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Daily News Roundup: Tuesday, 24th July 2018

Posted: 24th July 2018

BANKING

US banks call for tax cuts in UK

Wall Street banks have called on the British government to cut taxes and regulation or risk financial services jobs leaving the UK after Brexit. An unnamed Wall Street executive said: “If this government stays in place it realises it has to swing back to the middle ground after Brexit, otherwise it risks losing some of this. The question is [do we move business to] New York; that is the real risk.” City leaders admitted that tax cuts and deregulation in the US have increased pressure on the UK to be more competitive. Stephen Jones, chief executive of UK Finance, said: “There is a perception that in the UK this is still a relatively hostile business and regulatory environment.”

Paragon increases lending

Challenger bank Paragon said mortgage lending totalled £409.4m for the period between 1 October 2017 and 30 June 2018, as the business aims for year to date lending of £1.1bn, up from last year's total of £1.06bn. Commercial lending came in at £179.7m for the period – which will see end of year results come in far higher than 2017's figure of £285m, at £449m. Net loan growth is expected to come in at £393m for the year, a boost from 2017's total of £335m. Nigel Terrington, CEO of Paragon said: “The group continues to make strong progress towards its objective of being a leading specialist bank. The core buy-to-let business continues to see strong demand from professional landlords and the addition of Titlestone is expected to accelerate the growth of our Commercial Lending arm. We remain on track to achieve our 2018 targets and the business is well-placed to make further strong progress in 2019.”

Barclays plans new Glasgow hub

Barclays is planning a new functions, technology and operations hub at Buchanan Wharf in Glasgow, creating up to 2,500 new roles. The bank is working with Glasgow City Council on the project and has received a funding grant of £12.75m from Scottish Enterprise for the development. Nicola Sturgeon said: “The new campus will strengthen Glasgow’s financial services sector and shows Scotland continues to be a highly attractive location for inward investment.” Barclays said the campus would “play a pivotal role” in its long-term strategy.

Lloyds leaves Coleshill

The I reports that the town of Coleshill, Warwickshire, is to lose its final bank when the Lloyds closes in October. The town, which has a population of 6,500, has already seen HSBC and Barclays leave.

Activism in banking is tougher than on the fringes of finance

Patrick Jenkins in the FT examines why it has been difficult for activist investors to break-up banks due to concerns about financial stability.

PRIVATE EQUITY

Blackstone wins Thomson Reuters deal approval

The European Commission has cleared Blackstone Group to acquire a majority stake in Thomson Reuters' Financial and Risk unit for $20bn - with “no competition concerns given the limited market shares of the companies”.

INTERNATIONAL

Nordic banks fined over ‘shadow credit ratings’

The European Securities and Markets Authority (Esma) has fined five Scandinavian banks €495,000 each, a total of €2.5m (£2.2m), for providing “shadow credit ratings” without regulatory approval. The EU's markets regulator said Danske Bank, Nordea Bank, SEB, Svenska Handelsbanken and Swedbank had all issued credit research reports which included “opinions” on firms and associated debt instruments which constituted credit ratings in Esma's view.

Beijing injects $74bn to boost slowing growth

China's central bank has injected 502bn yuan ($74.3bn) into the market via the medium-term lending facility to maintain liquidity. The bank is striving to balance growth and risk prevention.

Julius Baer sees rising client caution over global trade

Shares in Julius Baer have dropped after the Swiss private bank warned that global tension was worrying clients. Pre-tax profits were up 18% in the first half.

AUTOMOTIVE

Fiat Chrysler Europe boss quits after Manley named new CEO

Fiat Chrysler’s European boss Alfredo Altavilla has resigned after being overlooked for the CEO role. Mike Manley, head of the company’s US subsidiary Jeep, has been appointed to the top job.

AVIATION

Higher wages hit Ryanair

Ryanair has said that its profits in the April to June quarter have been hit by higher wage costs as the airline faces strikes by staff over pay and conditions. The carrier said higher oil prices and a fall in fares also dented profits, which fell 20% to €319m (£285m).

FINANCIAL SERVICES

City left frustrated over Brexit

The City of London has been left frustrated by reports that Michel Barnier, the EU’s chief negotiator, has already snubbed the UK’s plan for a post-Brexit deal around financial services. Mr Barnier told ministers last week that the proposal would rob the EU of its “decision-making autonomy”. One key figure in the City said: “People are just tearing their hair out now – the politics is stuck. All that means is people are intensifying their own plans, actually rolling their plans out, which means relocations.” Meanwhile, City AM has found that there has been a surge in the number of financial services firm applying for authorisation from the Central Bank of Ireland in the last six-to-eight weeks, from around 80 to approximately 175, as fears of a no-deal scenario increase.

LEISURE AND HOSPITALITY

Stonegate lines them up

Slug and Lettuce-owner Stonegate Pub Company is to acquire bar chain Be At One, plus an additional 15 sites from Novus Leisure - including City stables The Gable, Abbey Bar, and the Forge. The two acquisitions take Stonegate's portfolio to 739 operating venues.

MANUFACTURING

Corbyn set to launch manufacturing campaign

The Labour leader Jeremy Corbyn will today accuse the government of selling out manufacturing by failing to introduce an industrial plan that could have helped them make more of the weak pound since the EU referendum. He will reportedly say that the UK economy has become too reliant on imports, meaning that companies have been unable to benefit from the drop in the value of the sterling.

MEDIA AND ENTERTAINMENT

Alphabet posts stronger than expected ad sales

Shares in Alphabet, Google’s parent company, have jumped by as much as 5% in after-hours trading after the firm reported stronger ad sales than expected. Alphabet earned $32.7bn in revenue in the three months to the end of June, up 26% from the same period last year. The company reported net income of $3.2bn.

REAL ESTATE

Facebook set to expand presence in London

Facebook has announced that it has acquired 600,000 sq ft of office space in King’s Cross capable of holding 6,000 employees, significantly more than the 2,300 it expects to have based in London by the end of 2018.

RETAIL

McColl's Retail profit slides

McColl’s Retail Group has reported that its half-year pre-tax profits declined 48% to £2.3m, impacted by the disruptions to its supply chain caused by the implementation of a more expensive, short-term distribution model. Revenue in the 26 weeks to May 27th rose 19% to £601.7m. The convenience store chain also announced that CFO Simon Fuller is leaving the firm.

ECONOMY

Brits now most confident on finances since Brexit vote

UK households are currently the most positive about their household finances for the year ahead since before the Brexit vote two years ago, according to IHS Markit's financial expectations index, while its measure of job security hit its highest level since the survey began in 2009. Sam Teague, an IHS Markit economist, noted a "marked improvement" in workplace incomes amid softer inflationary pressure.

UK living standards drop as child-poverty rate rises

The Resolution Foundation’s annual Living Standards Audit has found that household income growth has slowed over the last year, rising just 0.9% - the lowest level seen since 2012. Child poverty was estimated to have increased by 3% driven by benefit cuts which disproportionately hit low-income families.

OTHER

Foreign investors improve productivity of UK firms

Research by the Office for National Statistics (ONS) has found that mid-sized UK businesses in the services sector with foreign owners are up to three times as productive as those with only UK investors. Small businesses are ahead by almost as much when 10% or more of shares or votes are foreign controlled, while large firms have a smaller lead. However, the ONS said it cannot tell from this data whether the companies are more productive because they have foreign owners, or whether it is simply that foreign investors buy into businesses that are already highly productive.

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