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Daily News Roundup: Thursday, 2nd January 2020

Posted: 2nd January 2020


Cash machines to offer banking services

ATM maker Diebold Nixdorf says cash machines are likely to offer basic banking services within the next five years, including handling loan applications. Pointing to security concerns, it suggests such services would likely need to be offered from ATMs in small bank branches or similar locations rather than from hole in the wall machines. The firm’s UK boss, Matt Phillips, says services including customer service video chats could see ATMs help bridge the gap left by the closure of many full-service bank branches.

Banks see £700bn in fees

A report by data firm Refinitiv shows the world's investment banks earned $913bn (£692bn) worth of fees over the past decade - 39% more than over the previous 10 years. Fees totalled nearly £78bn in 2019, with JP Morgan accounting for the biggest share, earning just over £5bn. Along with Goldman Sachs, Bank of America Merrill Lynch, Morgan Stanley and Citi, the bank accounted for almost 27% of global investment banking fees.

40% charge for arranged bank lending

Several papers note that lenders are set to increase arranged overdraft rates to nearly 40% this year as they absorb the cost of new rules. Financial Conduct Authority regulations will stop banks charging more for unarranged borrowing than for arranged overdrafts as of April. HSBC, First Direct and M&S Bank will bring in 39.9% APR on arranged overdrafts in March, while Nationwide has already done so.

Persistent debtors risk having credit cards suspended

New rules introduced by the Financial Conduct Authority (FCA) will require credit card customers who have been in persistent debt to increase their payments or risk having their cards suspended. The regulator gave banks 36 months to identify problem borrowers and persuade them to hike their payments and this period comes to an end in February. The FCA said the move could save customers up to £1.3bn per year.

TSB staff fired for gaming compensation scheme

The Guardian reports that five TSB staff whose accounts were affected by IT issues at the bank have been sacked for allegedly gaming a compensation system set up to help customers affected by the matter. TSB is understood to have reassessed compensation claims lodged by a number of workers over fears they may have used inside information to get the largest possible payout.

Lloyds bosses cash in 1.8m shares

Bosses at Lloyds Bank made £1.2m after selling shares when the stock market opened after Christmas, with chief executive Antonio Horta-Osorio, chief operating officer Juan Colombas and chief risk officer Stephen Shelley selling 1.8m shares in the bank on December 27.

Bailey criticised for HBOS report delay

The outgoing head of the Financial Conduct Authority, Andrew Bailey, is being urged to tie off an investigation into the near collapse of banking giant HBOS in 2008 before he moves on to lead the Bank of England. The FCA and the Prudential Regulation Authority launched an investigation into the role of senior managers nearly four years ago.

Monzo to raise up to £100m for expansion

Monzo is reportedly in talks with investors about raising between £50m and £100m early next year.

HSBC jobs at risk

Up to 10,000 jobs at HSBC could be axed. Noel Quinn, the bank’s interim CEO, is set to unveil a shake-up in February as he seeks to cut costs across the bank.

Pay rises at Boutique firms

Bankers at boutique advisory firms have seen bumper pay rises following lucrative M&A deals with Rothschild and Gleacher Shacklock reporting some of the biggest gains in average pay.

Would-be banks fail to get off ground in 2019

The FT reports that the slump in applications for banking licences since 2018 is unlikely to be reversed as regulators focus on removing barriers to growth experienced by existing challengers.

Biased analysis raises conflict of interest fears

The research coverage provided by investment banks is favouring clients over other companies, research shows. The apparent bias was stronger among smaller brokers, who rarely had “sell” ratings on clients.

RBS utilises influencers

RBS has reportedly recruited a network of social media influencers to promote its new digital banking app, with sponsored Instagram posts showing online celebrities using Bó.

Savers hit by outage

Some Lloyds, Halifax and Bank of Scotland customers were left unable to access their accounts on New Year’s day after an outage hit internet and mobile banking services. A spokesman confirmed that the problem was caused by an IT glitch, not a cyber-attack.

