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Daily News Roundup: Tuesday, 1st October 2019

Posted: 1st October 2019

BANKING

Revolut to expand into 24 new countries

Revolut has agreed a deal with Visa that will see the digital bank expand into 24 new countries. The move will see Revolut increase its headcount from 1,500 employees to 5,000 next year. The start-up is now planning to offer its service in Japan and America by the end of 2019. Next year, Revolut, which has gained more than 7m customers for its branchless banking product, plans to launch in Argentina, Brazil, Chile, Colombia, Hong Kong, India, Indonesia, Korea, Malaysia, Mexico, Philippines, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Ukraine and Vietnam. Partnering with Visa will mean that Revolut’s banking service is available in 56 countries in total, a Visa spokesman said.

Glen warns against turning away from EU rules post-Brexit

John Glen, the City minister, has warned the UK to be cautious about dispensing with EU financial services regulations after Brexit arguing the rules had been the “hallmark of our credibility”. If only for systematic stability reasons the UK will still need to relate to the EU rules, he said. However, the economic secretary to the Treasury added: “There are opportunities, government to government, regulator to regulator, to actually create a better and smoother environment for more economic activity.” Meanwhile, Optimism within the financial services sector has fallen at its fastest pace since the global financial crisis, with 62% of the 83 companies surveyed by the CBI less optimistic about the business situation compared with three months ago, and only 5% more upbeat.

Cash will virtually die out by 2028

A report by UK Finance has suggested that fewer than one in ten purchases will involve cash by the year 2028. The rise of contactless payments means many consumers no longer carry notes and coins and only 4% mainly use cash. The report also found that 6,240 cash machines were removed during 2018, taking the total down to 63,360.

Panmure Gordon losses up after Bob Diamond group takeover

Losses at Panmure Gordon swelled to almost £24m since the start of 2018 as the City stockbroker tries to position itself as a “21st-century merchant bank”.

PRIVATE EQUITY

Hellman & Friedman considers joining battle for stake in Euroclear

Hellman & Friedman, the US buyout group, is exploring a bid to acquire a stake in Euroclear after it appointed bankers to explore options earlier this year.

Blackstone bags Colony warehouses

Blackstone has bought up industrial warehouses from Colony Capital for $5.9bn (£4.8bn), including debt, as it continues its global bet on the rise of ecommerce.

INTERNATIONAL

JPMorgan bullish on Europe as bank shifts away from US stocks

JPMorgan has shifted its position on eurozone equities stating that it now expects the region’s stocks to outperform the US despite the persistence of risks including Brexit.

PayPal is first foreign company to win Chinese payments licence

US payments company PayPal has become the first foreign company to acquire a payments licence in China after buying a majority stake in Guofubao, a small Chinese online payments company.

FINANCIAL SERVICES

Woodford Patient Capital Trust posts losses of £232m

Woodford Patient Capital Trust has posted pre-tax losses of £232m for the first half of 2019. That compares to gains of £5m in the same period a year earlier and £52m in the first half of 2017. Patient Capital also revealed a fall in net asset value to £654m at June 30, from £760m a year earlier. Meanwhile, Neil Woodford’s role at his own listed investment trust remains in doubt as the board “continues to evaluate” his position as portfolio manager. Patient Capital has suffered a number of writedowns on its investments and was hit by the suspension of Mr Woodford’s equity income fund. "Shareholders have endured an extremely disappointing six-month period, for which I am very sorry,” Mr Woodford said. “While shareholders can be forgiven for thinking there are no positives, I continue to believe that the majority of the businesses we have invested in are making good progress, in line with our pre-agreed milestones," he added.

Liquidity rules face delay

New rules imposed by the Financial Conduct Authority that will force fund managers to disclose more information around liquidity risk to investors will not come into effect for another 12 months, according to reports. The FCA is tightening its checks on open-ended property funds after expanding the pool of funds that are subject to daily monitoring, after fears of a possible no-deal Brexit prompted a wave of investor withdrawals. However, it is understood that the new regulations will not come into effect until September 2020, more than four years after several property funds suddenly blocked investors’ access to their money in the wake of the Brexit referendum. Additionally, the FCA said the new rules would not apply to EU-regulated funds known as UCITS, that include the Woodford fund.

