Customer jump for digital banks
Accenture has predicted that digital banks such as Monzo and Revolut are set to treble their customer base to more than 35m within 12 months, while high street lenders will see very little increase in new account holders. The analysis shows that challenger banks have snapped up roughly 5m new accounts during the first half of 2019, although many fintech offerings have struggled to turn increased customer numbers into profit, with the average online-only bank typically losing £9 per customer. Gary Greenwood, a banking analyst at Shore Capital, commented: “Particularly in a very low interest rate environment, it's just not enough to have customers and take in deposits. You need them to be doing revenue generating activities and be borrowing from you in order to make a return.”
HSBC rejects mortgage move criticism
Having announced that it is to lend an extra £35bn to homeowners, expanding its £100bn mortgage loan book, HSBC has played down criticism of its push into the mortgage market and concerns that it will further squeeze profit margins. HSBC UK chief executive Ian Stuart, said: “There are many critics, usually other banks, saying that we are being overly competitive in the market, and we are desperately trying to get share,” adding that the bank’s strategy was based on efficiency and customer service, not just attempting to out-price rivals. The Guardian notes that while HSBC held 6.4% of the mortgage at the end of last year – and aims to expand to around 11% - UK Finance data shows that Lloyds Banking Group has a 20% share, Nationwide has 13% and Santander UK holds just over 11%.
Issue hits Danske payments
Some Danske Bank customers were left unable to view and process payments yesterday, with regular transfers and direct debits, which are likely to include monthly wages, mortgage payments and utility bills, all affected. This comes just days after several major lenders including Tesco Bank and HSBC saw technical issues which left customers unable to view their balances on Friday.
Campaigners stick it to investors
Environmental protesters glued themselves to the pavement outside branches of Barclays and HSBC in Manchester yesterday to protest against fossil fuel investments on the final day of Extinction Rebellion’s action in the city.
Sweden’s EQT seeks to raise €500m in IPO
EQT, one of Europe’s largest private equity groups, is hoping to raise at least €500m - around 20% of its stock - from a listing in Stockholm to support its future buyout plans. The move will value EQT, which manages about €40bn of assets, at about €4bn. Existing shareholders will sell stock as part of the flotation.
Deutsche chief to spend 15% of salary on bank’s shares
A regulatory filing shows Deutsche Bank chief executive Christian Sewing has committed to buying shares equal to 15% of his net salary until the end of 2022, meaning a total investment of €850,000. This makes official a pledge Mr Sewing made in July when, in announcing a major restructuring of the bank, he said he would invest a “substantial amount” of his fixed salary in the bank.
Libra could undermine European Central Bank
The European Central Bank (ECB) has warned that Facebook’s plans to create its new Libra digital currency could both undermine its own powers. ECB board member Yves Mersch also said Libra could potentially “impair the monetary policy transmission mechanism by affecting the liquidity position of euro area banks and undermine the single currency’s international role, for instance by reducing demand for it.”
Volkswagen maintains US public sector access
Volkswagen will still be allowed to bid for public sector contracts in the United States, following an investigation by the UA Environmental Protection Agency. Instead of being excluded, Volkswagen will be made to install a second US monitor at its Wolfsburg headquarters in Germany.
Ireland approves over 100 firms
Central Bank of Ireland deputy governor Ed Sibley has revealed that more than 100 financial services firms that applied to set up or extend operations in Ireland because of Brexit have been authorised to do so. He said: “We’re well over 100 authorisations or authorisations in principle where we’ve said you’re authorised subject to certain conditions, for instance putting capital in,” adding: “We still have a number of applications that are in train.” He added that most larger firms, including Barclays and Bank of America, are approved, with “maybe one or two exceptions”.
NS&I slashes savings rates
National Savings and Investments has pulled its one and three-year fixed-rate savings products from general sale and reduced the rate for existing customers looking to renew their accounts. The savings provider has cut the rates on its Guaranteed Growth and Income Bonds by 0.25%, while it has also cut the rate on its Fixed Interest Savings Certificates by the same amount. NS&I said the cuts were due to the fact rates for similar products have fallen, while the measure it uses for raising finance for the Government was lower due to “exceptionally low” gilt yields. Sarah Coles, personal finance analyst at Hargreaves Lansdown, called the rate cut “incredibly disappointing for customers”, but accepted NS&I was “caught between a rock and a hard place.”
