CEO to exit Metro Bank
Metro Bank chief executive Craig Donaldson is to step down from his role at the end of the month, having come to a mutual agreement with the board over his position. This comes in the wake of founder Vernon Hill’s departure in October, with the moves leaving the bank with no permanent chief executive or chairman. Dan Frumkin, who has been with the bank for three months and previously held roles at Butterfield, Royal Bank of Scotland and Northern Rock, will take over as interim chief executive. Mr Donaldson will be on paid gardening leave for a year, earning a salary, pension and benefits worth around £800,000. Metro has faced pressure after an accounting error was uncovered by Bank of England (BoE) regulators earlier this year. The BoE’s Prudential Regulation Authority and the Financial Conduct Authority are conducting a joint review into Metro's loans error.
HSBC introducing blanket overdraft rate
HSBC is to bring in a single overdraft rate of 39.9% for UK customers from March 2020, with only its student offerings excluded. The bank currently charges rates between 9.9% and 19.9% on arranged overdrafts. The increase means some account-holders will see charges quadruple. HSBC will also remove a £5 daily fee for going into an unarranged overdraft and introduce an interest-free £25 buffer on some accounts. The move comes in response to the Financial Conduct Authority's plans to shake up the "dysfunctional" overdraft market, with rules coming into force in April requiring providers to charge a simple annual interest rate on overdrafts and remove fixed fees. Nationwide introduced a single rate of 39.9% across its current account range in November.
Greenpeace hits out at banks over coal claims
Greenpeace has criticised banks for supporting the global coal industry, alleging that Barclays, HSBC, Standard Chartered and Royal Bank of Scotland have collectively supported the industry with financing worth almost £24.7bn since the 2015 Paris Climate Agreement. Rosie Rogers, head of Greenpeace UK's climate emergency campaign, said: "Bankrolling the expansion of coal-fired power generation is indefensible - but this £25bn is dwarfed by the hundreds of billions that banks invest in oil and gas. Behind every coal mine and every oil and gas pipeline is a bank supplying the financial lifeline. It's time to pull the plug.”
Bank to shed 1 in 4 managers
Ulster Bank is planning to cut 175 manager positions in an effort to reduce costs, with this representing 25% of the lender’s managerial roles.
Zopa backer cuts valuation of peer-to-peer lender by almost half
Investment trust Augmentum Fintech took a 47% writedown on the value of its 6.2% stake in peer-to-peer lender Zopa, which on Tuesday completed a £140m fundraising as it looks to gain its banking licence.
Armacell deal agreed
PAI Partners and Lego owner Kirkbi are to buy German insulation foam maker Armacell from Blackstone Group for an undisclosed sum. Reports in October suggested a deal for the firm could be valued at €1.3bn to €1.5bn. PAI Partners will become the majority shareholder of Armacell, while Kirkbi will increase its stake to a significant minority position.
Thoma Bravo to buy Instructure
Thoma Bravo is to buy education software firm Instructure in an all-cash deal for about $2bn. Sachem Head Capital Management has been buying Instructure's shares over time.
RBC expects deal boost
Royal Bank of Canada (RBC) expects a pickup in deal-making in early fiscal 2020, chief financial officer Rod Bolger has said. He was speaking as Canada's biggest bank unveiled disappointing quarterly earnings on the back of a fall in investment banking fees. A 12% drop in RBC's capital markets business' profit led to a drop in overall earnings, with earnings per share up 5% in 2019 from the previous year. "We did see a number of large marquee deals move from Q4 of 2019 to Q1 of 2020," Mr Bolger said, adding: "So we do have a strong backlog as a result, going into 2020."
Fed partly blames stress tests for spike in borrowing costs
Federal Reserve vice-chair Randal Quarles has suggested banks' own internal stress testing may have exacerbated a spike in short-term borrowing costs.
Wall Street banks bet on rebound in battered Hong Kong stocks
Wall Street investors are being advised to make heavy bets on Hong Kong stocks, with the IMF predicting the economy would contract 1.2% this year and grow 1% next year.
General secretary appointed at Renault, Nissan alliance
Hadi Zablit has been promoted to general secretary of the alliance between Renault SA, Nissan Motor Co and Mitsubishi Motors, formed to improve business efficiencies across the firms. The move represents the first executive role to be announced by the alliance in the past year, since former chairman Carlos Ghosn's arrest in November 2018.
M&G suspends property fund
M&G Investments has suspended dealing in its flagship open-ended UK property fund, blaming Brexit uncertainty for a surge in investor requests to cash out. Unusually high and sustained outflows from the £2.5bn M&G Property Portfolio have coincided with a period of continued Brexit-related political uncertainty, M&G Investments said. The fund manager also said ongoing structural shifts in Britain's retail sector had made it difficult for it to sell some of its largest assets. The decision to suspend the fund, and its feeder fund, was taken by its official monitor - its authorised corporate director - and the Financial Conduct Authority (FCA) has been informed. "The FCA is working closely with the firms involved to ensure that timely actions are undertaken in the best interests of all the fund's investors," a spokesman for the FCA said.
