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Daily News Roundup: Tuesday, 28th May 2019

Posted: 28th May 2019

BANKING

Bank of England is watching mortgage price war ‘like a hawk’

Sam Woods, the deputy governor of the Bank of England, has said that regulators are watching a mortgages price war “like a hawk” and may need to impose stricter minimum capital requirements on lenders. The price war over the past two years may be good news for first-time homebuyers, but it was less good for a bank or building society concentrated in mortgages, Mr Woods warned. The Bank has said “ring-fencing” rules designed to protect high street operations from risks taken in lenders' investment banking had contributed to the increased competition. His comments come after the Bank forced Metro Bank to correct how much capital it was setting aside to cover mortgages after under-reporting the risk from its loan book. Separate figures from Moneyfacts reveal there are now 44 lenders offering 95% mortgages, which require a deposit of just 5% of the property value, compared with 33 a year ago.

New protection for fraud victims

New protection for individuals tricked into transferring money to fraudsters comes into force today. The new code aims to make sure that customers making payments are not penalised for fraudsters' criminal actions - even in circumstances where the customer's bank has done everything reasonably expected of it to protect the customer. The refund will come from a central pot in cases when neither the bank nor the customer are to blame. Providers which have reportedly committed to signing up to the code include Barclays, Lloyds Banking Group, HSBC, Metro Bank, Royal Bank of Scotland, NatWest, Santander and Nationwide. Meanwhile, commander Karen Baxter, national co-ordinator for economic crime at the City of London Police, says banks should not automatically refund victims of fraud, suggesting it is important to cultivate a sense of personal responsibility. She told the Sunday Times: “We need people to be more diligent, to be more personally responsible.”

Freedom hope for mortgage prisoners

So-called mortgage prisoners who had loans with now-defunct banks and had them sold on could soon be free to shop for better deals, with MPs and regulators looking into the matter. The FCA is looking at changing the rules around such loans, freeing people to switch lenders, while a group of MPs are conducting an inquiry into the sale of the loans by the government, who picked them up when Northern Rock and Bradford & Bingley collapsed during the financial crisis. The FCA estimates that around 150,000 borrowers are unable to move from their mortgage deal, despite having kept up with repayments.

Lloyds chief executive handed shares to his children

Lloyds has revealed that chief executive Antonio Horta-Osorio handed thousands of shares to his children in 2011 and 2012. Companies listed on the stock market must notify investors and the Financial Conduct Authority when their directors give shares to close relatives but an administration error by the bank meant the market was never notified.

Daily Mail, Page107

Monzo targets 3m customers within months

Tom Blomfield, the boss of Monzo, has said the digital bank could reach 3m customers within months, following the launch of a television advertising campaign last week. He said Monzo saw 10,000 customers sign up on the first day of the campaign, an increase of about 40% on its previous record for daily sign-ups. Monzo announced last week that it had reached 2m customers.

Santander gives £30m to fund university

Santander has donated £30m towards Milton Keynes University, or MK:U, which will open in 2023. The donation will help pay for “iconic buildings” on the campus, which will take up an entire block and cover more than 10 hectares. MK:U will be Britain's first digital university, specialising in cybersecurity, robotics and AI.

Basic bank accounts difficult to access

Digital current account provider Pockit has claimed that high street banks are not always making “no frills” accounts easily available to customers. Pockit also said that some banks were making it difficult for customers to apply directly for basic bank accounts.

Bank hands back charges

Santander has repaid about £1.4m of charges levied on customers after imposing unarranged overdraft fees on about 20,000 current accounts. The Competition and Markets Authority ruled the bank broke rules by not sending alerts first.

INTERNATIONAL

Deutsche Bank braced for loss of investment bank chief

Senior figures at Deutsche Bank have warned that Garth Ritchie, head of Deutsche’s investment banking operations, could leave because of concerns over CEO Christian Sewing’s drastic cuts and lack of shareholder support. An editorial in the FT says the bank’s AGM shows that it cannot afford to delay its overhaul any longer. Elsewhere, Tom Braithwaite in the FT looks at the recent problems blighting Deutsche Bank and notes that its decrepit technology is one area which needs upgrading.

Goldman Sachs to speed up push into US wealth management

  1. Sachs is set to target America’s wealth management market after acquiring United Capital. At present Goldman manages about $40bn of the estimated $28trn in assets held by the US’s ‘mass affluent’.

China banks and asset managers fined for masking bad debt

Financial regulators in China are stepping up penalties on banks and asset managers caught hiding bad debts, amid growing concerns about the country’s opaque cache of unpaid loans.

