FCA driving improved conduct
The Times reports that staff from the Financial Conduct Authority recently met young professionals in London from 16 investment banks, including JP Morgan, Citigroup and Barclays, to monitor the culture of the banking industry. The meetings form part of the regulator's 2015 programme to help wholesale banks to develop practices to improve governance and conduct. UK Finance, which represents banks, said: “The industry has undertaken significant reform over the past decade to rebuild trust and improve accountability. However, we cannot be complacent and will keep working hard to build a thriving banking and finance industry that acts in the best interests of consumers, businesses and wider society.”
Middle-class finances at risk after decade of cheap mortgages
The debt charity Stepchange has warned that an increasing number of middle-class families are at risk of falling into debt after a decade of low-cost mortgage deals. Stepchange said that wealthier households may struggle to cope with a change in circumstances, such as losing a job, after over-committing themselves financially. Meanwhile, new research from Moneyfacts has found that a greater number of lenders are offering 40-year mortgages. Over 57% of mortgages now offer repayments over four decades as standard, up from almost 36% five years ago. Lenders are also increasing the maximum age at which borrowers can repay their final instalment, allowing them to be saddled with debt well after retirement.
RBS made approach for Monzo two years ago
The Telegraph reveals that Royal Bank of Scotland attempted to buy Monzo around two years ago but baulked at the price tag. A source tells the paper Monzo co-founder Tom Blomfield was "dismissive" of RBS's approach telling an audience in July 2017 that selling out to a bank "is not why we're here". RBS’s own rival, Bó, is gearing up to launch next month, and, like Monzo, breaks down daily spending into categories to help customers budget and provides customers with a striking debit card.
HSBC plans First Direct relaunch to compete with digital rivals
HSBC is planning an overhaul of its First Direct brand over the next 12 months as it seeks to compete with fast-growing new digital rivals such as Monzo. Meanwhile, the FT’s Lombard argues that Noel Quinn’s plan to review HSBC’s global equities business and axe 10,000 jobs makes sense for an interim CEO undergoing his on-the-job interview.
UK Finance board appoints Santander and Visa veterans
Santander executive Susan Allen and Charlotte Hogg, CEO of Visa Europe, have been added to the board of UK Finance. Chair Bob Wigley commented: “Susan’s expertise in commercial and retail banking, alongside Charlotte’s broad-ranging experience in both public and private sectors, will contribute significantly to the UK Finance Board, further diversifying its wealth of experience and knowledge.”
TSB works on new strategic plan
TSB is working towards presenting its new strategic plan by the end of November, Jaime Guardiola, the chief executive of the Spanish parent company Banco Sabadell, said yesterday.
Sophos shares up on US private equity announcement
Shares in cyber security group Sophos were up 36.6% after it announced that US private equity firm Thoma Bravo would take it private in a deal that values it at £3.1bn. Sophos chairman Peter Gyenes noted: “Thoma Bravo has deep sector expertise in cyber security software as well as a long and successful record of partnering with and investing in its portfolio companies to support long-term growth and success.” Hargreaves Lansdown analyst Nicholas Hyett remarked: “It’s been a rocky road for Sophos investors… against that background we suspect most investors will be reasonably happy with the offer, and with Sophos’ former private equity owner Apax already committed to backing the deal we see little chance of it failing to win shareholder support.”
Private equity must show more transparency
A Financial Times editorial on the private equity sector’s bad reputation notes that US presidential candidate Elizabeth Warren has proposed making companies liable for the debt of firms they buy.
India needs to pull back from the brink
The Economist says the time is right for India to thrive but its financial system is letting the country down. With fraud and poor governance rife it is estimated that a third of the financial system is on crutches or under suspicion. The Reserve Bank of India (RBI) needs to stress test banks and allow those that fail to be wound up while state banks should be privatised to remove them from the influence of politicians. Finally, the Economist suggests the RBI overhauls its system of ongoing supervision. “It used to be widely admired but is starting to look like part of the problem.”
Negative interest rates hurting German savers
German banks are trying to increase fees and charges instead of imposing negative rates on savers as current ECB monetary policy continues to pressure lenders to charge for deposits. Germans hold more than 40% of their financial assets in the form of bank deposits, and the savings rate, at about 10%, is almost twice the average in the eurozone. Germany's banking lobby says the ECB's low-rates policy is costing its members €2.4bn a year.
