Provident Financial announces profit warning
Provident Financial’s share price fell by over 20% in early morning trading after the firm issued a profit warning, saying it expects earnings for 2018 to be at the lower end of expectations. Slightly higher payment arrangements at its credit card business Vanquis Bank were blamed, with profits for the year towards the lower end of an expected £151m to £166m range. Provident said that Vanquis was “well-positioned if there is any deterioration in the UK economic environment” after it had tightened of the terms under which it issues loans. The profit warning comes as the lender’s car finance arm, Moneybarn, remains under investigation by the Financial Conduct Authority over how it decides whether applicants can afford loan repayments.
Proposals on overdrafts could end free banking
Andrew Bailey, the head of the FCA, has said he is “very alert” to the possibility that proposed rules to tackle charges for unplanned overdrafts could raise the cost of planned consumer borrowing. His warning comes after MPs said that changes to overdraft rules could negatively impact the availability of free banking as banks would seek to replace any reduction in overdraft revenues. Charles Randell, chair of the FCA, added that the rise of fintech could mean banks also miss out on payment and transaction fees, possibly leading to a decline of free current accounts as banks seek alternative sources of revenue to make up for the loss.
Punish bankers over computer meltdowns
The FCA has suggested that bankers should be stripped off their bonuses if their websites fail. Chief executive Andrew Bailey also said that bosses must make the consequences of failure clear when drawing up their employee contracts. He told the Commons Treasury committee: “We expect banks' policies on variable remuneration to reflect operational resilience. They have to - if they don't, we will act.”
Santander U-turns on Orcel appointment
Santander’s decision to go back on the appointment of Italian banker Andrea Orcel as CEO has been described as a major failure. Santander said that it had rowed back on the move because of the "unacceptable" costs associated in compensating him for past remuneration at his former employer UBS. Analyst John Cronin at Goodbody said Mr Orcel may well have the right of redress having handed in his notice at UBS and suggested that “something else was going on in the background”. Santander's previous boss José Antonio Álvarez will now stay in the role for longer.
Mortgage rates cut
Borrowers are benefiting from a January mortgage sale as banks cut interest rates. Tesco Bank has cut rates for homeowners with smaller deposits looking to remortgage. It is now offering a two-year fixed rate of 2.26% for borrowers with a 10% deposit. Meanwhile, Barclays has lowered rates on two and five-year fixed deals by up to 0.10%. It is offering a 1.97% two-year fixed rate for borrowers with a 30% deposit. Mark Harris, chief executive of broker SPF Private Clients, says banks are fighting over limited borrowers due to Brexit uncertainty. “If you're looking for a deal in the next six months, consider securing a rate now,” he says.
TSB is tracking down criminals behind attacks
Writing in the Telegraph, Richard Meddings, the chairman of TSB, says the bank is hunting down the criminals who attacked the bank in May last year. He explains that TSB has launched a new partnership with the Metropolitan Police to bolster London’s fight against fraud, and to bring the criminal gangs behind it to justice. Mr Meddings adds that the bank aims to roll out the partnership to regional police forces right across the UK to support them in their fight against financial crime.
Euribor traders in court
James Waddington QC, representing the Serious Fraud Office, has told Southwark Crown Court that three former Barclays employees, who are accused of manipulating the Euribor rate, were part of an “elite” group of traders who gained the financial system for their own personal gain. The three - Sisse Bohart, Carlo Palombo and Colin Bermingham – deny fraud conspiracy.
Start-ups on course for battle with big banks
Katherine Griffiths in the Times charts the rise of fintech firms, notably N26, Monzo, Oaknorth and Revolut. She says the high price of fintechs will mean that the bigger, more traditional banks are unable to swallow them, adding that the next few years will determine who will win the digital race in the banking sector.
JP Morgan hit by fall in bond trading
JP Morgan Chase has reported a lower-than-expected quarterly profit as a slump in bond trading outweighed gains from higher interest rates and loan growth. Overall adjusted fixed income trading revenue fell 18% as investors fled commodities and credit trading markets due to spikes in volatility toward the end of 2018. Boss Jamie Dimon said that the continued US government shutdown could drive economic growth to zero in the current quarter.
US brings charges over SEC hack
The US has charged ten defendants, including two Ukrainian hackers, for their roles in the 2016 breach of a key government financial database. Authorities said the hackers broke into the corporate filing system, gaining confidential information on dozens of companies. They said the files were sold to traders, who used it to make more than $4.1m (£3.2m) in illegal profits.
ECB lays out bad loan deadlines for eurozone banks
The ECB’s regulatory arm, the Single Supervisory Mechanism, has warned banks that it expects them to reach targets for cleaning their balance sheets of bad loans.
US banks wake up to an easy money hangover
The FT opines about how banking stocks have recovered since shares in US lenders were down over 18% in the last quarter of last year, but investors remain wary.
Italy launches first major bond issue of 2019
Italy has issued its first large bond issue of the year, planned to exceed €5bn and mature in 2035. It is managed by Barclays, Citi, HSBC, JP Morgan and UniCredit.
Deutsche Bank launches second probe into Danske scandal
Deutsche Bank has launched a second investigation into its role in the money-laundering scandal at the Estonian branch of Danske Bank.
Ford and VW agree alliance
Ford and Volkswagen have agreed to co-operate on the development of vans and pickup trucks in a bid to reduce costs. The two companies said they would also look into co-operating on developing electric and self-driving cars. Sales from the partnership will begin in 2022 and will boost profits from 2023, the carmakers predict.
