PPI relief leads to surge in bank stocks
Shares in major lenders rose yesterday after the burden of PPI was partially lifted. Barclays closed up 6.9p at 147.68p, its biggest one-day gain since July 2016, while Lloyds closed up 2.1p at 52.3p. Both banks announced their final repayments provisions for mis-selling PPI on Monday. Analysts at Jefferies said the big hit to Barclays was a moment for “cleansing the Augean stables”, adding: “On the prospectively large PPI top up, the third-quarter charge should hopefully be the final charge and bring resolution to a years-long industry phenomenon that became grotesque.” Meanwhile, the Mail reports that HMRC will pocket millions from PPI compensation payments made to bankrupts after banks were hit with tens of thousands of complaints from the Official Receiver ahead of a deadline last month.
Weak demand sees return of bumper mortgages
Over one in 20 new mortgages was given to a borrower with a loan worth between 90% and 95% of the value of their home - the largest proportion since mid-2008, the Telegraph reports. Almost four in 10 borrowers have deposits of less than 25% of the value of their property, which is also a share last recorded 11 years ago. “Demand is very weak at present so this is very much about lenders trying to expand their lending in the face of very weak demand,” said Hansen Lu at Capital Economics. “They are offering very aggressive interest rates to try to get more people to take their mortgages.”
Another 1.5% easy access savings rate unlikely this side of Christmas
George Nixon considers in the Mail the slump in easy access accounts offering 1.50%. Virgin Money and Cynergy Bank followed Marcus Bank’s lead last week when it dropped it offering to 1.45%. James Blower, founder of the Savings Guru site, said: “It's not that the banks cannot afford to pay the rates on offer, it's that they can't sustain the volume that it will attract.” He predicts that the “best deals will come from the smaller new entrant banks and won't be there for long.”
Paragon Banking Group a solid long-term hold
The Times’ Tempus column recommends shareholders hold on to specialist buy-to-let mortgage lender Paragon Banking Group describing it as a high-quality lender, even if it is clouded by Brexit uncertainty. Now a more diversified financial services provider 60% of new lending is buy-to-let with a focus on professional investors, reducing risk.
Is Rose still in line for RBS top job?
The Times wonders whether the silence over the appointment of Alison Rose to the top job at Royal Bank of Scotland is a sign the board may have had second thoughts. The paper’s Katherine Griffiths says, despite having fought of several rivals, no confirmation that Ms Rose’s promotion has been given regulatory approval is a “poor start to what will be an extremely high-profile role.”
Lloyds tops complaints
Lloyds Banking Group generated the most complaints with the financial ombudsman during the first half of this year with 34,373 of the 161,390 total.
Cobham shareholder to vote against £4bn takeover
Leading Cobham shareholder Sanderson Asset Management has indicated it will vote against a planned £4bn takeover of the UK aerospace company by US private equity group Advent International. Meanwhile, former First Sea Lord Admiral Lord West has also spoken out against the takeover putting more pressure on the Government to intervene.
Snyk secures $70m investment
Cyber security firm Snyk has raised $70m (£56.7m) in funding, led by Accel, to fuel the next stage in its international expansion. The round was also supported by existing investors GV and Boldstart Ventures.
Swiss banks owe £3bn in commissions
Hundreds of thousands of UK savers who used institutions such as UBS, Credit Suisse and Julius Baer to invest through Switzerland's private banking system could be due refunds worth an estimated £3bn in retrocessions. Litigation funding firm Liti-Link is offering to buy claims from UK savers and pay for lawyers to pursue the case, for a 40% cut of any winnings.
Commerzbank raided by prosecutors investigating German tax scandal
Commerzbank’s Frankfurt headquarters have been raided as part of a criminal investigation into a decade-long “cum-ex” tax fraud. Deutsche Bank, DZ Bank and HypoVereinsbank are also linked to the cum-ex deals.
