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Daily News Roundup: Thursday, 5th March 2020

Posted: 5th March 2020

BANKING

Barclays to cut jobs and relocate staff

Barclays has announced a shake-up affecting more than 1,000 workers that will see the closure of a site in Leeds. Plans to close the processing centre by year-end will affect 800 staff, with 200 staff – as well as 90 contractors - to lose their jobs. Of the remaining 510 roles, 270 staff are set to be moved to Manchester and Sunderland. Another 100 affected workers in Leeds are to be given the option to work from home or at other Barclays locations in the area, while the future of a further 140 positions remains unclear. Elsewhere, the bank is putting a further 340 staff on notice for job cuts or relocations, with the majority of those affected currently based in Coventry. Barclays said: “In order to drive collaboration, Barclays is moving teams closer together at our UK sites in Glasgow, Greater Manchester and Northampton.”

Metro Bank executive leaves before starting

Metro Bank has announced that Grahame McGirr, who was set to be appointed interim chief risk officer, left the company just two weeks after arriving and before formally taking up the role. A spokesperson said: “He was only in the business for a couple of weeks and the bank decided it wasn't quite the right fit and therefore he left,” adding that “sometimes things don’t work out”. Current chief risk officer Aileen Gillan, who has held the position since 2013, will stay with Metro until the end of March while the company looks to make another interim appointment.

Monzo leads on customer service

Monzo has topped a customer service poll from MoneySavingExpert.com, with 94% of users ranking it as “great”. First Direct came second and Starling Bank third in the ranking which polled over 5,000 current account holders. Martin Lewis, of MoneySavingExpert, said traditional banks looked like "lumbering dinosaurs" in comparison to the digital challengers.

Banking competition fund may face NAO review

The state-backed Banking Competition Remedies scheme (BCR) – the body tasked with distributing funds that the Royal Bank of Scotland was ordered to set aside to boost business banking competition - could be set to face a review from the National Audit Office. The BCR has faced criticism for awarding £120m to Metro Bank despite it revealing a major accounting error. The bank later returned £50m because it could not meet targets.

Sherwood joins Revolut

Former Goldman Sachs banker Michael Sherwood has joined Revolut as a non-executive director. Revolut has also appointed Ian Wilson, who has held roles at Royal Bank of Scotland, Santander, Tesco Bank and Monzo, to its board.

Banks test disaster recovery sites on coronavirus fears

Goldman Sachs, JPMorgan, Morgan Stanley and Citigroup are among global banks testing disaster recovery sites in the UK and elsewhere ahead of a potential coronavirus outbreak.

PRIVATE EQUITY

Permira sells 11% TeamViewer stake

Private equity investor Permira has sold an 11% stake in TeamViewer. The sale, to institutional investors, saw 22m shares change hands at €32 each, valuing the sell off at around €700m. Permira retains a 51.5% stake and has set a 90-day lock-up period during which it will not sell any more shares.

INTERNATIONAL

Indian court overturns banking ban on digital currencies

India’s Supreme Court has overturned a ban on banks dealing with cryptocurrencies, lifting a bar put in place by the Reserve Bank of India in April 2018.

Spanish banks under pressure after credit card ruling

In a move set to impact upon the wider sector, Spain's Supreme Court has ruled that a 27% interest rate applied by online bank WiZink to one of its credit cards was unjustified. It is likely that the decision will see rivals forced to cut rates and, although the decision was specifically about a WiZink card, Caixabank, Bankinter and Sabadell shares dipped in the wake of the ruling.

Deutsche Bank’s trimmed bonuses

Deutsche Bank staff are expected to receive letters with their bonuses for 2019 later today, the pool for which is said to be 20% smaller than 2018's €1.9bn.

AUTOMOTIVE

More cash for UK's top-funded driverless car start-up

FiveAI has secured a further $41m (£32m) in funding, bringing its total haul to $77m – placing it among Europe’s best-backed driverless car businesses. Stan Boland, chief executive of the driverless car start-up, said the firm will turn its focus to the supply of software and safety data.

AVIATION

Flybe enters administration

Flybe has gone into administration, putting 2,000 jobs at risk, after a bid for fresh financial support failed. The UK airline said the impact of the coronavirus outbreak on demand for air travel was partly to blame for its collapse. Its website is now advising customers "not travel to the airport" unless they have arranged an alternative flight.

