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Daily News Roundup: Tuesday, 12th March 2019

Posted: 12th March 2019


Big banks join forces with mini-hubs for small business

Lloyds Banking Group, Royal Bank of Scotland and Barclays have opened the first jointly-run “business banking hub” in Birmingham, in response to concerns about branch closures and rising costs. The scheme, which will see six business banking hubs being piloted across the country, will allow businesses to pay in large volumes of coins, notes and cheques and complete cash exchange transactions. The hubs will have extended opening hours - 8am to 8pm - seven days a week. Managing director of SME at Lloyds Bank, Paul Gordon said: "The Business Banking hub pilot is being explored as an additional route for firms looking for flexible banking. Working collaboratively with other high street banks means more businesses will benefit."

Thousands of UK bankers paid €1m a year

Data from the European Banking Authority shows 3,567 of the 4,859 European financiers earning more than €1m a year were based in the UK in 2017. Thirty bankers were paid more than €10m each, while one asset manager collected €40.9m, of which their bonus alone was €38.3m. The highest-paid bank chief executive in the UK was Lloyds boss António Horta-Osório, who was awarded an 11% increase to £6.42m. John Flint, chief executive of HSBC, was paid £4.6m.

Investor 'bemused' by OneSavings merger plans

A top five shareholder in OneSavings Bank has queried a proposed £1.6bn merger between the company and Charter Court. The unnamed investor said “both [banks] are already very cost efficient so there's limited cost synergies.” However, Russ Mould, investment director at AJ Bell, remarked: “Consolidation among these challengers feels like a logical next step.”

Starling to open Southampton office

Starling is to open a new office in Southampton by the summer. The move comes a month after the digital bank won a £100m grant aimed at boosting competition in the business banking sector.


Alternative asset portfolios grow

As volatility hits mainstream markets, a quarter of private investors have 20% or more of their overall portfolio allocated to alternative assets such as private equity, infrastructure and real estate, research by Connection Capital reveals. Connection managing partner Claire Madden remarked: “Given the current challenging investment environment for traditional asset classes, a move towards higher allocations to alternatives is understandable for sophisticated private investors with the right risk profile.”

Softbank Acceleration Fund unveiled

Softbank will invest in early-stage startups, with the launch of a new global tech fund of up to $500m (£384.68m). The Softbank Acceleration Fund could be operational as early as next month. South Korea’s National Pension Service will also invest in the fund, alongside unnamed companies and asset managers.

Blackstone loan offer to fund rival’s deal challenges traditional Wall Street banks

Blackstone has used its credit division to offer a €1.5bn loan to back a deal done by its rival, Advent International. The offer was eventually rejected last week. Separately, Advent has announced that it is abandoning plans to take over Italian credit manager Cerved because of the share price increase.


Concerns over Deutsche-Commerzbank merger

Two top shareholders in Deutsche Bank are understood to have voiced concerns that the proposed merger with Commerzbank would not guarantee higher returns. A German banking union also said it would strongly oppose any merger that resulted in large job cuts.

StanChart, UBS settle Hong Kong IPO misconduct case

Standard Chartered and UBS are to settle a Hong Kong misconduct case connected to the 2009 IPO of China Forestry, launched some 10 years ago, according to reports.

BAML creates new investment banking role

Bank of America Merrill Lynch has appointed former UBS head of UK advisory James Robertson and Peter Luck, who joined the company in 2013, to a new UK investment banking role.

JPMorgan edges closer to zero fees in a push for passive

JPMorgan Chase’s investment arm has cut management fees for its new US stock exchange traded fund to just 20 cents for every $1,000 invested.


No-deal could cost Japanese carmakers $1bn

Analysis by Moody’s Investors Service suggests a no-deal Brexit would cost Japanese carmakers in Britain more than $1bn a year. The calculations are based on 10% tariffs being imposed on trade between the UK and EU.

Tesla vehicle prices to rise as store closure plan scaled back

Tesla is to increase the prices of its high-end vehicles by around 3% as it scales back a controversial plan to close most of its physical stores.


Ryanair to exclude British investors in no-deal plans

Ryanair’s UK shareholders will be issued with a “restricted share notice” under a no-deal Brexit that would strip them of voting rights and prevent them from attending or speaking at general meetings. The airline’s plans to “protect the company’s EU licences post-Brexit” also include preventing Britons from buying new shares.