Dimon says JPMorgan contingency planning for zero interest rates
JPMorgan Chase CEO Jamie Dimon told investors on Tuesday that the bank was considering preparations for zero interest rates in the US, even though he didn’t think they would transpire.
S&P calls for action on climate crisis
A report from S&P calls on banks and regulators to address the risk that climate change poses to the financial sector warning that failure to do so could costs banks hundreds of billions as climate change intensifies.
Portuguese watchdog hits banks with fine for data swapping
Portugal’s Competition Authority fined 14 banks a total of €225m for practising “a concerted exchange of sensitive commercial information” for over 10 years.
Tradeweb lines up new benchmark for $16tn Treasuries market
Investors and traders in the $16tn US Treasuries market now have a daily “closing price” to use as an independent benchmark after Tradeweb teamed up with IBA to generate a “closing price” mechanism.
Who can fix Nissan?
Hiroto Saikawa’s departure leaves Nissan looking for a new CEO who can overcome deep divisions in the group and navigate the most complex challenges the carmaker has seen for two decades.
IAG shares bounce back
IAG shares bounced back on Tuesday morning, midway through planned strike action by British Airways pilots. Though BA has told its customers not to go to the airport as most of its flights are cancelled, parent company IAG's stock rose 5% in early trading.
Bovis sweetens Galliford deal
Bovis Homes has revived takeover talks for Galliford Try’s housing arm with a £1.1bn sweetener - £25m higher than its initial proposal in May. The new offer values Linden Homes at £1.07bn and would see Bovis pay Galliford £300m in cash, award shares worth £675m to Galliford’s investors and absorb £100m of the firm’s debt - as well as its pension liabilities. The combined group would have around 3,100 staff and be capable of building 10,000 homes a year.
Woodford woes hit valuations, says IP Group
IP Group has warned that the Woodford fund suspension crisis has hit valuations and constrained funding. The FTSE 250 company said the “the well-publicised difficulties” experienced by Mr Woodford had “impacted” market sentiment towards the sector, damaging both company valuations and their ability to raise money. Meanwhile, Merian Global Investors is moving some of its investments in unlisted companies into its listed trust, amid increased scrutiny of unquoted stocks after the Woodford affair.
Annuity rates hit 25-year low
Research by Moneyfacts shows that buying a retirement income has never been more expensive after an unprecedented plunge in government bond yields. The financial information group said a person aged 65 can now expect to receive an income for life of £410 a year for every £10,000 handed to an annuity provider. Moneyfacts said that the current annuity rate of 4.1% was the lowest since at least 1994, when its records started. Just before the financial crisis the typical annuity income from £10,000 was around £600 to £700 and in the 1990s it was £900 to £1,100.
LEISURE & HOSPITALITY
888 Holdings' profits tank
Shares in 888 Holdings fell almost 10% on Tuesday morning after the gambling company revealed that profit before tax, for the six months to June 30, was $22.2m (£18m) - down from $60.1m in the same period last year. Though revenue increased just 2% to $277.3m, from $273.2m in the first half of 2018, 888 said average daily revenue was 6% higher than in the third quarter of 2018 and that it was "well positioned" going forward.
WeWork urged to abandon IPO
Office space provider WeWork is facing mounting pressure from investors, including its biggest shareholder, to ditch its IPO plans. Japan’s SoftBank, which holds 29% of its stock, is unhappy with WeWork’s complicated corporate structure, governance, and that its leases are too long - an average of 15 years - for start-ups.
Ex-Anfield tycoon’s son bids to buy Derby
Foster Gillett is understood to have held talks with Derby County owner Mel Morris about a takeover which values the Championship club at around £60m.
Earnings growth hits decade-high
UK unemployment was just 3.8% for the period between May and July, according to the Office for National Statistics (ONS), a 45-year low. Despite the slowdown in the UK economy, lower unemployment helped boost wages when bonuses are included by 4% - the highest since 2009. The increase means that real total pay, including inflation, rose at 2.1% in the period.