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Daily News Roundup: Thursday, 30th May 2019

Posted: 30th May 2019


Savers stick with Big Five but lose out on interest

A report by the Centre for Economics and Business Research (CEBR) has found that savers are missing out on higher interest rates by failing to switch to challenger banks. The study shows that Barclays, HSBC, Lloyds, Royal Bank of Scotland and Santander hold £827bn of the £1.3trn in UK household deposits, equal to a 63% market share. The Big Five are offering a maximum of £3.4bn in interest on current instant access and fixed-term deposit accounts over the next 12 months, but the study revealed if savers switched to the best rates paid by the smaller competitors, they could earn up to £7bn more over the same period. The CEBR said most challenger bank accounts offer rates at least one percentage point higher than their Big Five rivals, suggesting that many savers are either not aware of the better deals on offer or are put off by the hassle of switching.

Many yet to claim ahead of PPI deadline

With just three months to go to the August 29 deadline for claims over PPI, 25% of victims are yet to claim. Around 64m PPI policies were mis-sold between the 1970s and late 2000s, resulting in £34bn being paid out since January 2011. An estimated £10bn related to mis-sold PPI has been set aside by banks.

Bank fraud sanctions the wrong way round

In a letter to the Times, Lord Vaux - a member of the Lord’s EU financial affairs sub-committee – argues that banks which receive and process money stolen by fraudsters should be legally liable for victims’ losses. He says most frauds would not be possible if the fraudster were not able to use a bank account.

Record lending by Weatherbys

Client lending at private banking group Weatherbys rose by 23% to £475m in the year to 31 December. Net interest income was also up, rising £4.1m to £23.9m on the increased lending activity.


Warburg Pincus not planning fashion sale

Warburg Pincus, which bought Reiss three years ago in a £230m deal, has denied it is planning to sell the upmarket British fashion chain.


HSBC to boost retail wealth management staff in Asia

HSBC is to boost staff numbers in its Asia retail wealth management division by about 300 by the end of this year - with a focus on expanding its business in Singapore. HSBC is also planning to increase its insurance distribution and product offerings in Hong Kong, China and Singapore.


Brexit shutdown slashes UK car production

UK car production in April dropped by almost a half following factory shutdowns designed to cope with disruption from a 29 March Brexit. Even though that deadline was delayed, the factories still closed and production fell 44.5% according to the Society of Motor Manufacturers and Traders (SMMT). In what it called "an extraordinary month", the SMMT said only 70,971 cars rolled off production lines - some 56,999 fewer than in April a year ago.


Boeing 737 Max could be grounded for months

Boeing's 737 Max aircraft is unlikely to re-enter service before August, according to the head of the airline industry's trade body, IATA. Director General Alexandre de Juniac said "we do not expect something before 10 or 12 weeks", although he added a final decision was up to regulators.


Telford profits hit by shift towards rental sector

Telford Homes posted record revenues of £354.3m in the year ended March 31, but pre-tax profits fell from £46m to £40.1m, as it shifted focus towards the lower-return rental sector. The developer also said that the prices on its homes had fallen in London because of political uncertainty and customer expectations of higher discounts and incentives


FCA calls on Brussels to face 'reality' in no-deal Brexit planning

The Financial Conduct Authority has called on Brussels to stop ignoring the "reality" of open markets by putting up barriers to share trading in its no-deal Brexit planning. The FCA warned that a failure to grant temporary equivalence - which would allow for most businesses to operate as usual - in the event of no deal risked “fragmentation of markets”. The watchdog’s intervention comes as the European Securities and Markets Authority announced it has abandoned plans to prevent investors across the EU from trading dual-listed companies in London in the event of a hard Brexit. However, some restrictions remain in place, undermining investment firms’ ability to choose where to trade freely, which would “still cause disruption to investors”, the FCA said.