Challenger banks face tough choices

Dean Jayson, head of UK banking at Accenture, contends that challenger banks have just two choices if they want to take on their bigger rivals. He says the challengers could follow the CYBG route, consolidating to try and match the traditional banks in terms of scale and customer numbers. Or, he suggests, they could embrace their challenger status and transform their business for the digital age.


Value of private equity deals hits post-crisis high

The value of worldwide private equity buyout deals hit $478bn in 2019, according to data from Refinitiv, with this up from $460bn in 2018 and marketing the highest total since 2007.

VC funds raise record £3.9bn

Data compiled by PitchBook shows that venture capital activity in the UK hit record highs in 2019 as British investors closed £3.9bn in new funds, up from £2.6bn in 2018. A total of 29 new funds closed in the UK in 2019. In the US capital raised by venture capital funds was down 23.1% in 2019 compared to 2018, hitting £33.6bn, while European funds, which raised £9.1bn in 2018, saw £7.9bn raised in 2019.

Mercia contrite over small investors left out of £30m fundraising

Mercia Asset Management has apologised to small shareholders after it excluded them from a £30m fundraising in December.

Private equity injects €32bn into German companies in 2019

Private equity investment in Germany hit €32bn in 2019, with analysts expecting the surge in investment to continue into the new year.

PHS sold for £490m

Office cleaning company PHS has been sold to South Africa’s Bidvest for £490m by KKR, Anchorage and Monarch.


Danske sued for alleged laundering operations

A group of investors is suing Danske Bank for £170m over alleged money laundering at its branch in Estonia between 2007 and 2015. The lawsuit claims Danske should have told investors that its profits included funds from money-laundering.

China cuts bank reserves

The People's Bank of China is to lower the reserve requirement ratio for banks by 50 basis points, in the eighth such cut since early 2018, freeing up about 800bn yuan (£87bn) in new funds for loans. Meanwhile, Chinese banks have relaxed lending standards and lowered interest rates after Beijing called for lending to small businesses to increase by 30%, sparking fears of an increase in bad loans.

US bank lending plateaus as businesses hold back

The industrial slowdown in 2019 and cheap financing in the capital markets pushed growth in US banks’ businesses loans down to almost zero in the second half of the year.

Fidelity rebuked by Hong Kong’s financial regulator

The Securities and Futures Commission, Hong Kong’s financial regulator, has fined US asset manager Fidelity $450,000 for conducting about $40bn in futures trades without the right licence.

JPMorgan to tighten customer security

JPMorgan Chase is to ban fintech apps from using customer passwords to access bank accounts, instead issuing tokens that send data in a secure form.


Slow uptake of electric cars brings threat of fines

According to Moody’s, twelve of the biggest-selling carmakers in Europe are in line for fines totalling €2.4bn (£2.1bn) as a result of failing to meet new emissions controls. In 2020 manufacturers will have to meet targets on CO2 emissions averaging 95g per km on all new cars they sell.

Tesla lines up $1.6bn financing for Model 3 plant in Shanghai

A consortium of state-backed Chinese lenders will lend Tesla $1.6bn as the electric carmaker moves to accelerate production of its Model 3 sedan from its Shanghai factory.


Pension fund investments warning

Bank of England governor Mark Carney has warned that millions of pension fund investments could become “worthless” if firms fail to act on climate change. Mr Carney told BBC Radio 4’s Today programme that the finance sector was “not moving fast enough” to curb investment in fossil fuels.

Bankers hope for uptick in dealmaking

Uncertainty around Brexit and fears of a Corbyn-led Labour government are the chief causes of a slump in mergers and acquisitions involving UK companies over 2019, according to Dealogic, which says deals fell 50% on last year to $189bn (£146bn). The drop in dealmaking has been felt Europe-wide and investment bankers are hoping a more settled political landscape will bring more deals and their associated advisory fees. Separate Dealogic data shows the number of new listings globally fell by a fifth to 1,237, the lowest level in three years.

