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Daily News Roundup: Thursday 22nd August 2019

Posted: 22nd August 2019

BANKING

OneSavings profit rises

OneSavings Bank’s pre-tax profit rose 6% on an underlying basis to £96.9m while its loan book jumped 10% to £9.9bn. The lender said customers refinancing their loans with cheaper deals meant its net interest margin dropped to 2.78% in H1 2019, from 3.01% in H1 2018. The challenger bank pointed to a mortgage price war and continuing Brexit uncertainty, saying it will tighten its lending criteria due to the "macroeconomic outlook". OneSavings Bank is preparing to integrate Charter Court into its business after a £1.6bn merger. Charter Court also reported interim results yesterday, announcing a fall in pre-tax profits to £82.6m from £93.1m in the same period a year earlier, with its loan book up to £7bn from £5.7bn in 2018.

Barclays: No-deal ‘increasingly inevitable’

A research note from Barclays analysts has warned that a no-deal Brexit followed by recession, a plummeting pound and rising inflation may be on the horizon, saying the UK leaving the EU without a deal looks “increasingly inevitable”. The document from Barclays economists reportedly says of the Prime Minister’s strategy: “Economic risks are being downplayed while the benefits of mitigating contingency spending and easing are being emphasised.”

PRIVATE EQUITY

Advisers set for £210m fee windfall over Cobham deal

US private equity company Advent International’s proposed £4bn takeover of defence firm Cobham would see banks, lawyers and other advisers pocket fees of up to £210m. Cobham expects to spend £29.1m on fees, including £24m for financial advisers such as JP Morgan and Bank of America Merrill Lynch, while Advent will spend as much as £189.6m, with up to £135.2m going to firms including Blackstone and Goldman Sachs for arranging the finance.

INTERNATIONAL

Deutsche Bank tightens hiring

Deutsche Bank is tightening its procedures for new hires, with a memo seen by Reuters saying that any new hires would need approval from the bank’s chief executive Christian Sewing, his deputy Karl von Rohr and finance boss James von Moltke. The document says hiring will be “restricted to positions that are viewed as critical to the bank’s success and future growth.” The move comes as the bank conducts a £6.7bn restructuring that saw it announce plans to cut 18,000 jobs in July.

Citigroup and BNP Paribas named in case against Huawei boss

Citigroup and BNP Paribas have been named in documents published by a Canadian court as part of extradition proceedings against Huawei’s CFO Meng Wanzhou, who is currently under house arrest in the country having been accused of bank fraud and breaching US sanctions against Iran.

Goldman seeks to take control of joint venture

Goldman Sachs is looking to take majority control of its Chinese joint venture. It has an application with the China Securities Regulatory Commission to take its stake in Goldman Sachs Gao Hua Securities to 51% - the maximum permitted - from its current 33% holding.

Royal Bank of Canada sees rise in profit

Royal Bank of Canada saw an increase in third-quarter profit as its personal and commercial banking earnings rose. The bank reported net income of C$3.26bn in the three months ended July 31, up from C$3.11bn a year earlier. Analysts had forecast income of C$3.32bn. Net income in its personal and commercial banking business rose 10% and wealth management saw profit growth of 11%, although its capital markets business fell 6%.

Berlin Hyp sells €1bn mortgage bond at record negative yield

German real estate lender Berlin Hyp has sold €1bn in mortgage-backed bonds with a yield of minus 0.59% - the most deeply-negative yield on record.

Regulator prepares Danske report

Denmark's financial watchdog, the Financial Supervisory Authority, has prepared a draft report to send to Danish police over Danske Bank's overcharging of customers.

AVIATION

Ryanair blocks Irish strike but fails in London

The High Court in Dublin has granted Ryanair an injunction to halt a 48-hour strike planned by its Irish-based pilots. The airline’s lawyers told the court that the Irish Air Line Pilots’ Association, which represents 180 pilots, had not let talks reach a conclusion before announcing the strike, which would have begun today. However just hours after the decision, Ryanair lost a High Court bid in London to block strike action by its UK pilots, after Mrs Justice Lambert rejected the airline’s "various technical and legal arguments", and agreed that the British Airline Pilots' Association’s industrial action ballot and procedures were lawful.