Warnings over credit card debts stepped up

People with long-standing debts on credit cards are receiving letters encouraging them to make more than the minimum payments. Rules set by the Financial Conduct Authority mean that many people will now be receiving a second reminder suggesting they speed up repayments. Providers could also suspend cards if borrowers fail to take action by March. The FCA imposed the rules after it emerged that providers had made large profits from their 3.3m UK customers in persistent debt. However, StepChange has raised concerns that the warnings may not be clear enough. The debt charity said that as letters from card providers varied, it was not always entirely clear to individuals what was going to happen by next March.

CMA probes planned takeover of Provident Financial

The Competition and Markets Authority is investigating whether the £1.3bn takeover of Provident Financial would lessen competition for consumers. The sub-prime lender said the bid from Non-Standard Finance (NSF), run by its former boss John van Kuffeler, was "flawed". NSF has already offered to sell its home credit arm to head off concerns. The CMA wants to find out whether the sale of the Loans at Home business - the UK's third largest provider of home credit - would remove the overlap in the home credit market.

Silicon Valley fintech Plaid pushes into UK market

US fintech Plaid, which last year secured a valuation of $2.65bn, has expanded to the UK as it seeks to capitalise on the launch of open banking in the UK.

Libor broker banned for dishonest trades

Former City broker Terry Farr has been banned for life by the Financial Conduct Authority over nine “wash trades” that he was involved in between September 2008 and August 2009. The FCA said the trades had “no legitimate commercial purpose”.


ArcelorMittal cuts EU output

Steelmaking giant Arcelormittal has cut its European production for the second time this month amid weak demand. European customers are also relying on increased imports.


T-Mobile and Sprint could sell Boost for $3bn

Potential buyers are reportedly lining up bids of up to $3bn (£2.4bn) for pre-paid phone company Boost Mobile. The planned sell-off comes after T-Mobile and Sprint won approval for their $26bn merger.

YBS picks taps WPP agency for media account

Yorkshire Building Society has engaged WPP agency Mindshare for its media planning and buying account - which will be worth around £6m annually over the next five years.

KKR and Springer clan prepare bid to take media group private

The founding family and chief executive of Germany’s Axel Springer have teamed up with KKR in a bid to take the media group private.


Gap between asking and selling price widens

The average gap between the asking and the selling price of homes rose to 3.9% in the first three months of 2019, up from 3.3% in the same period last year, Zoopla's Cities House Price Index shows. Houses sold at lower prices due to "weaker market conditions" and "harder negotiations" from buyers, Zoopla said. In London, the selling price was on average 5.7% below the original asking price, however, Edinburgh and Glasgow both reported average selling prices above the original asking prices at 6.3% and 5.2% respectively. Average UK house prices rose by 2.2% to £218,700 in the period, as growth slowed down from 3.1% in the same period last year, according to the index.

Deutsche Bank enters UK mortgage market

Deutsche Bank Wealth Management is to start offering regulated mortgages to its private banking clients in Britain. The wealth manager said clients looking to buy houses in the UK and borrow £3m or more at competitive loan-to-value and interest rates will be able to use the product. It will be available to clients who want to buy houses in nine other jurisdictions, including France and Italy.


Rights issue could save M&S from FTSE relegation

Marks & Spencer appears likely to remain in the FTSE 100, although by a close margin, after launching a £600m rights issue to fund its joint venture with Ocado.


ECB warning over corporate debt bubble

The European Central Bank has echoed warnings from the Bank of England that a vast corporate debt bubble poses a fundamental threat to financial stability. In its latest examination of the dangers facing the financial system, the ECB said that leveraged loans to businesses presented particularly high risks. A “severe but plausible” scenario presented by the BoE last week suggested up to £10bn could be hurriedly sold by UK fund managers triggering a liquidity shortage, if swathes of corporate bonds were downgraded to below investment quality.

End of low pay in sight

Research by the Resolution Foundation shows the proportion of workers on low wages has fallen to its weakest level since 1980. The think tank found that 17.1% of workers in Britain were low-paid, defined as having wages below two thirds of median hourly earnings. The report also predicts this proportion could fall to zero by the middle of the 2020s as long as the government continued with incremental rises to the national living wage.

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