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Daily News Roundup: Tuesday, 19th March 2019

Posted: 19th March 2019

BANKING

Metro under pressure to beef up board

Metro Bank is facing pressure from the Financial Conduct Authority to shake up its board following the revelation in January that it had underestimated the riskiness of some property loans. The lender has promoted senior independent director Ben Gunn to deputy chairman, but the plan has sparked concern at the FCA because Mr Gunn has already spent more than nine years on Metro's board. Writing in the FT, Matthew Vincent questions why Metro Bank shareholders have not protested more about the bank’s corporate governance arrangements. Elsewhere, the BBC’s Simon Jack notes that Metro Bank is now the second most shorted company on the UK stock market - despite the bank's shares having already lost 80% of their value in the last 12 months.

RBS crowdfunding campaign for women entrepreneurs

Royal Bank of Scotland is to launch a crowdfunding scheme for female entrepreneurs. The new scheme, which forms part of the bank's wider ambition to reduce the gender gap, will also run through the NatWest brand in England and Wales and Ulster Bank in Northern Ireland. While most of the finance will come from the crowdfunding, the bank will provide a top-up in funding of £1m per year and will be offering up to 50% of an individual's fundraising target, capped at £5,000, for certain successful projects.

Lloyds chief facing pay criticism

Lloyds Banking Group chief executive António Horta-Osório has been criticised for being the only employee at the bank who is entitled to a pension based on his final salary. Lloyds is facing a possible showdown with shareholders over plans to pay both Mr Horta-Osório and the bank’s incoming finance chief pension contributions that potentially break the spirit of new guidelines intended to align the interests of company bosses with their staff.

PRIVATE EQUITY

Private equity buys US penny zinc supplier from Newell Brands

Retail conglomerate Newell Brands has agreed a deal to sell its Process Solutions Business division to One Rock Capital Partners.

INTERNATIONAL

Deutsche Bank workers fear job losses

Deutsche Bank staff are said to be increasingly frustrated by the lack of communication from bosses following the confirmation of merger talks with rival Commerzbank. Unions have warned that a merger could put up to 30,000 jobs at risk. Although chief executive Christian Sewing sent an internal memo on Sunday night, staff say the lack of a town hall or any meaningful discussion has frustrated those with concerns. Meanwhile, the FT reports that a top five shareholder in Deutsche who opposed the merger has now acknowledged that the tie up now “looks all but impossible to stop”. The Telegraph’s Juliet Samuel warns the merger would be a “disaster”, arguing that it will do nothing to solve either institution’s problems.

Goldman pushes for greater diversity

Goldman Sachs has set out plans to hire equal numbers of men and women as analysts and entry-level associates, as part of its continuing focus on diversity strategies. Bosses have also been warned their pay packets could be slashed or they could lose out on high-profile promotions if they do not help the bank become more diverse.

France tells banks to set aside more capital

France has told its banks to put aside more capital amid concerns that credit in the country could be growing too quickly and the financial system faces growing risks.

Arki Busson’s hedge fund gives up Swiss licence and cuts jobs

LumX has given up its mutual fund licence in Switzerland and announced job cuts. The hedge fund group reported a net loss of $4.5m in the six months to June last year.

Will China let shadow bankers back into the fold?

The FT features a report on the prospect of the Chinese government looking to bolster economic growth by allowing shadow finance to again play a key role in lending.

AVIATION

EasyJet withdraws from proposed Alitalia consortium

Easyjet has abandoned talks to join a consortium that would have bid for Italian carrier Alitalia, which went into administration in May 2017. The budget airline had been considering teaming up with Italy's state-controlled railway Ferrovie dello Stato Italiane and Delta Air Lines of the US.

CONSTRUCTION

Serco continues overseas push

Serco has secured a contract to manage an Australian remand centre housing hundreds of prisoners, in a deal worth £61m. The contract win marks a continuation of Serco’s plan to expand abroad while public sector tender opportunities in the UK dry up.

