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Daily News Roundup: Thursday 25th April 2019

Posted: 25th April 2019

BANKING

Bank cards operated by fingerprints

NatWest has launched a three-month trial of a biometric bank card containing an image of the owner’s fingerprint. Customers match their fingerprint to the image before a purchase is authorised. NatWest says the card is more fraud-proof and convenient than traditional "chip and PIN" plastic. Georgina Bulkeley of NatWest commented: “You don't need to remember your PIN and the print gives you safety and security.” Jeni Mundy, UK and Ireland managing director of Visa, NatWest's partner in the venture, added: “Biometrics are the next step. It is another layer of security.”

Challenger banks becoming more popular

New figures from Pay UK show that the popularity of challenger banks is growing, with Monzo, Starling and Triodos all gaining customers in the past three months. Pay UK found that 265,195 people switched bank accounts in the period. Nationwide made the most gains, adding more than 36,000 customers. TSB suffered the most losses with 17,000.

Shareholders await uplift from Staley

Patrick Hosking in the Times analyses the performance of Barclays under the control of CEO Jes Staley. Research from AJ Bell shows that total returns in local currency terms are down by 18.5% since Mr Staley took over in December 2015. However, there are City market watchers who are supportive of the American. Richard Buxton, head of UK equities at Merian Global Investors, argues that Mr Staley has largely done a good job. “Strip out [one-off costs like PPI and misconduct fines] and last year’s result was one of the best ever produced by the bank,” he comments.

Metro Bank’s CEO sees pay drop

Craig Donaldson, chief executive of Metro Bank, saw his pay almost halve last year, from £1.5m in 2017 to £800,000, after waiving his bonus following the loans blunder whereby a raft of commercial loans had been incorrectly classified. The bank’s annual report also revealed that part of chief financial officer David Arden’s bonus has been frozen pending probes by the Financial Conduct Authority and the Prudential Regulation Authority.

Reduced hours at TSB branches

TSB has revealed most of its Scottish branches will only open for two or three days a week from July. The changes will apply to 71 sites in Scotland and 22 in England. In addition, four Scottish branches are being closed - in Edinburgh, at Haymarket and Fountainbridge, Aberdeen's Holburn Street branch, and another in Keith, Moray. TSB said there would be no job losses as a result of the shake-up.

INTERNATIONAL

Credit Suisse boosted by ultra-rich

Credit Suisse has reported another rise in net profit for the first quarter of 2019. The bank reported a net income of SFr749m ($733.93m) for the first quarter of this year, an 8% increase year-on-year. The rise was driven by the Swiss bank’s wealth arm which attracted SFr9.6bn (£7.3bn) of new money in the first quarter, increasing the total under management to a record SFr786bn.

HSBC boss excited about Saudi Arabia

John Flint, group chief executive of HSBC Holdings, has said that the “future is bright” for Saudi Arabia, only a few months after withdrawing from a conference in the kingdom following the death of journalist Jamal Khashoggi. Mr Flint told an event in Riyadh that the banking group had "a lot of confidence" in Saudi Arabia.

DoJ staff push for Goldman guilty plea in 1MDB case

The US Department of Justice has recommended that a settlement with Goldman Sachs over the 1MDB corruption scandal should include a guilty plea at the parent company level.

‘Sticky’ savings banks keep big German rivals in check

The FT’s Olaf Storbeck contends that Germany’s local municipality-owned Sparkassen would remain the dominant force in German lending even if Commerzbank and Deutsche Bank merged.

European banks should stop waiting for deliverance

Writing in the FT, Martin Arnold argues that excuses for European banks which are lagging their US rivals are beginning to wear thin.

Softbank investing €900m in Wirecard

Japanese investment giant Softbank is to invest €900m (£781m) in German fintech firm Wirecard. The investment comes as part of a wider digital payments push, as Wirecard works to expand in Japan and South Korea.

AUTOMOTIVE

Nissan warns on profits

Nissan has issued its second profit warning in a year, partly blaming fallout from the corporate scandal following the arrest of Carlos Ghosn for financial misconduct for lower sales. The Japanese car group cut its forecast for annual operating profit by 295 to 318bn yen (£2.2bn), with net profit 22% lower at 319bn yen.

AVIATION

Boeing uncertain on how 737 crashes will affect profits

Boeing has said it still does not know how the crisis over the safety of its 737 Max 8 jets will affect its profits. In its latest set of results, Boeing said that uncertainty over when the plane would be allowed to fly again meant it could not forecast profits for this year. A fall in 737 deliveries has already led to a $1bn drop in revenues.

