CYBG confirms Virgin Money deal
Clydesdale Bank and Yorkshire Bank owner CYBG has confirmed a deal to buy Virgin Money for £1.7bn. CYBG agreed with Sir Richard Branson's Virgin Group to license the Virgin Money brand for £12m a year, rising to £15m later, and all of the group’s retail customers will be moved to Virgin Money over the next three years to become the UK’s sixth-largest bank, with about 6m customers. Under the terms of the deal, Virgin Money shareholders will end up owning around 38% of the combined business, which CYBG said would have about 9,500 employees, to be reduced by around one-sixth, suggesting 1,500 jobs could go. Annual cost savings of about £120m a year are anticipated, with one-off costs of £240m. Virgin Money’s boss Jayne-Anne Gadhia will step down from her current role and act as a senior adviser to CYBG chief executive David Duffy in a consultancy role. Mr Duffy said of the deal: “This will offer a genuine alternative for consumers and small businesses. By combining two of the UK's leading challenger banks, we will create a national, full-service bank with the capabilities needed to compete effectively with the large incumbent banks.” Katherine Griffiths in the Times questions how the deal will affect the banking landscape in the UK. Industry insiders are sceptical, with one saying: “Have the Big Four woken up quaking in their boots this morning? No, they haven’t.” Kate Burgess in the FT expresses a similar theme and says the big four have no need to panic over the CYBG-Virgin combination.
Branch-use figures were not fiddled
Bank chiefs in Scotland have hit back at claims that they were “selective” with the figures over branch use to justify widespread closure to the network across Scotland. Executives from RBS, Lloyds and Clydesdale will appear before MSPs today and have outlined a range of criteria which has been used to close branches, include footfall, transactions carried out and regularity of visits. However, local community groups have raised questions over the figures used to justify closures. Hollie Voyce, head of public affairs, personal and business banking at RBS, insisted a fair process had been followed. "It is not true that we are selective in our figures - we count every customer who uses any branch,” she said in a submission to MSPs.
Tech giants are big bank’s main challengers
Matthew Lynn contends in the Daily Telegraph that the main challenge to big banks will come from technology companies who enter the market. He notes that Facebook, Apple and Google are all upgrading their payment systems and money transfer facilities, while Amazon has unveiled plans to launch a current account. He says in the long term retail banks look doomed, as it is hard to see the industry in its traditional form surviving the next decade. He adds, however, that it will be technology, and its ability to open space for new combinations of products that will topple them, rather than challenger banks.
Why consumers are failing to switch banks
The BBC’s Jill Treanor offers opinion on why she believes consumers are hesitant to switch bank accounts, noting that only 3% of current account customers had moved their account in the past year. She cites research from the CMA which shows that customers with unarranged overdrafts are less likely to move, while customers tend not to switch unless they have a problem with their bank and most think they have little to gain financially by moving.
RBS moving to Marischal Square in Aberdeen
The Royal Bank of Scotland is taking up office space at the £107m Marischal Square development in Aberdeen city centre in August.
China orchestrates rescue for HNA
The People’s Bank of China has organised an arms-length rescue of HNA, the struggling aviation and investment group. Chinese media have reported that the bank has been coordinating a quiet “market-based” rescue in conjunction with the Hainan regional authorities and key creditors. The rescue comes as the PBOC announced plans to launch a special “financial risk tracking unit” to monitor local and international conditions after a surge in the number of corporate defaults in the country.
JP Morgan fined
JP Morgan Chase has been fined $65m (£49m) by US regulators for attempted manipulation of the ISDAfix benchmark. The Commodity Futures Trading Commission said the bank made false reports and attempted to manipulate the US Dollar International Swaps and Derivatives Association Fix to benefit its derivatives positions between 2007 and 2012.
Shareholders set for boost
Large US banks are set to hand out a record £128bn to their shareholders this year, according to Goldman Sachs analysts.
Audi CEO arrested
Volkswagen has confirmed that Rupert Stadler, chief executive at Audi, has been arrested. Munich prosecutors said: “The arrest warrant is based on concealment of evidence, adding he would be questioned as soon as he had spoken to his lawyers.
Lufthansa plots deal for Norwegian
Lufthansa boss Carsten Spohr is considering a bid for Norwegian Air, according to newspapers in Germany. Mr Spohr said: “There’s a new wave of consolidation approaching. That means we are also in contact with Norwegian.” The developments come two months after IAG acquired a 4.6% stake in Norwegian.
