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Daily News Roundup: Tuesday, 28th August 2018

Posted: 28th August 2018

BANKING

Executives leave TSB

TSB is to lose three senior executives as it continues to come to terms with its IT troubles earlier this year. HR director Rachel Lock will leave the bank by the end of November, while treasurer Ian Firth and chief marketing officer Nigel Gilbert are set to retire at the end of September. Meanwhile, TSB has apologised after admitting it has been late in sending debit card replacements to about 40,000 account holders, whose cards are due to expire in six days. Normally replacements are sent at least three to four weeks before the expiry of existing cards, but IT problems are continuing to affect the bank. Elsewhere, Iain Withers in the Telegraph looks at how TSB’s troubles have impacted its Spanish owner Banco Sabadell. He comments that the IT problems at TSB have raised question marks over Sabadell’s desire to expand in the UK in the long term.

Half of bank branches will close

Antony Jenkins, the former boss of Barclays, has said that 3,500 of the 7,000 bank branches nationwide could be at risk of closure. He said the pace of closures was quicker than first feared. “I predicted that between 20 and 50% of the jobs would go in financial services and about the same number of branches would be closed. We've already seen something like 25% of branches close between 2011 and 2015. My expectation is at least another 50% will close over the next five to 10 years,” he explained.

Traditional banks facing threat

The Telegraph’s Matthew Lynn reflects on the launch of Goldman Sachs’ Marcus and the growth of Monzo, which has just hit a valuation of $1bn. He says the two stories have one thing in common: they are both powerful signals that traditional banks are now coming under ferocious assault - and it can't be long before they crumble.

Banks examine early warning system for misconduct

According to the Telegraph, banks are looking are setting up an “early warning system” to identify major misconduct by their staff before it causes too much damage. An independent review is considering plans for an industry-wide data system that could identify and flag up systemic misconduct earlier. A spokesman for UK Finance said lenders were committed to improving standards, adding: “We look forward to the publication of the independent review and understanding what more can be done to support the UK's SMEs.”

Banks’ misconduct costs £71bn since crisis

A Mail on Sunday investigation reveals Britain’s biggest banks - Royal Bank of Scotland, Lloyds Banking Group, Barclays and HSBC - have paid out £71bn in fines, legal fees and customer compensation costs since the financial crisis. Lloyds has paid out the most at £23.4bn since 2008. A separate study by the CCP Research Foundation shows the biggest 20 banks worldwide, including the biggest four in Britain, had paid or set aside £264bn in the five years to 2017.

Inside the City: Time to avoid Metro Bank

Sabah Meddings in the Sunday Times examines the prospects for Metro Bank’s shares, concluding that with a forward price-to-earnings ratio of 225 times they are worth avoiding. Meddings notes that sceptics are wary of the bank’s habit of going cap in hand to investors for money. Last month, the bank announced plans to raise more than £300m through a new share placing, despite having said earlier this year that it would not need to.

RBS enlists help of Starling

RBS has enlisted the online-only challenger bank Starling to assist in its secret project to build a standalone digital bank. According to the Sunday Times, Starling has signed "a contract to provide payment services to support new initiatives at RBS/NatWest".

Triodos sees UK deposits top £1bn

Triodos has seen deposits pass the £1bn mark as it continues to grow customer numbers. In the first half of 2018, Triodos UK's total loans increased by 4.6% to £835m and customer numbers rose by 3.7% to 52,200.

PRIVATE EQUITY

Electra abandons sale plans

Electra Private Equity has ended its formal sale process after failing to drum up interest in a takeover. The £350m investment trust began a formal sale process in May as part of a strategic review. It said there had been interest in each of its portfolio assets, but no firm interest in acquiring the company. Assets including TGI Fridays remain up for sale.

More bankers make leap to private equity careers

Analysis by New York-based Options Group has found that an increasing number of ex-bankers are joining private equity firms in Europe, despite potentially having to take a pay cut.