Rothschild planning US expansion

Rothschild is drawing up plans to expand across America and wants to more than double its number of senior US-based dealmakers from 40 to 100, according to insiders.

AUTOMOTIVE

Fiat Chrysler and Renault in merger talks

Fiat Chrysler has made a "transformative" merger proposal for French carmaker Renault, the Italian firm said on Monday. The combined business would be 50% owned by Fiat shareholders and 50% by Renault stockholders. The carmaker said the merger would create a global automotive leader, with 8.7m vehicle sales. Shares in both companies rose strongly following the announcement.

CONSTRUCTION

Galliford Try rejects tie-up with Bovis

Galliford Try has rejected a potential merger bid from Bovis Homes Group. Bovis Homes approached Galliford Try in a bid to reopen discussions over a potential deal which would leave the two companies sharing a number of ­operations. In a statement, Galliford said it did not “value” Bovis’s Linden Homes and partnerships and regeneration divisions and such a deal was not “in the interest of shareholders”.

FINANCIAL SERVICES

M&G backs Provident Financial

Rupert Krefting, the head of corporate governance and stewardship at M&G, has written to Provident Financial chairman Patrick Snowball to say the fund manager intends to vote against a hostile bid from Non-Standard Finance. M&G, an influential investor which holds a 1.7% stake in Provident Financial, says it does not think the deal will create value for shareholders and “is not in the best interest of our investors”.

Fintech seeking grant to help start-ups gain a credit rating

Cashplus is applying to the Royal Bank of Scotland competition fund for a £10m grant to create a new way for start-up businesses to gain a credit rating. The fintech wants to bring together information about an embryonic company and its directors to create a rating on its creditworthiness that would enable start-ups to access investment more easily.

Direct Line founder leads investment into insurance start-up

Direct Line founder Sir Peter Wood has led a £2.5m funding round into British insurance start-up Pikl, which provides coverage to people making money from the sharing economy.

Standard Life Aberdeen rebuked by rival fund managers over pay

Standard Life Aberdeen’s annual meeting saw shareholders owning 42% of stock, including M&G and Jupiter, voting against its pay report, a move recommended by proxy advisers ISS and Glass Lewis.

Revolut leads fintechs in complaints to ombudsman

The Financial Ombudsman Service received 171 complaints about fintech firm Revolut between January 1, 2015, and December 31, 2018, while 82 complaints were made about rival Monzo.

Willis Towers Watson warns fund managers to reform their culture

Willis Towers Watson has told asset managers to improve their internal culture, warning that it will downgrade firms where workplaces are non-inclusive or executives receive excessive pay packages.

Old Mutual boss suspended

Old Mutual Ltd has suspended its chief executive Peter Moyo with immediate effect following a “material breakdown in trust and confidence between him and the board.”

Lendy collapses

The Financial Conduct Authority has announced that peer-to-peer lender Lendy has collapsed into administration.

MANUFACTURING

British Steel faces break-up

British Steel, which collapsed into liquidation after owner Greybull Capital failed to convince the Government to inject further cash, is likely to be broken up and sold off bit by bit if a buyer for the whole business is not found. Ministers have given a two-week deadline for securing a new owner, saying the Government will remove the indemnity it is offering if the steelmaker is not rescued in that time.

Bombardier finds treasure in Egypt

Bombardier will be unveiled today as the preferred bidder for a £3.9bn deal to build rolling stock for a new light railway in Egypt, as well as building and operating the line.

MEDIA AND ENTERTAINMENT

Facebook plans to launch crypto-currency

Facebook is finalising plans to launch its own crypto-currency next year. It is planning to set up a digital payments system in about a dozen countries by the first quarter of 2020. The social media network wants to start testing its crypto-currency, which has been referred to internally as GlobalCoin, by the end of this year.

REAL ESTATE

Greystar targets UK rental sector with £2bn fund

Greystar has launched a £750m fund to target the UK’s build-to-rent sector, which is attracting institutional investors amid the current political uncertainty.

RETAIL

Online drives retail sales in April

The ONS has revealed that retail sales stalled in April, but warmer weather boosted sales of clothing, which offset falls in other areas of spending. In the three months to April, sales increased by 1.8%, with a record quarter for the online sector. Sales from online-only retailers rose 9.4% over the three-month period - the highest three-month-on-three-month growth rate since records began, the ONS said, boosted by promotions and sales.

SPORT

Qatar in talks to buy stake in Leeds United

Qatar Sports Investments is in talks to buy a stake in Leeds United, according to the FT.

OTHER

Carstens rules himself out as Carney successor

The former head of Mexico's central bank, Agustín Carstens - who had been tipped to take over from Mark Carney as the next governor of the Bank of England - has ruled himself out of the race

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