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Daily News Roundup: Wednesday, 12th September 2018

Posted: 12th September 2018

BANKING

JP Morgan in full execution mode for Brexit

Mark Garvin, vice chairman of JP Morgan’s investment bank, has told MPs that up to 4,000 of the bank’s 16,000 staff could be relocated to the Continent as Brexit looms. He said that initial moves to prepare for the UK’s departure from the EU would be more modest, in the “hundreds” of staff. But he added: “We are now in full execution mode, we are in the very advanced stages of execution in fact - In many cases we've passed the point of no return.” Meanwhile, in the same hearing, Citi and Barclays also said they were starting to move staff and preparing for the worst-case scenario of a “no deal” Brexit. James Bardrick, head of Citi UK, said Brexit threw up “enormous uncertainty” for banks. He said Citi would move 150 to 200 staff. Barclays has said it plans to relocate about 150 employees, with most heading to Ireland.

PPI drives rise in finance complaints

The latest figures from the Financial Ombudsman have shown that Bank of Scotland is the most complained about financial business in the first six months of 2018. The bank received a total of 23,552 complaints, with 19,589 of them about payment protection insurance. Lloyds Bank was second for overall complaints with the FOS receiving 19,996 from January to June. PPI garnered the most grumbles with just over 105,000 complaints. Meanwhile, complaints about banking and credit have increased by 44% to around 63,000. Consumer credit saw an 80% rise in complaints to almost 29,500. In total, the FOS said it took on a total of 201,600 new cases in the first six months of the year.

Barclays embraces open banking with multiple accounts on app

Barclays is to allow customers to see their current accounts from other providers on its mobile banking app. The bank’s customers who also have a personal or business current account with Lloyds, Halifax, Bank of Scotland, RBS, NatWest, Nationwide or Santander can now choose to "quickly and securely" view their balances and transactions when they log into the Barclays mobile banking app. Catherine McGrath, managing director of retail banking at Barclays, said: “Today, lots of people have current accounts with more than one bank, so keeping track of your finances can be tricky as well as time-consuming.”

FCA too busy to punish mis-sellers

The Financial Conduct Authority has said that no banks or individuals will be punished for the improper sale of interest rate derivatives that led to the collapse of many small businesses. Mark Steward, executive director of enforcement at the FCA, said that the regulator had too much on its plate to look back over the problem of swap mis-selling.

Ten years on the banking sector is in a better place

Simon Lewis, the CEO of AFME, writes in the Telegraph that ten years after the financial crisis, the banking industry is in a better place. He says the next significant challenge for the sector is to find a way of restoring public and political confidence. Something, he says, which is necessary for a well-functioning, well-managed and well-regulated banking sector that is able to serve the needs of the economy and its customers over the long term. Elsewhere, Lord Adair Turner, the former boss of the FCA, opines in the FT that banks are now safer but debt remains a danger.

PRIVATE EQUITY

Abraaj closes London office

Dubai-headquartered private equity firm Abraaj has closed its London office as part of cost-cutting measures. The move comes ahead of the sale of Abraaj’s fund management unit.

INTERNATIONAL

JPMorgan to open wealth management business in Luxembourg

JPMorgan has announced plans to launch a wealth management business in Luxembourg as part of a corporate restructuring. The bank has also said it will merge its Luxembourg bank with its London-based bank into one legal entity – which will be completed early next year.

ING’s CFO quits over money laundering scandal

Dutch bank ING says Koos Timmermans, its chief financial officer, is stepping down after being identified as responsible for compliance failings that enabled firms to launder money.

AUTOMOTIVE

Jaguar boss issues Brexit warning

Ralf Speth, the boss of Jaguar Land Rover, has warned the Government to get “the right Brexit” or said it could wipe out his firm’s profits and lead to large job cuts. Speth called the prospect of a cliff-edge break with the EU as “horrifying”. He commented: “We are absolutely firmly committed to the UK, it's our home. But a hard Brexit will cost Jaguar Land Rover more than £1.2bn a year.”

AVIATION

Heathrow passenger numbers rise

Heathrow has said that the number of passengers through its terminals last month rose to 7.5m, boosted by new services to China. The airport said August customer numbers were up 2.6% from a year earlier. Cargo volumes were up 1.2%. Meanwhile, Gatwick Airport revealed passenger numbers in August rose 0.4% to 4.9m. Cargo traffic at Gatwick rose 22.3%.

CONSTRUCTION

Housebuilders facing skills shortage

The Federation of Master Builders has warned that small housebuilders are being hampered by skills shortages and Brexit could exacerbate the problem. In its annual survey, the FMB said that 44% of 116 small and medium-sized housebuilders felt that a shortage of skilled workers was a “major barrier to their ability to build more new homes”. A lack of “available and viable land” was cited as the most common barrier to housing delivery. Brian Berry, the chief executive of the FMB, said: “The construction sector is heavily reliant on EU workers, with just under one in ten workers from other EU states. Brexit, coupled with the end of free movement, threatens to further intensify the skills shortages. It is critical that the government doesn't pull the rug out from under the sector by introducing an inflexible immigration system.”

