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Daily News Roundup: Tuesday, 4th February 2020

Posted: 4th February 2020

BANKING

Credit card firms cautioned over indebted customers

The Financial Conduct Authority has told credit card providers to cut or stop fees for those who are caught in a cycle of persistent debt. In a letter to the chief executives of credit card firms, the financial watchdog said lenders must either cut, waive, or cancel fees if customers are unable to make payments. FCA executive director Jonathan Davidson says: “If a customer cannot afford the firm’s proposals for how to do this, the firm must offer forbearance, potentially including reducing, waiving or cancelling any interest, fees or charges.” An estimated 1.78m credit card customers are stuck in persistent debt, paying £1.3bn a year in interest, according to the regulator. James Moore in the Independent says the FCA’s stance is laudable but he questions whether those in debt will challenge banks and ask for help.

Travelex services still offline

Sainsbury's Bank, Royal Bank of Scotland, Lloyds and Barclays are among major High Street banks still unable to offer online currency services. The problem stems from provider Travelex, which is still working to bring back services more than a month after it suffered a major cyber-attack. Customers are able to buy travel money in branches, but cannot order online or over the phone.

Meddings set to join Credit Suisse

TSB chairman Richard Meddings is set to join the board of Credit Suisse. Meddings will have to grapple with a Credit Suisse spying crisis when he becomes a non-executive director. It emerged over the weekend that the Swiss bank reportedly spied on Greenpeace back in 2017.

Citigroup names new TTS head

Citigroup has appointed Peter Crawley as its new head of treasury and trade solutions (TTS) for the UK and Europe. Mr Crawley, who has been TTS head for Sub-Saharan Africa for 2013, will take up the new role in April.

Specialist bank gets approval

Oxbury, the UK’s specialist agricultural bank, will soon be able to launch to market, offering funding to farmers, after being granted approval by the FCA and the Prudential Regulation Authority.

Challenger banks lend record amount

New figures show that challenger banks lent a record of £115bn in the UK last year, although growth was slower than previous years.

PRIVATE EQUITY

Slide in UK private equity market

New data has showed that UK private equity deals have fallen to their lowest level in five years as the economic downturn and global uncertainty restrained the market. The research found that private equity firms completed 978 deals in 2019, a 19% drop from 2018, when 2,017 deals took place. The value of transactions last year totalled £86.5bn, down from £106.6bn the previous year.

Searchlight Capital acquires majority stake in GRP

Searchlight Capital Partners has announced that it has acquired a majority stake in Global Risk Partners. Mike Bruce, group managing director at GRP, said: “Partnering with Searchlight enables us to continue to capitalise on the considerable market opportunity ahead and their experience and relationships will be invaluable to GRP in executing our acquisition-led growth strategy.”

INTERNATIONAL

Goldman Sachs in talks with Amazon over small business loans

According to reports, Goldman Sachs is in advanced talks with Amazon to offer small business loans in the US. The investment bank has begun to build technology which would allow it to offer loans to small and-medium sized firms via Amazon’s lending platform. City AM notes that Goldman Sachs lacks the network of physical branches that many banks use to attract small business customers, although it does offer consumer lending through its retail banking arm, Marcus.

Julius Baer hit by charges and legal provisions

Julius Baer is to cut 300 jobs this year as it moves to boost profitability after a double-digit percentage earnings fall last year. On an unadjusted basis, net profit attributable to shareholders fell 37% to 465m Swiss francs last year, after a 250m franc impact from legal provisions and a goodwill impairment on its underperforming Italian asset manager Kairos hit earnings. CEO Philipp Rickenbacher wants to cut costs by 200m Swiss francs and grow income to improve its adjusted cost-income ratio to 67% by 2022, better than its previous 68% target and the 71% level achieved in 2019.

Germany and Austria at odds over finance tax

Germany and Austria are at odds over the introduction of a new financial transactions tax. German finance minister Olaf Scholz has proposed a levy of 0.2% on share purchases and wants to use the proceeds to help top up the pensions of low-paid people in Germany. However, Austrian chancellor Sebastian Kurz believes the plan would spare highly speculative financial instruments and derivatives, and would instead hit small investors.

AVIATION

Ryanair flying high despite Boeing delays

Ryanair has pushed back its target of 200m passengers by 2024 due to the late delivery of Boeing’s struggling 737 Max planes. In the three months to the end of December, Ryanair managed a 6% rise in customer numbers to 36m and swung from a €66m (£56m) loss during the same period in 2018 to an €88m profit. Total revenues jumped 21% to €1.91bn in the period, while revenue per passenger rose 13%. Ryanair expects annual profits after tax to likely fall in the middle of the already upgraded €950m to €1.05bn target range.

