BoE says no-deal Brexit would hit European banks hard
Sam Woods, the Bank of England’s (BoE) deputy governor and chief executive of its Prudential Regulation Authority (PRA), has said large European banks could be restricted in what business they do in the UK if the BoE is unable to come to a post-Brexit deal with its regulatory counterparts in the EU. Mr Woods said that there could be a situation where larger EU banks could be regarded as “iffy” and this could be “a point of tension.” He also suggested that if the PRA felt there was no cooperation between UK and EU27 regulators at the point of Brexit, the PRA would seek the subsidiarisation in London of the largest 25 European financial firms. The worst outcome would be a Brexit with no transition deal and no cooperation, Mr Woods said, but in such a scenario, the PRA would deploy the UK government’s decision to allow interim regulatory permissions.
Open banking launch catches Nationwide on the hop
Katherine Griffiths in the Times reflects on the launch of the “open banking” reforms which are intended to increase competition and give customers a better deal. She notes that Nationwide told the Competition and Markets Authority last week that it needed more time to implement the reforms – becoming the sixth financial institution to say that it could not meet the deadline for them. Meanwhile, banks have been accused of giving unclear information about open banking, and scaremongering about its risks. Dominic Lindley, of New City Agenda, a think tank, said: “Instead of scaremongering, the banks should be working together to make sure there is an easy way for consumers to check whether a third-party provider seeking to access their account is legitimate and authorised.”
RBS executives face MPs
RBS executives will appear before MPs today to explain why the publicly-owned bank is closing 62 of its branches in Scotland. Jane Howard, RBS' managing director of personal banking, and Lee Matheson, chief executive of personal and business banking, will give evidence to the Scottish affairs committee. Liberal Democrat MP Christine Jardine, a committee member, said RBS executives "should expect a serious grilling". MPs will also hear from Unite union representatives, who have accused RBS of playing down the scale of job losses.
Barclays accused of endangering pensions
Former pensions minister Baroness Altmann has called for action by The Pensions Regulator over Barclays’ decision to place responsibility for its pension fund onto its investment banking arm. “If I were a trustee, I would want the scheme to be properly funded and have the backing of the full strength of Barclays,” she said.
Quayle Munro snapped up
US investment bank Houlihan Lokey has acquired Quayle Munro, the corporate advisory firm founded in Edinburgh, for an undisclosed amount.
FCA rebuked over whistleblower
The Financial Regulators Complaints Commissioner has criticised the FCA for revealing the identity of a whistleblower to the Royal Bank of Scotland. The Complaints Commissioner said that the regulator had failed in its duty of care.
Government teams up with private funds to back start-ups
The government is teaming up with private equity investors in a scheme to put money into technology start-ups. The £7.3m pilot is intended to keep Britain on the front line of technology and innovation by combining the extensive reach of government programmes with investors’ expertise in picking winners. Under the new scheme, companies can apply for support of up to £150,000 to test ideas. Seventy per cent of this will be a non-repayable grant, with the remaining 30% coming from one of seven selected private equity firms.
US tax reform to help Citigroup beat targets
Citigroup expects the new US tax law to help it surpass its financial goals, despite the overhaul causing the bank to take a $22bn accounting hit. The writedown, which is expected to be the largest of any bank, is particularly big because Citigroup has significant deferred tax assets.
Uber to introduce limit on drivers’ hours
Uber is introducing a new policy on drivers’ hours across the UK next week, which it says will help to increase safety for drivers and passengers. A licensed driver on its app must take an uninterrupted six-hour break after 10 hours of driving with a passenger or travelling to pick up someone.
Welsh Government acquires stake in TVR
The Welsh Government has bought a 3% stake in the sports car maker TVR for £500,000. It has also provided a £2m loan to the company ahead of production getting underway in Ebbw Vale.
IAG hopeful of landing deal
IAG, the owner of British Airways, has said it remains hopeful of buying Austrian airline Niki. IAG had “confirmed” that it was to buy Niki, a subsidiary of the bankrupt Air Berlin. However, it was put back up for auction after German and Austrian administrators settled a spat about jurisdiction for the disposal.
Carillion survival “undermined” by banks
Carillion CEO Keith Cochrane has said the construction group was in talks with the government since October in a bid to stave off its collapse. He said the company was left with just £29m in cash by the time it went bust on Monday, with directors still believing a rescue was possible but banks had become more demanding. Directors reportedly wanted the government to “guarantee” more funding for four months while Carillion continued its restructuring, and be allowed to defer tax payments. However, both requests were refused. Mr Cochrane singled out RBS as one of the banks that wanted to impose tough new lending conditions. RBS said that it had “provided considerable support and forbearance to Carillion over many months”. Sam Woods, the BoE’s deputy governor, has said that UK lenders are not under direct threat following Carillion’s collapse, although he cautioned that the ripple effects are yet to be fully felt.