City leaders to call for review of tax system
Groups including the City of London Corporation, UK Finance, TheCityUK, the Investment Association and the Association of British Insurers are preparing a letter to the Government calling for the tax burden on entrepreneurs and the broader finance industry to be reviewed. The letter will call for the Treasury to launch a review alongside other measures aimed at ensuring the industry's competitiveness in the post-Brexit period, including reforms to Britain's immigration system, a network of regional regulatory offices to work with start-up businesses, and the creation of a new forum comprising the finance sector, government and regulators.
FCA to study impact of EU asset management rules
The Financial Conduct Authority is to launch an investigation into the impact of new European Union rules on the asset management industry. The Mifid II rules banned the use by brokers of no-cost corporate research to lure managers into paying trading commissions that might not offer clients the best price. Asset managers must now be able to demonstrate they chose a broker entirely on their merits.
Fidessa deal under scrutiny
The Competition and Markets Authority is investigating the £1.5bn takeover of Fidessa Group by Ion Trading amid concerns that the deal could be bad for the financial software market. The CMA said it wanted to know whether the bid would "result in a substantial lessening of competition".
ASA International listing in London
ASA International, a Dutch-Bangladeshi lender, has announced that it will list on London’s stock market. The company said that Sequoia, its private equity backer, would sell its holding in the flotation.
Noble suspends shares in Singapore
Noble Group has suspended trading of its shares in Singapore pending an announcement. The development comes as the commodities trader seeks approval from shareholders for a restructuring of its $3.5bn debt that would hand control to a group of major creditors.
Bupa to offer patients online GPs
Bupa is to offer patients access to online doctors after teaming up with AI firm Babylon Health. Babylon, which is backed by Google’s DeepMind, allows patients to book virtual appointments with GPs and receive prescriptions through its app. Mark Allan, Bupa commercial director, said: “Working with Babylon, we're able to give corporate businesses access to 24/7 virtual health services”. Babylon said it had teamed up with Bupa because it was a “natural partner”.
St Modwen to focus on warehousing projects
Property firm St Modwen has hired agents to seek offers of over £70m for its 26-acre Edmonton Green site, which is home to scores of buildings, including a sports centre, Travelodge hotel, gym, over 700 homes, a market, and a shopping centre let to retailers including Asda and Argos. St Modwen will focus on investing in its mega warehousing pipeline to capitalise on demand for space from logistics firms.
Skyscraper sold to Singapore
Singapore-based Ho Bee Land has acquired Ropemaker Place in the City of London for £650m. Ho Bee Land said the acquisition was a strategic move to take advantage of London’s Crossrail. Chua Thian Poh, Ho Bee Land's chairman, said: “Despite Brexit, London has proved resilient and maintained its position as the world's top financial city ahead of New York.”
Google invests in JD
Google is investing more than £400m in Chinese online retailer JD as it steps up the battle in online shopping against Amazon. The US technology group will hand JD £416m, helping it expand in Asia and become a major competitor in the online retail sector. Jianwen Liao, chief strategy officer at JD, said: “This partnership opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world.”
UK household incomes rising
Employment income in Britain saw its fastest increase since the global financial crisis, according to IHS Markit’s latest household finance index, suggesting an improved rate of underlying economic growth in June. Noting the strongest increase in living costs for three months however, Tim Moore, associate director at IHS Markit, said: “Stubbornly high inflation is set to hold back consumer confidence this summer, with rising fuel costs a prominent reason that increased wages are having a limited impact on spending power”.
Bitcoin traders dismiss the doubters
Bitcoin traders have played down the significance of a report from the Bank for International Settlements that warned cryptocurrencies would struggle to replace existing forms of money and could crash the internet. Anthony Peters, a cryptocurrency market commentator, said that while Bitcoin had suffered a sharp fall, its recent moves were nothing out of the ordinary when compared to some emerging market currencies.
Bank of England adds to Prudential Regulation Committee
Professor Julia Black, a specialist in regulation law, and Jill May, a former employee at SG Warburg and UBS, have been appointed to the Bank of England's Prudential Regulation Committee. They take seats previously occupied by Charles Randell and David Thorburn.