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Daily News Roundup: Tuesday, 10th September 2019

Posted: 10th September 2019

BANKING

Banks warn of additional PPI hit

Lloyds Banking Group has warned of an additional £1.8bn hit to its payment protection insurance (PPI) bill after a rush of claims before the August 29 deadline. Lloyds said it received between 600,000 and 800,000 claims per week in August, as customers raced to beat the deadline. Royal Bank of Scotland and CYBG have also warned that an unprecedented number of claims could lead to costs of £900m and £450m, respectively. The Mail’s Alex Brummer says that with Barclays also in for a bill of £1.2bn to £1.6bn, “it is hardly a surprise that a decade after the financial crisis UK bank valuations still lag those of American counterparts.”

NCA under pressure to probe forgery claims

The Treasury select committee has asked the National Crime Agency to meet with Julian Watts, a campaigner who has compiled evidence of alleged signature forgery by banks. A similar case in the US saw American banks pay out billions of dollars in settlements and fines after defective or forged documents were used as the basis for home foreclosures. Mr Watts said that his evidence suggests that something similar had occurred in Britain. The Serious Fraud Office and the Financial Conduct Authority have said they will look at the claims. Anthony Stansfeld, police and crime commissioner for Thames Valley, said that there was a “mass of irrefutable evidence” to back up Mr Watts’ claims.

Half of SMEs visit their bank once a week

Some 51% of SMEs visit a bank branch at least once a week while three quarters use online banking at least once a week, with 41% using it every day, according to Close Brothers Business Barometer research. David Thomson, CEO of Close Brothers Invoice and Speciality Finance, said: “While traditional bank branches provide many valuable services that online banking cannot, convenience is an advantage for busy SMEs."

Bank of Ireland named in tax case

The Bank of Ireland has had its name linked with a tax evasion scandal in Germany. Last week, a trial began in which two UK bankers have been charged with helping set up in so-called cum-ex deals between 2006 and 2011 that allegedly resulted in €400m losses to the German state.

Lazard UK’s new chief says UK groups vulnerable to takeovers

The new head of Lazard’s UK operations, Cyrus Kapadia, talks to the FT about how the bank intends to ramp up efforts to help “fast-growing UK-based tech and biotech companies” raise capital. Mr Kapadia replaces William Rucker, who steps up to the role of chairman.

Former Brexit negotiator Olly Robbins to join Goldman Sachs

Theresa May’s lead Brexit negotiator Olly Robbins is to join Goldman Sachs as a managing director in the investment banking division. He will begin his role after undertaking a sabbatical at the University of Oxford.

PRIVATE EQUITY

Eddie Stobart approached by private equity firm

Haulier Eddie Stobart has confirmed interest from private equity firm DBAY Advisors. The firm’s CEO Alex Laffey quit last month after its shares were suspended following the discovery of a £2m accounting error.

INTERNATIONAL

EU capital markets will shrink by a third post-Brexit

A report from think tank New Financial has warned that Brexit could reduce the EU’s global footprint in capital markets from 21% to 14%. France would dominate the bloc with a 24% share of activity against Germany’s 19%. “France has got all the big markets - the biggest asset management firms, insurers, banks, bank lending - it has pretty much got a clean sweep,” said William Wright, managing director of New Financial. "The overall depth of capital markets relative to GDP will fall, and the EU economy will be even more reliant on bank lending and bank savings than it is today," the report added.

World Bank chief set to become head of IMF

Kristalina Georgieva is poised to succeed Christine Lagarde as chief of the International Monetary Fund. The Bulgarian has served as the boss of the World Bank since early 2017 and is now the sole contender for the role.

Euroclear plans bond investment link with China

Securities depository Euroclear is planning to enable the use of renminbi-denominated debt to be used as collateral anywhere, allowing international investors access to the Chinese bond market.

Australia mortgage lending surges on relaxation of rules

The Australian housing market may have bottomed out, with figures indicating that house prices are recovering after double-digit declines over the last two years, with owner-occupiers' borrowing up over 5%.

Kenya’s Equity announces deal to buy Congo’s second-largest bank

Equity Group Holdings, owner of Kenya's Equity Bank, is working to buy 25% of Congolese government-owned Banque Commerciale De Congo, in the neighbouring Democratic Republic of Congo.

AUTOMOTIVE

Ford credit rating downgraded to junk by Moody’s

Moody’s has cut Ford’s credit rating to junk citing weak earnings and cash generation against the backdrop of the carmaker’s $11bn restructuring plan.

