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Daily News Roundup: Tuesday, 18th February 2020

Posted: 18th February 2020

BANKING

UK banks urged to act over Brexit

Germany’s chief banking regulator Felix Hufeld has said that British banks need to “get their act together” and relocate parts of their client base to Europe before the end of the December 2020 Brexit transition deadline. He said that UK financial firms must move some of their operations to hubs in the EU to ensure that current links remain unaffected after the UK fully leaves the EU. Mr Hufeld, who leads the German Federal Financial Supervisory Authority, said: "The efforts employed by all the major financial institutions are very strong, very obvious,” adding, “Even if we do have a deal now, even if we have a transitional phase until the end of this year, someday there will be a cliff. You better get your act together and transfer your client base to the necessary extent to new operations anywhere in the EU27.”

HSBC set to unveil overhaul

HSBC is set to unveil a comprehensive restructuring of its business with the bank planning to cut thousands of jobs across its global operations. According to the Daily Telegraph, temporary CEO Noel Quinn could announce the creation of a so-called “bad bank”, which would hold up to £200bn worth of underperforming loans. He also reportedly has a potential hit-list of bankers making more than £1m a year as he looks to slash costs. No announcement on Mr Quinn’s long-term future is expected. Meanwhile, Kathleen Casey, a former commissioner of the US Securities and Exchange Commission, is stepping down as a director of HSBC.

RBS falling short on service

Alison Rose, the CEO of RBS, is under fresh pressure after the bank was last in a customer satisfaction survey for the third year in a row. Fewer than half of customers who bank with RBS, which owns NatWest, said they would recommend its service to others, according to the Competition and Markets Authority. HSBC-owned First Direct and Metro Bank topped the rankings, with more than 80% of customers saying they would recommend their services. A spokesperson for RBS said the bank was investing in teams focused on improving the areas where service falls short.

First-time buyers hit hardest by bank mortgage restriction rules

The Financial Conduct Authority has said that banks are shunning cash-strapped first time buyers. New rules which were brought in back 2014 capped the number of mortgages that banks could offer to customers borrowing more than 4.5 times their income. It stated that just 15% of borrowers should be allowed to take out loans above this level, designed to prevent banks returning to the poor practices seen before the financial crisis. However, the restrictions have punished first-time buyers and others on middle incomes who are trying to buy in expensive locations. Experts have now called for the cap on lending to be scrapped to help first-time buyers. Ray Boulger of John Charcol, a mortgage broker, said: “The 15% rule should go completely. The Government is trying to help first-time buyers, but if they want to assist then these people need it most.”

Monzo to relaunch paid accounts

Monzo is relaunching its paid-for accounts in the first quarter. Following a failed introduction last year, when the UK fintech reversed a rollout after complaints, chief executive Tom Blomfeld says: “Our real focus is on monetisation. We’re looking to drive revenue and do it in a way that’s transparent and fair.” The UK fintech also plans to recruit another 500 people as it targets 5.5m users this year.

New boss at UKGI

Charles Donald, a career investment banker, is set to be named as the new chief executive of UK Government Investments, replacing interim boss Justin Manson. Mr Donald is currently head of the financial institutions group at UKGI, where he has been overseeing the RBS stake. Philip Aldrick in the Times says that Mr Donald’s promotion hints at the strategic priorities for the state-owned body, which was formed out of the shareholder executive and UK Financial Investments in 2016.

PRIVATE EQUITY

Atomico closes tech venture fund

Atomico has closed one of Europe’s largest tech venture funds, valuing it at $820m (£630m). The fund will predominantly invest in companies at series A stage, though its size will also permit Atomico to invest in series B and series C rounds for breakout stars. “Venture capital has a critical part to play in a world with so many urgent challenges,” said Niklas Zennstrom, founding partner and chief executive of Atomico.

INTERNATIONAL

Mifid II reforms could go further than expected

Kay Swinburne, a former Conservative member of the European Parliament (MEP), has warned that plans for limited changes of the Mifid II regulations could lead to unexpected consequences. Swinburne said that without the UK's input into the reforms, the rules may become more restrictive. She said: “Without the UK at the table, points relating to non-discriminatory access could be at risk, such as open access on trading venues and CCPs 'central counterparties'.” She added that the UK had argued for open and competitive access but other member states were not in favour.

AUTOMOTIVE

GM scraps Holden brand in Australia

General Motors has said it will retire the iconic Holden brand in Australia as it leaves more markets. GM said it will wind down Holden sales, design and engineering operations in Australia and New Zealand by next year. It also said China's Great Wall Motors had agreed to buy its manufacturing plant in Thailand.