FINANCIAL SERVICES

Savings fund launched for Britain’s poor

The Government has launched a new savings scheme to help people on low incomes kick-start a “rainy day” fund and build up their financial resilience. The initiative, which is available to working people on tax credits and universal credit, rewards savers with an extra 50p for every £1 saved. People saving the maximum of £2,400 into the Help to Save scheme over four years would receive a bonus of £1,200.

Nucleus Financial quick off the blocks

Investments management platform Nucleus Financial, which floated on London’s Aim market back in July, has revealed that revenue for the six months up to June rose 11% to £12.6m, while after-tax profit almost doubled from last year, to £2.2m. Nucleus, which provides software to financial advisers, also noted its assets under management were up 15.6% to £14.3bn.

Government urges pension schemes to be ‘socially responsible’

New government regulations will require trustees of pension schemes to disclose where people's savings are going. Using internet dashboard-type tools, pension scheme members will be able to see whether investments take into mind environmental concerns and are managed with poor corporate governance or socially harmful practices. The changes will not take away power from trustees to decide on a scheme’s investment strategy, though if they disregard long-term financial risks from factors like the environment they will need to justify why this won’t harm returns for members.

Data issues key risk to City, FCA warns

Andrew Bailey, the boss of the FCA, has warned that data is “the fastest rising issue” on the City landscape because of financial services’ “heavy use of personal data”. He said that the watchdog had increased the resources it puts towards monitoring data issues amid the impacts of technological change and the increasing complexity of financial crime.

Hargreaves Lansdown rolls out much-delayed cash savings product

Retail fund giant Hargreaves Lansdown has finally rolled out its Active Savings product, which was originally planned for 2016, to offer customers fixed-term savings accounts from banks and building societies.

UK’s largest payday lender swamped by cost of complaints

CashEuroNet UK, which lends under the QuickQuid and Pounds to Pocket brands, has said it faces £2.5m in costs in the first half of its financial year after being swamped by compensation charges.

HEALTHCARE

Vectura stockpiling for no-deal Brexit

Asthma inhaler-maker Vectura is the latest British firm to acknowledge that it is looking at potentially stockpiling products ahead of a no-deal Brexit. US giant Pfizer has already announced it has put aside $100m to prepare, while French group Sanofi and Switzerland’s Novartis are stockpiling ahead of possible supply disruption.

MANUFACTURING

Ineos set to expand refinery

Ineos has said it will invest £60m to expand its Grangemouth refinery and petrochemicals complex in Scotland. The energy firm said the investment showed its commitment to UK manufacturing at a time when it is in decline across many industrial regions around the country.

REAL ESTATE

New mortgages hit decade high

Mortgage lending is picking up according to fresh data from the Bank of England, with new mortgages hitting £73bn in the three months to the end of June 2018 - a 19.8% increase compared to the previous quarter and their highest level in over ten years. Residential loan value rose 3.8% in the second quarter of this year.

Lone Star aborts sale of UK residential property company Quintain

US private equity firm Lone Star has pulled plans to sell UK residential property company Quintain, for which it was seeking upward of £2.2bn. It had been in negotiations with a consortium led by Delancey.

RETAIL

Tech start-up raises £11.8m

Technology start-up Clippings has raised £11.8m in fundraising led by the venture capital arm of Advance Publications. The start-up is an online marketplace which sells furniture and lighting from designer brands. Clippings plans to use the new funds to expand its service in the US and other countries

SPORT

Rugby clubs reject offer from CVC

Member clubs of the Rugby Premiership have unanimously agreed that a £275m sale of a share of the league is “not a preferred option”. CVC Capital Partners is interested in purchasing a 51% share but Premiership chairman Ian Ritchie said clubs preferred a minority stake.

ECONOMY

Carney to stay until 2020

Chancellor Philip Hammond has confirmed that Bank of England governor Mark Carney will stay on until after Brexit. Speaking to the Commons, he said: “I can tell the house today that the governor has agreed despite various personal pressures to conclude term in June that he will continue until the end of January 2020 in order to help support continuity in our economy in this period.” Sir Jon Cunliffe, deputy governor with responsibility for financial stability, has also been re-appointed for a second five-year term.

Wage growth up 2.6% in three months to July

The ONS has reported that average total pay in the three months to July rose by 2.6% on the same period a year earlier. Excluding bonuses, pay was up 2.9%. The ONS also reported that the UK's strong employment growth this year is levelling off, with a quarterly rise in the numbers in work of just 3,000. However, the employment rate remained at 75.5%, close to a record high. Andrew Wishart of Capital Economics commented: “The labour-market figures suggest that competition for workers is finally starting to provide greater support to wages.”

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