AVIATION

British Airways' pilot strike kicks off

Almost all British Airways flights were grounded on Monday morning, as members of the British Airline Pilots’ Association (Balpa) began a two-day strike action over pay - taking shares in owner-IAG down with them.

FINANCIAL SERVICES

Debate over inequality revived with onset of bonus season

The Times’ Patrick Hosking says City workers will be starting to evaluate their chances of a bumper bonus this year, with that speculation triggering fresh debate on high pay and the banking culture. John McDonnell, the shadow chancellor said last week that if “grotesque levels of inequality” are not tackled a Labour government would ban bonuses. Mr Hosking asserts that the bonuses Mr McDonnell demonises are a symptom only: “Policymakers need to ask whether competition and the regulation of misconduct are working as they should. That is where reform needs to focus, whoever forms the next Government.”

Currensea to launch new travel money card

Currensea is set to launch the UK’s first card allowing customers to spend money abroad without having to open a new account. The fintech firm’s travel money card will be linked directly to users’ bank accounts. Currensea is advised by former UK managing director of Amazon and ex-chief executive of Visa UK, Marc O’Brien.

Elliott launches attack on AT&T

New York-based activist investor Elliott Management has called for a radical shake-up at AT&T after buying 1.2% of its shares. The hedge fund slammed AT&T for a spate of recent acquisitions and demanded that it sell off assets and slash costs.

Sage Group in talks to offload payment processing unit

Sage Group has hired Rothschild to find a buyer for its payment processing unit Sage Pay, which reportedly has about 50,000 small and medium business customers.

HEALTHCARE

London VC raises first tranche of $150m ‘advanced therapies’ fund

4Bio yesterday completed the first round of fundraising for a new fund focused on the advanced therapies sector. The venture capital firm has supported 29 biotech firms since 2010.

Abcam falls on expansion plans

Shares in Abcam fell 5.9% to £11.67 yesterday after the Cambridge-based biotechnology company announced ambitious plans to almost double revenues in the next five years.

MANUFACTURING

Car industry drags global manufacturing into sharp slowdown

Activity across car producers globally reached a near-record low in August, according to a survey by IHS Markit, while activity in the industrial goods, machinery and equipment and metals and mining sectors also contracted. The overall IHS global manufacturing index remained below the 50 mark for the fourth consecutive month in August — the longest period in seven years.

MEDIA & ENTERTAINMENT

Soros looks to offload Hyperoptic

George Soros has hired bankers at LionTree to oversee the sale of his stake in British ultrafast broadband venture Hyperoptic, in a deal that is expected to value the company at more than £500m. The billionaire’s Quantum Strategic Partners vehicle has backed the full fibre internet service provider since 2013. Abu Dhabi’s investment arm, Mubadala Investment Company, injected cash into Hyperoptic last year which came in addition to £250m in debt funding from a consortium of eight banks.

PROFESSIONAL SERVICES

Business services firms in pre-Brexit hiring spree

Accountancy and law firms have been on a hiring spree fighting for talent that can help them advise clients on the implications of Brexit, according to a survey by Manpower. The recruitment firm's poll also found the outlook for the finance and business services sector is up three points to 6%, its highest level in more than a year.

REAL ESTATE

Intu shares soar amid Orion Capital buyout rumours

A potential buy-out of shopping centre owner Intu took its share price up almost 20% in early trading on Monday, lifting its value to £546m. The chase, led by Orion Capital Managers, follows Intu revealing an 18% decline in rental income in the first half, while pre-tax losses fell to almost £900m. The FT’s Lombard says Intu would be a bargain if it was not for its £1bn of debt.

RETAIL

Primark owner pledges not to raise prices

Primark owner Associated British Foods says the fashion retailer’s sales for its current financial year are expected to be 4% ahead of last year, although like-for-like sales are set to be down 2%. The FTSE 100 group also warned its margins would continue to be hit by the weak pound, rising costs and discounting.

ECONOMY

UK brushes off recession fears

The UK economy expanded by 0.3% month on month in July, according to official figures, well above economists' expectations of 0.1% growth. The services, manufacturing and construction sectors all grew in the month, after stagnating or shrinking in June. “The pick-up in GDP in July is a reassuring sign that the economy is on course to grow at a solid – perhaps even above-trend – rate in the third quarter,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Markets tentative ahead of Draghi's final innings

Markets are hoping Mario Draghi will initiate a final wave of stimulus before he departs as European Central Bank president next month. Policymakers are expected to further cut interest rates into negative territory on Thursday and boost the ECB's QE programme, but opposition from the bank's governing council will be stiff.

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