BANKING
Analysts question decision to award Metro Bank funds
Metro Bank shares continued to slide yesterday, losing 22% at one point, after its dramatic results release and revelations of a regulator probe. While analysts at Jefferies underlined the disappointing fourth-quarter results, John Cronin at Goodbody said he was “very surprised” at the decision to award Metro £120m of funds from RBS, linked to competition-boosting business banking, adding: “Metro’s problems have been identifiable for a long time.” Meanwhile, Metro Bank’s CEO Craig Donaldson said that investors who bought shares in the bank’s £303m placing last July were not intentionally misled. Investors who bought into the placing have lost 72% of their money.
Santander chief earns £6.4m
Santander has revealed its UK boss Nathan Bostock picked up a £6.4m pay package for 2018. The lender’s annual report showed that Mr Bostock collected a £2.3m annual bonus on top of his £1.68m annual salary, with a further £638,000 in pensions and benefits. His total pay was topped up by £1.8m to compensate him for share bonuses when he left RBS at the end of 2013 – the final such annual payment. Last month Santander reported a 14% drop in UK profits to £1.7bn for 2018.
Barclays – Qatar deal was not a sham
Former Barclays director Glenn Leighton has told a court that two service agreements worth £322m which Barclays struck with Qatar at the time of its £12bn financial crisis fundraisings, subsequently helped the bank to win work in the Middle East. Leighton said projects he had worked on in Bahrain and Kuwait were landed with the help of Qatar following the two so-called advisory service agreements between the bank and the state in 2008.
Revolut accused of money laundering lapse
Revolut has been accused of violating basic banking rules by failing to block thousands of suspicious transactions on its platform. Documents obtained by the Telegraph claim that for three months last year, the fintech firm switched off an automated system designed to stop dubious money transfers. Revolut launched an internal investigation in late 2018 after a whistle-blower alerted the digital bank’s board about serious issues with its screening process.
PRIVATE EQUITY
Public to private takeover deals sparked by Brexit uncertainty
New research from Jefferies shows that Brexit uncertainty has sparked private equity fund interest in UK take-private transactions. Of the 42 firm offers for UK public companies last year 31% were made by private equity. “The longer Brexit uncertainty persists, the more vulnerable UK PLCs will find themselves to private equity approaches,” the report stated.
INTERNATIONAL
Investor keen on German deal
US investor Cerberus has said it is open to a merger between Commerzbank and Deutsche Bank. Speculation surrounding a possible merger has grown under the tenure of Germany’s finance minister Olaf Scholz, who has spoken in favour of strong banks. Cerberus is a major shareholder in both banks.
German fintech bank heads to Brazil
The German fintech challenger bank N26 is expanding to Brazil, making it the first of Europe’s biggest retail digital banks to enter the South American market. N26 is also set to enter the US in the first half of 2019, alongside competitor bank Revolut.
Scrap bail in rules, says Italian minister
Italian economy minister Giovanni Tria has said that EU “bail-in” rules covering failing banks should be scrapped. Designed after the global financial crisis to shield taxpayers from costly bank bailouts, the rules required investors in a bank to bear losses before public funds can be used.
AUTOMOTIVE
Fall in new car output
UK car production fell by 18.2% last month as Brexit concerns and trade tensions rose. The Society of Motor Manufacturers and Traders said 120,649 vehicles rolled off production lines, 26,858 fewer than the previous year and the eighth straight monthly reverse.
AVIATION
Dutch government acquires stake in Air France/KLM
The Dutch government has acquired a near 13% stake in Air France/KLM, prompting the French government to describe The Hague of acting like an “unfriendly” corporate raider. The Dutch aim to match France’s 14.3% stake in the airline.
FINANCIAL SERVICES
Market disruption likely under hard Brexit
The FCA has warned that there is no guarantee that preparations made already will avert disruption in markets if there is a no-deal Brexit. FCA CEO Andrew Bailey said that he could give no assurance there would not be market disruption if Britain crashes out of the bloc next month with no transition deal. Mr Bailey added that the FCA and the European Securities and Markets Authority are planning to reach an equivalence decision over credit-rating agencies.
