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Daily News Roundup: Tuesday 9th July 2019

Posted: 9th July 2019

BANKING

Deutsche Bank commits to City as hundreds sacked

Deutsche Bank has confirmed that it will push ahead with plans for a new UK HQ despite cutting hundreds of jobs in the City and exiting parts of its London-based investment bank. CEO Christian Sewing said the bank would still move into its new base at 21 Moorfields in the City in 2023. He was speaking shortly after those in London affected by the 18,000 global cuts were told that their passes would stop working by 11am. Sewing said the job cuts would give the better-performing parts of the bank “the oxygen needed to prosper”. The German lender, which is one of the City’s biggest employers, said that it would “retain a significant presence ‘in London’ and remain a close partner to our UK clients and to international institutions that want to access the London market”. The bank declined to comment on how many of the bank's 8,000 UK staff would be affected by the overhaul. However, one head-hunter said that he would estimate around 1,200 job losses yesterday and “a similar or greater number again over the next three years”. Commenting on Sewing’s strategy, the FT’s Patrick Jenkins says the bank has been painfully slow to respond to industry changes but is finally taking action. The Guardian’s Nils Pratley debates whether the tough action taken by the bank is a decade too late, while Ben Wright in the Telegraph says Deutsche’s biggest problem is that it “just doesn’t make any money”. He says what we are witnessing is not the start of the next financial crisis but the tail-end of the last one. A leader in the Times warns that Deutsche’s retrenchment suggests that the City of London’s status is under pressure.

Barclays left to stand alone in European investment banking

Reflecting on Deutsche Bank’s change in strategy, Ruth Sunderland in the Mail contends that it is even more important that Barclays succeeds in having a strong European investment bank. She says it would not be desirable for companies and governments to be solely in the hands of the US banks, particularly at a time of trade tensions and rising nationalism.

One in five with high rate card were jobless

Research by the Stepchange debt charity has found that almost one in five people who have taken out a high-interest rate, sub-prime credit card were unemployed at the time it was issued. Around 4m people in the UK have a sub-prime credit card, defined as one with an annual interest rate of between 30% and 70%. The research revealed that 79% of those with a sub-prime card said that it had made their financial situation worse, while a third of people with serious debt problems have a sub-prime card. Meanwhile, anti-poverty charities and campaign groups have accused the FCA of a “lack of action on predatory lending”.

Metro shares down amid board tensions

Metro Bank’s shares closed down by more than 3.5% yesterday amid reports of rising tensions in the boardroom. Top executives at the high street bank have reportedly been pushing chairman Vernon Hill to resign from the board amid torrid trading and growing pressure from regulators.

INTERNATIONAL

Julius Baer names new boss

Philipp Rickenbacher has been appointed as Julius Baer’s new chief executive. He is the current head of intermediaries and global custody at the Swiss private bank. He will replace Bernard Hodler, the current CEO, on September 1st. Julius Baer refused to confirm if it had considered appointing Iqbal Khan, who resigned as head of wealth management at Credit Suisse last week.

HSBC replaces US chief executive with Citi veteran

Michael Roberts is to replace Patrick Burke as the president and CEO of HSBC’s US operation. Mr Roberts moves from Citigroup, where he has been global head of corporate banking.

Bankers’ tin ears on bonus claims will deepen social tensions

The FT’s Patrick Jenkins says recent lawsuits brought by Credit Suisse and former UBS boss Andrea Orcel are clear evidence that defiance over bankers’ bonuses is returning.

Banks in no rush to join Facebook’s crypto project

The FT reports that banks are not rushing to join Facebook’s Libra project, noting that traditional lenders are working on their own faster, cheaper payments projects.