Sweden’s Volvo invests in wireless vehicle charging company
The Volvo Group Venture Capital AB, a subsidiary of the Volvo Group, has invested in high-power wireless charging company Momentum Dynamics as part of its push into electric vehicles.
Fresh rescue funds for Flybe
Stobart Group and Virgin Atlantic have outlined a revised rescue deal for regional airline Flybe. Along with investor Cyrus Capital Partners, Connect Airways, as the consortium is known, will pay £2.8m for the main trading company Flybe as well as its digital arm. Flybe, led by Christine Ourmières-Widener, stated: “In addition, a number of improved agreements with banks have also been reached today to improve liquidity.”
Persimmon increases profit forecast
Persimmon has revealed that 2018 profits would come in “moderately” above expectations, with temporary chief executive Dave Jenkinson saying he hopes the company can “move forward” after a bonus share scheme cost his predecessor his job. Revenues increased 4% to £3.7bn in 2018 and the firm said its profit before tax would exceed analysts’ expectations of £1.09bn.
Jaja Finance closes funding round
Jaja Finance, a credit card fintech start-up, has confirmed the final close of its £3.5m crowdfunding round, helped by an additional £1.5m from Celeres Investment. Co-founder Kyrre Riksen said the start-up plans to use the funding to launch its credit card product and increase hiring at its London office, with a target of 45 inhouse staff by the end of 2019.
Ashmore reports smaller inflows in second quarter
Specialist emerging markets investment manager Ashmore was not affected by redemptions in the final months of last year but saw a slowdown in inflows, the firm reported.
Spire issues profit warning
Shares in Spire Healthcare were trading down 13% by early afternoon yesterday at 101.2p after the private hospital chain cut up to £6m from its full-year earnings estimate. Spire said that its earnings in 2018 before interest, tax and other charges and excluding exceptional items were set to be about £120m. The company said that it had been affected by the pressures in the NHS.
LEISURE AND HOSPITALITY
Gym Group debt predictions increase, with shares falling
Gym Group has announced increased net debt in a trading update, despite growing profits and revenues, with shares falling 5% on the news. Year-end debt is expected to be £46m, up 22.6% year-on-year from £37.5m, after the firm acquired Easy Gym for £20.6m and invested in 17 new site openings.
US online betting ban knocks UK bookmakers
After the US justice department issued a legal opinion that all online gambling was illegal under federal law, shares in 888, Paddy Power, Betfair, William Hill and GVC have fallen.
Recruiter Hays posts double-digit international fee growth
As pressure on its UK market continues amid warnings from rivals over a slowdown, recruitment firm Hays has recorded double-digit international fee growth in its latest quarter.
M&S names next store closures
Marks and Spencer has named the next wave of stores earmarked for closure in its reorganisation plan, including those in Huddersfield, Hull and Luton. The 17 proposed closures are part of the clothing, homeware and food retailer's five-year plan to shut more than 100 stores by 2022. The latest plans will affect 1,045 staff, who will now be involved in a consultation process.
Banking sector warns of 1930s economic crisis
Stephen Jones, the head of UK Finance, has warned that a no-deal Brexit would be an economic and social “catastrophe”. He said that leaving without an agreement could lead to a 1930s-style economic depression, with widespread job losses, homeowners unable to afford their mortgages, and mass defaults on loans. He added that London’s position as the centre of the financial world would also end after Brexit. Jones explained: “We’ll do our best to retain what we can, within the context of what’s negotiated, no deal or a deal, but Frankfurt and Paris will become much more important financial centres in a European context.”
Theresa May's Withdrawal Bill suffers historic defeat
The Brexit Withdrawal Agreement negotiated by Theresa May with the European Union has been rejected by the House of Commons by 432 votes to 202. The defeat, by a majority of 230, is the biggest ever inflicted on any government. Of those who voted against, 118 were Conservative MPs, making it the largest Tory rebellion in modern British politics. Following the vote, the Prime Minister announced that the Government would make time for a vote of no-confidence on Wednesday. If the government prevails, Mrs May said she would hold cross-party meetings with senior parliamentarians to seek a way forward, alarming Brexiteers who fear this will move towards an even softer Brexit. Mrs May said: "The House has spoken. It's clear that the House does not support this deal. But tonight's vote tells us nothing about what it does support." Jeremy Corbyn, the leader of the opposition, immediately confirmed he had tabled a motion of no-confidence, however, observers expect this attempt to bring down the Government will be unsuccessful and force the Labour leader into pushing for a second referendum.
Business leaders frustrated - press for Plan B
Responding to Theresa May’s defeat in the Commons yesterday, the CBI called on the government to unveil a Plan B immediately. with the lobby group’s director general, Carolyn Fairbairn, stating: “Every business will feel no deal is hurtling closer […] All MPs need to reflect on the need for compromise and to act at speed to protect the UK’s economy.” Mrs May has until Monday to lay out her next steps. Stephen Martin, director general of the Institute of Directors, said there had been a “collective failure” on MPs’ part and that now “we are staring down the barrel of no deal.” He went on to say: “MPs are behaving as though they have all the time in the world - how are businesses meant to prepare in this fog of confusion?” Meanwhile, Dr Adam Marshall, director general of the British Chambers of Commerce, commented: “Basic questions on real-world operational issues remain unanswered, and firms now find themselves facing the unwelcome prospect of a messy and disorderly exit from the EU on March 29th.”