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Daily News Roundup: Thursday, 30th January 2020

Posted: 30th January 2020

BANKING

Santander stumbles in the UK

Santander generated a record €49.23bn in revenue last year, 1.7% higher than the €48.42bn in the year prior. A weighty goodwill impairment on its UK business in the third quarter resulted in Santander taking a 11.7% hit to pre-tax profits in 2019 however and Spain’s biggest bank also swallowed hefty restructuring costs amid the continuing low interest rate climate. While profit surged 75.7% in the final three months of the year - quarter on quarter - to €3.83bn, Santander took home €12.54bn (£10.6bn) compared to €14.2bn a year earlier. Underlying profit in Europe fell 3%, largely driven by a 16% drop in the UK. The lender was hit by £169m of PPI charges in the UK and invested £155m in its transformation programme. However, it posted its highest growth in home loans for a decade - up £7.4bn to £165.4bn. Santander UK’s CEO Nathan Bostock commented: “The environment for the banking sector remains challenging.”

Lloyds Bank closures detailed

Lloyds Banking Group is to close 56 UK sites, resulting in the closure of 31 Lloyds, 10 Halifax and 15 Bank of Scotland branches across the country between April and October this year. The closures are set to affect up to 80 members of staff, though many will be given new roles in other branches. A Lloyds Banking Group spokesman said: “In addition to our branches, all our customers can also use the Post Office to access their banking locally, alongside our mobile branches.”

Business owners call for Glen’s resignation

The resignation of John Glen, economic secretary to the Treasury, is being sought by small business owners and representatives of “mortgage prisoners”, who have written to the Prime Minister alleging banking misconduct and a shortage of help for the hundreds of thousands of homeowners trapped in high-interest mortgages because of a failure to meet stricter borrowing criteria. It is suggested that Kevin Hollinrake, co-chairman of the all-party parliamentary group for fair business banking, should replace him. Mr Glen recently told banking trade body UK Finance that he was open to using regulation to help mortgage prisoners, but that banks should “take the lead in making a real difference to this group.”

Virgin Money suffers shareholder revolt over pay

Virgin Money has suffered a shareholder revolt after being accused of paying top executives including chief executive David Duffy disproportionately large bonuses in 2019 and dismissing investor concerns. The high street lender saw 183.1m, or 18%, of shareholder votes either made against its pay report or withheld at the annual general meeting. Mr Duffy was handed an 89% pay rise last year despite widening losses at the bank. Kate Burgess in the FT’s Lombard suggests that Virgin Money’s next chairman needs to trim Mr Duffy’s pay.

More loans issued by BBB to northern firms

New figures have revealed that entrepreneurs in the north of England received more loans from the Government-backed British Business Bank than London firms, with the bank lending £151m through its Start Up Loans programme to 18,612 North East, North West and Yorkshire and Humber small businesses since 2012, while London-based companies had loans of £128m in total.

Barclays invests in autistic employees

Barclays has teamed up with Scottish Autism for a two-year project to create an inclusive and accessible environment for autistic employees at its Glasgow campus. The bank claims the move will promote a positive organisational culture and help to remove barriers to employment, creating a wider talent pool of prospective candidates.

INTERNATIONAL

Goldman looks to cut costs

Goldman Sachs has told investors that it wants to cut $1.3bn in costs over the next three years, with approximately $700m to come from its markets business. Speaking at the US investment bank’s first investor day, CEO David Solomon said that the bank aimed to achieve a 14% return on tangible equity by 2022. He added that, in the longer term, the bank would “seek to achieve returns in the mid-teens or higher” as newer businesses, such as transaction and consumer banking, “mature”. The FT’s Lex suggests that the bank should be broken up, pointing out that highly profitable Goldman businesses are heavily subsiding nascent ones.

Deutsche bosses abandon no-bonus policy

Senior executives at Deutsche Bank will receive about €13m in bonuses for 2019, after waiving them during recent years, with a net loss of about €5bn expected by the lender.

AUTOMOTIVE

Pendragon points towards gloomy horizon

Though performance “improved significantly” during the second half of the financial year, car dealership Pendragon has indicated that profits will be at the lower end of expectations. Improvements came “despite challenging market conditions and weakened consumer demand in the run up to the general election in the UK,” Pendragon said, following the closure of 22 underperforming locations, better management of used vehicle inventory and a focus on operational cost management.

Jaguar Land Rover CEO Ralf Speth to step back in September

Jaguar Land Rover chief executive Ralf Speth is to step down in September to concentrate on his position on the board of Tata Sons, the holding company which owns JLR.

Tesla shares up on last-quarter profit

Electric car maker Tesla has revealed that it made $105m (£80.7m) in the final quarter of 2019, after a $143m profit was announced in October. Shares were up over 10% in after-hours trading to over $650, with chief executive Elon Musk predicting last year that the firm would return to profitability in the second half following six months of losses.