FINANCIAL SERVICES

Worldpay in $43bn acquisition by FIS

US-based financial services technology company FIS has unveiled plans to acquire Worldpay in a $43bn deal that would see the creation of one of the largest providers of the infrastructure behind banks and payments facilities. Coming as consolidation in the payments industry increases, with US payments processor Fiserv recently agreeing to purchase rival First Data in a $39bn deal, this would mark the second time the Worldpay business has been bought. The deal values Worldpay at around $43bn, including the firm’s net debt of $7.7bn, while FIS shareholders will own about 53% and Worldpay holders the rest. FIS’s Gary Norcross, who will remain chairman of the board of directors, president and chief executive, commented: “Scale matters in our rapidly changing industry”.

Clearing houses pose stability risk

A group of former bank regulators has warned that clearing houses pose one of the greatest risks to financial stability in the event of another crisis. The Systemic Risk Council said that the lack of a credible system for dealing with failed clearing houses was “one of the biggest gaps in the post-crisis regime for financial stability”. The Financial Stability Board launched a consultation at the end of last year on how best to save failing clearing houses, amid concerns that some have become “too important to fail”.

Arrests follow collapse of London Capital & Finance

The Serious Fraud Office has arrested four people over the collapse of London Capital & Finance. The company promised returns of 8% for its mini-bonds or ISAs but collapsed in January after taking £236m from more than 11,500 savers.

City jobs market grows slowly

Figures from recruitment firm Robert Walters show the City jobs market has "gone into slow motion" as Brexit uncertainty hits confidence. "Headcount at the world's biggest investment and corporate banks grew more strongly last year in Frankfurt (up 10%), Milan (up 8%), Paris (up 6%) and Ireland (up 3%) than in London (up 2%)," said Robert Walters.

Rubicon closes its flagship hedge fund

Rubicon Fund Management, one of the oldest hedge fund managers in London, is to shut its flagship Global fund.

HEALTHCARE

NI diagnostics firm kicks off £53m Aim float

A Northern Irish company specialising in diagnostics medicine will debut on the Aim market this week after raising more than £20m from investors. Diaceutics is expected to fetch a valuation of £53m when it floats on Thursday. As part of the IPO, £20.75m worth of shares are being sold to institutional investors.

LEISURE AND HOSPITALITY

Travelodge plans expansion by targeting parents

Travelodge is hoping to address potential staffing issues after Brexit by targeting parents who want to return to work, with plans to open 100 new hotels creating 3,000 jobs by 2023. The chain says it will offer flexible hours and school hour roles. Sales were up 8.8% to £693.3m in 2018.

MEDIA AND ENTERTAINMENT

News UK launches new influencer marketing agency

News UK has announced the launch of independent full-service influencer marketing agency The Fifth, to be led by News UK’s former director of digital strategy and partnerships Oliver Lewis. Mr Lewis remarked: “Influencer marketing is one of the most exciting and fast-growing areas in brand communication, but the space is still in its infancy and as with any industry in rapid growth, challenges persist”.

Martin Sorrell’s S4 Capital discloses loss in debut annual results

Martin Sorrell’s marketing venture S4 Capital, set up after he left WPP in 2018, has unveiled a loss of £9.1m on a pre-tax basis in its inaugural annual results.

REAL ESTATE

40-year mortgages becoming ‘new normal’

Homeowners paying off mortgages into their 70s is expected to become the "new normal" as more than half of loans can now be extended over 40 years. Data compiled by Moneyfacts shows 51% of mortgage deals available on the market are available over a maximum repayment period of 40 years, up from 36% in 2014. By contrast just 3% of deals require borrowers to repay within 25 years, down from 7.5% in 2014.

RETAIL

JD Sports to buy Footasylum

JD Sports has agreed to buy clothing and shoe retailer Footasylum for £90.1m.

ECONOMY

Business investment growth set to hit 10-year low

The British Chambers of Commerce has warned that business investment growth will sink to its lowest level since the financial crisis amid continuing Brexit uncertainty. The lobby group predicts investment will fall by 1% this year, down from a decline of 0.9% last year. It would be the worst performance since 2009, when investment fell by 16.6%. The BCC expects exports to grow by 1.8% this year while imports will grow by 2%. It said that a weak net trade position combined with a slowdown in business investment will act as a drag on GDP, which will grow by just 1.2% this year.

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