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Daily News Roundup: Thursday, 28th June 2018

Posted: 28th June 2018


City watchdog warns on free banking

As the Financial Conduct Authority publishes a report exposing how lenders used the cross-sale of products, especially overdrafts, to make up for the costs of what are described as 'free' current accounts, chief executive Andrew Bailey warns there is “no such thing as free banking”. Research shows that around 10% of customers contributed between a third to half of all profits lenders generated from current account services.

Thousands of bank branches under threat

A report produced by DJB Research on behalf of Nottingham Building Society shows that Britain’s top five lenders could cut us many as 2,400 further branches, with 12,000 jobs at risk. This would be alongside some 670 closures already planned for this year. David Black, a financial analyst who wrote the report, said banks had calculated that they could provide effective nationwide coverage with only 600 branches, which would equate to about 2,400 closures.

Banks to get ‘cyber stress tests’

The Bank of England has declared that financial services companies are to be subject to “cyber stress tests” to mitigate “systemic risk’ to the wider financial system and to establish if institutions could recover in the event of a major breach. Working with the National Cyber Security Centre, the bank said the tests would be “severe but plausible” and that firms would need to meet “impact tolerance” standards.

Open Banking expansion

Mortgage approvals, credit scoring, financial management and reduced overdraft fees are all areas in which consumers could save, with the ‘Open Banking’ market expanding to £7.2bn over the next half-decade.

Full transparency on HBOS inquiry urged

The Treasury Select Committee has demanded "maximum transparency" in a report into the HBOS Reading fraud scandal.

TSB shambles after ‘inadequate’ training

TSB staff received "inadequate" training before the lender’s recent IT problems, according to the TBU union.


Private equity soars in Japan

The Financial Times features a report on the increasing acceptance and popularity of private equity deals in Japan.

Bridgepoint to open French Burger Kings

Bridgepoint has signed a deal with Groupe Bertrand to open new Burger King branches in France.


Diamond takes stake in Kepler with Rothschild group

Bob Diamond and the Edmond de Rothschild Group have become the largest shareholder in Kepler Cheuvreux. Mr Diamond said: "The opportunity for banks to outsource equity trading and research and partner with Kepler is very attractive for them".

New Australian digital lender

A new digital lender is being set up in Australia by Anthony Thomson, co-founder of Metro Bank, to be named 86 400 after the number of seconds in a day.


Carmaker Nissan is 'in the dark' over Brexit

Nissan is "in the dark" about the UK's impending departure from the EU, according to the chairman and CEO of the Renault-Nissan alliance Carlos Ghosn. "We have said very clearly we want to maintain the competitiveness of the UK,” said Mr Ghosn. "Obviously for us the stakes are very high, but it's difficult to tell you what kind of decision we're going to take without knowing exactly what is Brexit," he added.


Gatwick enjoys busiest ever year

Gatwick has revealed that total passenger numbers rose 3.6% for the year up to March 31, to 45.7m, its busiest ever year. Long-haul numbers grew by 14.4%, revenue was up 5.4% to £764.2m, while pre-tax profits stood at £233.7m.

Fastjet warns it may go bust

African budget airline Fastjet has warned shareholders that it will cease trading tomorrow unless more cash can be raised urgently.


FCA probes Carillion

The head of the Financial Conduct Authority, Andrew Bailey, has said he is investigating allegations that people connected to Carillion had traded in shares using inside knowledge before a large profit warning last year.


Brussels not prepared for no deal Brexit

The Bank of England has criticised the EU for not doing enough to ensure financial stability in case of a no-deal Brexit scenario. The central bank’s Financial Stability Report claimed that the UK has “identified the most important risks from a cliff-edge Brexit to the provision of financial services”, but “the EU has not yet indicated their solution to these fundamental issues which would be expected to have more material impacts on the costs and availability of finance on the continent in the unlikely event of a disorderly Brexit.”

Invesco Perpetual trust dispute resolved

A dispute between Invesco Perpetual and Invesco Perpetual Enhanced Income has been resolved, saving a deal to lower fees but seeing the departure of two executives.

Yoobic picks up $25m in funding round

Yoobic, a software start-up, has announced the close of a $25m (£18.8m) fundraising round led by Insight Venture Partners.


Cancer drug success boosts AstraZeneca

AstraZeneca has been boosted after the results of a clinical trial showed its Lynparza treatment helped women with ovarian cancer to live longer without a worsening of the disease, when it is given as a first-line treatment.

Takeda chief seeks to allay £46bn Shire bid concerns

Takeda’s chief executive Christophe Weber has brushed off mounting competition concerns over Shire’s haemophilia franchise as he works towards a £46bn takeover of the Irish drugmaker.


Costa UK coffee sales fall

Costa has blamed a lack of shoppers on the High Street for a fall in like-for-like sales at the start of 2018. The UK’s biggest coffee chain reported a 2% fall in like-for-like sales in the first three months of the year. However, parent company Whitbread said total UK sales growth was up 5.2% thanks to new store openings. Whitbread added: “The UK like-for-like sales decline resulted principally from footfall weakness in traditional shopping locations, whereas travel locations continued to show good growth.”

Pub chain suffering shortage of beer

Ei Group, which is Britain’s biggest pub operator with 4,500 properties, has said some outlets are running out of certain beer brands as CO2 gas shortages continue to hit the food and drink sectors.


Goldman profits from advising Fox on Disney bid

Goldman Sachs will earn $105m from its role advising 21st Century Fox on its $71bn asset sale to Walt Disney, as well as assisting in the financing of Rupert Murdoch's broadcasting venture.

ITV head to step down

Ian Griffiths, ITV's chief operating officer and finance director, is to retire after 10 years.


Ashurst reveals bumper partner profits

Law firm Ashurst has posted an 11% increase in partner profits - with the average equity partner last year taking home £743,000. In the year to April 30, the company’s revenue grew 4% to £564m.


House price growth hits five-year low, Nationwide says

Annual growth in UK house prices has fallen to its slowest pace in five years, according to Nationwide, which says demand has been subdued amid properties coming to the market as "more of a trickle than a torrent". Prices rose by 2% over the past year, while the month-on-month rise was 0.5%, taking the average price of a home to £215,444. Nationwide predicted that house prices will rise by 1% over the course of 2018.

IWG lowers expectations

Blaming a "weak performance" in the UK, along with an expansion drive which has caused higher costs in opening new space, serviced office group IWG has warned that profits will be between £15m and £20m lower than previously forecast. IWG is currently at the centre of a four-way bidding war, as private equity firms Terra Firma and TDR Capital and real estate investors Starwood Capital and Prime Opportunities compete for a takeover.


John Lewis warns of zero first-half profit

The John Lewis Partnership has warned that profits in the first half of the year will be “close to zero” and it will close five Waitrose stores as tough trading on the high street takes its toll. JLP blamed the likely fall on market uncertainty and significant extra costs as it invests in IT and suffers the pinch from Brexit-fuelled inflation. The group added that it would be gradually slimming down its high street presence over time.

Retailers report promising sales growth

Retailers have reported the fastest sales growth since September 2017, according to the CBI's monthly survey, which found that 43% of respondents said sales volumes were up in the year to June and another 32% expect sales to increase in the year to July. Just 13% placed fewer supplier orders than they did a year ago.


Carney defends expenses

Mark Carney, governor of the Bank of England, has defended expenses claims made by Bank employees, revealing that his own expenses bill exceeded £300,000 in the last two years.

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