HSBC reports 18% fall in profit
HSBC yesterday reported an 18% drop in third quarter profit to $4.8bn (£3.8bn), fuelled by weak results in its European and US divisions. Adjusted profit also fell 12% to $5.3bn while revenue slipped 3% year on year to $13.4bn. Acting chief executive Noel Quinn said performance at the bank’s US and continental Europe divisions was “not acceptable” and warned of “significant charges” to come in the fourth quarter. HSBC’s Europe unit sank to a $424m loss, after booking a $634m profit this time last year. Asia’s profit rose 4% year on year to $4.65bn. The Standard’s Jim Armitage says the planned job cuts are all well and good, but HSBC will need to “offer better, faster service” if it wants to recover. The FT’s Lex comments that until HSBC has made its plans on cost reductions clear and Hong Kong has settled down HSBC’s board will be keeping Mr Quinn on a tight lead.
FCA relaxes mortgages rules for banks
The Financial Conduct Authority (FCA) is to allow mortgage lenders to apply a reduced level of scrutiny to help trapped homeowners switch to a new provider, meaning that around 30,000 homeowners now have the freedom to move elsewhere. In some cases, so-called "mortgage prisoners" have previously been told that they cannot afford a new mortgage deal even though the monthly cost could potentially be lower than that which they were already paying. However, the change excludes thousands trapped on high rates who may have missed repayments, need to move for medical or family reasons or if they are in their fifties or sixties and have an interest-only mortgage. Seema Malhotra, Labour and Cooperative MP who co-chairs the All-Party Group on Mortgage Prisoners, said: “The FCA's own analysis suggests that these reforms won't help 90% of mortgage prisoners.”
Customers turn to challengers after poor service
A new report from Capgemini reveals that people are turning to challenger banks like Monzo because of poor customer service at high street banks. Lower costs, ease of use, and faster service, drew customers elsewhere, it said. "In an era of rising consumer expectations, banks are challenged to offer their customers a consistent engaging experience across all channels."
Lloyds Bank failed to pass on wills of 9,000 deceased customers
Lloyds Banking Group failed to return the wills of 9,000 deceased customers to their families, leading hundreds of them to distribute assets to the wrong people.
Apollo cuts voting stake in Athene after criticism
Apollo is ploughing $1.6bn into its affiliated life insurance company Athene. Apollo recently saw off lawsuits from shareholders that accused it of "looting" the company.
Top ten dealmakers are all men
Research by data platform Mergerlinks has found that the top ten investment bankers in Europe are all men. In contrast, the company's ranking of the top 10 M&A lawyers included two women. Mergerlinks chief executive Bartosz Jaskula said: "I think 'investment banks' are making progress but they are still behind the curve that's for sure."
Commerzbank’s third-quarter profit tops forecasts
Cost cutting by Commerzbank helped Germany’s second-biggest bank deliver better than expected third-quarter profits – operating profit jumped 29% in the quarter to €448m.
BAML cuts Aston Martin rating
Bank of America Merrill Lynch (BAML) cut its rating on Aston Martin from neutral to sell, slashing its target price from 550p to just 400p. BAML analyst Kai Mueller said Aston bosses are likely to slash their forecasts for the year ahead and face a significant increase in financial risk.
VW revs up efforts to take on driverless vehicle rivals
Former Apple engineer Alexander Hitzinger will lead Volkswagen Autonomy (VWAT), the German car giant's new driverless vehicle mission. It will leverage algorithms developed by Argo AI, in which it's invested.
Separate retail investors' funds, FCA says
Financial Conduct Authority (FCA) chief executive Andrew Bailey has suggested that retail investors should have their money held separately from institutional funds to better protect individuals. Following the collapse of Neil Woodford’s investment empire, Bailey said in an interview with The Times that Kent County Council’s attempt to withdraw £263m of pension investments from the £3.7bn fund, which was unable to meet the request, was “the very proximate cause” of Woodford’s flagship Equity Income Fund's (WEIF) suspension after it became overwhelmed by investor withdrawals. "Even if technically you could have liquidated holdings to meet that order, you are not satisfying the collective investment test,” he said. Separately, Neil Woodford and his business partner Craig Newman are reported to have made almost £20m in dividends in the last financial year.
Glen: UK will remain major global player
Financial services minister John Glen says he believes Britain will do whatever it can to ensure that its financial sector remains a major global player after Brexit. "This government absolutely believes in the City," he told a London conference Monday morning, adding: "We will strain every sinew to help you flourish. Britain is at a crucial stage of Brexit, but I am confident the UK will not lose its strength in financial services easily and London will retain its status as an international financial centre."
Uber unveils move into financial services
Ride-hailing app Uber has set up a new division called Uber Money, which will include a digital wallet and support for the firm’s debit and credit cards. The debit card has been trialled with Uber drivers and will now be rolled out to all 4m drivers worldwide. Uber is also relaunching its credit card offering for consumers, in partnership with Barclays.
LEISURE & HOSPITALITY
Duffel collects $30m to boost airline technology
London-based travel tech startup Duffel has closed a $30m (£27.1m) funding round led by Dropbox and Slack investor Index Ventures to hire more highly skilled engineering talent and fund expansion in North America and Europe.
MEDIA & ENTERTAINMENT
S4 Capital beefs up analytics division
Sir Martin Sorrell’s S4 Capital has unveiled the acquisition of London data firm Conversion Works and South Korean consultancy Datalicious Korea. S4 Capital said the two companies will be merged with Mightyhive, its programmatic media division, which has now expanded its presence to 15 countries and 21 cities.
Spotify finance guru to step down
Spotify's chief financial officer Barry McCarthy is to retire in January. He will be replaced by Paul Vogel, the firm’s head of investor relations. McCarthy played a key role in authoring its unconventional direct stock market listing, whereby it floated without creating any new shares.
AT&T placates Elliott Management with three-year ‘action plan’
US telecoms giant AT&T has declared a three year restructuring and asset review to appease activist investor Elliot Management's improvements agenda. Elliot wants chief executive Randall Stephenson replaced.
One in five UK law firms fails to comply with money laundering rules
As worries grow over a lack of reporting of suspicious activity by lawyers and accountants, the Solicitors Regulation Authority has found that 21% of UK law firms fail to maintain adequate systems to prevent money laundering. The watchdog also revealed that it had opened 172 investigations linked to anti-money laundering compliance this year. Michelle de Kluyver, corporate crime partner at Addleshaw Goddard, said the “focus [of the anti-money laundering effort] is shifting towards regulated professionals like accountants and lawyers,” adding: "There is a feeling that financial institutions have been focusing on their money laundering controls but there hasn't been as much scrutiny on the professional gatekeepers."
Stock levels at record highs on Brexit uncertainty
Retailers’ stock levels in relation to expected sales were at their highest on record in October according to the latest monthly CBI Distributive Trends Survey.
Business groups warn against fresh Brexit delays
Business leaders have welcomed the fact that a no-deal Brexit at the end of the month has been averted but warned that the extension “also prolongs the agony and uncertainty.” Josh Hardie, CBI deputy director-general, said: “Uncertainty remains high. It is vital — this time — the extra time leads to a deal.” Meanwhile, global FDI contracted sharply in the first half of this year, according to the OECD as trade tensions between the US, Europe and China weighed on the world economy. Although the UK is still a leading destination in Europe for overseas investors, new investment fell from $44bn to $19bn between the second half of 2018 and the first half of 2019.