CONSTRUCTION

Costains roof fix hits profits hard

Builder Costain was hit for £9.7m in repair works on a legacy project, taking first-half profits down by more than half. Pre-tax profits sank from £19.9m to £8.4m for the six months to June 30, over renovations at the huge national synchrotron laboratory in Oxfordshire.

FINANCIAL SERVICES

FCA suspends stockbroker over inactivity

German stockbroker Berenberg is trying to hire a senior banker after its licence to act as a sponsor was temporarily revoked by the Financial Conduct Authority due to a lack of activity. The firm, which was first granted the licence to be a sponsor around 18 months ago, has not completed a transaction. Its licence is expected to be reinstated once it hires an employee with recent sponsor experience, with this required as sponsors must assure the regulator that a market-listed firm has met its obligations.

LEISURE AND HOSPITALITY

easyHotel succumbs to takeover, Hostelworld takes a hit

ICAMAP and Ivanhoe Cambridge, as Citrus UK Bidco, are to take over easyHotel, much to the displeasure of founder Stelios Haji-Iannou. Separately, online bookings group Hostelworld shares tanked on Wednesday after it revealed that full-year underlying profits are expected to be below the €21.4m (£19.6m) recorded last year. It blamed low consumer confidence and increased competition for sales falling 9% to €38.8m in the six months to June.

REAL ESTATE

London accounts for 40% of stamp duty

Property agent Benham and Reeves has looked at the amount of stamp duty being paid in different locations across the UK, with data from 2018 showing that residential property transactions in London accounted for 11.3% of all transactions, with stamp duty receipts across the capital hitting £3,635m – 39.2% of all receipts. The South East accounted for 16.1% of transactions and 21.5% of all receipts.

Yopa announces cash boost and new chairman

Online estate agency Yopa has revealed a new funding round worth £16m, with a cash injection from existing investors. Yopa also named Grenville Turner, a former chief executive of Countrywide and director at Rightmove, as its chairman.

RETAIL

Supermarket considers rationing small business buyers

An unnamed supermarket executive has told the BBC that it is considering introducing rationing. The move will prevent firms that have not made their own no-deal Brexit plan from using food retailers as wholesalers. The executive said: “We would need to limit the amount restaurants or convenience stores, for example, that are short of stock could buy.” He added that he did not envisage that the limits would affect normal retail consumers. Former Sainsbury's chief executive Justin King agreed that some bigger retailers would effectively become wholesalers as it has happened before. He explained: “Suppliers are the ones who support and pay for promotions and they have access to point of sale data to make sure they are not being treated as wholesalers.”

SPORT

Spurs look to ease stadium debt

Tottenham Hotspur has reportedly reached a deal to refinance a significant amount of its bank debt. The club, which sought to finance the development and construction of its recently-opened new stadium, took out a £637m loan from Bank of America, Goldman Sachs and HSBC which was initially due to be repaid by April 2022. It is now set to refinance around £400m of that sum into bonds as part of a private placement scheme arranged by Bank of America.

ECONOMY

Government finances weaker than expected in July

UK public finances broadly underwhelmed in July, with Government receipts down 0.5% on last year - to £67.9bn. Increased outlay on wages and increased spending on goods and services saw July’s surplus total £1.3bn, falling short of last year’s £3.6bn and an analyst estimate of £2.7bn. Borrowing so far this year has grown to £16bn, an increase of 60% on last year. Tax payments reached £9.4bn last month, with the corporation tax take dropping by £100m while VAT increased only marginally.

Scottish figures point to ‘union dividend’

Figures from the Government Expenditure and Revenue Scotland report suggests Scots have benefited from a ‘union dividend,’ with public spending north of the Border £1,661 higher per person than across the UK as a whole in 2018/19. The report shows that the Scottish deficit was £12.6bn in 2018/19, compared with £23.5bn for the UK as a whole.

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