AVIATION

British Airways faces record fine for data breach

British Airways is facing a record fine of £183m for last year’s breach of its security systems. The airline, owned by IAG, says it is “surprised and disappointed” by the penalty from the Information Commissioner's Office (ICO), the first it has proposed under the GDPR. The ICO said the incident took place after users of British Airways’ website were diverted to a fraudulent site. Through this false site, details of about 500,000 customers were harvested by the attackers, the ICO said. The watchdog said a variety of information was “compromised” by poor security arrangements at the company, including log in, payment card, and travel booking details as well name and address information. Writing in the Guardian, Nils Pratley says the size of the proposed penalty will send shudders in boardrooms up and down the country as the ICO appears to be a regulator to be feared.

FINANCIAL SERVICES

Brokers take aim at Schroders

Shares in Schroders fell yesterday after analysts at Barclays and Jefferies questioned the money manager ahead of its interim results next month. The analysts believe Schroders has been hurt by falling fees and a flow of money away from expensive actively managed funds to cheaper passive products. Jefferies is also keen to see more on action on Schroders joint venture with Lloyds Banking Group, called Schroders Personal Wealth.

North suffering from credit deserts

According to a report from the think-tank Demos, swathes of Northern England – including parts of Yorkshire – are home to “credit deserts” where people may struggle to access affordable borrowing. Demos said that while many so-called credit deserts do have bank branches, building societies and credit unions, some residents may struggle to access their services due to their credit history. Areas named by the think-tank included Barnsley, Hull, Liverpool, Rochdale, Blackburn, Burnley, Blackpool, Hartlepool and Sunderland.

REAL ESTATE

WeWork looks to raise $4bn

The shared office space manager WeWork has reportedly met with the CEOs of Goldman Sachs and JPMorgan as it looks to raise $4bn in debt ahead of its highly anticipated stock market listing. The company is effectively seeking to securitise cashflows from the buildings in its property portfolio, using the money to reduce its debt. It mainly leases the buildings or spaces in buildings in which it runs its offices.

Broker Habito poised to offer buy-to-let mortgages

Habito has entered the mortgage lending space, launching a range of mortgages aimed at individual buy-to-let landlords. The move will be funded by an initial £500m investment from an unnamed global financial institution. Habito said it aims to cut the timeframe from mortgage application to offer in half by integrating the conveyancing process with its platform.

RETAIL

Debenhams urges Sports Direct to drop legal challenge

Debenhams landlord M&G has confirmed it is dropping a lawsuit against the department store chain over its company voluntary arrangement, which will allow Debenhams to close more than 50 of its 165 stores after Christmas to stay afloat. M&G Real Estate, which owns seven Debenhams stores, had launched a legal action after other landlords and creditors approved a CVA but Debenhams said yesterday that M&G had dropped its legal challenge after confidential negotiations. Terry Duddy, chairman of Debenhams, urged Sports Direct and Combined Property Control, a property company that owns six Debenhams stores, to follow M&G in dropping their separate lawsuit.

Lidl to create 500 jobs

Lidl is to create 500 new jobs in Scotland as it opens 12 supermarkets. Construction has already begun at several of the sites including Dumbarton, Dundee, East Kilbride, Cowdenbeath and Larkhall.

ECONOMY

Global economic slowdown stabilising

The global economic slowdown could end without a recession, according to a new report by the OECD, which suggests that growth is heading for a more stable footing as countries including the UK show signs of stabilising. OECD chief economist Holger Schmieding said: “We do not find serious excesses that would require a cleansing recession in the next two or three years.”

OTHER

MPs warn of rise in teenage ‘money mules’

A report by the All Party Parliamentary Group (APPG) on financial education for young people has warned of an increasing number of teenage “money mules”, with criminals preying on a lack of financial savvy. Fraud prevention service Cifas says there was a 26% increase in under 21-year-olds affected between 2017 and 2018. They are being exploited for money laundering - with criminals using their bank accounts to facilitate the movement of ill-gotten funds – and could end up in prison. The APPG found that children in care are particularly vulnerable to recruitment. Their report also urges financial education to be made a statutory requirement of primary and secondary schools.

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