UPS orders 20,000 vehicles from electric-van maker Arrival

Delivery firm UPS has placed an order for up to 20,000 custom electric delivery vehicles from UK startup Arrival, with 10,000 to be introduced by 2024.

AVIATION

Wizz asserts strong passenger growth

European budget airline Wizz Air has upped its full year profit guidance to between €350m (£296m) and €355m on strong third quarter results. Revenue rose 24.6% to €637.3m, up from €511.3m last year, while passenger numbers increased 23.2% to 10m from 8.1m the previous year in the three months to the end of December, compared to the same quarter the year prior. Net profit for the period was €21.4m, compared to a loss of €21m in the same period last year.

Boeing reports first loss in two decades

Boeing has reported its first annual loss in more than two decades as the 737 Max crisis continues to hit the firm. The plane manufacturer was forced to ground the aircraft, which had been its best seller, in March last year after two deadly crashes. Now it has said that it expects the bill for the grounding to surpass $18bn. Sales were worse than expected in the final three months of last year when Boeing booked $17.9bn in revenues. The firm posted a loss of £636m for 2019.

FINANCIAL SERVICES

Woodford investors face fresh blow

Link Fund Solutions has revealed that winding up Neil Woodford’s Equity Income fund has cost investors trapped inside more than £10m to date. A further £22.5m will be needed to honour promises made to young companies backed by Woodford. Meanwhile, the suspension of the fund has seen Kent County Council suffer an initial loss of over £120m.

Re-platforming nerves hit Quilter

Reversing three consecutive quarters of outflows, wealth manager Quilter returned to net inflows by the end of last year. Net client cash inflows were £500m for the fourth quarter and a total of £0.3bn for the year, while total assets under management and administration hit £110.4bn at the end of 2019, up 13% on the year prior.

M&G extends ‘temporary’ closure of property fund

Investment firm M&G has extended the suspension of its £2.4bn M&G Property Portfolio fund while the fund's managers continue to sell off assets. They have already struck deals to sell more than £70m, while sales worth a further £172m are under negotiation.

HEALTHCARE

Novartis sales rise 9% as new medicines provide a boost

New medicines including Entresto and Zolgensma boosted Swiss drugmaker Novartis to the tune of 9% last year, with net sales of $12.4bn in the fourth quarter alone.

MEDIA AND ENTERTAINMENT

Guardian bans fossil fuel firm advertising

At a cost of around £500,000 per year, the Guardian Media Group will no longer accept advertising from oil and gas companies. The policy will apply across the Guardian, Observer and Guardian Weekly’s print copies, websites and apps.

BBC News to cut 450 jobs

BBC News has announced it plans to cut around 450 jobs to complete its £80m savings target by 2022. Outlets to be hit by job closures include BBC Two's Newsnight, BBC Radio 5 Live and the World Update programme on the World Service. Bosses said that the cuts are necessary to save money and focus resources on reaching younger people, who increasingly access news online. However, unions warned that the cuts were an “existential threat” to the BBC and public service journalism.

Ticket reseller StubHub faces legal threat from regulators

The Competition and Markets Authority has warned StubHub that it intends to pursue legal action over the ticket reseller misleading customers. The CMA is already investigating the firm’s planned sale to Viagogo.

REAL ESTATE

House price growth increases, Nationwide says

Annual house price growth rose 1.9% in January to £215,897, according to Nationwide, up from 1.4% growth in December and the fastest annual growth rate in over a year. Separately, buyers of luxury London homes got less-generous discounts in the final part of 2019, according the Coutts London Prime Property Index, which said buyers in the £1m to £10m bracket got an average discount of 10.2% off asking prices in the three months to December 31, compared to a 12.7% discount in the same quarter a year earlier.

Landsec talks with CIT fail

FTSE 100 landlord Landsec has seen negotiations to sell its 95% share of X-Leisure collapse, after the £650m deal with private equity buyer CIT was called off. This follows a half-year loss at Landsec revealed in November, alongside the replacement of Rob Neal as chief executive by Mark Allan.

OTHER

Coronavirus hitting multinationals in China

The coronavirus outbreak in China is increasingly impacting multinationals in the region, many of whom have been forced to suspend travel, halt production and shut stores as the crisis deepens. Hundreds of the world’s top 500 companies, including Microsoft, German software company SAP and French carmaker PSA, have a presence in Wuhan - the epicentre of the outbreak. Carmaker Toyota has suspended production at four auto plants, British Airways has cancelled all flights to and from the country for the next few days, while IKEA, Starbucks, McDonald's and KFC have all closed Chinese outlets. Facebook, HSBC, Standard Chartered and LG Electronics have suspended or restricted travel by employees to China.

Citi named most inclusive UK financial firm

Citi has been named as the most inclusive financial services employer in the UK in LGBT charity Stonewall’s Top 100 Employers for 2020.

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