HSBC to trim workforce
HSBC will make as many as 4,700 people redundant from its global workforce. The move, which is being made in a bid to cut long-term costs and could bring its total salary costs down by 4%, could involve as much as 2% of its 237,685 strong global workface. Pointing to these percentages, CFO Ewen Stevenson said: “You can read into that that it is at the more senior levels of the organisation and therefore more strategic in terms of its focus, and I wouldn’t pick out any particular area of the bank.” The move will bring restructuring costs for the full year up to £576m. The announcement came in the wake of the news that chief executive John Flint is stepping down by mutual agreement after just 18 months in the role. He will receive a payoff worth about £3.1m and has been designated a “good leaver” so will also be entitled to his long-term incentive awards. Candidates to replace Mr Flint include Noel Quinn, head of HSBC's commercial bank, who is to serve as the bank’s interim chief executive, with Mr Stevenson, and António Simões, the head of its global private bank, also in the running.
Monzo customers urged to change PIN over security flaw
Challenger bank Monzo has advised customers to change their PIN after uncovering a potential security flaw, saying around 480,000 had been incorrectly stored where they could be accessed by internal engineers. Separately, Monzo has tested charging customers up to £7.50 per month for its new metal bank card, which will only be available to Monzo Plus customers. It has looked at charging the fee upfront as a £90 charge or in monthly instalments, along with alternative prices of £70 and £80.
Pressure builds on banks to share rates misery with rich
The FT looks at how global banks are responding to low and, in some cases, negative interest rates, saying some lenders are set to levy charges on ultra-rich account holders.
Summer switch doesn’t pay off?
Research from Moneyfacts.co.uk suggests that for those seeking a cash incentive to switch banks, the summer may not be the best time to change accounts. The data firm’s Rachel Springall says “sweeteners” may be more likely at the start of the year as banks look to lure new customers who are rearranging their financial affairs as a new year’s resolution. This comes as HSBC and Halifax recently pulled their cash incentives and TSB put the brakes on a ‘recommend a friend’ reward deal.
Apple Card on the way
Goldman Sachs’ credit card is expected to appear in Apple stores as soon as this week. Although Apple Card, which will use the MasterCard payment network, is a physical credit card, Apple and Goldman hope users will switch to using the iPhone wallet app as well.
PE investment at 5-year low
Analysis shows that private equity investment in the UK has fallen to its lowest level in over five years. A total of 384 deals were completed between January and June 2019, with a combined value of £28.5bn. This marks a decline of 31% in deal volumes compared to H1 2018, with a 40% dip in deal values. The figures also fall short of the 483 completed deals totalling £31.5bn during the first half of 2014. The number of first-half deals involving private equity in the middle market also fell, from 273 in 2018 to 199 this year, although the total value of these deals increased, hitting £18.4bn compared to £17.69bn last year.
Canada retirement fund sets sights on capital-hungry India
The Canada Pension Plan Investment Board plans to start a credit arm in India and could partner with non-bank providers to offer debt.
Car sales fall in July
Figures from the Society of Motor Manufacturers and Traders show that the number of new cars registered fell for the fifth consecutive month in July. Total sales were down 4.1% on July 2018, with just over 157,000 new cars being snapped up. Sales of diesel cars fell 22.1%, marking a 28th consecutive month of decline. However, three times as many new electric cars were sold in July compared to a year ago.
Heathrow strike called off
Strike action at Heathrow has been called off after the airport group and union Unite reached a deal over pay. A strike yesterday was suspended so negotiations could continue, with these talks seeing an improved pay offer which will now be presented to the union’s members. This development has seen today’s strike action called off, although Heathrow said a walkout on 23 and 24 August is still scheduled to go ahead, with Unite saying the walkouts are still “on the table” until the outcome of a ballot is known. Some 4,000 workers had threatened to walkout over a pay deal which Heathrow said is worth 7.3% over two-and-a-half years.
BBA Aviation profits dip
Aerospace services firm BBA Aviation saw pre-tax profit fall to £150.2m in the first half of 2019, a 2% year-on-year drop. The period saw revenue increase by 19% to £1.53bn, free cash flow rose 13% to £129m and net debt was up 7% to £1.34bn. Chief executive Mark Johnstone said: “The first half of 2019 has been broadly in line with our expectations”.