INTERNATIONAL

Banks remain quiet over merger talks

UniCredit and Société Générale have declined to comment on a report that they are working with a senior Rothschild banker on a possible merger. An Italian media report claimed UniCredit was working with Rothschild's Daniel Bouton, a former chairman of Société Générale who resigned in 2009.

Deutsche-Commerzbank deal seen as a question of when, not if

The FT examines speculation in Germany over a possible deal between Deutsche Bank and Commerzbank, stating that bankers have said it would have to be radical to be successful. Meanwhile, the FT’s Lex looks at how Deutsche Bank lessened the impact of a $7.2bn settlement with the US Department of Justice, by saying it would provide $4.1bn of relief to consumers.

Wells Fargo lays off 638 in mortgage division

Wells Fargo has reportedly sacked approximately 638 people in its mortgage lending division, as the company reacts to a downturn in applications and originations.

Diamond faces shareholders’ ire at African bank

Shareholder advisory group Glass Lewis has raised corporate governance concerns about Atlas Mara, the African-focused banking venture co-founded and chaired by former Barclays CEO Bob Diamond.

Japan clears regional bank merger after regulator stand-off

Japan’s Fair Trade Commission has approved the merger of Fukuoka Financial Group and Eighteenth Bank, paving the way for a potential wave of takeovers.

New Mizuho chief pledges to save Japan from SME succession crisis

Tatsufumi Sakai, the new chief executive of Mizuho Financial Group, has said he plans to focus on the business opportunities arising from Japan’s succession crisis.

Irish bid for ECB role

Sharon Donnery, deputy governor of Ireland's central bank, has applied to head the European Central Bank's single supervisory board.

AUTOMOTIVE

Musk drops plans to take Tesla private

Tesla CEO Elon Musk has said he will no longer be taking the electric car maker private, just two weeks after saying he was considering a deal. Mr Musk, who owns about a fifth of the company, said he had spoken with shareholders and major banks to consider the privatisation but found the sentiment was “please don't do this”.

Uber gears up for shift to bikes on short trips

Uber CEO Dara Khosrowshahi has said the ride-hailing app is planning a shift from cars to electric bicycles and scooters for shorter journeys as part of its long-term strategy.

CONSTRUCTION

MPs bid to save suppliers from Carillion repeat

More than 200 MPs have backed a campaign to clamp down on construction firms paying suppliers late in the wake of the Carillion collapse. The Aldous Bill, named after MP Peter Aldous who is leading the campaign, is looking to prevent large building firms from delaying payments. It aims to put supplier payments into safety deposit schemes so that if major firms go bust, sub-contractors are not left out of pocket.

Serco success over Australian contract

Serco has announced that it has successfully rebid for its contract with the Australian Defence Force, adding up to £75m to its revenues for a three-year contract providing services such as catering and ground maintenance to military bases in the Middle East.

FINANCIAL SERVICES

Wonga close to collapse

Payday lender Wonga has said it was considering “all options” after reports suggested it was on the brink of collapse. The development comes after a surge in compensation claims against the firm, amid a government clampdown on payday lenders. According to Sky News, the firm is exploring the possibility of a pre-pack administration. However it could also look to sell assets, including its Polish subsidiary, to bolster its cashflow.

Quilter posts strong rise in profits

Wealth manager Quilter has posted a rise in profits in its first set of results since listing as a standalone business. The firm, which was spun out of Old Mutual earlier this year, posted pre-tax profits of £110m in the first half of 2018, up 16% compared with the same period last year. Assets under management rose 2% to £116.6bn, while the firm revealed net inflows of £2.2bn. CEO Paul Feeney insisted that the firm is still “someway from demonstrating its full potential”, despite there being “significant growth opportunities” in the market.

No jump in pension opt-outs

Opt-outs from the government’s auto-enrolment scheme have not risen as anticipated after higher contributions began in April. Workers were forced to begin paying 3% of their salary into a pension earlier this year, up from 1% before, with the option to drop out if they could not afford it. Analysis by Legal & General Investment Management found that opt-out rates showed “no jump in April and May”.

