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Daily News Roundup: Thursday, 20th February 2020

Posted: 20th February 2020


Metro Bank hands interim boss the top job

Metro Bank has promoted interim chief executive Dan Frumkin to permanent chief. He took the interim role when former boss Craig Donaldson stepped down on the back of an accounting scandal at the lender. Metro Bank’s chairman Sir Michael Snyder said: “When we began the search for a permanent chief executive, we were looking for someone who believed in prioritising excellent customer service with a track record in retail banking and business transformation, and the necessary experience to deliver sustainable growth … We have conducted a comprehensive evaluation from a strong field of candidates and Dan stood out.” Mr Frumkin, who joined Metro as chief transformation officer in September 2019, will outline his new strategy next week, detailing his vision for the lender alongside the bank’s full-year results.

Online bank warning from FCA

The Financial Conduct Authority (FCA) has warned that the new online banks increasingly favoured by consumers offer less protection than traditional lenders, with some online challenger firms not covered by the Financial Services Compensation Scheme (FSCS). Revolut, with 10m customers, is among those with a different type of banking licence which does not include FSCS protection. A spokesman for the firm commented: "All of our customer funds are safeguarded and held in separate customer trust accounts with banks in line with our regulatory obligations. In the unlikely event of a default, customers' funds would be protected and paid out in priority to everyone else."

Barclays installs "Big Brother" software at London HQ

City AM reports that Barclays is trialling technology to monitor employees' computers in its London headquarters. The software reportedly alerts staff if they are not deemed to have been "in the zone" enough and urges them to "avoid breaks" if they do not hit targets. Barclays told the paper the technology is "widely used across the industry" and colleague wellbeing is of "paramount importance".

Lloyds’ annual results due with bonuses expected to fall

John Cronin, analyst at Goodbody, has predicted that bonuses at Lloyds Banking Group could be reduced by some 10%, following a large fine for PPI mis-selling last year. The lender is expected to post pre-tax profits today of £4.5bn for the year, representing a 24% decrease on a year earlier after it put aside nearly £22bn to address the scandal.

NatWest gives flood victims mortgage holiday

NatWest has given customers hit by floods a three-month holiday from paying off their mortgages, saying they can defer their repayments, apply for extra credit and get easier access to cash. Affected customers, including those at Royal Bank of Scotland, will be able to close fixed savings accounts to get access to cash without the normal early withdrawal charge.

New £20 notes enter circulation

With 2bn new £20 notes printed, the Bank of England expects 50% of cash machines to have switched over within a fortnight, while the first of the new polymer notes go into circulation in England and Wales today. Bank of Scotland and Clydesdale will launch their polymer £20 notes next week, with RBS following on 5 March, in Scotland, while banks in Northern Ireland will make the change later this year. Natalie Ceeney, chair of the independent Access to Cash review and a non-executive director and former chief executive of the Financial Ombudsman Service, writes in the Times that: “We may be heading to a digital future, but until we've got the rails to run it on - and products that meet a wider set of needs - we need our cash infrastructure to remain viable.”


Softbank $100m investment in AI firm could be made next week

Reports suggest that Softbank's second Vision Fund could finalise a $100m (£77m) deal with UK startup Behavox, which uses artificial intelligence (AI) to help financial companies monitor employee behaviour, as soon as next week. The technology is intended to identify cases of rogue trading, bribery, and misuse of expenses.


The humbling of Goldman Sachs

Jonathan Guthrie, writing in the FT, discusses reaction to Goldman Sachs’ first ever investor day, noting that it “signalled how badly the bank's fortunes have waned.”

Chinese government bonds rally on haven buying

China's 10-year Treasury yields have fallen over 25 basis points to 2.87% since January 1, with investors betting on Beijing seeking to soften the economic impact of the coronavirus.


Renault rating cut by Moody's

Credit agency Moody’s cut its rating for Renault’s debt to junk after last week’s poor full-year results, downgrading the French automaker from Baa3 to Ba1.


