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Daily News Roundup: Tuesday, 16th July 2019

Posted: 16th July 2019

BANKING

Banks see business investment slow ahead of Brexit

Britain's major banks say a growing number of business customers have delayed decisions on investment and borrowing in recent weeks, as the probability of a disorderly exit from the European Union inches higher. Senior executives told Reuters that activity among corporate customers had fallen in recent months, as Conservative leadership candidates Boris Johnson and Jeremy Hunt have both said they are ready to take the UK out of the EU without a withdrawal deal. Executives said they were preparing for a potentially disorderly Brexit, including refining “early warning” systems to identify struggling clients and spot possible weak links in their supply chains.

Revolut’s new hire pledges to improve governance

Revolut’s new COO Richard Davies has promised to strengthen governance at the digital bank, which is planning to raise up to $500m from investors before the end of the year. Meanwhile, Matthew Vincent in the FT questions whether Martin Gilbert is the right choice to chair Revolut, suggesting the company might need “a greyer grandee.”

Santander offered a €52m sign-on to Andrea Orcel

The FT reports that Santander offered to pay Andrea Orcel a sign-on package worth up to €52m in its aborted attempt to recruit him as chief executive.

Older savers switching to online banking

Research by Ford Money has found more than 9m older savers prefer to use online banking to in-branch services. Some 79% of over-65s - equivalent to 6.5m people across the UK - now use online banking to manage their savings while 61% say they prefer to bank online over in-branch.

INTERNATIONAL

Citigroup starts Wall Street earnings season with rise in profit

Citigroup has kicked off Wall Street's earnings season by posting second-quarter profit of $4.8bn (£3.8bn), up 7% on last year, despite revenues in its trading and investment banking arms sliding. Its M&A bankers had the toughest period, with advisory revenues falling 36% on last year to $232m. Citi also revealed that its trading revenues had fallen by 5% and that investment banking activity had dropped by 10% in the three months to June 30. Meanwhile, JPMorgan Chase will unveil its quarterly earnings today, in the first update since the appointment of finance boss Jenn Piepszak.

US treasury chief fears Facebook's Libra could be misused

Facebook's planned Libra cryptocurrency is facing further opposition after the US treasury secretary warned about its potential criminal use. Steven Mnuchin told a press conference it could be used by "money launderers and terrorist financiers" and said it was a national security issue. David Marcus, head of Facebook’s Libra project, is expected to tell the US Senate banking committee and the House financial services committee today that Facebook will not launch its digital currency until all concerns from regulators worldwide have been addressed.

Regulators urge move away from Libor

Financial Conduct Authority chief executive Andrew Bailey has told an audience in New York that the financial sector should not rely on politicians to solve the issue of Libor-linked contracts. At the same event, New York Federal Reserve president John Williams said that financial institutions "must not wait" to stop using the lending benchmark.

Leeds firm in landmark tribunal appeal for Ghanaian bank

The Employment Tribunal has unanimously upheld a landmark ruling that Ghana International Bank was right to dismiss one of its employees who was accused of breaching the bank's policy on money laundering. Leeds law firm Shulmans represented the African banking giant.

StanChart CEO blasts investors as ‘immature’ for pay revolt

Standard Chartered chief executive Bill Winters has criticised investors who recently staged a protest against his pay as “immature.”

AUTOMOTIVE

JLR wins government loan guarantee to build electric cars

The Government will guarantee loans of £500m to Jaguar Land Rover to develop and produce new electric vehicles in the UK. The guarantee is being provided by UK Export Finance, the state-backed credit agency, under a new “general export facility” intended to boost exports.

Sales down at Peugeot maker

Sales at French carmaker PSA Group have fallen in the first half of the year. The Peugeot manufacturer sold 1.9m vehicles in the six months from January to June, compared to 2.18m the previous year.

AVIATION

Boeing changes 737 Max name on new Ryanair plane

A Boeing 737 Max due to be delivered to Ryanair has had the model's name changed to 737-8200 on the nose of the aircraft, fuelling speculation that the Max will be rebranded.

FINANCIAL SERVICES

British fintech booms

Data from Innovate Finance shows the UK's fintech sector has hit a new high of $2.9bn (£2.3bn) in funding in the first six months of 2019. The amount represents the highest intake of investment in a half-year period to date. Investment in the first half of 2019 was up 45% compared to the same period last year. Separately, the Telegraph reports that digital start-up Curve has raised $55m (£44m) in the latest major investment in the UK's fintech scene. The deal brings the total amount raised by Curve to more than $75m, valuing it at around $250m. The London-based fintech links up different banking apps, meaning users can track payments from several different cards at once. Meanwhile, personal loan start-up Lendable has struck a £200m deal with Goldman Sachs which will see Goldman’s Private Capital division commit to buying loans originated by the London-based fintech.

Insurers ‘must do more’ to help travellers with illnesses

The Financial Conduct Authority has outlined proposals that would see travel insurers having to help people with medical conditions find suitable cover. Under the new rules, companies must “signpost” customers to other providers if they charge a premium to cover an existing condition. They will have to do the same if they deny cover or cancel a policy because of a condition.

IT pros question colleagues’ data security credentials

More than nine in ten financial services IT professionals (94%) believe that their colleagues lack the ability to keep data safe and must work around rules to perform their jobs, research by Blackberry suggests.

AMP says $2.3bn life insurance business sale unlikely to proceed

AMP has said the A$3.3bn ($2.3bn) sale of its life insurance business to London-based Resolution Life is now unlikely to proceed because of strict capital requirements set by New Zealand's central bank.

UK deals blow to insurers with new discount rate

Britain is to change the Ogden Rate, used to calculate compensation for personal injuries, to minus 0.25% from minus 0.75%. The move is a blow for insurers, who had been expecting a rate of around 0.5% and had moved to setting their reserves based on a rate of 0%.

HEALTHCARE

Glaxo ovarian cancer drug passes test

A drug bought by Glaxosmithkline in a £4bn acquisition has demonstrated encouraging results in the treatment of ovarian cancer, helping to assuage investor unease over the deal.

LEISURE AND HOSPITALITY

Thomas Cook rescue plan questioned

Lenders could block a proposed rescue deal for Thomas Cook, amid concerns over the ability of its Chinese backer Fosun to deliver a turnaround. Citigroup analyst James Ainley warned: "The uncertainties are significant and the risk of the process stalling seems high."

REAL ESTATE

Sales of new leasehold houses slump

Figures from the ONS show only 4.2% of all new-build houses sold last year in England and Wales were leasehold, down from 13.3% in 2017. The decline in leasehold sales comes after intense scrutiny on developers after a series of mis-selling scandals.

Sainsbury’s land-banking devaluing homes

Residents of Staplehurst, a village near Maidstone in Kent, have accused Sainsbury’s of causing local house prices to fall by “land-banking” sites and leaving them undeveloped. The supermarket chain acquired two commercial sites in 2013 but have yet to start work on either them.

RETAIL

Sports Direct delays results

Sports Direct shares have fallen after the retailer delayed the publication of its results, citing the complexities of the integration of House of Fraser and uncertainty around trading. The company was due to publish results for the year to 28 April on Thursday.

OTHER

Alan Turing is new face of £50 note

Computer pioneer and codebreaker Alan Turing will feature on the new design of the Bank of England's £50 note. The £50 note will be the last of the Bank of England collection to switch from paper to polymer when it enters circulation by the end of 2021.

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