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Daily News Roundup: Tuesday, 8th January 2019

Posted: 8th January 2019

BANKING

RBS invests in tech start-up

RBS has acquired a 25% stake in Loot for £2m, following an initial investment of £3m in July 2018. Loot, which was launched in 2014, aims to help young people and students manage their finances by providing customers with a pre-paid debit card and insights into their spending habits. The app currently has more than 175,000 customers. RBS invested on behalf of its digital-only bank Bó, which is being developed by NatWest. Mark Bailie, Bó chief executive, said: “Loot is a really exciting brand and one that we're proud to be associated with. Through its innovative use of technology and intention to change the status quo, it's quickly built a following of loyal customers, with potential for rapid future growth.”

Bramson targets Barclays

Activist investor Edward Bramson is to seek shareholder approval to push for changes to the board of Barclays as he increases pressure on the bank to cut its investment banking arm. Bramson’s investment vehicle, Sherborne Investors, has built up a 5.5% stake and is one of Barclays largest shareholders. In a letter to Sherborne’s investors, Bramson said he will call for a “shareholder vote to make changes in the composition of the board”. Bramson believes more resources should instead be funnelled towards Barclays’ “attractive” consumer operations. The FT’s Lex suggests that Bramson must now show he has a better strategy plan for Barclays than the bank’s CEO Jes Staley. Alex Brummer in the Mail contends that Bramson’s suggestions should be shown the door, adding that his real motive is quick profits rather than the long-term interests of Britain.

Brexit sees £800bn in assets moved to EU hubs

New analysis suggests that assets worth almost £800bn are being moved from Britain to new financial hubs in the EU ahead of Brexit, although it is noted that this represents a fraction of Britain’s £8trn banking and £2trn insurance sectors. Meanwhile, Barclays has hired an extra 100 investment bankers in Europe to help the UK bank bolster its position in the EU after Brexit.

HSBC sparks controversy with ad campaign

HSBC has been criticised over a new advertising campaign that has been perceived by some as being anti-Brexit. The advert highlights the influence of overseas countries and cultures on life in the UK, with the bank claiming the UK “is not an island”. JWT, the agency behind the campaign, said the work was in response to the current “atmosphere” and to remind people that we are all global citizens “whatever the political climate”.

Starling Bank to target European markets

Starling Bank is to target French and German markets in a bid to mitigate any potential fallout from Brexit. CEO Anne Boden explained: “We take great pride in being based in London, but are proud too of our international outlook and of having an employee base drawn from around the world.” Ms Boden added that Starling would launch new credit card and euro accounts for UK customers in 2019 along with other products, and expand its lending activities.

PRIVATE EQUITY

Surge in number of Asian venture capital deals bucks global trend

Amid a slowing of global venture capital activity, Asia enjoyed over 5,000 of the 14,247 transactions worth $207bn last year, according to new research.

INTERNATIONAL

JPMorgan retains top spot on investment bank fees table

According to data from Refinitiv, JPMorgan Chase has retained the top spot for investment banking fees after earning a total of $7bn last year. Goldman Sachs maintained its position in second place with 6.2% share and an estimated $6.4bn in fees, followed by Morgan Stanley, which climbed one position to take the third spot with $5.1bn. In total, worldwide investment banking fees reached $102.6bn, a decline of 4% compared to 2017.

Gordon Dyal hunts biggest game since leaving Goldman

The FT profiles former Goldman Sachs banker Gordon Dyal who has launched his own advisory firm, Dyal Co. Dyal recently advised Bristol-Myers Squibb on its takeover of Celgene.

EU reforms to tighten rules on investment firms operating in bloc

EU member states have agreed to impose more oversight and tighter pay rules on investment firms wanting to operate in the bloc.

Credit Suisse settles lawsuit

Credit Suisse has settled a 2012 New York state lawsuit alleging misconduct over residential mortgage-backed securities.

HSH sued over illegal writedowns

A group of 18 American and European investors are suing HSH Nordbank for €1bn (£900m) over alleged illegal write-downs of corporate bonds issued by the troubled shipping lender.

