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Daily News Roundup: Wednesday, 18th December 2019

Posted: 18th December 2019


Mortgage prisoners launch legal action

Homeowners trapped in expensive mortgages have instigated legal action against two nationalised banks over allegedly excessive interest rates and unfair charges. More than 150,000 people are estimated to be owed as much as £20,000 because banks sold them lengthy fixed-rate mortgages. Law firm Harcus Parker is investigating long fixed-rate mortgages sold by Northern Rock and Bradford & Bingley, with claims sent to UK Asset Resolution, a holding company established by the government in 2010 to manage the assets of the two banks after they collapsed. Harcus Parker said that with the banks becoming inactive or zombie lenders – or having their loan books sold to other financial institutions, including inactive subsidiaries of TSB and the Co-operative Bank - it meant that when borrowers came to the end of their fixed-term mortgages they were not offered any new deals and instead placed on a high standard variable rate.

No-deal fear and stress test analysis sees share sell-off

Shares in Barclays, Lloyds and Royal Bank of Scotland fell yesterday, with the decline partly attributed to the Prime Minister’s plan to amend his Brexit bill to legislate against any extension of the transition period – a move that Michael Hewson, chief market analyst at CMC Markets, said reignited concern over a no-deal Brexit. Barclays shares fell 2.8%, with RBS’ share price down 3.9% and Lloyds seeing a 4.9% dip. Some analysts suggest that the results of Bank of England’s stress tests played a part in the dip in share values at Lloyds and Royal Bank of Scotland. While both passed, analysts at Jefferies suggest plans to double a 100 basis point capital buffer designed to protect lenders in a depressed economy could put both banks' 2020 share buyback plans in jeopardy.

TSB savers handed extra compensation

TSB has handed a number of customers hit by an IT meltdown in April 2018 more compensation. Several customers have reportedly been advised that they are entitled to payouts, despite having already received compensation. A spokesman for TSB said: “As part of our normal monitoring process of complaints, we constantly review the quality of our decisions to ensure that customers are treated fairly and consistently. If we believe that any of our customers did not receive adequate compensation, we will put it right.”

Goldman Sachs cuts Marcus rate

Goldman Sachs has cut the rate of its Marcus account for news savers, with the new 1.35% rate marking the first time since its launch that it has not offered the top easy-access rate. The cut means Shawbrook Bank’s easy access account now has the best rate, at 1.41%. Marcus launched in September last year with a rate of 1.5%, with this trimmed to 1.45% a year later. Existing savers will continue to earn the higher rate for the duration of their initial 12 month period.

City of London Group building towards SME bank

City of London Group is planning to raise up to £50m to develop a new UK small and medium enterprise bank. The investment company said it will target a further capital raise of £25m to £50m, following the application for a formal licence for its SME bank Recognise. The announcement came alongside the news that its losses widened in the six months to the end of September, from £2.35m to £3.34m, after it took a £1.3m hit on the cost of its banking licence application.

Co-operative Bank signs code of conduct

Co-operative Bank has signed up to a voluntary code of conduct that promises fairer treatment for bank scam victims. Lloyds Banking Group, RBS, HSBC, Metro Bank, Santander, Starling Bank, Barclays and M&S Bank have already agreed to the standards.


Goldman unveils alternatives platform

Goldman Sachs has unveiled an alternative investments group, with the platform to cover private equity, infrastructure and debt investments as well as partnerships, co-investments and funds offered through its investment management arm.


Credit Suisse to probe second spying allegation

Credit Suisse is to review its business practices after an allegation of intrusive surveillance against its head of human resources, Peter Goerke. This is the second such claim levelled at the bank, with it revealed in September that Iqbal Khan, the lender's former wealth management head, had been followed after he resigned to join UBS.

Banks eye Commerzbank's mBank stake

Poland's biggest bank, PKO BP, Austria's Erste and Credit Agricole are expected to be among those making first-round offers for a stake in Commerzbank's Polish arm, mBank. Commerzbank aims to sell its 69.3% stake in mBank, Poland's fourth-largest lender by assets, by the end of 2020.

Santander buys back Spanish HQ

Santander has reportedly agreed a deal to buy back its global headquarters in Madrid from its previous owners Marme, who have gone into liquidation


AA reveals new CFO

AA has announced the appointment of a new chief financial officer, with Kevin Dangerfield joining from investment vehicle Wilmcote Holdings. He will take on the CFO position in January, subject to approval from the FCA, taking over from interim CFO Mark Strickland - who will stay with the company.


Springfield Properties enjoying 'greater market certainty'

Scottish housebuilder Springfield Properties is confident that it can leverage an increase in completions and revenue across its business to benefit from "a period promising greater market certainty”. In a trading update, Springfield said it had entered the current financial year in a strong position on the back of an increase in completions and revenue in both private and affordable housing. Hundreds of new homes for rent are to be built across Dundee, Edinburgh, Inverness, Perth and Stirling, thanks to a partnership deal it struck with residential development outfit Sigma Capital Group.

