HSBC to invest up to $17bn in expansion and tech
HSBC CEO John Flint has announced that the bank plans to invest as much as $17bn (£12.7bn) in expanding its network and adopting new technology. The bank will invest between $15bn and $17bn “primarily in growth and technology”, Mr Flint said. “After a period of restructuring, it is now time for HSBC to get back into growth mode. The existing strategy is working and provides a strong platform for future profitable growth,” he added. The bank will also target a return on tangible equity of 11% by 2020. Its capital ratio will remain above 14% over the same time period, HSBC said. The investment will be subject to a positive jaws ratio, referring to growth in income that is higher than growth in operating costs. It also aims to “redeploy capital into higher-return businesses”, its strategy update said. The Times Tempus recommends investors sell HSBC shares. The paper believes that expectations for growth are already reflected in the share price.
TSB faces bill for IT upgrade
The Mail reports that TSB could be forced to pay Sabadell, its Spanish owners, £110m a year for the botched IT upgrade which brought chaos to the bank earlier this year. TSB’s CEO Paul Pester has confirmed that Sabis, the digital arm of Sabadell, owns the system's physical infrastructure and the bank paid the Spanish division £110m a year to run the IT.
The City and the UK government must stop their Brexit bickering
The FT’s Patrick Jenkins looks at how big banks are no longer so keen on the long-advocated policy of seeking a post-Brexit system of “mutual recognition” between the UK and EU27.
Fintech threatens to eclipse banks that do not adapt digitally
Francisco Gonzalez, the executive chairman of BBVA, writes in the FT that fintech will soon eclipse banks that fail to adapt digitally. He adds that he believes banks are able to evolve.
Mars expands further into petcare market
Mars is set to acquire Swedish veterinary services provider Anicura from Nordic Capital. The deal comes after Mars bought Linnaeus, the British veterinary care provider, for an undisclosed sum last week.
Citigroup warns on automation
Citigroup has warned that it could cut 10,000 of its technology and operations staff in the next five years, as machines supplant humans at a faster rate. Jamie Forese, the US bank’s president and chief executive of its institutional clients group, said that the roles were “the most fertile for machine processing”. He added that Citi would hire in other areas like sales and research. “What people are doing, the type of work being done by the human rather than the machine will change,” he said. According to research by the FT, if the losses were replicated across the industry, the potential job cuts would represent a steeper rate of cuts than in 2007-17, when almost 60,000 jobs were cut from the eight of the world’s top 10 investment banks.
StanChart to pursue Hong Kong virtual banking licence
Standard Chartered has revealed it is planning to apply for a virtual banking licence in Hong Kong. The FT says the move suggests the lender is aiming to launch a new banking business in the city.
France tells its banks to set aside more capital
France’s financial stability council has ordered banks in the country to keep extra capital set aside for risks related to a private sector borrowing binge.
Investment banking: stronger franchises emerge 10 years after crisis
Laura Noonan in the FT looks at how big investment banks are now more profitable than they were in the mid-2000s, but notes that shareholders still face low returns on equity.
Daimler forced to recall defective cars
The German government has ordered Daimler to recall 238,000 vehicles in Germany after they were found to be fitted with emissions-cheating software. Across Europe a total of 774,000 diesel vehicles contain “defeat devices” and Daimler said it would recall them all. The diesel versions of the Mercedes C-Class, Vito and GLC models are the main ones affected, the ministry said.
Land Rover Discovery production moved to Slovakia
Jaguar Land Rover (JLR) has said it will move production of its Land Rover Discovery SUV from the West Midlands to Slovakia from next year. The automotive firm said the Solihull factory, where the Discovery is manufactured, will be used to build a new generation of Range Rovers. JLR added that there might be some job losses in the UK as a result.
BCA rejects bid
BCA Marketplace has rejected a £1.6bn takeover approach from Apax Partners. Apax has until July 8 to either announce an intention to make a firm offer for BCA or to announce that it does not plan to make an offer.
Construction output edges up in April
Data from the ONS shows that the UK’s construction output rose 0.5% in April following three consecutive months of contraction. However, on a quarterly basis, construction in the UK continued its recent decline falling by 3.4% in April 2018, the biggest fall since August 2012. The ONS said that the decrease in construction output was driven by falls in both repair and maintenance and new work.
