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Daily News Roundup: Tuesday 3rd May 2018

Posted: 3rd May 2018

BANKING

TSB IT fallout costs Paul Pester his bonus

TSB chief executive Paul Pester will give up his "integration bonus" of £1.6m following the bank's IT migration issues. He told the Commons' Treasury Select Committee that 40,000 complaints have been received, after millions of customer accounts were moved to its own computer system from Lloyds. Mr Pester also told ministers he took "full responsibility", and that the bank will "come back" from the recent issues.

Top bankers to head £775m funding body

Godfrey Cromwell and Brendan Peilow have been appointed to head Banking Competition Remedies (BCR) – a body set up to hand out £775m in grants to Britain's smaller banks to boost competition in the sector. BCR will judge applications from lenders such as Metro Bank, Virgin Money and Aldermore, with a decision due by the "summer of 2018".

Standard Chartered on road to recovery

Standard Chartered is showing signs that it is on the road to recovery, as profits grew by a fifth in the first quarter, hitting $1.26bn before tax thanks to a growth in loan demand. The results met with analyst expectations, as operating income was up 5% on a constant currency basis to $3.9bn. Meanwhile, Richard Horrocks-Taylor has resigned after 12 years at RBC Capital Markets to join Standard Chartered, indicating that the bank wants to bulk up its business advising mining companies on potential deals.

Banking leverage remains dangerously high

Leverage in the UK banking system remains dangerously high after the Bank of England “fell short” in the capital requirements they imposed on lenders, according to John Vickers.

Santander Mastercard switch

Santander will become the first of Britain’s "big five" banks to issue debit cards through Mastercard rather than Visa. The change will commence when customer cards expire in 2019.

HSBC buoyed by Saudi contracts

HSBC has won contracts for several privatisations in Saudi Arabia, a senior bank executive said. The Saudi government is working on a series of privatisations as part of economic reforms aimed at diversifying the economy away from oil.

PRIVATE EQUITY

Oxx raises $100m to fill funding gap

Oxx, which is aiming to fill the funding gap for SMEs falling through the gaps between venture capital and private equity, has raised $100m for its first fund. The firm will focus its investment on business-to-business software companies in the UK, the Nordics and Israel.

INTERNATIONAL

Commonwealth Bank of Australia forced to reveal lost accounts

The Commonwealth Bank of Australia has been forced to reveal it lost the records of almost 20m accounts and kept the information from its customers, another blow to an institution already reeling from multiple scandals.

AUTOMOTIVE

VW shareholders urged to reject directors at AGM

Advisory groups have called on Volkswagen shareholders to reject board candidates including Wolfgang Porsche, as the carmaker grapples with legal proceedings and regulatory investigations.

AVIATION

Rolls-Royce chief will do ‘whatever it takes’ to beat engine woes

Rolls-Royce’s Warren East is driving the firm hard to make up for engine problems that could threaten plans for a cash flow of £450m this year, and £1bn by 2020.

CONSTRUCTION

Construction industry rebounds

The UK construction industry recovered in April, according to IHS Markit/CIPS' latest construction survey, with activity growing at its fastest rate in five months. The IHS Markit/CIPS UK Construction Purchasing Managers' Index rose to 52.5 last month, up from 47 in March. All three construction sectors - housebuilding, commercial and civil engineering - returned to positive territory according to the PMI, with the largest rebound seen in housebuilding.

FINANCIAL SERVICES

Huw van Steenis joins Bank of England as adviser to Carney

Huw van Steenis, the former analyst at Morgan Stanley and Schroders strategist, will join the Bank of England as a lieutenant to Mark Carney, in a specially created role which will also involve examining how technology can be used to ensure emerging economies have sufficiently robust banking systems in order for the UK to handle their money flows.

Hedge funds face big hit from new clearing rules

Analytics firm Opengamma has warned that funds looking to exploit price differences between two related markets, like bonds and futures, will be most affected by new clearing rules formulated by international organisations such as the Committee on Payments and Market Infrastructure, part of the Bank for International Settlements, and the International Organisation of Securities Commissions, with some facing a 70% additional margin. Peter Rippon, chief executive of Opengamma, championed the principle: “But in practice, these rules trigger an enormous cost for the industry, which ultimately will be shouldered by the very end investors rule-makers are trying to protect,” he added.

High-cost credit soars after payday loan crackdown

Debts from catalogue credit, doorstep lending and rent-to-own have all more than doubled in recent years amid a crackdown on payday loans. The Financial Conduct Authority’s cap on payday loan interest rates has saved borrowers £150m per year and cut the cost of fees and charges from more than £100 to £60. Other lenders now face a crackdown, with the FCA keen to ensure high-cost loans are only used by borrowers who can afford the debt and are helped by it.

'Beast from the East' devours Direct Line's weather budget

Direct Line's quarterly gross written premiums fell from £810.3m to £769.9m in the first three months, estimating that the "Beast from the East" would cost the firm around £50m after tax. Home insurance partnerships were hit hard, with gross written premiums down 52% to £47.3m, though motor insurance grew by 2.9% to £404m and Direct Line's own brands rose 0.4%.

LEISURE AND HOSPITALITY

Paddy Power Betfair to return £500m to shareholders

Paddy Power Betfair is expecting underlying earnings before interest, taxation, depreciation and amortisation of between £470m and £495m, and is returning £500m to shareholders. The company's underlying operating profit for the first-quarter fell to £80m, compared with £91m for the same period in 2017.

LeoVegas fined £627k

The Gambling Commission has fined LeoVegas £627,000 for its misleading advertising and handling of problem gamblers. The online gaming company's results showed a 76% increase in revenue in the first quarter and adjusted earnings of €9m.

REAL ESTATE

Record planning permissions granted in 2017

According to a report from the Home Builders Federation (HBF) and construction data firm Glenigan, there were 351,169 planning permissions granted for houses across England in 2017, a 21% increase on 2016’s total. This is the largest total since the HBF and Glenigan started tracking the data in 2006. Stewart Baseley, executive chairman of the HBF, said the figures are “a clear demonstration of the industry’s commitment to ramping up housing supply even further than the unprecedented increases of the last four years.”

RETAIL

House of Fraser planning CVA

House of Fraser expects to make a formal CVA proposal next month, with a full restructuring in place by early 2019. The retailer said China's C.banner, which also owns Hamleys, is taking a 51% stake and is likely to close some of its 59 stores and renegotiate rents on others.

ECONOMY

Eurozone grows four times faster than UK

The first quarter saw the eurozone’s economy grow four times faster than Britain, despite signs of flagging in the currency bloc. Figures showed that the 19-member group had expanded by 0.4% compared to Britain's 0.1% growth rate. It marked the fifth of seven quarters since the Brexit referendum that the eurozone has outpaced the UK, meaning that the country has lagged behind the United States and the eurozone for four quarters running.

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