The Scotsman


Financial services exports up £3.8bn

A report from The City UK shows that British net exports of financial and related professional services grew almost 5% in 2018, climbing £3.8bn to hit £82.8bn. The research shows that financial services accounted for £1.1bn of the increase, while £2.7bn came from related sectors such as legal services, accounting and management consultancy. Trade Secretary Liz Truss commented: “The financial services sector is a bedrock of the UK's trade and economic growth.” She pledged that the Government will “ensure our fantastic professional services will continue to lead around the world.”

FCA hands out first CMC fine

The Financial Conduct Authority has fined claims management company Professional Personal Claims £70,000 for misleading consumers - the first fine since the regulator was granted powers to oversee the sector in April.

Hargreaves drops M&G fund from buylist

Hargreaves Lansdown has dropped the £2.1bn M&G Recovery fund from its Wealth 50 buylist. The fund, managed by Tom Dobell, has returned 20% over the past five years, compared with 47% for the average fund in the IA UK All Companies sector in the same time period.


Hospital firm hit by debt claim

Private hospital firm NMC Health saw more than £1.8bn wiped from its value after hedge fund Muddy Waters accused the company of understating its debt by about £242m. Muddy Waters claims NMC failed to properly report leases in its 2018 accounts associated with British hospital operator Aspen Healthcare. Muddy Waters has taken out a short position on NMC shares but did not disclose the size of the stake.


Equinox set to expand

US fitness brand Equinox has detailed expansion plans, saying it will open in London’s Soho and enter the Middle East market. Adding to four existing or planned UK sites, it has signed a deal with West End landlord Shaftesbury to create a luxury fitness club which will be ready for use in 2021. The company is also set to work with franchise operator Alshaya Group to launch the firm’s fitness brands, Equinox, SoulCycle and Blink Fitness in Dubai from late 2020.


Factory output falls

Factory output fell at the fastest pace since the financial crisis in the past three months, a CBI report shows. The survey found 41% of manufacturers reported order books to be below normal levels compared to only 13% who reported above normal. CBI deputy chief economist Anna Leach said businesses will want the Prime Minister “to break the cycle of uncertainty” and are looking for commitment to getting the UK economy “fighting fit as it prepares to leave the EU."


FRC challenges auditor conflicts of interest

The Financial Reporting Council (FRC) has issued a major revision to its Ethical Standard and revised Auditing Standards. The changes will help to strengthen auditor independence, prevent conflicts of interest and ensure the UK is seen as a destination to do business due to stronger investor protection resulting from high quality audit. The revision incorporates changes to international ethical requirements, which now prohibit auditors from providing recruitment and remuneration services or playing any part in management decision making.


First-time buyer mortgage approvals up

There were 32,260 new first-time buyer mortgages completed in October, according to research from UK Finance, 2.8% more than the same month last year. The number of homemover mortgages completed in the month increased 4.2% on the same month last year, reaching 33,370, though the number of buy-to-let home purchase mortgages slipped 1.5% to 6,600. There were 18,910 new remortgages with additional borrowing, down 20.8%, while the number of new remortgages without additional borrowing also fell by 20%.


Bookseller falls into administration

The Book People has instigated an insolvency process. Its private equity owner, Endless, had been attempting to secure a sale of the company and a number of credible parties had expressed an interest. No redundancies will be made while administrators continue to search for a buyer.


Unemployment hits 44-year low

UK unemployment dropped to its lowest level in 44 years in the three months to October. The number of people claiming unemployment benefits decreased by 13,000 to 1.28m for the quarter, Office for National Statistics (ONS) figures show. The overall rate of unemployment held flat at 3.8%, while the unemployment rate for women fell to a record low of 3.5%. The number of people in work increased by 24,000 to 32.8m, while the proportion of people in employment was flat at 76.2%, with 27.7m people in paid employment. The ONS data also revealed that average total pay increased by 3.2% in the quarter, slowing from 3.6%. Job vacancies fell by 20,000 to 794,000 in October, marking the tenth consecutive month of declines and the first time in more than two years that the figure slipped below 800,000.


LinkedIn users eye BoE governor role

The role of the governor of the Bank of England (BoE) is one of the most viewed jobs in 2019 on LinkedIn. Analysis shows that 645 people applied for the role via the professional networking site, with 486 applications coming from London-based users. The BoE position, which was advertised as an open role with HM Treasury, was described as “one of the most exciting jobs in world finance” and told applicants they would be expected to commit to an eight-year term. The position was the platform’s 11th most viewed vacancy of the year.

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