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Daily News Roundup: Thursday, 4th January 2018

Posted: 4th January 2018


UK believes Barnier is bluffing on No Brexit deal for banks

Theresa May reportedly believes that Michel Barnier is bluffing when he says there will be no special deal for financial services in a free trade pact. Talks have yet to start on Britain’s future trade agreement with the EU but the EU’s chief negotiator said last month there was no chance of a deal that replicated the easy access that UK-based financial services currently enjoy to the single market. Two senior UK officials familiar with the matter said Mr Barnier was simply setting out an opening position that did not have backing from the 27 other EU member countries. They said banks based in London will be fine because businesses operating in the EU will need to maintain access to finance after Brexit.

RBS offloads Lombard assets

Royal Bank of Scotland has sold offshore assets from its asset financing group Lombard to Investec and Shawbrook Bank for £150m. RBS put around £200m worth of assets up for sale in October in order to comply with rules intended to separate the retail and investment banking sectors which will come into effect in 2019. RBS declined to confirm the sale, reported by Sky News and neither Investec or Shawbrook were available for comment.

Good causes to get £330m in dormant accounts

Hundreds of millions of pounds from dormant bank accounts are to be used to help the homeless and boost good causes. The £330m windfall is to come from bank and building society accounts that have remained untouched for at least 15 years and where the holder cannot be traced by the financial institution involved.

Buoyant UK banks rush to tap debt

According to the latest figures from the Bank of England, UK banks and businesses are tapping debt markets at the fastest rate for eight years. Net new issuance of bonds and commercial paper reached £17.5bn in November.


US blocks sale of Moneygram to Ant Financial

The US has blocked the $1.2bn (£880m) sale of money transfer firm Moneygram to China's Ant Financial, the digital payments arm of Alibaba. Ant Financial and Moneygram said they had abandoned the deal “following the inability of the companies to obtain the required approval for the transaction from the Committee on Foreign Investment in the United States, despite extensive efforts to address the Committee's concerns.”

M&A reaches record in 2017

Thomson Reuters has revealed that the number of worldwide mergers and acquisitions hit a record in 2017, while fees paid to deal advisers rose by 22% year-on-year. A total of 49,448 deals were announced last year, a rise of 3%. The total value of deals hit $3.6trn, similar to 2016. The largest bank by fees earned was Goldman Sachs, which was paid a total of $2.45bn.


Tesla misses production forecasts

Tesla has again missed production forecasts for its new Model 3 car and further delayed one of its targets as it continued to experience “manufacturing hell” in the fourth quarter. The electric carmaker built fewer cars in the last three months of last year than it did in the same period the year before.


Airlines set to hand out bonuses

American Airlines and Southwest Airlines are to hand out $1,000 bonuses to their employees to mark the passing of President Trump's corporate tax cut. American Airlines said that the distribution, costing about $130m, would take place in the first three months of the year. Southwest said that it would distribute the $1,000 bonuses next week and would give a further $5m to charitable causes. CEO Gary Kelly said: "We applaud Congress and the president for taking this action to pass legislation."


Housing boost for construction as growth slows

Demand for housing supported the construction industry in December, IHS Markit’s purchasing managers’ index (PMI) shows, although growth slowed. Residential property construction led the way with a score of 55.3, slightly down on the 56.6 recorded in November, while the commercial construction sector fell to 47.2, down from 48.4 in November, marking six consecutive months of falls. The overall reading for the PMI was 52.2, down from 53.1 in the previous month. Duncan Brock of the Chartered Institute of Procurement and Supply said the continued fall in commercial activity appears to be “testament to Brexit-related uncertainty on the horizon.”

FCA probes Carillion

Carillion is being examined by the Financial Conduct Authority. The construction firm said the watchdog is investigating the “timeliness and content” of its announcements from 7 December 2016 to 10 July 2017. During that period Carillion’s share price plunged and its chief executive departed following a series of profit warnings. In July 2017 Carillion said it was writing off £845m in revenue it had expected from several large contracts, and it admitted that its already big borrowings were becoming bigger.


Crypto currency boom boosts Plus 500

Plus500 expects to report full-year profit and revenue ahead of market expectations after rising customer numbers and strong trading helped to offset challenges from a sector-wide regulatory clampdown. The spreadbetting company said it achieved strong volumes in crypto currency CFDs and experienced increased interest in the offering throughout the year. Record quarterly revenue was achieved in the final quarter of 2017 and about 246,000 new customers joined during the year, up from 104,432 a year earlier.

