Barclays investment banking boss leaves
Tim Throsby has stepped down as head of Barclays’ investment bank amid a raft of leadership changes. The shake-up come as activist investor Edward Bramson continues to push for radical changes at Barclays’ investment bank. Jes Staley, Barclays’ CEO, will become interim CEO of the entity housing the UK lender’s investment bank in addition to his current role. In a statement, Mr Staley said: “I believe we need a more granular execution focus on the businesses within the CIB if we are to drive those returns, in a reasonable timeframe, towards and above that cost of capital. And so I have decided to change the leadership model for that business, delayering the organisation in order to bring oversight and accountability for the performance of the corporate and investment bank much closer to me as the group CEO.” Ashok Vaswani, current chief executive of Barclays UK, will become global head of consumer banking and payments, while the bank’s chief operating officer Paul Compton will become president of the investment bank. Stephen Dainton, who runs equities, has been appointed interim global head of markets.
Co-op Bank report reveals regulatory failures
A Treasury-commissioned report has found that the Financial Services Authority approved the Co-op Bank’s merger with the Britannia Building Society in 2009 despite identifying “vulnerabilities” in the lender. The City regulator had backed the deal partly out of fear of the knock-on effects had Britannia been allowed to fail. The inquiry was overseen by Mark Zelmer, who said there were measures the FSA could have taken at the time that would have helped protect the Co-op but instead it was left “relatively defenceless”. It nearly collapsed four years later when it attempted to purchase 632 bank branches from Lloyds Banking Group and a £1.5bn black hole due to bad loans was revealed. Mr Zelmer went on to criticise reforms put in place since the financial crisis to avert more taxpayer bailouts, questioning whether the financial system will be sufficiently protected in the event of a systemic threat. He pointed to bail-in debt and Open Banking as key concerns and made several recommendations to the BoE and the PRA, including that banks’ capital levels should be externally checked.
TSB sale an option
Banco Sabadell has suggested that it could sell challenger bank TSB, rather than push ahead with a turnaround plan. Sabadell’s chairman Josep Oliu said TSB needed three years to get back on track, but that a merger or a sale were options. The company also said it had been forced to postpone its own profitability target by one year to 2021 because of TSB's IT crisis. TSB had to hire more than 2,100 staff to fix the issues, which saw up to 1.9m prevented from accessing their accounts for several weeks - in total, the meltdown cost the bank £330m and led to heavy losses.
US regulators launch probe into Swedbank
US regulators are investigating Swedbank over its handling of money laundering allegations at its Baltic branches. According to sources, the bank was being investigated by the New York Department of Financial Services for misleading investigators over transactions linked to other money laundering scandals. These involve Danske Bank and Mossack Fonseca, the law firm at the center of the Panama Papers. Writing in the FT, Richard Milne says Swedbank’s handling of a money laundering scandal is a lesson in fallibility.
Unions warn Deutsche Bank over planned Commerzbank merger
Union bosses have warned Deutsche Bank that they will scupper the integration of Postbank if a deal with Commerzbank goes ahead. Meanwhile, new figures have revealed that Deutsche Bank’s president Garth Ritchie earned €8.6m last year. In contrast, the seven members of Commerzbank’s board were collectively paid €8.76m.
Hong Kong hands out licences
Hong Kong has issued three virtual banking licences that allow financial institutions to operate branchless savings and loans businesses. The licences have been issued to joint ventures of Standard Chartered and BOC Hong Kong, and another to ZhongAn Technologies International. Observers were left surprised that Tencent and Alibaba's Ant Financial were left out of the round of approvals.
UK car output falls
The Society of Motor Manufacturers and Traders has said that the number of cars made in the UK fell more than 15% to 123,203 last month. The drop – the ninth in a row – was fuelled by a near 19% slump in cars designed for abroad.
Nissan boss deemed too powerful
An external panel of experts has found that too much authority was given to former Nissan chairman Carlos Ghosn. The report, which was commissioned to find ways to improve management and corporate governance at Nissan, found a “concentration of all authority” in the former chairman. Meanwhile, the FT reports that Renault is to restart merger talks with Nissan.
Ford quits Russia car market in latest retrenchment
Ford has announced it plans to withdraw from the Russian car market and close two factories in the country.
Cathay Pacific to buy budget airline
Cathay Pacific has announced that it will buy carrier Hong Kong Express for HK$4.93bn ($628m). A Cathay Pacific spokesperson said: “We intend to continue to operate Hong Kong Express as a stand-alone airline using the low-cost carrier business model.”
