PPI behind most conduct and litigation charges against banks
The majority of all litigation and conduct charges against Britain’s biggest banks in recent years come from the mis-selling of payment protection insurance (PPI). “Profitability of the five largest UK banks - HSBC, Barclays, RBS, Lloyds Banking Group and Santander UK - has long been weakened by persistently high conduct and litigation costs,” asserted Laurie Mayers, associate managing director at Moody’s. Lloyds was the most affected, with PPI provisions in the third quarter of 2019 ranging between 4% and 6% of its Common Equity Tier 1 capital as of June 2019. Meanwhile, Co-op Bank bosses are reportedly setting aside up to £75m extra to repay victims of the PPI scandal. Separately, the FT notes that some UK banks are reportedly challenging PPI claims submitted by the Official Receiver on behalf of the estates of people who went bankrupt. Any compensation is set to be distributed to creditors.
Banks could lose £225bn by 2025
A report from Accenture suggests banks could miss out on as much as £225.5bn in payments revenue by 2025 due to the growth of digital challengers, with banks that fail to adapt set to lose business.
Maintenance hits online banking
Maintenance work on internet and telephone banking services at Lloyds Bank and Halifax left some customers unable to access services on Monday evening. Customers commenting on social media said they could not access their accounts, with many criticising the banks over a lack of notice about the issue. Halifax and Lloyds had notified customers that some services may be unavailable between 8-11pm on their official Twitter feeds but some users suggested they should also have been warned about the updates by text.
Shareholders back Cobham takeover
Shareholders in defence firm Cobham have backed a £4bn takeover by US private equity firm Advent International, with 93% of those taking part in the vote supporting the move in a vote that required 75% to green light the move. Campaigners have urged ministers to scrutinise the deal over concerns linked to national security. While shareholders have given the move the go ahead, Business Secretary Andrea Leadsom could still probe or halt the deal, with a Government spokesman commenting: “If any national security concerns are raised they will be taken into consideration.”
Automation company agrees merger
Vivint Smart Home, a home automation company backed by Blackstone Group, has agreed to merge with a company funded by Mosaic Acquisition Corp, a unit of Japan's SoftBank Corp. The move will create a firm with an enterprise value of $5.6bn.
ECB chief economist defends stimulus measures
European Central Bank (ECB) chief economist Philip Lane has defended stimulus measures designed to kickstart growth and inflation that saw the ECB last week relaunch its bond-buying programme and cut its deposit rate by 0.1% to -0.5%. Some members of the ECB's governing council have questioned the move but Mr Lane said yesterday: “There's a high degree of consensus about needing to act. The fact we've reopened an existing programme, I don't think is a very dramatic decision." When faced with stubbornly low inflation, he said, "you have to act".
Traders charged with manipulating precious metals market
Two current and one former precious metals traders at JPMorgan Chase have been charged with manipulating futures markets. The US Justice Department said Michael Nowak, Gregg Smith and Christopher Jordan illegally moved prices for gold, silver, platinum and palladium over eight years and via thousands of unlawful trades. Prosecutors allege the men - alongside co-conspirators - committed widespread market manipulation, fraud and spoofing by placing bids with no plan to realise them, using a “complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand”.
Kazakh financial group to list in London
Financial group Kaspi.kz, which controls Kazakhstan's third largest-lender Kaspi Bank, plans to list in London this year. Morgan Stanley, Citigroup Global Markets, Credit Suisse Securities and Renaissance Capital are advising on the offering.
CPP Group in China partnership
Financial services business CPP Group has partnered with Bank of Communications, the fifth largest bank in China, to give users access to its Loss Reporting Service, which provides round-the-clock assistance in the event of a card going missing.
MJ Gleeson brushes off Brexit
Housebuilder MJ Gleeson has built up a double-digit rise in earnings as it shrugged off the ongoing Brexit uncertainty on the back of strong demand in the north of England. The low-cost developer, which operates Gleeson Homes, posted pre-tax profits of £41.2m during 2019, up 11% from £37m the prior year. Revenues increased 27% to nearly £250m, prompting the board to keep Strategic Land within the group, after previously mulling a sell off.
FCA boss in equivalence call to avoid disruption
Andrew Bailey, chief executive of the Financial Conduct Authority, has urged the EU to recognise equivalence for financial markets post-Brexit, warning that overlaps between UK and EU share trading regulations would seriously damage markets. In a speech at Bloomberg on Monday morning, he asserted equivalence as “the best option” to avoid disruption to derivatives trading. Brussels has previously warned that in the event of a no-deal Brexit, EU investment firms must trade euro-denominated shares within the bloc – many of which are traded in London. Mr Bailey also praised firms which had "stepped up" Brexit planning, saying that “much progress has been made on preparations in financial services,” but noting: “Inevitably, we cannot relax, progress is welcome but there are issues still to be resolved and uncertainly to be dealt with." Mr Bailey added that while “considerable progress” has been made, “we do not underestimate the task ahead."