FCA fines Prudential £23.8m

The Financial Conduct Authority has fined Prudential £23.8m for failures related to non-advised sales of annuities. The financial services firm has also offered customers approximately £110m in compensation for its breaches. The regulator said Prudential’s non-advised annuity business focused on selling annuities directly to existing Prudential pensions holders. Firms are required to explain to customers they may get a better rate if they shop around. The FCA said Prudential failed to do this consistently. It also failed to ensure documentation used by call handlers was appropriate and failed to monitor calls with customers properly, the FCA said. Mathew Vincent says in the FT the fine didn’t even make Pru flinch and that and without the FCA biting deeper there is the “risk is that corporate lifers view puny penalties as the cost of doing lucrative business.”

Wonga’s legacy of mis-sold loans

Administrators have revealed that payday lender Wonga has received 389,621 claims for mis-selling since it collapsed. Former customers of the company had until last night to make a claim for historic mis-sold loans via an online portal. The administrators hope to make payouts to those owed money by the end of January, although it is unlikely compensation will be paid out in full, as those entitled to payouts are among the host of creditors to receive a cut of the assets of the collapsed lender.

Attempt to ease cap on pension fees is rejected

The Government has rejected a call from the British Business Bank to dilute UK workplace pension protections so savers can invest in riskier and more expensive venture capital. The Times’s Patrick Hosking says being able to invest in venture capital and private equity would not be a “panacea” for savers. He assumes a flood of fresh cash would reduce returns and describes as “deluded” the presupposition that there “is a vast supply of entrepreneurs with credible and viable ideas who can’t get funding at all.”

New rules force pension funds to consider ESG factors

New rules that come into force today require all defined-contribution schemes with more than 100 members to set out how they are addressing environmental, social and governance factors (ESG) when investing members’ cash. Pensions minister Guy Opperman said: “I believe that the changes coming this week will have a bigger effect on tackling climate change than almost any other decision by government.”

LEISURE & HOSPITALITY

Black hole at Goals could be higher

Bosses at Goals Soccer Centres have admitted that the £12m black hole in their accounts could be far higher than expected. The announcement came as the five-a-side pitch operator was delisted from the stock exchange after the accounting issues - relating to unpaid VAT - could not be resolved before yesterday’s deadline.

Whitbread tumbles on Barclays downgrade

Barclays downgraded Whitbread yesterday, sending shares in the UK’s biggest hospitality company tumbling 5% during trading. The bank blamed “the utter lack of visibility around Brexit” for the decision.

REAL ESTATE

WeWork pulls plans for stock market flotation

WeWork has officially scrapped plans to sell shares on the stock market, saying that it will instead “focus on the core business”. The decision comes after the property company's offering in August sparked little enthusiasm from investors, who had questioned the firm's finances, governance and leadership.

RETAIL

Hammerson offloads retail park

Hammerson has announced that it has sold Abbotsinch retail park in Paisley to Ashby Capital in a £67m deal. Hammerson acquired the site, which houses B&Q and Dunelm, in 2012 for £42m.

ECONOMY

Economy beats expectations, credit growth slows

The economy beat expectations in the first quarter of the year, according to Office for National Statistics (ONS) figures, with UK GDP up 1.3% in the year to the second quarter of 2019, 0.1 percentage point above economists’ predictions. The April to June period however saw the biggest fall in production output since 2012 as Brexit stockpiling was relaxed – a downwardly-revised fall of 1.8%. Separately, figures from the Bank of England show consumers increased their borrowing at the slowest rate since 2014 in August - down to 5.4% from its peak of 10.9% in November 2016. Britons also borrowed less to buy houses, the BoE noted, with net mortgage borrowing by households weakening to £3.9bn in August.

OTHER

Treasury planning to mitigate no-deal Brexit

Sajid Javid has revealed that the Treasury was drawing up plans to pump billions of pounds into the economy to mitigate the effects of a no-deal Brexit. In interviews before his speech at the Conservative Party

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