Wizz Air investor set to sell £500m shares

Indigo Partners, the largest shareholder in Wizz Air, plans to sell shares worth £500m via an accelerated bookbuilding process. Wizz Air said the sale was likely to increase qualifying national ownership, but said it will review the placing.

FINANCIAL SERVICES

Legal & General opposes chair and chief executive roles

As part of a wider annual review of its voting policies, Legal & General Investment Management (LGIM) is to step up pressure on firms who combine chief executive and board chairman roles, taking on global giants including Facebook’s Mark Zuckerberg and Blackrock’s Larry Fink. LGIM has over £1bn under management and the move could particularly hit companies in the US, France and Spain, where combined executive roles are common. The separation of the chief executive and board roles provides a better balance of authority and responsibility over time, comments LGIM

Worldline to buy Ingenico

Payments firm Worldline has agreed to buy French rival Ingenico, creating a new European leader in the sector and the world’s fourth largest payment services provider - with an implied equity value of €7.8bn.

EIB signs deal with Azimo

The European Investment Bank has agreed a debt financing agreement worth €20m (£17m) with London fintech startup Azimo. Azimo said it would use the financing to help expand.

LEISURE AND HOSPITALITY

Safestay asserts strong start to the year

Sales at boutique hostel Safestay have surged so far this year following its portfolio expansion. Total revenue increased 25% to £18.3m last year as the hostel chain opened eight new venues, taking its total portfolio to 21 sites and more than 5,100 beds. Like-for-like revenue increased 7% in the year to December 31st on the back of bed occupancy rising to 77.3%.

MANUFACTURING

Manufacturing industry begins to stabilise

UK manufacturing enjoyed its best performance in nine months in January, according to the IHS Markit/Cips manufacturing purchasing managers index (PMI), which rose to 50 last month as new orders and business confidence recovered. Duncan Brock, group director at the Chartered Institute of Procurement & Supply, commented: “It was home-grown orders that provided the fuel for manufacturing to move out of contraction territory as businesses returned to a little more normality.”

MEDIA AND ENTERTAINMENT

Future confident despite short-seller attack

Publishing group Future saw its shares rise yesterday, just days after coming under attack by a short-seller. In a trading update, Future, under fire from research firm Shadowfall, which claims the media group is “a collection of generally low quality, often distinct and shrinking assets,” said it had continued to grow audience numbers and had seen strong revenue growth.

PROFESSIONAL SERVICES

Burford issues profit warning

Burford Capital has warned that its profit for 2019 will be lower than last year. The group litigation funder forecast $20m-$30m less in net realised gains and about $50m-$70m less in net unrealised gains. Burford’s shares plunged in August when it came under attack from U.S. short-seller Muddy Waters, with bosses later claiming there was evidence of trading “consistent with illegal activity”.

REAL ESTATE

British Land selling stake in £3bn Canada Water regeneration scheme

British Land is looking for a buyer of its stake in its 53-acre regeneration project in Canada Water, London. Advisers have been appointed to find an equity partner for the project, which is expected to cost more than £3bn. British Land has consent to build up to 3,000 homes, 2m sq ft of workspace and 1m sq ft of retail, leisure and community space.

RETAIL

Advent eyes bid for Pepco

Advent International is reportedly working with Hellman & Friedman and Mid Europa Partners on a potential bid for Pepco Group, which could value the company at more than £3.8bn. Steinhoff International is looking to sell Pepco, which includes retailer Poundland. The Advent-led consortium would provide an alternative to a float which Steinhoff has been exploring for months.

OTHER

BoE role failed to attract female candidates

In a letter to the Treasury Select Committee, Sajid Javid has revealed that a total of 23 people applied for the role of the next Governor of the Bank of England, but only two of them were female. The revelation emerged despite the Treasury hiring a specialist recruitment firm aimed at diversifying its list of candidates. Both women who applied to be governor made the shortlist, alongside seven male candidates, with Andrew Bailey ultimately chosen as Mark Carney’s successor.

Citi suspends senior bond trader over alleged theft from canteen

Citi has suspended a senior bond trader, Paras Shah, head of high-yield bond trading for EMEA, after accusing him of stealing food from the canteen.

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