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Daily News Roundup: Thursday, 26th July 2018

Posted: 26th July 2018

BANKING

FCA mulling basic savings rate

The Financial Conduct Authority is considering imposing a basic savings rate requirement (BSR) on banks, for customers with accounts open for a set period of time, over concerns that loyal customers are getting lower rates than those who shop around. The BSR would apply to all easy access cash ISA products, as well as savings accounts. The FCA suggested it would be up to each bank to set their own BSR, which would apply across all their instant access accounts. The rates would then be published on the FCA's website, so consumers could compare them easily. Christopher Woolard, executive director of strategy and competition at the FCA, said: “Efforts to encourage customers to switch have had limited impact and we remain concerned about the way firms are treating customers.”

Santander UK profits fall

Santander has warned of a “challenging environment” after its UK profits fell sharply in the first half of 2018. Earnings in the UK fell by 15% to £903m because of investment costs and weaker revenues, while restructuring costs also took their toll in its home base of Spain. But the bank’s global profits rose by 4% after strong growth in the US and Brazil. Overall, the bank said it earned €3.75bn (£3.3bn) in the January-to-June period while increasing its customers by three million to 140m. Santander executive chair Ana Botin said the bank had delivered “strong growth in underlying revenue and improving credit quality, despite strong currency headwinds”. Santander’s UK chief Nathan Bostock added: “We have strong and sustainable foundations in place and the right approach to succeed.”

Barclays boss not sweating over Brexit

Barclays boss John McFarlane has said he does not believe that Brexit will cause “terminal damage”. Speaking to Reuters, he highlighted the recent spike in Italy’s cost of borrowing as a reminder that “the EU needs London’s markets as much as London needs the EU” and suggested that London's competitive advantage is not easily replicated. “You need to get on with it,” he asserted. Meanwhile, Deutsche Bank CEO Christian Sewing has revealed that the bank has a plan in place for a no deal Brexit, claiming the German financial giant has “all the key issues in hand” when it comes to Britain leaving the EU.

Fewer City jobs to move on Brexit day, says BoE

The Bank of England believes banks, insurers and other finance companies will need to move fewer jobs on the day Britain leaves the EU than previously feared. It had expected between 5,000 and 10,000 jobs would be relocated to the EU as a result of Britain’s departure from the bloc. However, Sam Woods, head of the Prudential Regulation Authority, has said the number will be “at the bottom end of that range,” or even slightly below that.

Metro slides after tapping up shareholders

Shares in Metro Bank fell 1.5% to 3370p yesterday after the bank announced a surprise fundraising. The bank succeeded in placing 8.9m new shares, worth 3422p each and raising a total of £303m. Ben Marlow in the Telegraph says that although Metro needs to raise capital to fund its growth it also needs to demonstrate to shareholders that it can deliver sufficiently profitable growth.

INTERNATIONAL

Deutsche Bank cost-cutting to continue at pace

Christian Sewing, the CEO of Deutsche Bank, has warned employees that he will not let up the pace of cost cuts after the lender reported that profits fell by 14% year-on-year. The German bank reported net income of €401m (£357m) during the second quarter. In an address to staff, Mr Sewing said that bank will not “slow down” in its “transformation” of the business, adding that “a fourth-quarter spike in costs, as we saw last year, must not be repeated.”

Bank of Ireland to cut jobs

Bank of Ireland is likely to cut up to 20% of its workforce by the end of 2021 as it aims to slash its cost base under targets unveiled last month. As many as 2,180 jobs could be cut, based on the bank's 10,892-strong employee base last year, including 500 people on fixed-term contracts.

AVIATION

Ryanair jobs at risk

Ryanair has announced it is cutting its Dublin-based fleet from 30 to 24 planes for the winter 2018 season, putting 300 jobs at risk. The six planes will transfer to the carrier’s Polish charter airline, which it said was growing rapidly. Ryanair blamed a downturn in forward bookings and airfares in the Republic of Ireland, partly as a result of recent rolling strikes by Irish pilots.

Wizz falls 8% after high-growth airline cuts capacity forecast

Hungarian airline Wizz Air has cut its capacity forecast for the year amid strikes and high fuel costs, sending shares down 8% in early trading.

CONSTRUCTION

London bucks national construction growth trend

The Rics quarterly poll of surveyors has indicated that construction growth in the second quarter of 2018 virtually matched that of the previous two quarters in London, despite evidence of constraints in finance and labour. In Q2, 11% more chartered surveyors in London and the south east reported that their workloads had risen rather than fallen. Financial constraints, such as the difficulty of obtaining credit, were reported by 80% of national respondents to be the most significant impediment to building activity.