Boeing shares down following fatal crash

Shares in Boeing fell by as much as 10.6% in pre-market trading on Monday, following a second fatal crash of one of its flagship jets. Several airlines have grounded Boeing 737 Max 8 jets following the Ethiopian Airlines crash on Sunday.


Kier shares fall because of 'accounting error'

Kier Group has announced that its debt was higher at the end of last year than previously indicated, despite efforts to reduce it, with shares falling as a result by as much as 16%. The firm’s net debt position for the end of 2018 was adjusted from £130m to £180.5m, as a result of hedging activities and a reclassification of debt associated with assets held for resale. Liberum analyst Joe Brent said the company’s situation was the result of an "accounting error", which led to the "restatement of £40m of net debt from assets held-for resale to underlying net debt".


FCA to run no-deal Brexit 'war room’

The Financial Conduct Authority has plans in place for a financial war room to take action in the event of a no-deal Brexit. The war room will keep a close eye on the IT changes that will be required over the weekend following 29 March. It is understood that the regulator will keep in close contact with leading City firms to watch for potential disruption in the financial markets. An FCA spokesman said: "We will have teams in place throughout the weekend of exit to monitor the situation and respond as needed, working closely with the Treasury and the Bank of England."

FRC to be replaced by new governing body

The Financial Reporting Council is to be scrapped and replaced by a new regulator for accountancy firms, the UK government has announced. The Audit, Reporting and Governance Authority will have enhanced powers and be able to make direct changes to accounts, instead of applying to court. "This new body will build on our status as a great place to do business and will form an important part of strengthened public trust in businesses and the regulations that govern them," said Business Secretary Greg Clark.

Provident rejects takeover bid

Provident Financial has reiterated its rejection of a takeover bid by rival firm Non-Standard Finance (NSF), calling the proposed £1.3bn deal “strategically and financially flawed”. Provident stated that the takeover would hinder the progress it has made to refocus its business over the past few years, and also warned that NSF management did not have sufficient banking and credit card experience to cope with the company’s Vanquis Bank business. A proposal to demerge the Loans at Home business was also criticised.

Financial sector expected to cut jobs

A leading recruitment agency says finance and business services companies will start to cut jobs in the next three months as confidence in the domestic economy falters ahead of Brexit. Manpower said that a boom in the jobs market was coming to an end, with hiring by finance and business services firms having suffered its “least optimistic year since the depths of the financial crisis”.

Doubts expressed over Gilbert’s Revolut role

A top ten investor in Standard Life Aberdeen has questioned the decision by Martin Gilbert, its co-chief executive, to take an additional role advising Revolut. The announcement raised eyebrows as Standard Life is battling to improve its performance, with its share price having fallen by more than 40% over the past year.

Brexit holds no fears for Euronext

Stephane Boujnah, chief executive of Euronext, says the exchange operator has increased its London workforce from 30 to 50 staff since the 2016 referendum and does not expect growth to stall after Britain leaves the bloc.

Man Group chief executive’s pay more than halves

Man Group chief executive Luke Ellis saw his pay more than halved last year, receiving $2.86m compared with $6.22m in 2017, partly due to the firm’s financial performance.


Pensions Regulator drops probe into publisher Johnston Press

The Pensions Regulator has abandoned an investigation into whether Johnston Press used a controversial insolvency procedure to dump pension liabilities of £300m on the industry lifeboat fund.


DWF breaks new ground with flotation

Law firm DWF has listed on the main market of the London Stock Exchange with a market valuation of £366m. DWF’s chairman, Sir Nigel Knowles, received shares worth £3.3m, while its 243 partners will share £232m of shares, equivalent to 63.5% of the business.


London commercial property starts to feel Brexit chill

The FT’s Judith Evans says Brexit is affecting London’s commercial property market, with investment into City real estate down 17% year-on-year in the last quarter of 2018.


Low business investment set to persist, says BoE

Jonathan Haskel, an external member of the Bank of England’s Monetary Policy Committee, has warned that business investment in the UK risks staying low because of continuing Brexit uncertainty.


Carney’s potential successor casts doubts on QE

A former chief economist at the International Monetary Fund has said quantitative easing does not work and central banks should be prohibited from using it. Raghuram Rajan, who has been tipped as a potential successor to Mark Carney as governor of the Bank of England, said it was his “strong conjecture” that QE “works by depreciating the exchange rate [and] stealing demand from other countries.”

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