City bosses press Javid for cuts in tax and regulation
A group of bank and insurance executives have told Chancellor Sajid Javid that tax cuts are needed to ensure the prosperity of the City in a competitive global market after Brexit.
Harris steps down as director of Woodford Patient Capital Trust
Woodford Patient Capital Trust has said that Steven Harris, co-founder and CEO of Circassia Pharmaceuticals, intends to step down as a non-executive director at the end of September. Jane Tufnell, the co-founder of Ruffer Investment Management, has joined the board as an independent non-executive with immediate effect. Mr Harris’s departure comes amid speculation that Neil Woodford may be fired from managing his own investment trust.
LEISURE AND HOSPITALITY
Equinox falls to loss in UK
Equinox Fitness, the UK arm of an upmarket US gyms chain which has faced a backlash over its owner's links to Donald Trump, has posted a £6.1m pre-tax loss this side of the pond in 2018 - after a £242,000 profit in 2017. It managed to boost sales 28% to £11.9m here however, with members tempted by investments in a larger range of classes.
Manufacturing falls to seven-year low
The UK manufacturing sector fell to a seven-year low in August, sending the pound down against all of the major currencies. The purchasing managers’ index (PMI) produced by IHS Markit/CIPS fell to 47.4 in August, down from 48 in July. A figure below 50 indicates the sector is contracting. New orders fell at the fastest pace for seven years, and business confidence fell to its lowest level since the survey first began to track the measure in 2012. Rob Dobson, director at IHS Markit, commented: “High levels of economic and political uncertainty alongside ongoing global trade tensions stifled the performance of UK manufacturers in August. The global economic slowdown was the main factor weighing on new work received from Europe, the USA and Asia. There was also a further impact from some EU-based clients routing supply chains away from the UK due to Brexit.”
German real estate giants step towards merger
Two German real estate firms are considering merger that would create a market leader worth €25bn. TLG Immobilien has bought a 9.99% stake in rival Aroundtown, with an option to acquire up to 4.99% additional stake. Aroundtown’s largest shareholder Avisco Group said the move “is the first step to enable the potential creation of a pan-European commercial real estate market leader, focused on Germany and the Netherlands and geared towards offices and hotels.”
Sales flat in August
Analysis from the British Retail Consortium shows that retail sales flatlined in August, while like-for-like sales were down 0.5% from the previous year. August’s readings put total sales ahead of the average quarterly rate of minus 0.4%, but behind the annual average of 0.4% growth. The 12-month average of 0.4% sales growth is the lowest on record.
M&S faces FTSE 100 relegation
Marks & Spencer saw share values decline on Monday on expectations that it will drop out of the FTSE 100 at the latest quarterly reshuffle, with a ‘Sell’ rating from Goldman Sachs also hitting the retailer. M&S’ shares, which have declined by about 40% since January 2018, fell 1.4% yesterday.
Arcadia COO stands down
Arcadia chief operating officer David Shepherd has left the firm, according to filings at Companies House, with it revealed that he retired at the end of last month. Sources close to Sir Philip Green’s retail empire say Mr Shepherd’s resignation is unrelated to Arcadia's recent restructuring efforts.
Sterling shaken by election talk
The pound fell to the lowest level in three weeks yesterday amid mounting speculation that a general election is on the horizon, sinking more than a cent against the dollar to $1.2050. Against the euro, it fell below the €1.10 mark after a dip of around 0.7%. Experts warn that political uncertainty is hitting the currency, with Michael Hewson, chief market analyst at CMC Markets, saying headlines that suggest an election could come sooner rather than later have put pressure on the pound, while Craig Erlam, senior market analyst at Oanda Markets, pointed to a “seriously eventful week in parliament” and commented: “I don’t think sterling volatility is going anywhere soon.”
BoE official in regulation warning
Bank of England official Alex Brazier, executive director for financial stability, strategy and risk, has warned that rolling back financial regulations introduced since the financial crisis would damage the economy. He said: “When it comes to the resilience of the core financial system, the regulatory pendulum hasn’t been swung too far. It doesn’t need to be brought back,” adding that it would be “harmful to swing back from here”.