HEALTHCARE

Number of ‘ghost patients’ at GP surgeries rises sharply

The number of “ghost patients” registered with GPs in England has soared since Capita took over back-office services to primary care providers in 2015, tasked with tackling the problem.

LEISURE AND HOSPITALITY

Barclays close to buying hotel

Sir David and Sir Frederick Barclay, the billionaire owners of the Ritz and the Telegraph newspapers, are close to buying the five-star Beaumont Hotel in London after outbidding its operators, Christopher Corbin and Jeremy King. The Barclays’ are understood to have agreed to buy the Mayfair hotel's lease from the Grosvenor Estate for between £125m and £140m.

MANUFACTURING

Melrose looks to start GKN break-up

Melrose is set to launch a £1.8bn sale of GKN’s powder metallurgy division when it posts interim results on September 6. The sale would come despite Melrose chairman Chris Miller saying in March that it would “not be appropriate” to sell the division. However, the Sunday Telegraph understands that strong interest from prospective buyers has prompted a change of strategy.

MEDIA AND ENTERTAINMENT

Labour vows to tighten regulation of Facebook

Labour has said, if elected, it would tighten regulation of Facebook and other social media companies, and could potentially introduce large fines for failures to remove hate speech.

REAL ESTATE

Mortgage approvals down

New figures from UK Finance have revealed that mortgage approvals fell to 39,600 in July, down from 40,300 in June, as the UK housing market continued to show signs of slowing down. Total mortgage lending, however, rose in July to £24.6bn – a rise of 7.6% on the same month last year. UK Finance suggested the growth was driven by homeowners remortgaging to take advantage of ultra-low interest rates. Separate figures from UK Finance showed that credit card spending was 8.1% higher in July than a year earlier.

Lone Star and Delancey in stand-off over Quintain

Lone Star, the US owners of Quintain, are locked in a stand-off with a consortium led by Delancey over a potential £2bn sale of the company.

UK’s Help to Buy scheme is being used for ‘upsizing’

Over 32,000 UK households have used the government’s Help to Buy scheme to trade up for bigger properties rather than buying a first home, new analysis has revealed.

SPORT

Chelsea up for sale

Roman Abramovich has reportedly put Chelsea Football Club up for sale with a price tag of more than £2bn. According to the Sunday Times, The Raine Group has been hired to assist with the deal and will seek interest from China, the US and the Middle East.

ECONOMY

Consumers dipping further into savings

Consumers are continuing to dip into their savings to maintain their current levels of spending, as growth in personal deposits drops to an 11-year low. According to UK Finance, the rate at which Britons add to their savings has slowed dramatically over the past year, with growth in personal deposits falling to 1.2% last month.

Threat of no-deal Brexit hits wages

A Guardian analysis of economic developments over the past month has found that the British economy is failing to deliver stronger growth in workers’ pay, as the mounting risk of a no-deal Brexit increases the pressure on household finances. Writing in the paper, Andrew Sentance, a former member of the Bank of England’s rate-setting monetary policy committee, said heightened talk of no deal would hold back business investment, while higher inflation would limit the consumer spending.

OTHER

Interview: FCA chief Andrew Bailey

The Mail on Sunday carries an interview with Financial Conduct Authority CEO Andrew Bailey. He acknowledges that the public could be frustrated by the lack of senior bankers to have suffered any meaningful punishment for the involvement in the financial crisis. He says the bosses of failed banks could have been punished under existing rules but were not, although he believes “attitudes are very different today”. Bailey also expresses regret that no people were banned as directors as a consequence of the financial crisis, and he supports the notion of a tribunal or beefed-up ombudsman to resolve small firms' disputes with their banks. Alex Brummer comments in the Mail on the interview and suggests that the watchdog needs to bark louder. He says what Mr Bailey and the FCA have to do is hold those responsible to justice.

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