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Daily News Roundup: Tuesday, 17th July 2018

Posted: 17th July 2018


Delay for £775m RBS bank fund

Following a failure to appoint executive directors on time, the distribution of a £775m business banking competition fund from Royal Bank of Scotland, part of conditions attached to its £45bn bailout during the financial crisis, is nearly six months behind schedule. This comes as challenger banks including CYBG, Metro, Starling and TSB work on bids for the funding to develop new facilities for business customers, such as current account, lending and payments offerings.

Lenders scale back cuts to fees amid fears of ATM deserts

Banks have scaled back plans to reduce the fees paid to cash machine operators after fears of ATM "deserts" were raised. John Howells, chief executive of the UK's largest cash machine network Link, remarked: "Link is committed to maintaining the UK's extensive coverage of free-to-use cash machines for many years to come. However, many consumers are turning to alternatives to cash more quickly than expected, and usage of ATMs is now dropping at 6% per annum. Link will therefore adjust interchange to maintain free-to-use coverage in line with our commitments." Consumer group Which? revealed last month that cash machines around the country are disappearing at a rate of 300 every month.

Banks warn about overheating UK asset finance market

Executives and senior bankers at some of the UK’s biggest lenders have warned about overheating in the £32bn asset finance market, with competition pushing down profit margins and encouraging risky practices.

FCA hears HBOS fraud compensation ‘flawed’

The Financial Conduct Authority has heard from representatives of small businesses affected by the £1bn HBOS Reading fraud that Lloyds Banking Group’s compensation scheme has failed to deliver a fair outcome. SME Alliance stated that the compensation process was "fundamentally flawed". Lloyds, meanwhile, noted that it "considers any losses that customers have suffered and also the distress and inconvenience that they experienced. The group has paid for all customers to take independent legal advice before entering into any settlement agreement".

Rate cut hits savers

National Savings & Investments is to reduce rates on its Direct ISA from 1% to 0.75%, effective from 24th September. Jill Waters, retail director at the firm, stated: "We have taken the decision to reduce the interest rate on our Direct ISA to deliver positive value for taxpayers." Sarah Coles, personal finance analyst at broker Hargreaves Lansdown, noted: "This is a blow to loyal NS&I savers, but it had little choice in the matter.” She went on: "It has to maintain a difficult balance between offering reasonable rates to savers - and not attracting so much cash that it overshoots its target."


Cerberus to consider Abraaj investment

Gulf-based private equity group Abraaj may receive an investment from Cerberus Capital Management, which is expected to decide as early as this week whether to proceed with the move.

Arconic shares up

Shares in metals manufacturer Arconic have increased 11.1% to $19.31 after media reports that private equity firms were interested.


Goldman Sachs to confirm new boss

Goldman Sachs is widely expected to confirm that its president, David M. Solomon, will take over from Lloyd C. Blankfein to become its next chief executive. Solomon joined Goldman in 1999 after working at Irving Trust, Drexel Burnham and Bear Sterns, and was promoted to president and co-chief operating officer in 2016 after Gary Cohn left to work with Donald Trump.

Deutsche beats expectations

Deutsche Bank has indicated that profits will be significantly above analyst estimates for the second quarter, with income before tax expected to be €700m (£618m) for the period, with net income of €400m.

Bank of America profit jumps, revenue falls less than feared

Bank of America has revealed strong growth in net income, to $6.8bn, for the second quarter, particularly in its consumer business, boosted by higher interest rates and increased deposits.


Scotland gets green light for first ever UK spaceport

Lockheed Martin has chosen a piece of land at Sutherland, on the north Scottish coast, as the location for the UK’s first commercial vertical launch space port to send satellites into orbit. The satellites, which are expected to launch into space within the next five years, will be used for earth observation along with other data-gathering ambitions.


FCA warns online investment platforms to improve

The Financial Conduct Authority has warned investment platforms, including lead service Hargreaves Lansdown, to do more to help customers switch between rival providers as “competition is not working as well as it should do for consumers”. Christopher Woolard, the FCA’s executive director of strategy and competition, said: “We have outlined a package of measures today to address the issues we have found, but we also want to see the industry step up, making it easier for consumers to transfer from one platform to another.” Meanwhile, AJ Bell and Nucleus Financial Group are working on plans to float on the stock market despite the FCA’s report into the industry.

Paypal leads London paytech funding round

Cross-border e-payments company PPRO Group has announced a $50m (£37.9m) investment round led by Paypal, with additional participation from Citi Ventures and HPE Growth Capital. Citi Ventures managing director Luis Valdich commented: "Tech is revolutionising how consumers and businesses make and accept payments, and PPRO is on the leading edge of meeting those needs.”

BlackRock investor inflows fall

Growing concerns over global trade tensions have caused asset manager Blackrock's investor inflows to fall in the second quarter to a two-year low.


Netflix viewer numbers and shares down

After missing subscriber targets for the first time in over a year, Netflix saw shares fall around 13% in after-hours US trading. Eric Schiffer, chief executive of private equity firm Patriarch, commented: “Investors are devastated by Netflix's Q2 projection that went down in dramatic flames. Now future projections are suspect and that decimates valuation.”

Comcast likely to withdraw from Fox battle

Comcast is likely to focus on the bidding contest for Sky, as its withdrawal from the 21st Century Fox takeover battle looks increasingly likely. This follows its bid last week of £14.75 a share, or £25.9bn, for Sky.


Britain's services exports lose billions

Total UK services exports have fallen to £37.8bn, according to the Office for National Statistics (ONS), a £7.8bn decrease in first three months of 2018 compared to the previous quarter. Though exports to Ireland, Belgium, the Netherlands and Germany saw steep declines, the EU remains the UK's largest exports destination, with £14.7bn in total during the first quarter.


Debenhams payout under threat from tough trading

Facing tough trading conditions and a revision of some trade credit insurance terms, Debenhams may cut its dividend, though the retailer says its balance sheet and cash position are healthy.


IMF downgrades economic forecast

The International Monetary Fund has downgraded its growth forecasts for Britain by more than expected, following a series of "negative surprises" in the economy early this year. The organisation stated: "The balance of risks has shifted further to the downside… The tariff increases by the United States and retaliatory measures by trading partners have increased the likelihood of escalating and sustained trade actions.”


ECB banking watchdog seeks new chief

The European Central Bank is seeking a bank supervisor-in-chief, with any successful candidate expected to shoulder responsibilities including managing cross-border regulation after Britain leaves the EU.

Regulators study lenders exposure to crypto-assets

The Basel Committee on Banking Supervision is considering capital safeguards and examining banks' exposure to "crypto-assets" such as bitcoin, which may put banks off investing in the growing sector.

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