Financial services must root out ‘bad apples,’ watchdog says
The Financial Conduct Authority (FCA) has warned that the financial services sector must act against employees with poor conduct records being able to freely move to new companies. Acknowledging that many firms had asserted a change in the level of "detail, clarity and quality of conversations on culture and expected behaviours,” a review by the FCA found that “rolling bad apples” continued to be an issue in the sector - despite the introduction of new tougher regulations and its senior managers regime, which looks to “change the tone at the top” of firms by making senior management directly accountable for specific activities or misdemeanours.
Quilter losses prompt life assurance arm sale
Asset manager Quilter plans to offload its life assurance business to ReAssure for £425m, subject to regulatory approval, following a first-half operating loss of £40m. Adjusted pre-tax profits rose 5% to £115m and assets under management and administration increased 8% during the period - to £118.4bn. ReAssure’s owner Swiss Re said the acquisition will add over 200,000 policies and £12bn of assets to ReAssure’s platform.
LEISURE AND HOSPITALITY
UK hotels rake in record profits
The top 100 UK hotel groups saw profit break the £1bn barrier last year. Profit rose 83% year-on-year from £583m as the weak pound tempted Brits to holiday at home and overseas tourists to visit the UK. Revenue was up 1.5% from £6.8bn to £6.9bn in 2019, according to the latest research from law firm Boodle Hatfield. It also found that the budget hotel sector is now growing faster than the rest of the market, with turnover at the five leading chains increasing 7% in the year, from £1.7bn to £1.9bn.
Sir Stelios hits out at easyHotel offer
Sir Stelios Haji-Ioannou has hit out at a £139m takeover bid for easyHotel from a consortium of real estate investors. The cash bid, which has been recommended by easyHotel’s board, comes from a consortium made up of Ivanhoe Cambridge and ICAMAP, which currently holds a more than 38% stake in easyHotel. Sir Stelios, the chain’s founder and a 27% shareholder, described the offer as “very low” and has called on shareholders to reject the takeover “until the true value and future potential of easyHotel can be evaluated”.
London prime property recovers slightly
Prices in London’s prime property areas are now 3.1% higher than they were at the end of 2018, according to the latest London Prime Property Index by Coutts, which indicates that though sales activity picked up 21.4% on the previous quarter, the number of prime properties on the open market is down 12.5% on last year.
Sales growth down in July
Figures from the British Retail Consortium (BRC) show that retail sales growth fell to its lowest level on record last month, hitting 0.3% in July. This was down from a 1.6% increase in July 2018 and represents the lowest rate for July since records began in 1995. While online sales of non-food items rose by 3.7% in July, in-store sales fell by 4.1% and food sales fell by 0.3%. The BRC attributed the month’s weak performance to "the combination of slow real wage growth and Brexit uncertainty".
Tesco set to cut 4,500 jobs
Tesco has announced that around 4,500 staff at the UK’s biggest supermarket will lose their jobs in the latest round of redundancies. The majority of workers will leave from Tesco’s Metro stores, with other positions going at some Express and larger stores. In the wake of the news, Shopworkers' union Usdaw, which represents over 160,000 Tesco staff, called for the Government to tackle the “crisis” currently facing the retail sector.
Services growth sees recession fears recede
Stronger than expected growth in the services sector means the economy is set to avoid a recession, offering a boost after contractions in the manufacturing and construction sectors. IHS Markit’s purchasing managers' index (PMI) rose to 51.5, marking the strongest score for the industry since October and an increase on June’s 50.2 on an index in which a score above 50 indicates growth. Combining all sectors the PMI rose to 50.7, up from 49.7 in June. Chris Williamson, chief business economist at IHS Markit, said the improved rate of growth in the service sector is “welcome news” after other sector surveys revealed “the sharpest drop in manufacturing output for seven years and a construction sector that is mired in its deepest downturn for a decade”. He added: “The overall picture is one of an economy that is only just managing to skirt recession,” noting that July’s performance was “among the worst since the height of the global financial crisis in 2009”.
Government bonds returns hit record low
UK bond yields have hit a record low, with the benchmark 10-year gilt yield dropping below 0.5%.