Norwegian fund bets on Britain
Norway’s £740bn sovereign wealth fund has declared its investment in Britain will increase regardless of the outcome of Brexit negotiations. CEO Yngve Slyngstad said: “We will continue to be significant investors in Britain […] With our time horizon, which is 30 years-plus, current political discussions do not change our view of the situation.” Tory Eurosceptic Jacob Rees-Mogg said the move “is a recognition that the freer the market in Britain is the more attractive the country will be to outside investment.” The Times notes that Middle Eastern funds have also increased their exposure to Britain and cites David Zahn, senior vice-president at Franklin Templeton Fixed Income Group, who says a fall in sterling triggered by a hard Brexit would encourage even more investment.
St James’s Place’s pot passes £100bn
Funds under management at St James’s Place have hit £102bn. The wealth manager's net inflows last year were £10.3bn, up from £9.5bn in 2017, while operating profit increased by 9% to £1bn, as it managed to successfully navigate continuing Brexit uncertainty. The group will issue a full year dividend of 48.22p per share, an increase of 12.5% from the previous year.
LSE leads funding for fintech firm
The London Stock Exchange has led a £15m funding round for fintech start-up Niavura. The firm, which was founded in 2016, automates the back-office processes for issuing debt and equity and provides digital investment banking platforms for banks and other financial firms. Santander InnoVentures, Allen & Overy, Linklaters and Transamerica Ventures also participated in the funding round.
MANUFACTURING
Ineos commits £1bn for UK oil pipeline and new chemicals plant
Ineos boss Jim Ratcliffe has promised £1bn worth of investment in UK oil and chemical industries, saying the move “underlines its confidence” in Britain. Ineos will spend £500m overhauling the Forties pipeline system, build a £350m energy plant at Scotland's Grangemouth oil refinery site and a £150m chemicals plant in Hull.
MEDIA AND ENTERTAINMENT
ITV and BBC could partner for streaming service
ITV is in advanced talks with the BBC to launch a Netflix-rival entitled Britbox. ITV’s total external revenue was up 3% to £3.2bn, it said in its full-year year results for 2018, while total non-advertising revenues grew 5% to £1.9bn. A 1% increase in total advertising revenue, driven by a 36% boom in online advertising, offset a decline in TV commercials.
Spotify launches in India
Spotify has launched its service in India, hoping to tap into millions of consumers in a rapidly growing market. The Swedish firm will compete with other services already operating in India, such as Gaana, Saavn, Google Play and Apple Music.
REAL ESTATE
Taylor Wimpey unveils 19% profit boost
Taylor Wimpey has posted a 19% increase in pre-tax profit of £810.7m for the last year after selling 15,275 homes. Revenues rose 3% in the year to £4.1bn and the average selling price of its private homes grew by 2% to £302,000, while the order book stands at 9,622. Chief executive Pete Redfern said the firm had yet to see any sign of a Brexit-related slowdown in demand. He added that while it would be “naive not to be concerned” and aware of the risks in the short term, there was a “large underlying demand” for housing in the UK which would not be affected by Brexit in the long term.
Capco to speed up Earls Court demerger despite retailer boost
A host of upmarket retailers have bolstered Capital & Counties’ rental income from the Covent Garden estate, up 10% year on year thanks to the arrival of names like Tiffany, Peloton and Lacoste. Capco is looking for a “prompt” demerger of its Earls Court development as the value of the scheme took another hit - down by £101m to £658m last year.
ECONOMY
1.2m public sector workers earn below living wage
The Living Wage Foundation has warned that 1.2m public sector workers across Britain earn wages below the standard required to make ends meet. This included NHS staff and workers at four councils. A report said public sector workers, employed either directly by the state or on outsourced contracts, accounted for up to a fifth of the 6m people in Britain paid below £9 an hour, or £10.55 an hour in London.
UK economic sentiment at lowest in six years amid Brexit worries
A monthly EU survey shows economic sentiment in the UK at its lowest level in six years, driven by a slump in confidence among services companies.
OTHER
HMRC urges UK taxpayers to reveal their offshore assets
The FT picks up on news that HMRC is warning people with overseas income of the risk of prosecution if they “complete a false certificate” in relation to their tax liabilities.