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Daily News Roundup: Wednesday 13th March 2019

Posted: 13th March 2019

BANKING

Aldermore boss expects challenger bank mergers

Aldermore boss Phillip Monks expects more M&A deals among Britain’s smaller banks as they fight for growth. The former Barclays' executive said some UK challenger banks are “incredibly undervalued”. OneSavings is currently in talks with Charter Court about a merger, just months after Clydesdale and Yorkshire Banking Group (CYBG) acquired by Virgin Money and Aldermore itself was acquired by South Africa’s FirstRand early last year. Mr Monks was speaking as Aldermore reported a pre-tax profit of £74.7m in the six months to December 31st compared with £62.8m in the same period a year earlier. Aldermore increased its loans by 4% to £9.4bn and maintained a net interest margin of 3.6%.

Watchdog upholds majority of TSB complaints

New figures from the Financial Ombudsman Service show that 89% of customer complaints about TSB were upheld by regulators in the second half of 2018. A total of 5,764 people complained to the FOS about their treatment by TSB. The bank is fighting to save its reputation after an IT meltdown last April locked 1.9m customers out of their accounts and sparked a wave of fraud.

Lloyds puts squeeze on customers

The Mail reports that Lloyds Banking Group’s net interest margin rose to 2.68% last year, up from 2.6% in 2017, helping to lift profits at the bank 13% to £6bn. Lloyds was the only large high street bank to increase its margin last year. The retail arms at rivals Barclays, Royal Bank of Scotland, HSBC and Santander were all squeezed, largely because of ultra-tough competition in the mortgage market.

PRIVATE EQUITY

Sweden’s EQT raises €9bn for its biggest infrastructure fund

The Swedish private equity group EQT has raised €9bn for an infrastructure fund. The bulk of the money will be invested in Europe and North America.

INTERNATIONAL

Regulators fear Deutsche Bank could bungle Commerzbank merger

European banking regulators have expressed concern that Deutsche Bank lacks the “ruthless brutality” needed to push through a successful merger with Commerzbank.

Wells Fargo rebuked by regulator over risk management

The Office of the Comptroller of the Currency has rebuked Wells Fargo saying that its efforts to reform its governance and risk controls have so far been a failure.

UBS is ignoring its own advice on women’s rights

An editorial in the FT argues that UBS is ignoring its own advice on women’s rights having cut female managers’ bonuses.

AUTOMOTIVE

Nissan to halt UK production of Infiniti model

Nissan is to end production of its premium Infiniti models at its UK car plant in Sunderland as it stops selling the brand in western Europe. The Japanese company said it was “working to find alternative opportunities for any employees who will be affected.”

AVIATION

Boeing 737 Max planes grounded across Europe

Boeing's 737 Max plane has been banned from the UK and the rest of the European Union following the Ethiopian Airlines disaster, which killed 157 people. The Civil Aviation Authority said its ruling was “a precautionary measure” and would remain in place “until further notice”. Boeing said in a statement it understands operators “have made decisions that they believe are most appropriate for their home markets”. Shares in Boeing closed down 6.15% at $375.41.

FINANCIAL SERVICES

Spiralling Wonga compensation claims could hit other firms

The number of unresolved customer complaints at Wonga, over mis-sold loans, is four times higher than originally estimated by the Financial Ombudsman Service in January this year. Wonga’s administrators told the Treasury Committee that as many as 40,000 consumers could be affected, prompting committee chair Nicky Morgan to caution: “This issue raises questions about whether the coverage of the Financial Services Compensation Scheme should be widened to provide protection for customers of high-cost short-term lenders and those of firms that later go bust.”

Finance sector to tackle climate change

The Bank of England and the FCA have said that four working groups have been established to deal with the risks climate change poses to the UK’s financial system. The groups will focus on risk management, scenario analysis, disclosure and innovation. The Bank of England has previously highlighted how financial losses due to extreme climate could hurt the City because of the interconnected nature of modern finance.

Quilter building profits

Wealth management firm Quilter increased profits in 2018, despite challenging market conditions. Though assets under management shrank 4% to £109.3bn last year, outflows rose from £11bn to £12bn and sales for the group hit £14.7bn, down from £17.3bn in 2017, the firm formerly known as Old Mutual Wealth reported that profit before tax was up 11% to £233m in 2018.

