that it has now disabled the third-party supplier’s access. A spokesman added: “This wholly unacceptable use of the audio feed was without the Bank’s knowledge or consent and is being investigated further.”
Nutmeg CEO to quit
Martin Stead, chief executive of digital wealth manager Nutmeg, is stepping down early next year. He will be replaced by chief financial and operating officer Neil Alexander.
Arrow Global celebrates fund raise
Debt recovery outfit Arrow Global has raised €838m (£712m) for its first fund. The firm's eight-year closed end fund is targeting a total €2bn assets under management by the end of 2020.
Louis Dreyfus names new finance chief in latest management change
Agricultural commodity trader Louis Dreyfus Company has announced that former Credit Suisse investment banker Patrick Treuer will become finance director, while retaining his role as chief strategy officer.
NMC Health hits back at Muddy Waters
NMC Health has hit back at Muddy Waters after the short seller published a report raising “serious doubts” about the healthcare operator’s finances. NMC Health issued a statement saying Muddy Waters’ claims “appear principally unfounded,” saying that it will investigate “assertions, insinuations and accusations” in the report, adding that they appear “baseless and misleading.” The hedge fund’s research note suggested NMC’s reported cash balances “show two red flags that indicate they could be materially overstated,” while its margins appear “too good to be true” compared to peers.
LEISURE AND HOSPITALITY
Bet365 boss takes record pay
Bet365 CEO Denise Coates took home £323m in the year to the end of March – the highest ever figure collected by a UK company director. This includes a basic salary of almost £277m, £57m more than the year before. She was also awarded a £45m dividend for her majority stake in the bookmaker.
Fintech start-up helps restaurants go paperless
London restaurants including Japan Centre, Sakagura and Boparan Restaurant Group, which owns Giraffe, Ed’s Easy Diner and Slim Chickens, have agreed a tie-up with digital receipts start-up Flux. It means visitors who bank with Monzo or Starling, as well as select Barclays users, will be able to receive digital itemised receipts for their purchases inside their mobile banking app.
MEDIA AND ENTERTAINMENT
CMA blasts big tech's digital marketing dominance
The UK competition watchdog has warned that the tech giants are unfairly dominating Britain’s digital advertising market. The Competition and Markets Authority (CMA) said Google and Facebook are “now so large and have such extensive access to data that potential rivals can no longer compete on equal terms,” which could “lead to reduced innovation and choice in the future and to consumers giving up more data than they feel comfortable with.” Google has an over 90% share of the UK’s £6bn search advertising market, the CMA found, while Facebook is responsible for almost half of the £5bn display advertising market.
Pearson sells Penguin Random House stake
Education publisher Pearson has agreed to sell its final 25% stake in Penguin Random House to Bertelsmann to generate £530m. It will return £350m to shareholders via a share buyback once the disposal clears. Pearson’s chief executive John Fallon is to step down in 2020.
Staffline accounts issue claims CFO scalp
Shares in Staffline fell 25% on Wednesday morning after the recruiter restated last year’s earnings and confirmed the resignation of chief financial officer Mike Watts, who has been replaced by temporary CFO Daniel Quint. The board said profit may have been overstated by £4m in 2018 following a further review of accounts and also cut full-year adjusted operating profit for 2019 to £10m-£12m, down from £17m.
House price growth slows
House price growth has slowed to a seven-year low. Values were up 0.7% in the year to October, down from the 1.3% growth recorded in September and marking the slowest rate since September 2012. On a monthly basis, values decreased 0.7% between September and October. The figures from the Office for National Statistics show that the average UK house price was £233,000 in October, a £2,000 increase on the typical price a year ago.
Fintech boom boosts London office rentals
Central London office take-up ballooned 31% to 900,000 sq ft between October and November, up 5% year on year. The booming fintech sector led the increase and is responsible for 31% of take-up in November, with the largest deal being Monzo's move into Broadwalk House in Broadgate.
WeWork secures Goldman Sachs credit
Goldman Sachs, itself an investor in WeWork, has authored a $1.75bn (£1.34bn) credit line commitment with the firm.
Landlord tries to scupper Debenhams rescue plan
A Debenhams landlord is threatening to derail the department store chain’s rescue plan, attempting to reverse a previous legal ruling. The retailer was given the green light by a judge to go ahead with shutting stores after Combined Property Control Group, which owns six of the properties that Debenhams leases, challenged its CVA. The company complained it was being treated unfairly as a creditor. It has now appealed the decision, with a hearing expected at the end of January.
Inflation holds steady in November
UK inflation held at 1.5% in November, with the Consumer Prices Index at the same level as that recorded in October. Despite falling short of a Bank of England’s target of 2%, the figure came in higher than the forecasted 1.4%. Mike Hardie, head of inflation at the Office for National Statistics, said: “The headline rate of inflation remained steady with prices rising across a variety of goods and services.”
European IPO proceeds dip
Research shows that proceeds from European IPOs fell 36% this year, with Brexit uncertainty and issues regarding US-China trade relations among factors driving the decline. Analysis shows that European IPOs raised €22.1bn in 2019, down on the €34.5bn generated last year. There were just 105 new market listings this year, compared to 195 in the previous twelve months.