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Daily News Roundup: Thursday 20th September 2018

Posted: 20th September 2018


Regulators ask insurers to reveal Libor plans

Banks and insurers have until December 14 to provide a summary of the risks related to Libor for their businesses, as well as an action plan for moving away from using the Libor rate. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority has written to firms to seek "assurance that senior managers and boards understand the risks associated with this transition and are taking appropriate action now". Sonia, the Sterling Overnight Index Average, is the rate preferred by the FCA and the Bank of England.

Mass bank closures are unacceptable

Age Scotland has said that mass bank closures are “unacceptable” for older people and innovative solutions like shared banking should be introduced. Following a bank closure debate at Holyrood, Age Scotland called on banks to introduce measures to alleviate the loss of local branches. Brian Sloan, Age Scotland’s CEO, said: “Physical branches are important to older people. They prefer having a face-to-face conversation about their finances with a real person.” Meanwhile, the cross-party Scottish Affairs Committee has accused the UK Government of “burying its head in the sand” after refusing to use its majority stake in RBS to halt the branch closures programme.

Metro names new non-executive director

Metro Bank has appointed Catherine Brown as an independent non-executive director. Her previous appointments include: group strategy director at Lloyds Banking Group, executive director of human resources at the Bank of England and chief operating officer at Apax Partners.

Santander shifts liabilities to Madrid

In order to comply with British ring-fencing rules, Santander UK has transferred £22.9bn of assets and £20.7bn of liabilities to its Madrid-based parent group. The assets shifted represent about 7% of both its British assets and liabilities.

Savings rates failing to beat inflation

New figures from Moneyfacts have revealed that nearly every savings accounts is failing to pay enough interest to beat inflation. With inflation, as measured by the consumer price index, rising to 2.7% last month, Moneyfacts said that only four savings accounts offered high enough returns to protect families' nest eggs from being eroded by inflation. These were accounts from BLME, PCF Bank and Charter Savings Bank.


Private equity governance model has been successful

James Lewisohn objects to claims that the “mixing of private equity with banking could be a recipe for disaster” stating that rules demand a bank's consolidated leverage cannot increase as a result of the acquisition.


Banks launch first blockchain commodity trading platform

Global banks and trading firms are to launch the first blockchain-based platform for financing the trading of commodities from oil to wheat. The platform will be run by a venture called komgo SA, based in Geneva, Switzerland, and is due to go live later this year. The komgo founders include ABN Amro, BNP Paribas, Citi, Credit Agricole Group, Gunvor, ING, Koch Supply and Trading, Macquarie, Mercuria, MUFG Bank, Natixis, Rabobank, Shell, SGS and Societe Generale.

Danske chief quits over laundering scandal

Danske Bank CEO Thomas Borgen has announced he is to resign following one of the world’s largest ever money laundering scandals. The bank admitted €200bn of questionable funds flowed through its Estonian branch and that half of its 15,000 customers there were suspicious.

ING Ventures invests in Cobase

ING Ventures has invested £6.7m into open banking platform Cobase. Cobase, which is an arms-length venture of ING Bank, allows users with multiple bank accounts to view balances and transactions, make payments and use cash management services in one place.

NAB cuts executive pay and revamps bonuses

National Australia Bank is cutting its executive pay and has introduced a new framework to sharpen its “customer focus”.


Motor industry pleads against ‘no-deal’ Brexit

The Society of Motor Manufacturers and Traders (SMMT) has warned that the £5bn in tariffs that the UK motor industry would face in the event of a 'no deal' Brexit was “just the tip of the iceberg” and urged Theresa May to drop talk of crashing out of the EU. The trade body said import tariffs would push up the cost of cars made in the UK and sold in the EU by an average of £2,700. Mike Hawes, the head of the SMMT, said: “Without a deal, there can be no transition period and the complex issues around tariffs and trade, customs, regulation ... will remain unresolved.”