Exchanges granted extra time on Mifid

The FCA has granted waivers to the London Metal Exchange and ICE Futures Europe on the first day of Mifid II, giving them a 30-month extension to rules on the buying and selling of derivatives. The waivers were granted amid concerns that, if the exchanges were not allowed more time to adopt the new rules, it could lead to a seizure in important financial markets. The FT notes that the introduction of Mifid II passed without significant upset, with fears that new IT systems would buckle and trading would evaporate proved unfounded.

Brummer: The City must go it alone

In the wake of the introduction of Mifid II, Alex Brummer in the Mail argues that instead of having to conform to the bureaucracy involved and agreeing to every rule and trading change with Brussels, Frankfurt and Paris, the City of London should go it alone. He adds that the Square Mile is at its best, most innovative and creative as a rule maker rather than a rule taker.

Britain braced for Brexit raid on asset management

The FT reveals that ministers are preparing themselves for a raid on the UK’s asset management industry after Brexit. Paris, Frankfurt, Dublin and Luxembourg are all said to be looking to expand their share of the European fund management sector.

Numis co-chiefs take home £2.5m

City adviser Numis has handed its co-chief executives a £2.5m bonus package for the year to September. Alex Ham took home £1.5m while Ross Mitchinson was paid £1m.

Bosses buy motor insurer

Motor insurer Tempcover has been bought by its bosses for £13.3m. The deal was funded with £7.5m from Connection Capital, and a £5.8m loan from Santander.


Allergan plans job cuts

Pharmaceutical firm Allergan has announced a series of cost-cutting actions, including slashing more than 1,000 currently-filled positions and around 400 open roles. The company expects to incur around $125m (£92m) in restructuring costs.


JP Morgan firewall blocks YouTube hate videos

Google has been accused of not doing enough to remove dangerous content from YouTube after JP Morgan created its own tools to prevent its online advertisements from appearing alongside hate-filled videos. Tim Loughton, a member of the home affairs select committee, said: “It is a damning indictment of the lack of seriousness and urgency that social media platforms place in vetting extremist, abusive and other inappropriate content that respectable international companies like JP Morgan have to develop their own technology to avoid being tainted by it.”


Brexit staffing fears begin to bite

Recruitment firm Staffline has admitted that revenues would fail to meet the City’s expectations. The agency said full-year revenue would miss its £1bn target and as a result shares fell 12.7p at 997.3p. The Standard notes that many employers expect the economy will worsen over the next year as the UK prepares to leave the EU, meaning they are less likely to recruit new staff.


Wells Fargo buys London office

Wells Fargo has finalised its purchase of an office block on King William Street in the City of London, marking the US bank’s first international property buy.


Poundland financing deal reduces reliance on Steinhoff

Poundland has distanced itself from its South African parent company Steinhoff by securing £180m of independent financing. Pepkor Europe, the European owner of Poundland, said the loan facility from US investment firm Davidson Kempner Capital Management reduces its reliance on Steinhoff, which is facing criminal and tax investigations.


Man City tops football financial power list

Event organiser Soccerex has found that Manchester City have more financial firepower than any other club in world football. In a report, Soccerex suggested the Premier League leaders have the biggest economic growth potential. UK clubs dominate the top ten spots with Arsenal ranked second, Tottenham Hotspur fifth, Manchester United seventh and Chelsea in ninth position. The list is based on five factors including potential owner investment.


Scotland has UK’s lowest rate of business growth

Official data shows Scotland had the worst net number of new businesses in the UK during 2016. A total of 22,000 businesses were created while 21,000 disappeared from its marketplace, leaving a net gain of 1,000 companies. Analysts say the poor performance is due to political uncertainty, low productivity and infrastructure problems. Elsewhere, small businesses in Yorkshire are expecting a good year in 2018, predicting revenue growth of 1.9% compared with the previous year’s average rise of 1.2%.


Fat Cat Thursday for FTSE bosses

The average pay of FTSE 100 chief executives will today pass the annual average wage for full-time workers. The day has been declared "Fat Cat Thursday" by the High Pay Centre and the CIPD, which calculated that company bosses earning an average of £4.5m in 2016 will take just three days to surpass the typical worker’s salary of £28,758. However, average FTSE 100 chief executive earnings have fallen, down from £5.4m in 2015.

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