Facebook’s Libra faces hurdles
Dante Disparte, the deputy chairman of Facebook’s Libra project, has told the FT that the group will struggle to secure regulatory approval to meet its planned 2020 launch date. The proposed “stablecoin” is also facing problems after the withdrawal of PayPal, Visa, Mastercard, Stripe, eBay and Mercado Pago as potential sponsors. Barry Eichengreen, professor of economics at the University of California, Berkeley, and a former senior policy adviser at the IMF writes in the Guardian on Libra, saying the reluctance of major firms to involve themselves with the project “is hardly surprising, given growing awareness of Libra’s potential adverse consequences.” He concludes that those living in developing countries should look for financial solutions from their own regulators and politicians, not from tech entrepreneur Mark Zuckerberg.
EU direct lending set to soar to record levels
Analysts predict that direct lending by European investors will soar to record levels by the end of the year. Private lenders made €22.6bn (£20bn) of loans in the first half of 2019 and are expected to increase this by 18% by the end of 2019, overtaking the record €38.1bn seen the previous year. A total of 178 direct lending deals were completed across Europe during the first half of the year, led by the UK, which saw 65 deals struck during the period.
Prudential chairman Paul Manduca steps down
Veteran fund manager Paul Manduca is to stand down as Prudential chairman by 2021 as required by City governance rules. The firm will continue to be run by chief executive Mike Wells, while shareholders in the Prudential will receive new shares in the domestic and European arm of the business, M&G on October 21.
Andrea Rossi steps down as chief executive of Axa Investment Managers
Axa Investment Managers CEO Andrea Rossi is to step down and become strategic adviser to Gérald Harlin who will become acting CEO. Mr Harlin has pushed back his retirement to take on the role.
LEISURE & HOSPITALITY
Fitness technology industry growing
In-home, digitally-connected fitness classes such as Peloton are disrupting the $40bn (£32bn) global fitness market, with start-ups in the sector raising an estimated $1.3bn in the first six months of the year, according to CB Insights.
MEDIA & ENTERTAINMENT
KKR acquires majority stake in Hyperoptic
KKR has acquired a majority stake in Hyperoptic, the UK's largest residential gigabit broadband provider. KKR bought the stake, understood to be worth £500m, from funds managed by investment firm Newlight Partners and Mubadala.
Softbank financing package could take control of WeWork
Shared office space company WeWork could come under the control of Softbank under a $1bn (£795m) financing package which would significantly increase the latter’s stake. WeWork is believed to be working with JP Morgan Chase to negotiate a $3bn debt deal after a planned IPO last month was abandoned due to investor concerns about the firm’s valuation and business model. The company lost $1.9m last year, filings reveal.
New finance chief for Laura Ashley
Laura Ashley has appointed Sagar Mavani as its new finance chief, replacing company veteran Sean Anglim. News of Mr Anglim’s departure sent the stock down 26% before swinging back to 11% down.
Leeds United owner claims three investors interested
Leeds United owner Andrea Radrizzani is believed to be in negotiations with three potential investors in the Championship club, claiming he has been approached by more than 20 parties and has selected three, including Qatar Sports Investment and Nasser al-Khelaifi.
Bury set for liquidation
Bury FC are set to be liquidated tomorrow after the club's last hope of a rescue disappeared. The team, which was kicked out by the EFL last month, were set to contest a winding-up petition from HMRC but a potential buyer has pulled out.
Sir Jon Cunliffe issues warning over ultra-low rates
Bank of England Deputy Governor Sir Jon Cunliffe has warned that the world economy is increasingly risky as ultra-low interest rates drive banks, pension funds and insurers to make dangerous financial decisions in search of returns. Speaking at the Society of Professional Economists’ annual conference, Sir Jon also warned that households and businesses are taking on bigger debts, which may be affordable now but which could cause trouble if a recession strikes.
Dividend payouts rocket to £1.1trn
A study by Henderson International Income Trust (HINT) reveals that shareholder payouts look set to hit a new record in 2019 with £1.1trn set to be paid out to the investors of the world’s 1,200 most valuable listed companies. Ben Lofthouse, fund manager at HINT. “Our research shows that dividends from approximately one fifth of the world’s companies… are potentially unsustainable, especially if the global economy weakens.” A separate study by fintech firm Link Group shows Q3 dividends in the UK fell 0.2%, when one-offs were excluded. “As the world economy falters and the UK remains mired in its political crisis, we are witnessing a significant slowdown in UK plc’s dividend growth rate,” said Michael Kempe of Link Market Services, who predicted that 2019 would be a “temporary high-water mark" for UK dividends.