Santander profits hit by regulatory costs
Santander has revealed a pre-tax profit of £1.6bn, 14% lower than the £1.8bn reported a year earlier. On an underlying basis, pre-tax profit declined to £1.7bn in 2018 from £2bn. Net interest income fell 4% to £3.1bn due to pressures on new mortgage lending margins. The bank incurred higher regulatory costs related to ring-fencing and MiFID II. It was also hit by a £32.8m fine by the City watchdog last month for “serious failings” in processing deceased customer accounts. Nathan Bostock, chief executive of Santander UK, said: “Our 2018 financial performance reflects our strategy of selective growth, while actively managing costs in the competitive and uncertain operating environment. In the current uncertain environment, we will continue to do everything we can to support our customers and deliver on our purpose of helping people and business prosper across the UK.” Globally, Santander reported a 4% net profit rise in the fourth quarter led by a strong performance in Brazil and Mexico.
Barclays prepares to trigger £166bn no-deal Brexit plan
Barclays is set to pull the trigger on no-deal Brexit plans to move £166bn worth of assets to its Irish division as it “cannot wait any longer” amid continuing political uncertainty. The High Court, which has approved the move, says the move involves 5,000 clients. However, few jobs in London are expected to be affected. The business amounts to around 15% of Barclays £1.2trn in total assets and was previously conducted in the UK through branches across the EU. Barclays had to ask the High Court for approval to transfer the business which took place in branches in Germany, France, Spain, Italy, the Netherlands, Portugal and Sweden for corporate banking, investment banking and some wealthy private clients.
Boath: Fees Barclays paid to Qatar may be viewed as ‘bungs’
Richard Boath, who headed Barclays' EU financial services group during the crash, has indicated that staff knew “secret fees” paid to Qataris in 2008 could be viewed as a “bung”. The SFO claims Barclays bankers used two advisory services agreements to pay Qatar’s sovereign wealth fund and its former Prime Minister £322m as part of an inflated fee in exchange for a crucial investment that saved the bank from being nationalised. In a call with the bank’s top internal lawyer, Boath was concerned about how the media might react to the ASAs. He said: “My worry is every journalist just gets it and says this is you know - I hate to use the phrase so I'm not going to use it - it begins with a 'B'.”
Investors kick back at CYBG over directors’ pay
Over a third of shareholders in Clydesdale and Yorkshire banks’ parent company CYBG have voted against a pay deal for top bosses. According to CYBG’s annual report, chief executive David Duffy was paid £1.8m in 2018, including bonuses, a decrease on the previous year’s £2.05m, but the bank said it would fully engage with shareholders in the coming months to understand their concerns. CYBG recently revealed it swung to a full-year loss of £164m after it was forced to take an extra £150m charge linked to the mis-selling of PPI.
Lloyds to cut jobs
Lloyds Banking Group is set to cut 270 jobs as part of changes it said were needed to adapt to the changing requirements of customers. The cuts will be made in the bank’s operational and support teams, with 490 jobs cut and 220 new roles created. A spokesman for the bank said: “The group's policy is always to use natural turnover and to redeploy people wherever possible to retain their expertise and knowledge within the group. Where it is necessary for employees to leave the company, we will look to achieve this by offering voluntary redundancy. Compulsory redundancies will always be a last resort.”
TSB employees tasked with rebuilding trust
Workers at TSB are to be given access to the boardroom to help “rebuild public trust” following the IT problems last year. In what is thought to be a first for a high street bank, TSB's employee advisory panel will provide feedback and present ideas directly to the board, giving its 8,000 staff influence. The panel, called Link, is made up of 125 TSB employees from across its branches and head office. Working on a two-year cycle, the latest cohort is due to start in March.
Shares in Metro Bank slump
Shares in Metro Bank fell by more than 10% yesterday after Banco Santander warned that the UK’s operating environment was “competitive and uncertain”. AJ Bell investment director Russ Mould said that the challenger bank has less room to disappoint than its rivals due to its high growth expectations. Alex Brummer in the Mail comments that Metro Bank might need a respected name parachuted in to head the bank. He notes that although it has a decent model its execution has been disappointing.
Lucas: Banks should do more to protect customers from fraudsters
Writing in the Times, Edward Lucas argues that banks should do more to protect their customers from fraudsters. He contends that banks have created an online banking system that is a fraudsters’ paradise, adding that it should be their responsibility to make it safe for us to use.
Santander chairman admits to rushing botched Andrea Orcel hiring
Ana Botín, the executive chairman of Banco Santander, has said the bank rushed its move to hire Andrea Orcel from UBS before financial details were “completely set”.
Deutsche Bank investors to tot up Sewing’s scorecard
Olaf Storbeck in the FT looks ahead to Deutsche Bank’s annual results, which are due tomorrow. Analysts are unconvinced about the bank’s medium term profitability pledges.
Formidable arsenal lines up against scandal-hit Danske
The FT’s Richard Milne examines the problems facing Danske Bank including the threat of regulatory action in Denmark and the US.
