BANKING
TSB to close scores of branches
TSB plans to cut up to 400 jobs and close 82 branches next year as part of wider plans to save £100m by 2022. Detailing a new three-year strategic plan, chief executive Debbie Crosbie said the move would help deliver a 15 percentage point improvement to the bank’s cost to income ratio. TSB will invest £120m into its digital channels in a bid to make three-quarters of its customers digitally-active and Crosbie asserted plans to achieve around 5% net lending growth per year. Thoroughly departing from her predecessor’s slogan of Local Banking For Britain, TSB also indicated that head-office functions will be “streamlined”. The strategy has not been well received with commentators arguing that closing branches after another IT failure was not the way to get customers on side. The FT’s Patrick Jenkins suggests the latest TSB affair shows “just how laggardly banks have been in ensuring their boards are capable of overseeing the technology machines that modern-day banks have steadily become.”
Ten year fixed mortgage rates hit new record low
Ten-year fixed mortgage rate deals are lower than ever, with the average now 2.76%, according to Moneyfacts. A fierce mortgage price war has seen the number of 10-year fixed rate mortgages on offer grow substantially over the past year, pushing rates down. The lowest rate currently on the market is set at just 2.2% by Coventry Building Society, following the news earlier this month that five-year fixed rate home loans are also now at rock bottom levels. Furthermore, the average 10-year fixed rate mortgage is just 0.36 percentage points higher than the average two-year fix, despite offering an additional eight years of security on monthly payments.
PRIVATE EQUITY
Taylor Swift dispute highlights music perils for private equity
The FT considers how Carlyle found itself caught up in a spat between Taylor Swift and the owners of her back catalogue, who Carlyle helped finance.
FINANCIAL SERVICES
Do financial services leaders understand the risks of AI?
Patrick Hosking discusses how technology has made banking, insurance and investment cheaper, more accessible and less time-consuming than it used to be. However, the era of artificial intelligence and machine learning brings risks as well as advantages, says Hosking, who posits that just as regulators are trying to introduce more personal accountability into the finance industry, AI is pushing in the opposite direction with directors ill-equipped to understand the risks. He goes on to cite Stephen Blyth, a professor of statistics at Harvard, who sees parallels between the rapid growth in financial engineering before the financial crisis and recent advances in machine learning and algorithmic trading.
Charles Schwab swoops on TD Ameritrade
Charles Schwab has agreed to buy rival TD Ameritrade in an all-share merger valued at $26bn. The move will create an industry group with $5trn of assets under management. The FT says with its swoop on TD, Schwab has put traditional full-service brokerage firms such as Morgan Stanley and Bank of America Merrill Lynch on notice.
Woodford’s demise ‘a nail in the coffin for liquidity in Aim’
The chief executive of Finncap has warned that the collapse of Woodford Investment Management has drained liquidity from Aim, the market for small companies, and has made investors wary of thinly traded shares. Sam Smith said that the implosion of Neil Woodford’s investment empire had been “a nail in the coffin of an already quite difficult trading environment” for London’s junior stock market. “It was a huge problem in our market, the whole fund having to wind down,” she added.
HEALTHCARE
South Korea’s SK Biopharmaceuticals plans to raise $850m in IPO
SK Biopharmaceuticals is expected to raise more than $850m through a planned IPO in January. It will be South Korea’s biggest listing in two years.
LEISURE & HOSPITALITY
Wagamama reveals slowing growth
Wagamama owner The Restaurant Group, which also owns Frankie & Benny’s and Chiquito, has revealed slowing sales growth in the second quarter. Though turnover increased 11% to £93.5m, as the firm opened six new Wagamama restaurants and one delivery kitchen during the quarter, like-for-like sales growth was 6.3% in the UK, less than half the 12.9% growth reported in the first quarter of the year.
MEDIA & ENTERTAINMENT
Marketing budgets hit five-year low
UK companies have slashed their marketing budgets to a five-year low – 9.3% of overall company revenue down from a peak of 11.6% in 2016. However, 57% of marketers expected a budgetary increase in 2020.
Future boss set for £18m payday
Zillah Byng-Thorne, chief executive of Future, the publisher behind Tech Radar and Four Four Two, is set to pocket an £18m bonus after overseeing a twentyfold increase in the firm’s share price in the last five years.
Cerillion posts record results
Software firm Cerillion yesterday reported a record set of full-year results following a 78% rise in new orders. The firm posted an 8% rise in revenue to £18.8m in the 12 months to the end of September, while pre-tax profit jumped 36% to £2.4m.
REAL ESTATE
Intu sells Sprucefield to New River REIT
Retail landlord Intu has sold Sprucefield Retail Park in Lisburn, Northern Ireland, to New River REIT for £40m. New River expects the park, which is anchored by Sainsbury’s and B&Q, to generate an extra £3.7m of annual net property income and the sale brings Intu’s year-to-date disposals total to £268m, as continues to dump retail assets.
RETAIL
Retail sales on the up
UK retail sales improved in the year to November, according to the latest CBI distributive trends survey, after six months of declines. Almost half (44%) of retailers now expect sales volumes to increase in the year to December, while just 23% expect sales to decline. Online sales growth slowed to its slowest pace since June however, while wholesale sales fell at their sharpest rate in over seven years.
LVMH clinches takeover of Tiffany
LVMH has agreed to buy Tiffany & Co for $16.2bn in the luxury goods maker’s biggest acquisition to date. The agreement represents a premium of about 37% over the $98.55 at which Tiffany’s shares closed on the last day of trading before its move became public. Citi and JP Morgan advised LVMH, with Centerview and Goldman on the ticket for Tiffany.
Sports Direct to be renamed Frasers Group
Mike Ashley is to rename Sports Direct International as Frasers Group in a move the company says reflects its "transformation into the holder of a diversified portfolio of sports, fitness, fashion and lifestyle fascias”. If approved by shareholders, the rebranding will take place on Dec 16.
ECONOMY
Regional productivity lagging behind London
Research shows productivity levels in London are significantly ahead of the rest of the country, and that the economy would be boosted by 4% (£83bn) if regions with sub-par productivity were able to close just half of their shortfall with the national average. Wales, the East Midlands and Yorkshire and the Humber are the lowest-productivity areas in the UK, while productivity in London is 40% above the national average.