Investor revolt over bonuses at Northgate

Northgate has suffered a shareholder rebellion over remuneration. The van hire company saw 60% vote against proposed changes to executive bonuses.


Royal London opposes re-election of Ryanair chair

Royal London Asset Management has called on investors to vote against the re-election of David Bonderman as Ryanair’s chairman at its AGM today. Royal London has also taken issue with the airline's proposal to remove voting rights for British shareholders post-Brexit.


FCA closes investigation into life assurers with no action

The Financial Conduct Authority has now closed all of its investigations into life assurance providers Abbey Life, Countrywide, Old Mutual and Police Mutual, Prudential and Scottish Widows, without action.

NEX Group fined

NEX Group has been fined $50m (£38m) to settle allegations it colluded with banks to manipulate interest-rate markets.


Alliance Pharma reorganisation taking its toll

Alliance Pharma has revealed that underlying profit before tax gained just 2% in the six months to June 30, to £12.1m, while underlying earnings rose 1% to £13.8m. Revenue grew 10% to £45.5m and gross profit rose 12% to £32.4m. Alliance is suffering from high costs and is also reorganising its Chinese operations to focus on its Nutraceutical, Kelo-cote and Nizoral businesses.


Manufacturers targeted with “sweetheart” deals to quit UK

The Telegraph claims that major British manufacturers are being offered so-called sweetheart deals to relocate plants abroad as countries gamble that the UK will exit the EU without a deal. Overtures to major manufacturers are understood to have been particularly heavy from cities and regional bodies in France, Germany, Spain, Belgium and some eastern European locations. The EEF, which represents the manufacturing industry in the UK, said it has become aware of approaches being made on a “daily” basis. Stephen Phipson, CEO of the EEF, commented: “Over the last few months concerted efforts are being made by major European cities and other governments to attract the jewels of British manufacturing away from the UK. This has taken a step up in the past few weeks.”

Babcock engineering revenue growth

Babcock's order book stands at around £18bn, according to the engineering services firm's trading update for the six months to the end of September, with £14bn in the pipeline. Around 87% of revenue is now in place for 2018/19, Babcock said, while 57% of revenue for 2019/20 is in place.


Tesco unveils first Jack’s discount stores

Tesco has formally opened the first two branches of its new cut price spin-out chain Jack’s, in Chatteris in Cambridgeshire and Immingham in Lincolnshire, named after Tesco-founder Jack Cohen. Tesco chief executive Dave Lewis said: “It’s a no fuss approach with a simplified range of products, no fancy fixtures or fittings, and no added extras, just good quality at low prices.” Branches of Jack's will stock only 2,600 product lines compared to 35,000 in an average Tesco - and 1,800 of them will be the new chain's own-label food and drink.


Inflation hits six-month high

Increases in the prices of petrol and package holidays have taken inflation to its fastest rise in six months in the year to August. The consumer price index (CPI) tracking inflation rose by 2.7% compared to last year, according to the Office for National Statistics, its highest rate since February.

Brexit uncertainty is the talk of boardrooms

Andy Haldane, the Bank of England’s chief economist, has said that businesses are increasingly concerned about uncertainty caused by Brexit, with the topic dominating conservations in boardrooms. Mr Haldane said that an analysis of companies’ use of words in relation to mentions of uncertainty showed that the word “Brexit” cropped up ten times more often than the word “customer” and almost seven times more often than the word “staff” in proximity to the word “uncertainty”.


Bank of England warns of danger of echo chambers

The Bank of England has warned that the economy could be destabilised by rumours spread on social media where echo chambers amplify “groupthink” and lead to negative collective decisions. In a speech in Estonia, Andy Haldane, the Bank’s chief economist said increased digital connectivity had “also increased the chances of self-reinforcing and self-referential waves of collective irrationality taking hold.”

Global standard for cryptocurrency anti-money laundering to be agreed

Marshall Billingslea, president of the Financial Action Task Force, has indicated that the body is close to establishing a governing set of standards to apply to virtual currencies.

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