BlackRock tells companies to find a social purpose
BlackRock chief executive Larry Fink has warned companies to make a positive contribution to society or risk losing the asset manager’s support. In a letter sent to heads of FTSE 100 firms and global business chiefs, Mr Fink told companies they must make "a positive contribution to society" and not just deliver profits for shareholders.
Provident staff facing axe
Provident Financial is set to cut jobs after suffering heavy losses. Shares in the doorstep lender dropped by 12% yesterday after the company revealed that its consumer credit arm had lost around £120m last year. The company signalled that jobs would be lost within its 600-strong admin department.
Insurers compete with fund managers for lucrative pension pots
The FT says a “turf war” has erupted between insurers and asset managers over the £1.6tn sitting in the UK’s defined benefit schemes.
Melrose faces pensions hurdle in GKN bid
GKN’s pension trustees have told Melrose that any takeover bid will have to address the engineer’s £1.1bn pension deficit. Trustees of GKN’s 32,300-member pension schemes said they were “concerned” that any potential buyer should be aware of the funding gap it faces.
Two-year Brexit transition too short, says EEF chief
Stephen Phipson, the new boss of the EEF, has said that a two-year Brexit transition period is not long enough for the UK to adapt to leaving the EU. He declined to say how long the transition should last, however.
MEDIA AND ENTERTAINMENT
Brands wary of advertising on YouTube
Bethan Crockett, senior director of brand safety and digital risk at Group M, has said that companies are hesitating to buy adverts on YouTube and Facebook because of fears that they will appear next to inappropriate content.
15% increase in first-time buyer loans
November saw a 15.2% annual rise in the number of new first-time buyer mortgages, new figures from UK Finance show, with 34,800 new first-time buyer loans. Lending to home movers rose 16.8%, with 36,200 new mortgages, and remortgaging also increased, with an 8.5% climb recorded. Across all mortgages, lenders approved 13% more loans in November than at the same time last year.
UK house prices up 5.1%
Data from Land Registry and the ONS shows that the average house price in the UK reached £226,000 in November, a 5.1% year-on-year increase. The increase was led by Cambridge, where values jumped 16.4%, and the West Midlands, where the average sold price was 7.2% up on a year earlier. Across the UK, England saw average prices climb 5.3% to £243,000, Wales’ average was up 4.5% to £153,000, Scotland saw typical values rise 3.6% to £146,000, and Northern Ireland’s average price of £132,000 marked a 6% increase.
Dalian Wanda offloads London site
Dalian Wanda has sold One Nine Elms, a landmark hotel and residential development which is still under construction, to Hong Kong-listed Guangzhou R&F Properties. The deal is worth £59m, plus a loan payment of £159m to Wanda Hotel Development.
JD Sports lifts profit forecast for second time since September
In a trading statement, JD Sports has announced that it expects pre-tax profits for the year to February 3rd to be around £300m, slightly above the top end of market expectations of £270m to £295m – the second time it has upgraded its profits forecast in the last four months. Group sales in the second half of 2017 grew 3%, the firm said, with both online sales and overseas expansion aiding growth.
Ashley ends takeover talks with Staveley
Newcastle United owner Mike Ashley has ended talks with businesswoman Amanda Staveley over a takeover that could have been worth around £250m. The talks are believed to have broken down after Ms Staveley’s PCP Capital Partners group failed to match Mr Ashley’s valuation of the club.
UK inflation rate drops to 3%
The ONS has reported that the UK’s inflation rate has fallen for the first time since June, mainly because of the impact of air fares. The inflation rate dipped to 3% in December, down from November's rate of 3.1% - a six-year high. The ONS said that while air fares rose last month, it had a smaller impact than at the same point in 2016. It added that a drop in the price of toys and games also contributed to December’s fall. The Retail Price Index (RPI), a separate measure of inflation, rose to 4.1% last month from 3.9% in November. Laith Khalaf, senior analyst at Hargreaves Lansdown, commented that the drop in inflation was not enough to “significantly ease the pressure on UK household spending” because wages were still rising by less than the rate of inflation.
Fewer jobs for graduates
The number of jobs for graduates who left university last summer fell by 5% from the previous year. High Fliers Research found the largest drop in graduate recruitment came in accounting and professional services companies, banking and finance and investment banking. Across the private sector, graduate recruitment fell 10.3% in 2017.