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Daily News Roundup: Thursday, 4th April 2019

Posted: 4th April 2019

BANKING

Santander to slash UK costs

Santander has outlined plans to cut costs by a further €1.2bn (£1.03bn) across its European operations, with a tenth of that hitting Santander UK. The bank said that it would find efficiencies in the UK by "simplifying, digitalising and automating the bank" in a move that could save about £85m. Santander had announced in January that it was closing 140 UK branches this year, taking its estate down to 614. Santander’s profits fell in Britain by 12% to £1.72bn last year as margins came under pressure. It also missed targets for selling customers more than one product and for digital customer numbers. The FT's Lex suggests that, in time, the Spain and Latin America-focused bank may dispose of its UK arm entirely to meet ever-increasing global capital requirements.

Digital challenger expands in Yorkshire

Digital challenger Cashplus has revealed that it is now providing alternative banking services for 2,329 businesses in Yorkshire. It has set a target of supporting 10% of all new businesses in the region over the next five years.

PRIVATE EQUITY

Anti-fraud start-up raises another $50m

A British technology start-up has raised $50m (£38m) in new funding from investors including Japan's SoftBank Investment (SBI). Onfido has now raised more than $100m (£76m) for its software, which uses artificial intelligence to check documents and prevent fraud.

Carlyle shakes up top team in Europe after deals flop

Carlyle has shaken up the top management of its European flagship fund, with executive Zeina Bain departing the private equity group. She is set to join ICG in September.

INTERNATIONAL

Commerzbank board to discuss Deutsche merger

Commerzbank's executive board is to hold a meeting on 9 April to decide whether to continue merger talks with Deutsche Bank. Commerzbank's CEO Martin Zielke previously told investors in March that the firm's management was aiming for a decision on the merger within "two to three weeks".

Freshfields sued over role in German bank’s tax scandal

The liquidator of failed Frankfurt-based lender Maple Bank is suing law firm Freshfields Bruckhaus Deringer for €95m in damages in relation to its advisory role in controversial share-swapping schemes.

Malaysia ex-PM on trial over 1MDB scandal

Malaysia's former leader Najib Razak has pleaded not guilty to all charges in the first of several trials over his alleged involvement in the looting of sovereign wealth fund 1MDB. He is accused of stealing millions from the state investment vehicle.

Asia tech companies fuel $23bn convertible bonds boom

Tech companies in Asia are increasingly leveraging the convertible bond market to finance their growth, with equity-linked deals generating almost $3bn in the first quarter of 2019.

AUTOMOTIVE

AA profits fall following tech investments

Profits at the AA went into reverse last year amid higher spending on new technology, roadside patrols and marketing. Pre-tax profits fell by almost two thirds to £53m in the year to January, partly thanks to £26m of “strategic expenditure” that included developing a new “Smart Breakdown” service.

European carmakers face profits hits from emissions rules

Analysts at UBS have warned that Europe’s biggest car manufacturers are facing a €7.4bn crash in profits from the cost of meeting the EU's emissions rules, set to come into effect in 2021.

AVIATION

Pilot shortage grounds Flybe

Flybe cancelled dozens of flights yesterday as it enters discussions over potential job losses. The company blamed an industry-wide shortage of pilots for the delays, as well as its own pilots taking holidays.

CONSTRUCTION

Finance chief set for top job at Intu

Intu Properties finance boss Matthew Roberts is expected to be promoted to chief executive at the shopping centre developer in the coming days.

FINANCIAL SERVICES

Customers face tax bills on mis-sold Isas

People who held mini-bonds with collapsed firm London Capital & Finance (LC&F) may have to pay tax on the failed investments, with HMRC saying Isa accounts dating back to April 2017 are void. Although LC&F was approved by HMRC as an official Isa manager and its bonds advertised as Isa-eligible, the mini-bonds it sold were not Isa-compliant. The Revenue has thus declared that income tax must be paid on any interest earned over and above individual tax allowances. HMRC says it is not pursuing investors aggressively or retrospectively and is sympathetic to the position they find themselves in. Separately, property developer Ocea Group is planning to raise up to £5m over five years through a new mini-bond that it expects to generate £25m in profits.

Spread-better warns of revenue hit

CMC Markets is expecting a 37% hit to its full year revenue due to the European Securities and Markets Authority restricting the marketing and sale of contracts for difference to retail customers last October. The spread-betting company expects to report contract for difference and spread betting revenue of around £110m for the year to March 31, and net operating income of around £131m, down from £187.1m the year prior.

Exports from Scots finance firms outpace London

Research from TheCityUK reveals growth in exports of Scotland's financial services is significantly outpacing expansion of the sector in London. Scotland exported £7.2bn of financial and related professional services in 2017, representing a 7.4% increase from the previous year. Over the same period, the equivalent exports from London increased by 4.4%.

Quilter to acquire Lighthouse

Quilter has agreed to buy financial advice firm Lighthouse in a deal worth £46m. The acquisition would see the wealth manager, formerly Old Mutual Wealth, add Lighthouse’s 400 advisers to its network. Fund manager Paul Mumford suggested Lighthouse could attract better offers from larger firms such as Hargreaves Lansdown or Rathbones.

Woodford lists stakes on Guernsey exchange

Fund manager Neil Woodford has listed his stakes in several private companies on the International Stock Exchange in Guernsey, enabling him to avoid regulatory limits on unlisted shares.

ECONOMY

Service sector shrinks

Growth stalled in the first three months of 2019 as the services sector contracted in March for the first time in two-and-a-half years. The purchasing managers' index from IHS Markit/CIPS fell to 48.9 in March from 51.3 in February, below forecasts. It is the first time the index has fallen below 50 since July 2016, immediately after the UK voted to leave the European Union.

OTHER

Carney warns no-deal risks are 'alarmingly high'

The risk of Britain stumbling into a "disorderly" no-deal Brexit is now "alarmingly high", Mark Carney has warned. The Bank of England governor said that although "real progress" had been made preparing for leaving without a deal, it would still mean "lots of things to worry about". He added it was "absolute nonsense" to suggest no-deal could be easily managed. Meanwhile, Goldman Sachs boss David Solomon spoke about the "challenges" posed by Brexit at the US investment bank's 150th anniversary party. He told attendees: "The kind of discussions on Brexit are happening in the midst of broader conversations about trade, security and regulation and the impact of geopolitical events on markets and businesses can never be underestimated."

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