Outlook for finance jobs gloomy
A new report from Manpower has warned that the outlook for jobs in the business and financial services sector has fallen to a nine-year low, raising the possibilities of redundancies. Manpower’s data shows a net employment outlook for the third quarter of this year of -1%, the first negative outcome in almost a decade. James Hick, managing director at Manpower Group Enterprise, said: “As the UK is a global centre for financial and professional services, if the sector's shrinking it's not good news for UK plc. While financial services only employ 3.5% of workers, it generates about 11% of government tax receipts.” He pinned some of the blame on structural changes in the sector, including greater use of automation in banking, leading to branch closures and job losses. A separate survey by City & Guilds Group found that nine out of ten UK employers said that they were struggling to recruit skilled staff, with Brexit topping the list of concerns.
LGIM targets climate change laggards
Legal & General Investment Management (LGIM) has said it will take action against companies that are not addressing the risks of climate change. LGIM said it would exclude offending firms from its Future World index fund. Where those firms featured in its other equity funds, it would vote against re-electing the chairs of their boards. China Construction Bank and Russia’s Rosneft were among the worst, it said. Separately, the FT reports that two of the strongest internal candidates to succeed Mark Zinkula as LGIM CEO are Sarah Aitken, head of distribution EMEA and Emma Douglas, head of defined contribution solutions.
NS&I cuts maximum deposit on popular bonds
National Savings and Investments has cut the maximum investment allowed into its one-year and three-year guaranteed growth and guaranteed income bonds to prevent them from becoming too popular. The limit has been dropped from £1m to £10,000. NS&I said that it had to “manage demand” to meet the Treasury-imposed net financing target of £6bn for 2018-19.
Share trading platform heads towards Aim
Aquis, which has been dubbed the Spotify of trading venues, is set to float on the Aim market in an attempt to raise £12m to take on larger rivals, such as the London Stock Exchange and Deutsche Boerse. Aquis is looking to attract market share from its rivals following the Mifid II regulations. Investors on Aquis pay a monthly subscription fee based on their average number of transactions, rather than a percentage of the value of each trade. It claims that the model “should materially reduce” costs for its customers.
UK manufacturing output falls at swiftest rate since 2012
The ONS said manufacturing output fell by 1.4% in April compared to the month before. Overall industrial production contracted at a month-on-month rate of 0.8%, below expectations of a 0.2% rise.
MEDIA AND ENTERTAINMENT
Microsoft buys British games studios
Microsoft is set to buy Leamington Spa-based PlayGround Games and Cambridge-based Ninja Theory as part of a plan to expand its game offering. PlayGround reported turnover of £26m in 2016 and a profit of £2.4m, according to a filing on Companies House, growing 38% year on year. Meanwhile, Ninja Theory reported a turnover of £3m in 2017.
Major London office transactions announced
Real estate investment group Henderson Park has made its first London office market acquisition, announcing the purchase of 147,000 sq ft office building Athene Place from Commerz Real, a subsidiary of Germany’s Commerzbank, in a £101m transaction. Elsewhere, property firm M&G Investments has snapped up Anglo American’s HQ in Farringdon, in a £265m deal that will see the mining giant commit to the capital with a new 25-year lease.
Poundworld enters administration
Poundworld has appointed administrators, putting 5,100 jobs at risk. The move came after talks with a potential buyer, R Capital, collapsed leaving Poundworld with no option other than administration. Poundworld, which serves 2m customers a week from 355 stores, also trades under the Bargain Buys name. The administrators said the stores will continue to trade as normal with no redundancies at this time.
Wembley sale opened up to other bidders
The Evening Standard reports that the sale of Wembley stadium will be opened up to other bidders in the autumn in a bid to receive a higher offer than the £600m on the table from Fulham owner Shahid Khan. According to the paper the Football Association’s advisers, NM Rothschild have been instructed to “actively make it clear we are open to offers” after the summer.
US makes arrests in email scam case
The US has arrested 74 people including nearly 30 people in Nigeria, as part of an effort to combat email scam artists. The US authorities said they have seized, recovered or disrupted more than $16m (£12m) since January. FBI Director Christopher Wray, whose agency funded and coordinated the operation, said: “This operation demonstrates the FBI's commitment to disrupt and dismantle criminal enterprises that target American citizens and their businesses.”