Boeing unveils fix for 737 Max aircraft
Boeing has issued changes to controversial control systems linked to two fatal crashes of its 737 Max planes in the last five months. As part of the upgrade, Boeing will install as a standard a warning system, which was previously an optional safety feature.
Buoyant Bellway boss critical of Persimmon
Jason Honeyman, chief executive of Bellway, has criticised Persimmon's announcement last week that it would let buyers hold back 1.5% of the value of their home until any problems found after they moved in were fixed. “My approach to customers is one of build the home, get it right first time - not move people in and fix it later,” Honeyman stated. Bellway reported another strong set of results, with revenues surging 12% to £1.5bn in the six months to January, with pre-tax profits up 10% to £314m.
Lloyd’s reveals £1bn losses
Lloyd’s of London has posted an annual loss for the second consecutive year, amid a raft of natural disasters and reports of sexual harassment problems at the firm. The insurance market revealed a pre-tax loss of £1bn for 2018, following a loss of £2bn in 2017, and paid out £19.7bn in claims following a spate of global catastrophes. Renewal rates on insurance policies picked up however, rising 3.2%, and Lloyd’s removed £3bn of underperforming business from the market amid wider cost-cutting efforts.
Nutmeg seeks ‘seven figure sum’ in crowdfunding round
Digital wealth manager Nutmeg has announced that it will launch a crowdfunding round later this year, targeting a seven figure sum. Nutmeg said the proceeds of the round would fund its international expansion and development of new features for UK customers. Goldman Sachs, Taipei Fubon Bank, Convoy and Balderton Capital are current investors.
Myners calls for investigation into London Capital & Finance
Lord Myners, a former City minister, has called for the Financial Conduct Authority to be investigated over possible failings in its handling of the collapse of London Capital & Finance. Concerns had been raised with the regulator about LCF, which collapsed in January, as early as 2015, but it is not believed to have intervened until last December.
Centene to buy WellCare in $17bn US healthcare deal
US health insurance firm Centene’s $17bn acquisition of WellCare has contributed to this year’s bumper haul ($181bn) of healthcare deals, which include Bristol-Myers Squibb's Celgene acquisition.
Nationalise drug research, urges expert
Lord O’Neill, a former Goldman Sachs chief economist and author of a review on drug resistance, has said that antibiotics research should be nationalised to encourage the development of medicines to fight drug-resistant superbugs.
MEDIA AND ENTERTAINMENT
M&C Saatchi underlines ‘organic’ profit rise
M&C Saatchi boosted profits last year on the back of organic growth, the advertising giant has asserted. The firm hiked its full-year dividend up 15%, to 10.96p, after profit before tax grew 16% year on year to £32.3m.
UK retail sales endure hefty contraction
UK retail sales volumes endured their fastest contraction for 17 months in March, according to businesses surveyed by the CBI. Some 46% said sales volumes were lower in March than a year earlier, while just 28% said they were higher. The CBI said underlying conditions remain subdued as Brexit uncertainty and slower global growth continues to hold back the economy.
Goals Soccer Centres suspends trading amid VAT concerns
Football pitch operator Goals Soccer Centres has suspended trading in its shares following a “substantial misdeclaration of VAT” totalling approximately £12m. The London-listed firm said that “historical accounting errors” meant it could not be clear on its exact financial position and that it intends to “enter into discussions with HMRC immediately” amid discussions with lenders to agree new facilities.
Business confidence slumps
A survey of 600 employers by the Recruitment and Employment Confederation has found that business confidence in the British economy has plunged further as employers scale back hiring and investment plans. Some 49% of UK employers expressed concern about the availability of permanent-hire candidates, with a lack of engineers and health and social care workers causing most concern. Meanwhile, 35% of employers intending to hire temporary workers expressed concern about a lack of agency staff having the necessary skills they require. REC chief executive Neil Carberry commented: “For months, businesses have told us that they were concerned about the general outlook for the economy. It is clear to us that this concern is now closer to home.”
Life expectancy gap between rich and poor widens
ONS data shows the life expectancy gap between people living in the wealthiest and poorest areas of England and Wales has increased. Between 2012-2014 and 2015-2017, female life expectancy in the richest areas increased by 84 days, widening the gap between rich and poor by half a year. In men, the gap also widened - but less markedly. Life expectancy in the UK as a whole has stopped improving at the rate expected, the ONS said. Women in the most deprived areas in England can expect to live for 78.7 years, while women in the least deprived areas can live for 86.2 years. Among men, life expectancy for those in the most deprived parts of England was 74 years, compared with 83.3 years in the least deprived areas.