Profits slide at Close Brothers on ‘difficult market conditions’

Group adjusted operating profit at Close Brothers slipped slightly in the six months to the end of January, down 4% year on year amid tough asset management and brokerage markets.

LEISURE AND HOSPITALITY

888 grows profits

Online gambling firm 888 has posted double-digit growth in profit before tax for the full year, despite a small dip in revenue. The company said adjusted profit before tax rose by 11% to $86.7m. Revenue declined by 2% to $529.9m.

MEDIA AND ENTERTAINMENT

Ocean Outdoor buys Dutch digital agencies

Digital advertising firm Ocean Outdoor has acquired the combined portfolio of Interbest and Ngage Media, which operate across the Netherlands, in a deal worth around €51m (£43.5m). The firms’ combined portfolio is 60% digital and, together, they generated revenues of €25.7m in 2018.

WPP board welcomes Microsoft chief executive

Advertising group WPP has appointed media and technology veteran Cindy Rose to its board. The Microsoft UK chief executive joins as a non-executive director.

News Corp keen on Mergermarket

The Mail reports that News Corp is among the potential bidders for financial media firm Mergermarket. German tycoon Axel Springer and American credit agencies Standard & Poor's, Fitch and Moody's are also said to be in the running.

PROFESSIONAL SERVICES

G4S profits dented by staff compensation charges

G4S has reported a 63% drop in pre-tax profits. The outsourcer added that it had received several offers for its cash handling business.

REAL ESTATE

Lending down for home buyers

New figures from the Bank of England and the FCA have shown that mortgage lending was up for remortgaging and down for house purchasing in Britain in the fourth quarter of 2018 compared to a year earlier. Lending to existing borrowers in the form of remortgaging was 1.4 percentage points higher than a year earlier, at 31.1% of the total figures. Meanwhile, the proportion of lending for house purchases, including all buy-to-let lending, was one percentage point lower than in 2017's fourth quarter at 63.5%.

RETAIL

Mothercare to offload Early Learning Centre for £13.5m

Mothercare plans to sell the Early Learning Centre to TEAL Brands, the owner of The Entertainer chain of toy shops, for £13.5m, describing the move as the “next step towards being free of bank debt”.

SPORT

CVC plans Six Nations bid

CVC Capital Partners has offered to buy a 30% share of rugby’s Six Nations Championship and the autumn internationals in a package worth approximately £500m. The development comes after CVC purchased a 27% stake in the commercial arm of the Gallagher Premiership in December for £220m.

ECONOMY

Brexit dragging on ‘sluggish’ UK economy

UK GDP expanded 0.5% in January, according to the Office for National Statistics (ONS), a marked improvement on December 2018 when GDP shrank by 0.4%. Boosted by growth in construction (2.8%) and manufacturing (0.8%) earlier this year, the economy grew by 0.2% in the three months to January 2019, which should be used as an “indicator of the longer-term trend of the economy”, the ONS said.

OTHER

MPs reject Theresa May’s Brexit deal

Theresa May's EU withdrawal deal has been rejected by MPs by an overwhelming majority for a second time, with just 17 days to go to Brexit. MPs voted down the PM’s deal by 149 - a smaller margin than when they rejected it in January. Mrs May said MPs will now get a vote on whether the UK should leave the EU without a deal and, if that fails, on whether Brexit should be delayed. In a statement after the defeat, Mrs May said: “I continue to believe that by far the best outcome is the UK leaves the European Union in an orderly fashion with a deal. And that the deal we have negotiated is the best and indeed only deal available.” Setting out the next steps, she said that if the Commons declines to approve a no-deal Brexit in a vote today, a vote on extending Article 50 - the legal mechanism taking the UK out of the EU on 29 March - will take place on Thursday. She said MPs would have to decide whether they want to delay Brexit, hold another referendum, or whether they “want to leave with a deal but not this deal”.

Bank of England needs to modernise

A report from the Public Accounts Committee (PAC) has warned that the Bank of England must modernise its outdated way of working, slash costs and overhaul its compliance or risk damaging its credibility. The PAC said that while the Bank has acknowledged it needs to improve its operations, it “lacks a clear vision” of the changes needed to drive the widespread overhaul needed. The MPs also said that the Bank was making little progress towards its diversity targets. Only 5% of the institution's senior managers were from a black or minority ethnic background, against a target of 13% by 2022.

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