Victims of pension scams targeted by HMRC

Up to £10bn has been lost by people who have invested in apparently legitimate pensions schemes. Many of the rogue schemes were enrolled with HMRC and the Pensions Regulator and employers such as the MoD, the NHS and Royal Mail approved transfers because they too considered them safe. Victims are now being pursued by HMRC because the schemes broke tax laws.

Brexit talks may require extension, City believes

New research reveals that 59% of financial services firms believe Boris Johnson will be forced to extend the transition period beyond December 2020 in order to finalise issues over equivalence and market access.

LSE Group says it will not sell Italian exchange

A senior executive at the London Stock Exchange Group has said it is unlikely to sell off assets ahead of its $27bn acquisition of data provider Refinitiv. There had been speculation that the group could offload the Italian stock exchange and other big assets as part of a restructuring.

Prudential to prioritise investing in Asia after split

Nic Nicandrou, Prudential’s chief executive for Asia, has said that the insurance group will prioritise investing in the region following the demerger of its UK business.


Redx in takeover talks

British biotechnology company Redx Pharma has received bid interest from a syndicate led by senior industry executive Sam Waksal.


Key sectors contract but GDP set to grow in 2020

The IHS Markit/CIPS purchasing managers indices for manufacturing and construction are expected to show the sectors shrank for the eighth consecutive month in December, coming in at 47.7 and 45.7 respectively. Services is also expected to show a contraction.


Huawei’s access to UK 5G must be limited, says former minister

Former defence minister Tobias Ellwood has urged Boris Johnson to curtail any involvement of Huawei in UK infrastructure networks until it is proven that the company has not been funded by the Chinese government. His warning comes after reports in the US that Huawei had received as much as £57bn of state aid from Beijing.


House prices soared over last 20 years

UK house prices have more than trebled over the last 20 years, according to new research by Halifax, with London property enjoying increases of 239% - from £157,453 to £533,437. An average home in the UK would have cost £91,199 at the end of the last millennium and £279,997 today.

First-timers at highest level since 2007

Analysis of UK Finance figures by Yorkshire Building Society suggests the number of people taking their first step on the property ladder reached its highest level since 2007 last year. There were 353,436 first-time buyers in 2019, up from 2018’s 353,130 and the highest annual total since the 357,590 recorded 12 years ago.

Mortgage approvals rise

Mortgage approvals increased 6.8% to 43,700 in November, according to UK Finance data, the highest level in almost two years. Remortgage approvals soared 12.7% while gross mortgage lending dipped 3.3% last month compared to the same month last year.


Hedge funds bet against High Street recovery

Hedge funds including Blackrock, Citadel and Pelham have placed bets worth £1.6bn against British retailers as the industry braces itself for further pressure. According to the Financial Conduct Authority, Morrisons is Britain’s most heavily shorted retailer with 6.12% of its shares on loan.


BCC: Economy stagnated in Q4

The British Chambers of Commerce has warned that the economy stagnated in the final quarter of 2019, prompting director general of the group Adam Marshall to call on the Government "to take big decisions to stimulate growth". The service sector, which accounts for almost 80% of economic output, worsened in Q4. "Listless" manufacturers saw falling export business rather than rising order books for two quarters in a row - the first time that has happened for a decade, while domestic orders are in a sustained decline for the first time since 2011 and investment intentions are at an eight-year low.

Credit card borrowing slows

Growth in borrowing on credit cards slowed in November, according to industry body UK Finance, with the amount borrowed just 2.2% higher than a year earlier and the lowest increase since 2014. Overall consumer credit growth, which also includes borrowing through personal loans, overdrafts and car finance, fell to 4%, the lowest level in seven months.

Fewest floats in a decade

Figures show that 2019 saw the lowest number of stock market floats in London since the financial crisis, with just 36 companies completing initial public offerings on the London Stock Exchange. This is the lowest total since the 23 recorded in 2009. The analysis shows that £7.2bn was raised in new issues last year.

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