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Daily News Roundup: Tuesday, 7th August 2018

Posted: 7th August 2018

BANKING

HSBC reveals strong results

HSBC has posted a 5% rise in pre-tax profits to $10.7bn (£8.2bn) for the first half of the year, with adjusted pre-tax profits of $12.1bn, down slightly (2%) on last year due to an 8% rise in operating costs. Lending growth increased by 5% since the start of the year to $43bn. John Flint, HSBC's new chief executive, said the rise in costs, to $16.4bn, reflected major investment in new hires and digital banking under the three-year strategy unveiled earlier this year and warned that trade war tensions between the US and China could yet still derail global stock markets. Alongside the results, HSBC confirmed that it had finished setting up its ringfenced bank and also revealed that HSBC Bank chairman Jonathan Symonds would be taking on the role of deputy group chairman.

CMA scolds Barclays over PPI failures

The Competition and Markets Authority (CMA) has criticised Barclays for failing to adequately remind customers of their right to cancel PPI policies. Adam Land, the CMA’s senior director of remedies, business and financial analysis, said: “This is Barclays’ second breach of the PPI order. As a result, we are issuing legal directions which can be enforced by a Court, to ensure they comply with the order."

Equity release firms rely on ‘unfit’ valuations

A think tank has accused the Bank of England of ignoring a potential problem in the equity release mortgages sector. According to a study by the Adam Smith Institute, equity release firms stand to lose billions of pounds and could collapse entirely in the event of a house price crash, because the price of policies has not properly factored in the risk of house values falling in the future. And the Institute says that the Prudential Regulation Authority knowingly allowed these firms to use "unfit" valuation methods.

Hammond sees dangers of bank capital shift after Brexit

The FT examines Chancellor Philip Hammond’s concerns that Brexit will fragment European financial markets, forcing banks to split up the pools of capital that they have concentrated in London.

Teenagers targeted by Monzo

Monzo is to make current accounts available to 16- and 17-year-olds, with gambling and overdrafts banned and other restrictions in place.

Contactless is the pay to go

Some 77% of consumers regularly use contactless payments, according to a Go Compare study, working out at 40m people in Britain. The firm’s Martyn John commented: "Contactless technology has transformed the way we make payments, but the fear of fraud is an issue for some."

Legal & General and Virgin mortgage team-up

Legal & General and Virgin Money will offer lifetime mortgages to Virgin customers at the end of their interest-only home loan terms under a five-year deal. Steve Ellis, CEO of Legal & General Home Finance, noted: "Solving the interest-only challenge is just one area where we see lifetime mortgages as a potentially transformative solution for the lives of UK borrowers."

PRIVATE EQUITY

Transparency urged on private equity fees and costs

The FT features a column on the fees and expenses private equity funds extract from investors, ahead of a study on the issue by the Oxford Saïd Business School.

INTERNATIONAL

Facebook requests users’ financial data

Facebook has approached JP Morgan, Wells Fargo, Citigroup and US Bancorp with a request for users' financial details, including card transactions and account balances, claiming that it seeks to use the data to offer new services. The firm is said to have pitched features in its Messenger app to the lenders, that would show users their current account balances or fraud notifications. At least one banks is believed to have withdrawn from discussions over privacy concerns.

UniCredit claims compensation from Caius

A dispute over whether part of the capital at UniCredit is valid has seen the bank claim €90m in compensation from hedge fund Caius Capital.

Goldman trading co-head named

Jim Esposito has been named global co-head of Goldman Sachs’ trading division. Mr Esposito was previously co-chief operating officer of the bank’s FICC franchise.

AUTOMOTIVE

UK new car market shows signs of stabilisation in July

Following several months of decline, UK car sales rose 1.2% in July, according to the Society of Motor Manufacturers and Traders, with 163,898 cars registered.

FINANCIAL SERVICES

Merrill Lynch wealth managers ditch Thomson Reuters for Factset

Wealth managers at Bank of America-owned Merrill Lynch are replacing Thomson Reuters as their primary market data provider with Factset, a relatively new entrant to the scene.

Pensions surplus announced

Oliver Morley, new chief executive of the Pension Protection Fund, has announced an unexpected funding surplus which may benefit members who saw company retirement schemes collapse.

HEALTHCARE

Spire reveals falling NHS revenue

Shares in hospital group Spire Healthcare tanked on Monday following a profit warning due to upgrading costs and tough market conditions. NHS revenues dropped 9.5% in the first half.

REAL ESTATE

IWG snubs bidding war

Office provider IWG, formerly known as Regus, has ended the bidding war for the firm, ceasing all discussion with interested parties Starwood, Terra Firma and TDR. IWG also revealed that pre-tax profit had fallen by a third in the first half of 2018 to £54.3m due to what it described as “additional growth related and talent investments”.

RETAIL

Poundworld founder criticises management

As Poundworld’s last stores close this week, founder Chris Edwards has blamed poor management for the collapse. He commented: "They started selling multi-price products ignoring Poundworld's unique selling point, which was its amazing range of products all priced at just a pound. Customers found this confusing."

ECONOMY

Pound hits 11-month low

The pound has hit its lowest level in eleven months, falling below its mid-July low to the weakest point since September 2017. The dip has been partly attributed to comments from international trade secretary, Dr Liam Fox, who warned that a no-deal Brexit was now more likely than not, saying there was a 60:40 chance that the UK would leave the European Union without an agreement. The pound has fallen 2.5% against the dollar over the past month and weakened 1% versus the euro.

OTHER

Doctors warn on heart attack increase in young bankers

Cardiologists have warned that finance industry workers in their 20s and 30s are suffering more frequently from heart attacks and other conditions. Dr Syed Ahsan, a cardiologist with a clinic in Canary Wharf, commented: “In investment banking, I think whatever they [the banks] say… the hours and the pressure that is put on these guys is huge. So as much as they may be doing things to improve – I don’t think it’s changed at all”.

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