BANKING
Profits rise at HSBC
HSBC has reported a 31% jump in pre-tax profits for the first quarter as it cut costs and incomes from Asia grew. The bank made $6.2bn (£4.8bn) before tax in the three months to March, up from $4.8bn in the same period a year earlier. It beat the $5.58bn average of analysts’ estimates compiled by HSBC. HSBC said “management of costs and investment” would allow it to “to meet risks to revenue growth, given the current uncertain economic environment”. The bank reported a 7% rise in revenue in Asia, compared with a year earlier. Meanwhile, the bank’s US business brought in $379m, compared with a pre-tax loss of $596m in the first three months of 2018. CEO John Flint said the results were "encouraging" against a backdrop of global economic uncertainty.
Lloyds launches review of HBOS
Lloyds Banking Group has launched a review of a scheme set up to compensate victims of fraud at the Reading branch of HBOS. The lender has appointed Sir Ross Cranston to carry out an independent assurance review following intervention from the Financial Conduct Authority and the City minister John Glen. Lloyds said: “Due to the high level of public interest in the HBOS Reading customer review, the assurance review will be led by a high-profile independent party to go above and beyond a customary lesson learned exercise.”
Goldman delays launch of Marcus in Germany
Goldman Sachs has delayed the German launch of its consumer bank Marcus until 2020 because of cost constraints and Brexit. Had Brexit taken place on March 29, Goldman would have looked to German depositors to help fund its Frankfurt trading operation. The US bank declined to comment, but said it was focusing on its UK Marcus operations.
Investors braced for more pain from Metro Bank fundraising
Analysts and market participants have suggested that Metro Bank might have to give away almost half of the company to persuade investors to hand over £350m to strengthen the bank’s finances. According to sources, the lender may have to price its rights issue at a 40% discount to its present level, leaving investors facing the prospect of their holdings being diluted unless they put in more capital.
Monzo plans US launch
Monzo is planning to launch in the US as soon as this summer, according to the Telegraph. The challenger bank is in the process of hiring executives to lead its product and marketing arms in the US. At present, Monzo does not have a US banking licence, but it is believed to planning a similar soft launch to how it set up its app in the UK by launching a pre-paid card. Revolut and German financial technology start-up N26 are also targeting America.
Whistleblower claims he was ousted
A whistleblower who warned senior staff at Standard Chartered of a loophole in its money laundering checks says he was ousted after highlighting the issue. The anonymous whistleblower says he warned two managing directors that it was possible to “mis-spell the name” of a client and still process a transaction. Separately, Standard Chartered is facing a backlash from investors this week over an increase in CEO Bill Winters’ pension payments. The lender is giving Mr Winters £474,000 this year towards his retirement - up from £460,000 a year earlier.
Bramson facing own battle
Edward Bramson, who owns 5.5% of Barclays through his Sherborne Investors fund, is facing criticism from his own shareholders following a 27% fall in the value of their investments. Bramson’s attempts to win a seat on Barclays’ board was defeated last week.
Small businesses sue Clydesdale Bank over fixed-rate loans
A group representing 140 small business is suing Clydesdale Bank, with a lawsuit filed at the High Court alleging deceit, misrepresentation and breach of contract over the sale of small business loans.
OakNorth targets the wealthy
OakNorth is launching a new range of mortgages aimed at high net worth individuals who do not have more traditional streams of income. The bank said it will serve customers who are “asset rich but income poor”, adding that they are under served by traditional banks, with loans more than £500,000.
PRIVATE EQUITY
Buffett warns over private equity
Warren Buffett, the billionaire chairman of Berkshire Hathaway, has warned pension funds to be “very careful” when dealing with hedge funds and private equity firms as he claims they are dishonest about the amount of money they make. Buffett explained: “We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest.”
US wealth management becomes hotbed of M&A
The FT examines how private equity managers are driving rapid change across the US wealth management industry by turning numerous small providers into a few multibillion-dollar operators.
Investors put off UK private equity by EU departure risk
Research from Invest Europe reveals that private equity investments in UK companies dropped last year, as dealmakers postponed decisions because of Brexit uncertainty, and fears over currency volatility.
INTERNATIONAL
Luxembourg raises concerns about Revolut
A member of Luxembourg’s parliament has raised concerns about Revolut’s bid for a banking licence in the country. Laurent Mosar, a member of the CSV opposition party, submitted a parliamentary question on the “legitimacy and compliance of this fintech with national and international regulations”. Revolut is also at the centre of a political debate in Lithuania over two European banking licences it was granted by the central bank. James Cook in the Sunday Telegraph profiles Revolut in detail, suggesting that the firm has gone from the golden child to enfant terrible of the fintech age.
Ex-Goldman banker released on $20m bail by US court in 1MDB case
Roger Ng, a former Goldman Sachs banker, has pleaded not guilty to money laundering and bribery in the 1MDB scandal in Malaysia.
Swedes urged to hoard banknotes
The Swedish Civil Contingencies Agency, an arm of the government, has urged people in Sweden to stockpile coins and banknotes in case the country’s move towards a cashless society leaves them without money in a cyber-crisis.
Czech banks hit after prime minister’s proposal on dividends
Shares in Czech banks have fallen after the country’s PM Andrej Babis said they should pay up to 20% of their dividends into a new state development fund.