FINANCIAL SERVICES

Regional cities could be hit hard by Brexit

A report from the City of London Corporation has claimed that Brexit-supporting cities with a high dependence on financial services could lose more from leaving the EU than the City of London. The report suggests that Cardiff, Northampton and Leeds could be hit hardest by Brexit, with financial services making up about three quarters of their services exports. “London is well-placed to bounce back from any post-Brexit downturn thanks to its vast labour market and business base,” Andrew Carter, chief executive of Centre for Cities, said. “The worry is that many other cities, especially those outside the southeast, will struggle to adapt to the shocks that might lie ahead.”

UK will retain financial status

The Lord Mayor of the City of London, Charles Bowman, has said that the strength of the UK’s financial services sector will not be diminished by Brexit with international firms focused on the longer-term picture. He said that the fundamentals of UK's financial sector in terms of its innovation and culture were “difficult to replicate”.

Lifetime ISA should be abolished

The Treasury Select Committee has recommended that the Treasury abolishes the Lifetime Isa (Lisa) that was introduced in March last year. Nicky Morgan, chairwoman of the committee, said: “People aren't really sure what 'the Lisa is' meant to do because it's partly about pensions, partly about property and partly to do with building up savings.” A Treasury spokesman said it would not be abolishing the Lisa. "People deserve choice and freedom in how they save and the Lifetime Isa does just that," he said.

Crystal Amber increases stake in De La Rue

Activist fund Crystal Amber has increased its stake in banknote maker De La Rue to 4.58%. Back in May, Crystal Amber said De La Rue was “highly vulnerable” to a takeover offer after disclosed a 3.11% stake in the company. Meanwhile, De La Rue has threatened to block Crystal Amber from asking awkward questions at today's annual meeting.

HEALTHCARE

Indivior shares tumble 20% on profit and market share uncertainty

London--listed addiction treatment specialist Indivior has reported falling revenue and operating profit as it battles to retain market share amid tough US market conditions.

GSK invests in gene profiling firm

GlaxoSmithKline is investing $300m in a US gene profiling company called 23andMe. The drugs company will focus on science related to the immune system, use of genetics and advanced technologies.

LEISURE AND HOSPITALITY

Marston’s confident

Marston’s is on track to hit record turnover and pre-tax profit for the year. The pub company and brewer said sales were up 5% in the last 16 weeks on the back of the World Cup and the warm weather.

MANUFACTURING

Corbyn: Labour manufacturing campaign does not echo Trump

The Labour leader Jeremy Corbyn has denied his new “Build it in Britain” campaign is protectionist and insisted it does not echo policies introduced by President Donald Trump. Mr Corbyn said: “What we are saying is invest in our manufacturing base so that we can trade with other people. Germany does that, France does that, Italy does that, Spain does that, we don't. It’s not protectionism, it’s the opposite because that gives us a chance to trade in the future.”

MEDIA AND ENTERTAINMENT

Facebook user growth slows

Shares in Facebook dropped by 20% yesterday after the social media network’s revenue and user growth fell short of investor expectations. Facebook said it had 2.23bn monthly active users at the end of June. This was up 11% on June 2017, the slowest growth in more than two years. The company reported revenue of $13.2bn for the three months to the end of June, up 42% year-on-year. Expenses, however, grew even faster, rising 50% to about $7.4bn.

REAL ESTATE

UK mortgage approvals on the up

British banks approved lending for 40,541 house purchases in June, the highest since September last year, according to UK Finance, which also said value of approved loans for house purchases had risen to over £8bn for the first time since February. A 3.4% year-on-year increase in remortgaging, the trade body added, made up for a 4.7% reduction in house purchase lending in June - compared to the same month last year.

First step on housing ladder out of reach

According to analysis from the ONS, home ownership became less affordable for first-time housebuyers across most of England and Wales last year. London remained the least affordable region for first-timers, with prospective buyers set to spend 13 times their annual earnings on property in the capital. The northeast of England was the most affordable region, with first-time buyers spending about 5.5 times earnings.

RETAIL

Retail sales on the rise

The CBI has reported that 32% of retailers have confirmed that sales volumes were up this month compared to a year ago, with just 12% reporting declines. The good weather drove sales growth, with recreational goods up 67%, at the expense of furniture and carpet retailers - who reported sales down 43%. The outlook for next month is less upbeat, with retailers expecting sales volumes and orders to flatten out.

OTHER

Employees' rights in hot weather

Amid predictions that temperatures could top 36C tomorrow, the Telegraph looks at the law regarding employees' rights in hot weather. Regulations place a legal obligation on employers to provide a "reasonable" temperature in the workplace, but while there is a minimum working temperature, there is no statutory upper limit.

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