AVIATION

Cathay Pacific warns of financial hit as coronavirus grounds half of flights

Hong Kong-based airline Cathay Pacific has warned that the coronavirus will hit its financial performance “significantly” after the outbreak forced it to ground almost half of its flights. Ronald Lam, Cathay’s chief customer and commercial officer, said: “This was the most challenging Chinese new year period we have experienced. As the novel coronavirus outbreak in mainland China intensified towards the end of the holiday period, travel demand dropped substantially.” Swire Pacific, the airline’s biggest shareholder, also expects a hit to its first-half profit as a result.

FINANCIAL SERVICES

FCA fines Moneybarn

The Financial Conduct Authority has fined car finance provider Moneybarn £2.77m for treating customers unfairly when they fell behind on loan repayments and for being insufficiently clear with customers about the likely financial consequences of failing to keep up with payments. Over 1,400 Moneybarn customers defaulted between April 2014 and October 2017 after entering into unsustainable short-term repayment plans, the watchdog said. Moneybarn, part of Provident Financial, has voluntarily repaid over £30m to almost 6,000 customers potentially impacted by the failings.

Premium bond prizes trimmed

National Savings & Investments has slashed the payouts on its savings accounts and Premium Bonds. NS&I said that the odds of any £1 bond number winning any prize will decrease from 24,500-1 to 26,000-1 from the May 2020 draw. Meanwhile, from May 1, the rate on NS&I's Direct Saver will be cut from 1% to 0.7% and the Investment Account rate will tumble from 0.8% to 0.6%.

Jupiter agrees deal to acquire rival

Jupiter Fund Management has agreed to pay £370m to buy rival Merian Global Investors in a deal which will create the UK’s second-largest retail asset management group. The enlarged group will have £65bn under management, although analysts said the deal was essentially a defensive merger of two struggling businesses. Commenting on the deal, the Telegraph’s Ben Marlow suggests that instead of just getting bigger, fund managers should concentrate on just getting better.

Interactive Investor snaps up The Share Centre

Interactive Investor has agreed to buy The Share Centre in a cash and shares deal worth around £61.9m. The price represents a 41% premium on Friday’s closing price.

HEALTHCARE

Shetty resigns from NMC Health

BR Shetty has resigned as NMC Health’s executive chairman after stepping back from board discussions. Questions had been raised over the founder and chairman’s holdings in the embattled healthcare provider. Chief investment officer Hani Buttikhi and board member Abdulrahman Basaddiq also resigned from their positions.

LEISURE AND HOSPITALITY

Travelodge to open new London hotels

Travelodge, which already has 77 venues in the capital, is actively exploring opportunities at 100 more locations in 29 of London’s 32 boroughs, including Westminster, Kensington and Islington. More than 500 new jobs and £350m of third-party investment could be created by the expansion plans, Travelodge said. The hotel operator is aiming to attract co-investors among local councils, retail park developers and pension funds.

William Hill names new CFO

William Hill has appointed Adrian Marsh as its new CFO. Mr Marsh joins from packaging firm DS Smith. He was previously group director of tax, treasury and corporate finance at Tesco.

MANUFACTURING

Bombardier in talks to sell trains unit

French manufacturing firm Alstom has agreed to buy Bombardier’s rail arm for $8.2bn (£6.3m) raising fears of job losses. The two companies have around 5,000 staff working on trains and the rail system in the UK, with Alstom likely to look for savings if the deal is agreed. Alain Bellemare, chief executive of Bombardier, described the sale as a game-changer for the company as it struggles to pay down a crippling $9.3bn debt pile.

MEDIA AND ENTERTAINMENT

Kantar boss ousted

Eric Salama has left his role as CEO of Kantar ahead of his planned departure later this year. According to people familiar with the matter, friction had emerged between Salama and Kantar’s board over long-term planning. Kantar was acquired by Bain Capital from WPP last year.

ECONOMY

Household finances hit record outlook

IHS Markit’s UK Household Finance Index (HFI) hit 47.6 in February, from 44.6 in January, as UK households’ perceptions of their financial wellbeing rose to its highest ever levels. Joe Hayes, an economist at IHS Markit, said: "Post-election survey data so far scores a fairly good chance a first quarter GDP pickup following a flat end to 2019". The Future Household Finance Index – which measures expected change in financial health over the next 12 months – also rose to 52.7 in February, from 49.6 last month, in a further sign of the UK’s positive outlook.

OTHER

Rise in public sector employment expected

The Chartered Institute for Personnel and Development has said it expects the number of public sector jobs to increase for the first time in more than a decade as the Government eases austerity. The national body for human resources professionals anticipates employment in the sector will rise in line with the private sector. Analysts believe growth in public sector jobs will mostly benefit women, who are more likely to work in the care and education sectors.

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