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Daily News Roundup: Tuesday, 9th April 2019

Posted: 9th April 2019

BANKING

Bramson seeks place on board

Edward Bramson, whose investment firm Sherborne Investors owns a 5.5% stake in Barclays, has urged shareholders to grant him a place on the bank’s board – while stepping up his attacks on the company’s strategy. He reiterated calls for Barclays’ investment banking division to be scaled back and said the current strategy to commit more resources to the division was “untenable in the long run.” In a letter to shareholders, Sherborne said: “In view of Barclays’ most recent announcements of sudden management realignments and departures, we believe that Mr Bramson’s experience and temperament would be a strongly stabilising influence on the board.” Matthew Vincent in the FT’s Lombard notes that Mr Bramson’s letter has prompted some criticism but he says the bank’s shareholders are itching for better returns.

Big tech speeds up move into banking

The Bank for International Settlements has reported an increase in the pace at which large tech firms are mobilising to operate in the financial services industry. The global regulator said digital players are moving from payments into mainstream lending, with the trend most pronounced in regions with immature banking and payments industries, such as China and Latin America. It says more large tech firms in the banking environment has the potential to enhance competition and financial inclusion, as their manipulation of data is more effective than banks and credit rating agencies. However, there was also a warning that just a few large players could end up dominating the sector, giving rise to “systemic risks.”

Cashless society could quickly become reality

The Bank of England has warned that the end of cash could come quickly as bank branches close, more shops refuse to accept notes and coins and the cost of handling traditional currency rises. The BoE’s chief cashier Sarah John said that many consumers are at risk of losing access to cash without urgent action. She said: “For cash to remain a viable payment method, the public needs access both to withdraw cash and to deposit cash. And if retailers cannot easily deposit the cash they receive from customers, they may choose to stop accepting it.” Figures reveal that about 2.2m people rely mostly on cash for everyday spending, while 1.3m people have no option because they do not have a bank account.

Y Combinator to invest in Monzo

Y Combinator, the Silicon Valley venture capital firm, has agreed to invest new funds in Monzo. According to sources close to the situation, the funding round is expected to be led by Y Combinator's Continuity fund and could raise up to £100m. With the new investment, Monzo would overtake Revolut as Britain’s second-most valuable banking start-up after OakNorth.

Banks face legal action over tax schemes

A number of banks, including Barclays and Santander are facing fresh lawsuits over alleged tax-avoidance schemes that accusers say represent mis-selling “on an epic scale”. Santander could be sued over the Imagine film-financing scheme part-funded by Alliance & Leicester, while Barclays faces being sued by over the Timeless Releasing strategy.

Jury discharged in Barclays fraud trial

The jury in the fraud trial against four former Barclays bankers - including former CEO John Varley - has been discharged. The case dated back to the financial crisis, when the bank raised billions of pounds from Middle East investors. All four were charged with conspiracy to commit fraud by false representation in relation to Barclays' June 2008 capital-raising.

PRIVATE EQUITY

London eyes fintech crown

A new report from Robert Walters and Vacancy Soft has suggested that London is on track to house the same number of fintech unicorns as San Francisco, which is currently the world’s leading city for firms in the sector valued at over $1bn. Of the 29 fintech unicorns globally, nine are based in San Francisco, with seven housed in London. The report predicts that London will catch up with San Francisco as early as this year. The UK also boasts the highest consumer fintech adoption rate of any western country, with 52% of British consumers using fintech services against a global average of 33%.

Octopus launches new fund

Octopus Ventures has launched a new £83m fund to further back its portfolio of industry disruptors. Octopus said the new fund would allow it to invest between £250,000 and £20m in start-ups and become “part of a small group of investors with the resources to support start-ups from inception all the way to international scale-up”.

London and south-east secure bulk of private equity investment

A new study has found that companies in London and the south-east have received 75% of all private equity investment in the UK.

INTERNATIONAL

Standard Chartered prepares to agree settlement

Standard Chartered is expected to pay more than $1bn to settle long-running regulatory investigations into alleged breaches of sanctions against Iran. According to reports, the emerging markets-focused bank could announce settlements with prosecutors and financial watchdogs in the United States and Britain today.