London extends currency and derivatives dominance
Research by the Bank for International Settlements has revealed that London has strengthened its position as the global centre for the foreign exchange and derivatives markets. Foreign exchange trading volumes have risen almost 30% on the figure recorded in 2016’s survey, with the UK’s market share up from 37% to 43%. In the derivatives trading markets, London’s share of business rose from 38% to 50% - pushing it ahead of the US. Miles Celic, chief executive of TheCityUK, said: “The UK currently has a clear competitive advantage in financial and related professional services and it is vital that this position is not inadvertently eroded. The Government must be proactive in reinforcing the global attractiveness of the UK as a place to invest and do business.”
Regulator watching stock exchange bid
FCA chief executive Andrew Bailey says the watchdog is monitoring the £32bn takeover bid for London Stock Exchange Group by Hong Kong Exchanges and Clearing, with both groups having been "in close touch" with the regulator over their plans. He added that while the FCA is “listening, we're observing,” it has not yet formed a view of the potential deal, commenting: “If we do have to take a position, and of course we do have formal powers in that area, it can only be based on a firm proposition."
Cryan to chair Man
Former Deutsche Bank CEO John Cryan, who was ousted by the German bank in April 2018, has been made chairman of Man Group and will take up the role in January 2020, replacing Ian Livingston. Mr Cryan, a non-executive director at Man since 2015, left Deutsche two years before his contract was due to end amid concerns from shareholders and board members over its poor performance.
Fintech start-up trims workforce
Fintech start-up Bud, which is backed by Goldman Sachs and HSBC and is developing software to allow banks to connect their services to other financial firms, has laid off 20% of its employees. Chief executive Ed Maslaveckas said that changes in the business, which in February raised £16m in funding, mean that it "needs a different group of people."
Alfa issues profit warning
Alfa Financial Software has warned that profit would be "significantly below" prior expectations due to customers stopping spending on "optional upgrades". Alfa, which provides software to the asset finance industry, said that while its revenue looked set to dip to £31m in the first half of 2019, from £32.9m the same period last year, its operating profit would plunge to £5m from £8.6m.
Spire asserts post-Brexit medicines safety
Private hospital operator Spire Healthcare has asserted that its no-deal Brexit plans leave the odds of the UK facing any potential disruption to medicines low. Though the government’s Yellowhammer report has warned of potential disruption to supplies if there is no deal, Spire boss Justin Ash has been working with manufacturers and distributors for the past 18 months, he said, to ensure that enough supplies are in place after October 31. Spire, which runs 39 hospitals in the UK, posted a 3.4% sales rise to £491.6m for the six months to June and a pre-tax profit of £9.6m, up from a £2.2m loss the year earlier.
MEDIA AND ENTERTAINMENT
Endeavor eyes IPO
Entertainment agency Endeavor Group is looking to raise up to $619m in an IPO that could value it at as much as $7.8bn. The company, which intends to use proceeds to repay $500m of outstanding long-term borrowings and for acquisitions and complementary businesses, plans to offer about 19.4m shares of its Class A stock, priced between $30 and $32. A further 2.9m shares may be sold to the underwriters of the float, which include Goldman Sachs, JP Morgan and Morgan Stanley, according to a company filing.
Many on Help-to-Buy did not need aid
A report by the Public Accounts Committee has found the government’s flagship Help-to-Buy scheme has only benefited those who were already able to buy their own home. Around three-fifths of people who sought assistance did not require financial assistance, the report says. While acknowledging the scheme had increased the supply of new homes and boosted the house-building sector following the financial crash of 2008, the report said 20% of people who have used the scheme so far were not first-time buyers.
Blackstone deal values Dream Global at $4.7bn
Blackstone’s property arm has acquired Dream Global, valuing the owner of office properties across western Europe at $4.7bn.
Aldi to invest £1bn in stores
Aldi UK CEO Giles Hurley has revealed that the supermarket chain is planning to open a new store in the UK every week on average for the next two years, indicating that the discount retailer would invest £1bn to achieve its aim. Last year, the company attracted more than 800,000 new customers, adding an extra £1.1bn in sales, up 11% on the previous twelve months, though most of the sales growth is from opening new stores. Profits for the same period fell 18% however, partly due to price cuts aimed at keeping its competitive edge.
Asda profits increase
Asda has reported that its operating profit rose by 9.2% in 2018 – a year in which it unsuccessfully tried to merge with Sainsbury’s. Accounts showed Asda's operating profit was £803.2m in the year to December 31st, on revenue up 3.1% to £22.92bn. The accounts showed that Asda's like-for-like sales rose 1.6% last year, compared with a 0.5% increase in 2017.
CVC trying to get Six Nations deal over the line
CVC has "entered into an exclusive period of negotiation" with the Six Nations as it looks to acquire a stake in the rugby championship. The Six Nations unions - England, Ireland, Scotland, Wales, Italy and France - have been in talks over pooling their commercial interests. While it was initially reported that CVC's initial offer was for an approximate 30% share in the Six Nations, reports suggest the latest proposal would see CVC take control of 15% of the unions' collective commercial arm.
BTG Advisory appoints new partners
BTG Advisory has appointed four new partners to its London Canary Wharf office. Anthony Brennan joins from CameronBarney LLP, while Paul Davies moves from Menzies and Andrew Dalton and Sorca Hunt have been promoted from within the firm. Mark Fry, national head of advisory and restructuring at BTG Advisory, said the new partners have “significant and specialist experience that will be invaluable to both new and existing clients alike”.