FINANCIAL SERVICES

Briggs moves on at Aviva

Andy Briggs, the head of Aviva’s UK insurance business, is leaving the group after missing out on the top job to the group’s new CEO Maurice Tulloch. Despite leaving that role immediately, he will remain with the business until Oct 23 to support an “orderly transition”. Angela Darlington, currently group chief risk officer for Aviva, will become interim CEO of the UK insurance business, subject to regulatory approval.

European mutual funds hit 11th month of outflows

Data from Lipper shows that net outflows from European mutual funds reached €18.8bn (£16.26bn) in March, marking the 11th consecutive month of losses. Outflows have reached €58.3bn in the year-to-date, due to risks including Brexit and trade wars. Lipper said that bond funds, which were the best-selling individual asset type in March, saw inflows of €16.4bn in the month.

HEALTHCARE

Biogen promises to plug pipeline gap after Alzheimer’s failure

Pharmaceutical firm Biogen has said it is on the lookout for acquisitions to bolster its pipeline of drugs. CEO Michel Vounatsos says the firm has the cash for share buybacks and M&A.

LEISURE AND HOSPITALITY

Café bar operator raises £83m

Cafe bar operator Loungers has raised £83m ahead of an IPO next week. The group is set to valued at £185m when it floats, falling below City expectations of a £250m market capitalisation.

Dutch brewer Heineken sparkles with first-quarter growth

Heineken has reported a 15% rise in first-quarter net income of €299m, compared with the €260m a year earlier.

MEDIA AND ENTERTAINMENT

BT plans to offload Irish unit

BT is planning to withdraw from Ireland with a £400m auction of its business serving corporate clients in the country. The telecoms group has invited bids for BT Ireland as part of a restructuring of its Global Services international arm. Sources suggested that BT Ireland's underlying earnings of about €50m could attract bids in the €350m to €500m range from pension funds and private equity players looking for stable returns.

Facebook sets aside $3bn for privacy probe

Facebook has said it will set aside $3bn (£2.3bn) to cover the potential costs of an investigation by US authorities into its privacy practices. Facebook said that while it has prepared for a heavy fine from the investigation by the US Federal Trade Commission, the final cost could be $5bn.

REAL ESTATE

Buy-to-let shift hits stamp duty but boosts CGT

The Government’s tightening up on buy-to-let investing has led stamp duty receipts to fall by £1bn, according to HMRC, the largest drop since the financial crisis. Tax take from stamp duty fell to £11.9bn in 2018/19, from £12.9bn the previous year, following the three percentage point surcharge on second homes introduced in 2016 and the exemption for most first-time buyers. Meanwhile, a squeeze on returns has seen a number of buy-to-let owners selling up, triggering a 18.6% rise in capital gains tax payments, which hit a record £9.2bn in the financial year 2018/19.

RETAIL

Sainsbury’s and Asda set to concede defeat over £7bn tie-up

The FT reports that Sainsbury’s and Asda are “unlikely” to appeal against the verdict of the Competition and Markets Authority on their proposed merger, which analysts expect to be rejected.

ECONOMY

Government borrowing falls to 17-year low

UK public borrowing fell to £24.7bn between April 2018 and March 2019, according to the Office for National Statistics (ONS), £17.2bn less than the previous financial year and its lowest level for 17 years. Public sector net debt at the end of March grew by £22.1bn year on year to £1.8tn excluding public sector banks. Central government receipts rose 5% year on year, but corporation tax dropped 2.6% while income and capital gains tax grew 6.4%.

UK growth likely to rise above 1.5% next year

The National Institute for Social & Economic Research (NIESR) has said that Britain’s growth rate will bounce back above 1.5% next year as ministers exceed existing public spending budgets to cope with an ageing population. NIESR said its predictions were based on a “soft” Brexit that maintained a high level of access for UK and EU businesses in each other’s markets

OTHER

Bank of England launches search to replace Carney

The search for the next governor of the Bank of England has been launched to replace Mark Carney when he stands down next January. The Chancellor praised Mr Carney's “steady hand” in the role and said it was “vital” to find the right successor to ensure the ongoing strength of the economy. Andrew Bailey, the current boss of the FCA, is seen as the leading candidate for the post. The Standard suggests he is likely to be up against internal rivals including deputy Governor Ben Broadbent and chief economist Andy Haldane, as well potentially as international candidates such as former Indian central bank chief Raghuram Rajan.

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