FINANCIAL SERVICES

Minister: UK can lead the world on financial services

With London looking to maintain access to EU markets, financial services minister John Glen says Britain has no plans to drastically rewrite the rulebook governing the banking sector. With Brussels set to weigh whether UK-based banks, insurers and asset managers comply with rules that are "equivalent" or as robust as those in the EU before granting access, Mr Glen insists there is “no secret plan to deviate.” He told the House of Lord's sub-committee on financial affairs: “The core message that we have is we want to observe the highest standards," adding that Britain has put EU financial rules into UK law. He added that Britain has begun reviewing how financial services should be regulated in future, saying: “I want us to be world leaders in every bit of financial services.”

FCA: 7 investment funds breached ‘trash ratio’

The Financial Conduct Authority (FCA) has revealed that, since 2017, seven UK fund managers breached European rules that limit holdings in unquoted securities to 10% of their portfolio. The eight instances of the so-called trash ratio being breached do not include breaches made by Neil Woodford’s now defunct Equity Income fund. Revealing the information following a Freedom of Information request by the Financial Times, the FCA did not disclose the names of the funds. It did note that four cases were classed as active, where fund managers make decisions that tip the portfolio beyond the 10% mark.

Lloyd's of London asserts emergency coronavirus plan

Lloyd’s of London has “emergency trading protocols” in the form of electronic placing to ensure business continuity, should the coronavirus epidemic restrict access to its building. The firm is one of the last stands of face-to-face trading in the City.

Legal & General boosts operating profit

Legal & General boosted operating profit 12% to £2.1bn in 2019, up from £1.9bn the previous year, and finance chief Jeff Davies expects deals to continue at the same rate this year. Operating profit from continuing divisions rose 17% to £3.5bn, from £2.1bn the year prior, while pension risk transfer sales increased from £9.1bn in 2018 to £11.4bn, taking the firm's full year dividend up 7% to 17.5p per share.

Regulatory equivalence with EU could put deal with US in doubt

The House of Lords EU Financial Affairs committee have discussed how a potential UK-US trade deal could be complicated if financial services equivalence with the EU is negotiated.

LEISURE AND HOSPITALITY

Hostelworld books £3.5m coronavirus hit

Online booking platform Hostelworld has warned that coronavirus could hit first-quarter profits by up to £3.5m due to a fall in bookings, a rise in cancellations and a big advertising spend to attract customers. Pre-tax profits fell 55% to €3m (£2.6m) for the year to December, as bookings dropped 5% and sales slipped 2% to €80.7m.

REAL ESTATE

Buying activity slows property fund outflows

Property funds are enjoying their best performance since September last year, according to Calastone’s Fund Flows Index, as net outflows slowed to just £18m in February - down from £80m in January. The reduction was caused by an increase in buying activity, as selling activity remained close to the 16-month low experienced in January, marking the seventeenth consecutive month of outflows.

RETAIL

Coronavirus hits retail supplies

Around 24% of retailers have said that the coronavirus outbreak has disrupted their supplies and significantly affected their business, a survey by Retail Economics suggests. According to the study, a further 28% said that they were able to manage the disruption, while 48% said they had not experienced any disruption and 7% of retailers said they were able to switch suppliers. The study found that 45% reported falling sales and 75% expect to see a decline in sales if the spread of the virus continued.

SPORT

Footballer tax affairs investigations hit record levels

A record number of footballers, clubs and agents in England are being investigated over tax payments. HMRC is investigating the tax affairs of 330 footballers, 55 clubs and 80 agents, up from 173 players, 40 clubs and 38 agents in January 2019.

ECONOMY

Exports dip amid coronavirus worries

Coronavirus is starting to hit the UK economy, with exports to Asia dipping in February. The IHS Markit/CIPS export index was down last month, from 50.4 to 47.7 on an index where a score of above 50 indicates growth on the month and a figure below 50 shows contraction. Growth in the services sector, which accounts for four-fifths of private sector activity, slowed slightly as the PMI slipped from 53.9 to 53.2. The all-sector PMI rose to 53 in February, up from 52.8 in January to its highest level since September 2018. Chris Williamson at IHS Markit said that survey data suggested the British economy will grow by 0.2% in the first three months of this year, after stagnating at the end of 2019, but warned that a downturn could be on the cards, saying: “Whether this expansion can be sustained in coming months is starting to look increasingly at risk.” "The survey data leaves policymakers juggling between current signs of both improved economic growth and rising prices, while risks to the outlook have clearly intensified," he added.

OTHER

Coronavirus and the effect on the global supply chain

Coronavirus has unleashed a domino effect of global supply chain disruptions that exposes the trading vulnerability and questions the trend towards a geographic concentration of suppliers. David Abbott, Partner at BTG Advisory, discusses the potential impact on businesses: https://www.btgadvisory.com/articles/corporate/coronavirus-exposes-global-supply-chain-vulnerability

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