Airbus in job cuts announcement

Over 350 jobs at Airbus in Britain are to be cut as the company announces 2,360 redundancies throughout Europe. Problems with the firm’s A400M military transport aircraft, as well as fines related to claims of bribery and corruption have weighed heavily on the company.

Qatar Airways raises stake in IAG

Qatar Airways has increased its holding in British Airways owner IAG to 25.1%, having snapped up an additional £465m stake.


Shares up as HSBC tips housebuilding sector

Analysts have upgraded profit and dividend forecasts as HSBC said the 80-seat Conservative majority in the election “brought the prospect of a final settlement of Brexit closer and unleashed pent-up demand in housing.” Crest rose 1.6%, or 5.9p, to 519p while Persimmon was up 1.7%, or 55p, to 3298p on the announcement; meanwhile HSBC moved Berkeley Group up from 'hold' to 'buy', as the firm’s shares climbed 2.1%, or 112p, to 5474p, and Taylor Wimpey’s 1.9%, or 4.5p, to 236.2p.


Victims of LCF scandal seek compensation

Lawyers acting for bondholder victims of the London Capital & Finance collapse have launched a legal action against the investors' compensation scheme. With the Financial Services Compensation Scheme saying it will pay victims who transferred their savings into LCF ISA bonds from other providers’ stocks and shares ISAs – excluding those who transferred from cash ISAs or simply bought the bonds direct - Shearman & Sterling is taking the ruling to a judicial review, claiming it was "illogical".

FCA warned on online investment ad fraud

Mark Taber, a campaigner against scam financial advertising online, has advised the Financial Conduct Authority (FCA) and Google of 126 separate promotions in just six weeks, telling them that as much as 90% of advertising on Google for investment ISAs and bonds could be fraudulent. This comes as the FCA reveals that savers stand to lose £20bn from bad pension advice, if regulation is not tightened. It stated: "Pension scams continue to be both a cause of significant consumer harm to victims and a threat to wider consumer confidence and market integrity.” Mr Taber, meanwhile, advised: "Don't look for investments on Google."

Odey hedge fund opposes Anglo bid for Sirius

Odey Asset Management has opposed Anglo American’s £405m takeover of Sirius Minerals, claiming that the 5.5p-a-share offer “does not represent fair value for shareholders in Sirius” after acquiring a 1.3% economic interest in that firm this week. Sirius has claimed there is a “high probability” that it would be placed into administration should the takeover fail to go ahead.


Big Tech will have to share data under EU proposals

The European Commission has proposed that major technology firms share data with smaller rivals, as it seeks to address monopolies by the like of Google and Amazon in the sector.


PA Consulting posts record fee income

PA Consulting has reported record fee income of £500m for last year, representing a 10% increase on 2018’s figure. Alan Middleton, the firm’s chief executive, remarked: “We’re perfectly positioned to deliver on our ambitious growth plans.”


All regions report rise in house prices

House prices have increased in every region in the UK for the first time in two years, as the general election result and a more settled economic outlook calmed buyers’ nerves. The value of the average home jumped by 2.2% – or £5,013 – to a record £234,734 in the year to the end of December, up from 1.7% in the previous month, Land Registry figures revealed.


Inflation rises to six-month high

UK inflation hit a six-month high of 1.8% in January, according to the Office of National Statistics, up from 1.3% in December but below the Bank of England’s 2% target. The primary drivers of the increase were rises in the housing and household services, and transport, which rose 0.2% on rising fuel pump prices. The retail and hospitality sectors also recorded rises.

Global economy under threat from coronavirus

Oxford Economics has warned that the coronavirus outbreak could see $1.1trn wiped off the global economy, with global GDP predicted to decrease by 1.3% if the spread worsens.


BoE’s Haldane supports central power base in government

Bank of England chief economist and chairman of the Industrial Strategy Council Andy Haldane has said that the creation of a central power base in government would have positive effects on policymaking. He said moves to fix the country’s productivity problems by investing in infrastructure, skills, innovation and regional development “are even more front and centre in the new government than they were under its predecessors.”

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