Ghosn claims arrest was result of “plot and treason”
The former chairman of Nissan, Carlos Ghosn, has said that his arrest in Japan was the result of a “plot and treason” against him. He said some Nissan executives wanted to stop his plan to integrate Renault, the French car firm he headed, with its Japanese alliance partners, Nissan and Mitsubishi. Mr Ghosn faces three charges in Japan of financial misconduct, including understating his income and aggravated breach of trust.
Car makers cut investment
Investment in the UK car industry almost halved last year to £589m as firms held back ahead of Brexit. As a result, the Society of Motor Manufacturers and Traders warned that car manufacturing is “close to an irreversible decline”. SMMT boss Mike Hawes said investment in the industry has effectively “stalled” amid fears over future trading prospects with key markets, including the EU.
Volvo reveals strong fourth quarter
Volvo will pay a dividend of five Swedish krona (42p) per share after revealing that its core trucks division recorded its most profitable year on record. Volvo’s operating income in 2018 was 34.5bn krona, up 16% on 29.7bn krona the previous year, while it generated 390.8bn krona in sales, a rise of 17.5% on last year’s 332.7bn.
Boeing quarterly results fly past estimates on strong plane demand
Boeing has flown in record revenues of over $100bn for the full year, after delivering over 800 jets. Fourth quarter revenues were $28.3bn, while operating profits were $4.2bn. Separately, rising costs have bitten into Wizz Air's third quarter profits. Pre-tax profit tanked 87.6% to €1.7m (£1.5m) in the last three months amid higher staff and fuel costs.
Insurers urged to improve
The FCA is set to widen the scope of a scheme intended to shame general insurers into improving value for money and the quality of their products through a new ranking system. The regulator has also said it wants to add complaints data to the information it publishes about individual insurance products.
LSE takes stake in Euroclear
The London Stock Exchange has acquired a 4.9% stake in clearing house Euroclear. The £242m deal will allow the LSE to continue to operate smoothly after Brexit.
Former TP Icap boss loses bonus
John Phizackerley, the former boss of TP Icap, will not receive a payoff of up to £7.5m after he was classified as a “bad leaver”.
Mimiro attracts weighty backers
Fintech startup Mimiro has closed a $30m (£22.8m) funding round led by Revolut investors Index Ventures and Balderton Capital.
MEDIA AND ENTERTAINMENT
Facebook users keep growing despite privacy scandals
Facebook users have continued to rise despite a series of data privacy scandals and criticism over its attempt to stem toxic content. The social media company said the number of people who logged into its site at least once a month jumped 9% last year to 2.32bn people. Fears the firm's scandals could put off advertisers also proved unfounded with annual revenues up 30% on last year. Meanwhile, Apple has closed down Facebook’s internal apps amid broader debate about data privacy.
Mortgage approvals dropped in December
Mortgage approvals dropped to an eight-month low, to 63,793 from 63,952 the previous month, amid falling household confidence and heightened uncertainty in December, according to the Bank of England. Mortgage lending rose by £4.1bn in the same month, down from £3.6bn in November. “Weak mortgage approvals reflect the very high level of house prices, which, combined with rising interest rates, have been suppressing demand. However, the data suggests that Brexit uncertainty is increasingly weighing on lending volumes,” said Hansen Lu, economist at Capital Economics.
Major retailers failing on sustainability and worker protection
The Environmental Audit Committee has found a group of major UK fashion retailers, including JD Sports, Sports Direct, TK Maxx, Amazon UK, Boohoo and Missguided, is failing to take action to promote environmental sustainability. The six firms are the "least engaged" in the industry. The EAC wrote to 16 leading retailers last year asking what they are doing to reduce their environmental and social impact. Next, Debenhams, Arcadia Group and Asda Stores are "moderately engaged", while Asos, Marks & Spencer, Tesco, Primark and Burberry are the "most engaged".
Credit card usage squeezed over Christmas
New figures from the Bank of England have shown that shoppers spent less on their credit cards at Christmas. Consumers paid back nearly as much as they borrowed on credit cards in December - the key month for Christmas trading. Some £92m more was borrowed than repaid, the lowest level of any month since September 2014, the data shows. The Bank of England's seasonally adjusted figures show that £72bn remains outstanding on the UK's credit cards, but that balance only rose slightly in December. General consumer borrowing, which includes loans, overdrafts and credit cards continued to grow but the rate of increase has slowed. The annual growth rate stood at 6.6% in December, much lower than the double-digit growth seen in the second half of 2016 and first half of 2017.
British firms accelerate no-deal Brexit plans
The CBI has said businesses are in despair following the Parliamentary showdown on Tuesday with many expecting a no-deal Brexit is now more likely. “I don’t think there will be a single business this morning who is stopping or halting their no-deal planning as a result of what happened,” CBI director general Carolyn Fairbairn stated. Jasmine Whitbread, CEO of business group London First, urged the Government to delay Brexit rather than leave without a deal.
IoD head steps down
Stephen Martin has resigned as head of the Institute of Directors less than two-years into what is normally a three-year post. The IoD said the director-general had told them of his plans to leave before Christmas but it had decided not to announce his departure until he had served his full notice period. The IoD currently has 30,000 members, down from a peak of 40,000 before the financial crisis.