AUTOMOTIVE

Car sales slump

The Society of Motor Manufacturers and Traders (SMMT) has reported that 2.36m new cars were registered in 2018 down 6.8% on the previous year, the biggest drop since an 11% fall in 2008. The SMMT blamed last year’s fall in cars sales - the second consecutive year that the market has declined - on uncertainty over Brexit and a shortage in supply of some vehicles due to a new emissions testing scheme. CEO Mike Hawes described those challenges as "something of a perfect storm" for the industry. He said: “What we have been seeing over the last couple of years is a decline in business and consumer confidence, especially the confidence to buy big ticket items like a new car.”

Tesla starts building Chinese factory

Tesla has started construction on a new manufacturing plant in Shanghai. The facility will produce Model 3 and Model Y cars as it pushes to grow its presence in the world's largest car market. The factory will help Tesla to avoid US tariffs on car imports into the country.

AVIATION

Norwegian blames Rolls-Royce for stunting growth

Norwegian Air boss Bjorn Kjos has blamed issue-prone Rolls-Royce engines on its fleet of Boeing Dreamliners for hitting the airline's finances, resulting in "cost-cuts" in late December. His comments came as Norwegian posted record passenger figures, with over 37m people taken in 2018, a 34% year-on-year increase under the key metric of revenue-generating kilometres.

CONSTRUCTION

More support for construction industry needed – O’Rourke

Ray O’Rourke, the CEO of construction firm Laing O’Rourke, has called for more support after striking a deal with the firm’s lenders to safeguard the future of its 15,000 workers. Following months of negotiation, the company has agreed new bank loans which are not due for repayment until 2022. Reflecting on the refinancing deal, Mr O'Rourke said: “Financing and regulatory processes in UK construction are not simple for any business at present. The entire sector has been impacted. This remains an issue of critical national importance and concern. We urge government and other bodies to support the modernisation and reform of the industry and the three million UK jobs it creates.”

FINANCIAL SERVICES

Gallagher snaps up Stackhouse Poland

Brokerage firm Arthur J Gallagher has signed a definitive agreement to acquire 100% of Stackhouse Poland Group Ltd, a local UK community broker. Stackhouse Poland has more than 500 employees across 23 offices in the UK and specialises in high net worth, real estate, commercial and healthcare insurance.

UK clearing reaches record

New figures have shown that a total of $1,077trn or £845trn of complex derivatives trades were processed by the LCH Clearnet division in 2018.

Will fintechs sink or swim when floats are regulated?

Izabella Kaminska questions in the FT whether fintech companies will be as successful when the industry faces greater regulatory oversight.

MANUFACTURING

Manufacturers fear post-Brexit border disruption

Three quarters (76%) of British manufacturers fear post-Brexit border delays would adversely impact their trading, according to a survey by insurer AIG and manufacturing association EEF, which also reveals that 62% of manufacturers are planning to stockpile goods. “This is bringing with it a whole host of risks from increased exchange rate volatility to rising input costs which right now are very difficult to plan for,” said EEF chief executive Stephen Phipson.

MEDIA AND ENTERTAINMENT

WPP axes thousands of jobs

WPP chief executive Mark Read has asserted a “radical evolution” for the “unwieldy” advertising giant. His plan will cost £300m, to cover property closures and redundancies, and result in the loss of 3,500 jobs, though around 1,000 new likely digital jobs will be created amid acquisitions.

RETAIL

Aldi UK sales hit £1bn in December

Aldi UK, the country’s fifth-biggest grocery chain, said the week beginning December 17th was the busiest in its history, with sales up 10% on last year, helping it to almost $1bn in revenue for the month as a whole.

OTHER

Jim Yong Kim steps down as World Bank President

Jim Yong Kim has made the surprise announcement that he is stepping down as President of the World Bank. Mr Kim, who was not due to leave until 2022, will step down on February 1st. The World Bank said that Kim will “join a firm and focus on increasing infrastructure investments in developing countries.”

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