BANKING
UKAR repays taxpayer loan
UK Asset Resolution, which runs loans granted by Northern Rock and Bradford & Bingley before their financial crisis bailouts, has repaid its £48.7bn taxpayer loan. UKAR had not expected to repay the crisis-era loan until the mid-2020s but has been able to do so more quickly by selling off packages of loans to private equity buyers. CEO Ian Hares commented: “I am delighted that, in under ten years, we have been able to repay in full the government loan of £48.7bn. Looking forward, we are focused on the disposal of the remaining government investments in NRAM and B&B whilst ensuring that customers are appropriately protected.”
Probe launched into One Savings Bank and Charter Court merger
The Competition and Markets Authority has announced that it is investigating the potential £1.6bn merger between One Savings Bank and Charter Court - assessing whether the deal could potentially lead to a “substantial lessening of competition” in the market. The CMA has invited comments on the merger by June 19.
PCF sees profits surge
Challenger bank PCF has posted a 57% profit surge as its lending portfolio continued to grow rapidly in the first half of the year. The specialist lender said profit rose to £10.1m in the six months to the end of March. PCF also entered the bridging property finance market earlier this year, which will contribute to profit from 2020, and also acquired media finance provider Azule.
Bank of England calls ‘last orders’ on Libor
The Bank of England has called “last orders” on the Libor interest rates, mandating that financial institutions transition away from the measure by 2021. Deputy governor Dave Ramsden said solid progress was being made in the switch to the alternative Sterling Overnight Index Average (Sonia) benchmark. He explained that the task was by some measures on a bigger scale than preparing for Brexit. He said: “We are following up with each firm individually. There is much to welcome in sterling markets but progress needs to accelerate.”
INTERNATIONAL
HSBC rolls out digital wallet to lure start-ups
HSBC has launched its PayMe e-wallet in Hong Kong in a bid to fend off competition from Tencent and Alibaba in its most lucrative market.
Investors face $647bn China banking blind spot
Analysts have warned that delays by rural and city banks in China in reporting results suggests a potential build-up of bad debt.
AUTOMOTIVE
New car sales slide
New car registrations dropped by 4.6% last month due to uncertainty over diesel policy and the government’s decision to cut incentives for plug-in hybrid vehicles, according to the Society of Motor Manufacturers and Traders. The industry body said sales fell to 183,724 cars in May. SMMT chief executive Mike Hawes commented: “Confusing policy messages and changes to incentives continue to affect consumer and business confidence, causing drivers to keep hold of their older, more polluting vehicles for longer.”
Ford plant facing closure
According to sources, Ford is set to close its engine plant at Bridgend, which employs 1,700 workers in South Wales. A Unite spokesperson confirmed its members would meet bosses today, adding: “Our priority is our members' jobs, the communities and livelihoods in the supply chain that Ford Bridgend supports.” Ford has not commented on the speculation.
JLR and BMW join forces on electric cars
BMW and Jaguar Land Rover are to join forces on developing electric car technologies. The car firms said they would work together to develop electric motors, transmissions and power electronics. The companies said they will save costs through shared research, shared production planning, and by jointly buying electric car components.
Volkswagen to cut jobs
Volkswagen has said it could cut up to 4,000 jobs in non-production units as part of a plan to digitalise its operations. The cuts will mainly centre around administrative roles in Germany, where digital processes are upending traditional roles across industries. It also said the modernisation would include a new “highly efficient purchasing system” and “new standard human resources applications”. VW added that the move would create “at least 2,000” jobs in other departments.
FINANCIAL SERVICES
Wealth manager drops Woodford
St James’s Place has dropped Neil Woodford as a manager of its £3.5bn high-income fund. It follows the decision by the Woodford Equity Income Fund to stop investors taking money in or out of the fund. St James Place said investments in its high-income fund were not affected by the suspension. It said it “believes these changes will ensure its clients' investments continue to be managed effectively”. Separately, Hargreaves Lansdown said that it would waive fees for investors who had money invested through the company in the suspended Woodford Equity Income Fund. Emma Wall, head of investment analysis at Hargreaves Lansdown, said: “We do not think it is fair to charge our clients a fee while they cannot trade in the fund. This is a frustrating and difficult time for clients and we are doing what we can to support them.” Analysts have suggested that Mr Woodford should also waive his fees, to show “contrition, humility and sympathy” with investors.
Advisers collect despite failed bid
The Times examines how some of the City’s most senior lawyers and bankers are set to collect millions of pounds in fees for working on Non Standard Finance’s failed bid for Provident Financial. Slaughter and May is expected to receive more than £6m for providing both corporate finance and regulatory legal advice. NSF's bankers at Deutsche Bank and Ondra will together be paid just over £500,000. Alex Brummer in the Mail questions why NSF and its advisers were so confident that the bid would be successful is unclear. He adds that the very idea that the PRA was going to allow Provident’s Vanquis Bank to fall into less safe hands was “fantasy”. Meanwhile, shares in Provident Financial rose by 16.1% yesterday to 517.75p. NSF’s shares fared less well – down 10.7% at 42p. Finally, Miles Costello in the Times recommends investors buy shares in Provident.
Regional jobs being created in financial services
A new report from TheCityUK has found that tens of thousands of jobs have been created away from London as part of a big shift since 2016. The trade body says the number of people employed in the sector in Wales has jumped by more than a fifth – or 11,000. There has also been a 10,000 rise in the West Midlands, 12,000 in the East of England, and 24,000 in Yorkshire and Humber. In contrast, the number of financial workers in London has dropped by 10,000 since 2016, and by 32,000 across the South East of England. The research also revealed that there has been a 6,000 drop in financial services jobs in Scotland.
Aviva CFO to depart
Aviva's chief financial officer Tom Stoddard is to depart in the latest shake up under new boss Maurice Tulloch. He will be replaced on an interim basis by Jason Windsor, who is currently the CFO of the UK insurer’s UK arm.
LEISURE AND HOSPITALITY
GVC suffers pay revolt
GVC has been hit by a sizeable shareholder revolt over pay despite its boss agreeing to a last-minute salary cut. The owner of Coral and Ladbrokes said 42% of investor votes were made against pay plans for top bosses at its annual general meeting. CEO Kenny Alexander agreed last week for his salary to be cut from £950,000 to £800,000.
MANUFACTURING
Deadline for British Steel bids extended to the end of June
A deadline for bids for British Steel has been pushed back to the end of June to allow potential buyers more time to prepare offers.
REAL ESTATE
BT to close wealth of offices
BT has begun work to close 90% of its estate of 300 UK sites as part of a wider radical restructuring, whereby around 13,000 of 100,000 workers are set to be made redundant in a plan to save £1.5bn over three years.
RETAIL
Sports Direct launches bid for Game Digital
Sports Direct has made a £51.9m bid for Game Digital. The sportswear retailer said it would offer 30p a share for Game Digital under the cash bid, which was triggered after it upped its stake in the chain to 38.5%. Sports Direct said it did not believe that, as a standalone business, Game was “able to weather the pressures that it is facing”.
ECONOMY
UK economy ‘close to stagnation’
The UK service sector hit a three-month high in May, 51.0 from 50.4 in April, according to IHS Markit and the Chartered Institute of Procurement & Supply (Cips), who cautioned that Brexit and the global slowdown are dragging on growth. Chris Williamson, chief business economist at IHS Markit, said: “The PMI surveys collectively indicated that the UK economy remained close to stagnation midway through the second quarter.” Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking, said: “While a small expansion in the sector is positive, we must be realistic – many services firms remain understandably cautious in the current environment.”