Woodford Income Focus remains suspended pending decision
A decision over the future of suspended fund Woodford Income Focus has been postponed by administrators Link Fund Solutions, as possible options for its survival are reviewed. In a letter to investors Link stated: “Suspension will cease as soon as possible following LFS’s determination of the course of action that is in the best interests of investors.”
Brexit-related Irish hubs could create significant employment
The Central Bank of Ireland has said that hubs in Ireland set up by asset management companies in Britain seeking to avoid Brexit-related disruption could provide significant employment. The bank says that more than 100 licence applications from British firms have been received so far, and are currently being examined by the European Securities and Markets Authority for sufficient "substance", or number and seniority of staff.
Winklevoss crypto-exchange hires Starling Bank co-founder
Gemini Trust Company, the cryptocurrency exchange founded by Cameron and Tyler Winklevoss, has hired Julian Sawyer, co-founder of UK digital bank Starling, to head a European expansion drive.
GAM accused of accounting ‘misstatement’ by Swiss bourse
The Swiss stock exchange has accused GAM of a “potentially material misstatement” in its accounting for its acquisition of UK hedge fund Cantab Capital Partners three years ago.
MEDIA AND ENTERTAINMENT
Accounting scandal deepens at M&C Saatchi
Advertising agency M&C Saatchi has admitted that an accounting scandal was much worse than previously thought and issued its second profit warning in less than three months. The group said that following an external review that identified the “misapplication of accounting policies”, it would be taking an £11.6m hit - up from an initially reported figure of £6.4m stemming from internal investigations. Chief executive David Kershaw said a “robust” review has been undertaken and the firm has, under its new group finance director, “started implementing processes and procedures to prevent such issues arising again.”
Orange dividend announced alongside European mobile mast plans
Orange has issued a modest dividend outlook of 70 cents per share as it announced plans to carve out its mobile towers in a majority of European countries in which it operates. Shares were down by around 4% in early trade, with Bryan Garnier analyst Thomas Coudry noting: "Investors will need to wait until 2021 and beyond to see more tangible positive results.” Analysts estimate the mobile towers could be worth around €10bn ($11bn).
Homeowners could face Christmas mortgage penalty
Research by MoneySavingExpert has calculated that homeowners whose mortgages expire over the festive period could be left more than £100 out of pocket, even if they have remortgaged to a new deal with a low interest rate. The consumer website said that in the worst instances homeowners could be paying £130 in extra interest payments this Christmas. A borrower with a typical outstanding loan of £350,000 would pay £70.98 in extra interest if their loan expired on Christmas Eve. This would rise to £131.78 for a homeowner with a £650,000 mortgage outstanding. This issue only affects those switching to a different lender, rather than to a new deal with the same provider.
Older borrowers being steered into equity release
More than two thirds of older borrowers who approach their lender or an adviser for a traditional mortgage end up taking a more expensive equity release deal, according to Lynda Blackwell, ex-mortgage sector manager at the Financial Conduct Authority. She cites research showing that 60% of older borrowers are looking for a traditional mortgage when they first approach their lender or adviser, yet 70% of these customers end up with a lifetime mortgage, having deliberately funnelled toward the product by their adviser.
Clintons seals rescue deal
Clintons has been bought out of administration in a deal that safeguards 2,500 jobs. The greetings card retailer will be salvaged through a complex transaction that allows it to be sold back to its existing owners. The deal means Clinton's 334 stores can keep trading throughout the crucial Christmas season.
Services sector shrinks
The services sector in the UK has seen its sharpest fall in eight months, with the final IHS Markit/CIPS purchasing managers’ index for services dropping to 49.3 in November from 50 a month earlier. A sub-50 figure marks contraction in the sector. Ruth Gregory, senior UK economist at the consultancy Capital Economics, said services seemed to have “done no better than flatline” in the month, while IHS Markit economics associate director Tim Moore said the sector was “falling back into decline after a brief period of stabilisation”. The UK economy is “staggering through the final quarter of 2019,” he added. Duncan Brock, group director at CIPS, said Brexit nerves have “descended over European clients,” leaving them “reluctant to commit until there is more clarity in the UK’s future direction”.
Global economy set to grow in 2020
Asset manager Investec has forecast that global economic growth is set to pick up in 2020, with it predicted to hit 3.3% in 2020 compared to this year’s 2.9%. Investec says trade tensions, a slowdown in China, and difficulties in Eurozone manufacturing have hit growth this year, while also warning that the trade dispute between the US and China is likely to roll into 2020.