AUTOMOTIVE
Robo-taxis will drive Tesla growth
Tesla boss Elon Musk has told investors that the electric car maker will be worth $500bn thanks to new “transformative” driverless technology that could turn its cars into a fleet of robo-taxis. Musk said Tesla could become a “half-trillion-dollar market cap company” due to its investment in autonomous driving technology.
AVIATION
Boeing admits of prior knowledge of 737 Max problem
Boeing has admitted that it knew about a problem with its 737 Max jets a year before the aircraft was involved in two fatal accidents, but took no action. The firm said it had inadvertently made an alarm feature optional instead of standard, but insisted that this did not jeopardise flight safety.
CONSTRUCTION
New funding to encourage SME housebuilders
The British Business Bank is to make up to £1bn of guarantees available to banks that lend to housing developers. The move follows a pledge by the Chancellor to help small and medium-sized developers, in a bid to meet a Government target of 300,000 new homes every year. The proportion of homes put up by small builders has halved since the late 1980s, and many in the sector have complained that access to finance is one of the biggest hurdles.
‘Unrealistic timetable’ caused Crossrail delays
The National Audit Office has said that Crossrail was driven over its budget and beyond schedule after bosses clung to an unrealistic launch date. Decisions were driven by a desire to meet the December 2018 deadline for the new east-west railway in London, the spending watchdog said. It added that Crossrail cut risk management teams ahead of an expected completion, but is now rehiring them.
FINANCIAL SERVICES
Provident steps up cost-cutting measures
Provident is to increase its cost-cutting measures as it continues to battle a £1.3bn hostile approach from rival Non-Standard Finance (NSF). In a first quarter trading update, the doorstep lender laid out a strategy that includes “responsible growth, supported by cost control and efficiency” as it looks to realise “synergies that arise from common processes across the group”. Provident’s Vanquis Bank grew new customers by 13% in the first quarter. Meanwhile, customer growth at its core home credit arm was 27%.
Takeover bid launched for broker
Interactive Investor Services has approached retailer stockbroker Share about a takeover. Share confirmed the move after its stock rose 13% to 34.5p, its highest price for almost four years. Interactive has until the end of May to confirm whether it intends to make an offer for the business.
BlackRock and HSBC launch Saudi investment funds
BlackRock and HSBC have been criticised after launching investment funds dedicated to Saudi Arabia. The fund launches come seven months after the killing of journalist Jamal Khashoggi sparked outrage.
HEALTHCARE
Care UK prepares to sell division
The Sunday Express reports that Care UK is planning to sell its healthcare division. According to its last set of results, which cover the year to the end of September 2017, Care UK's healthcare business saw revenues rise 10.1% to £357m.
LEISURE AND HOSPITALITY
Thomas Cook seeks £400m safety buffer
Thomas Cook is in talks with its banks about securing extra debt facilities. The travel firm is seeking up to £400m on top of its existing £875m facilities as a cushion against challenges facing the holiday industry.
MANUFACTURING
Chinese firms leading the race to buy Bombardier
State-run Chinese firms are leading the race to rescue Bombardier's Northern Ireland business from closure, according to Stephen Kelly, chairman of Manufacturing Northern Ireland. Mr Kelly said that the Aviation Industry Corporation of China (AVIC) and the Commercial Aircraft Corporation of China (COMAC) are believed to be considering bids for the aerospace plants.
RETAIL
Walmart mulls sale of Asda
City sources have said that Walmart is exploring a stock market float of Asda following the collapse of its planned £12bn merger with Sainsbury’s. Walmart is also said to be considering a potential sale of the grocer, with private equity firms and bargain chain B&M said to be interested.
Burberry quits Leeds expansion plans
Luxury fashion brand Burberry has officially abandoned plans to set up a new factory in Leeds which would have created 200 jobs.
ECONOMY
Public finance warning
Analysis from credit ratings agency Moody’s suggests that an exodus of high earners, a push to end austerity and an ageing population could see public finances significantly weaken. Offering insight into fiscal risks ahead, the report suggests public debt could be close to 90% of GDP by 2020. It added that the Government is “running out of options” to cut spending in areas that were not ring-fenced and said changes to commitments to run a budget surplus by 2020 and other revisions “speak ill of policymakers' forward planning ability”. The analysis also suggests that ministers have increasingly concentrated the tax take on "a small number of taxpayers for revenue" and warned that a relocation of financial services jobs post-Brexit risks losing the "very wealthiest taxpayers".
Services sector sees growth
The IHS Markit CIPS services sector purchasing managers' index (PMI) rose to 50.4 in April, up from March's 32-month low of 48.9. This comes after a survey of manufacturers found the PMI slipped to 53.1 last month from 55.1 in March, while the construction sector saw a three-month high of 50.5 in April from 49.7 the month before. Chris Williamson, chief business economist at IHS Markit, said the PMIs suggest the economy remained weak going into the second quarter.
OTHER
Teach money skills to children
A study from consultant ThoughtWorks has found that nearly two-thirds of Britons believe money skills should be taught on the national curriculum, so that future generations are better equipped to handle their finances and make decisions. The survey also found that 49% of people believe that banks should run inclusion programmes for the elderly, to make sure they are comfortable with technology and can manage their financial matters themselves. Meanwhile, the Scotsman reports that plans are under way to launch Scotland’s first nationwide schools programme for financial services. The SFE Financial Services Unified Schools Programme, run by Scottish Financial Enterprise (SFE), was established to encourage and inspire school pupils to consider and explore the career opportunities offered by financial services.