Larry Fink says BlackRock aims to control a Chinese asset manager

BlackRock CEO Larry Fink says the firm is “very engaged” with Chinese regulators as the world’s largest asset manager attempts to take control of state-backed CICC Fund Management.

Credit Suisse pay under scrutiny

Proxy adviser Glass Lewis has advised shareholders to vote against Credit Suisse’s compensation report. The adviser cited an “unjustified CEO bonus increase” for CEO Tidjane Thiam for opposing the report. The increase has, however, been backed by Institutional Shareholder Services.

China sounds alarm over bad-loan surge at small banks

China’s central auditing authority has raised concerns about bad debt at small banks across the country. As a result fresh questions over whether Beijing will rescue struggling banks have emerged.

UBS head to move on

Thomas Rodermann, the head of UBS Europe SE, is set to leave the bank when his contract expires in November.

AUTOMOTIVE

JLR begins Brexit shutdown

Jaguar Land Rover (JLR) has shut down production for a week because of uncertainties around Brexit. It affects thousands of staff at Castle Bromwich, Solihull and Wolverhampton in the West Midlands, and Halewood on Merseyside. The shutdown is in addition to a scheduled closure for Easter. JLR said it needed more certainty around Brexit, and warned that a "no-deal" Brexit would cost it more than £1.2bn in profit each year.

FINANCIAL SERVICES

FCA strengthens post-Brexit ties with Australian regulator

The Financial Conduct Authority has agreed to Memoranda of Understanding with the Australian Securities and Investment Commission, to ensure continuity after the UK leaves the European Union. The agreements mean that Australia will be able to access trade repositories, which collect records of derivatives, that are based in the UK, and that alternative investment firms that operate across borders will be properly supervised in both countries.

LSE to shift Turquoise to the Netherlands

  1. London Stock Exchange has said its pan-European platform Turquoise would shift trading in euro denominated-shares to its new Dutch hub if Britain leaves without a deal at the end of this week. British, Swiss and US shares would stay on its existing platform in London.

Lendinvest secures £200m funding from HSBC

Lendinvest has landed up to £200m in funding from HSBC in order to launch its home loan product this year. The new funding will allow the mortgage marketplace and property investment platform to enter the regulated home loan market for the first time. The fintech firm also allows investors to back its mortgages through its co-investment platform, discretionary fund and £500m London Stock Exchange-listed bond programme.

LME Code of Conduct to apply to third party events

The London Metal Exchange’s first ever code of conduct states that LME-branded receptions or parties should not be held at venues that could make participants feel “uncomfortable”.

MEDIA AND ENTERTAINMENT

Pinterest seeks $11.3bn valuation in New York IPO

Social media platform Pinterest is hoping to raise as much as $1.3bn (£995m) when it floats on the New York Stock Exchange later this year. However, its proposed price range of $15-$17 per share puts its maximum potential valuation at $11.3bn, below the $12bn valuation it earned after a funding round in 2017; an indication that Wall Street’s interest in new tech listings could be waning.

RETAIL

Brexit dampens retail sales

Retail sales fell by 0.5% in March from a year ago as shoppers curbed their spending amid Brexit uncertainty. Helen Dickinson, the chief executive of the BRC, commented: “Brexit continues to feed the uncertainty among consumers. For the sake of everyone, MPs must rally behind a plan of action that avoids no deal - and quickly - or it will be ordinary families who suffer as a result of higher prices and less choice on the shelves.”

ECONOMY

Companies amass record cash balances

Figures from the ONS show that private companies, excluding financial institutions, have stored away £173bn since March 2016 and are now sitting on £747bn on cash, a level not seen before. The ONS said the figures underscore the financial health of Britain’s corporate sector and point to pent-up potential for investment in the economy. The Treasury believes that the balances are proof that there will be a “deal dividend” from better economic growth as companies raise spending if or when the UK leaves the European Union on good terms.

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