BANKING
Ping An escalates campaign for HSBC break-up
HSBC bosses have been accused of exaggerating the risks posed by a break-up as Ping An, the bank’s biggest shareholder, continues its push for a split. The Chinese insurer issued a statement ahead of HSBC’s AGM next month. Its chairman and CEO Michael Huang said: “HSBC management has failed to fundamentally address key business model challenges. Despite sharing multiple suggestions with HSBC, we have been extremely disappointed by HSBC management’s consistent closed-minded attitude to all solutions.” But HSBC insists that “alternative structural options will not deliver increased value for shareholders. Rather, they would have a material negative impact on value.”
Game of Thrones stars challenge big banks over fossil fuel funding
Two stars from the hit show Game of Thrones are to play new roles in a Richard Curtis short film highlighting the “toxic relationship” between UK high street banks and the fossil fuel industry. Kit Harington and Rose Leslie will act in the Couples Therapy film, which is part of Curtis’s Make My Money Matter campaign to raise awareness of how consumers’ cash may be financing industries that are destroying the planet. The campaign calls on the big five UK banks – Barclays, HSBC, Lloyds, NatWest and Santander – to stop financing new oil, gas and coal expansion, and said it was inviting the public to join it in “pressuring them to stop”.
INTERNATIONAL
Bank of America plans 4,000 job cuts despite strong results
Bank of America has announced plans to cut as many as 4,000 jobs – or 2% of its workforce - by the end of June amid expectations of a weakened economy. The announcement came alongside BofA’s earnings that showed profits rose 15% in the first quarter from a year ago to $8.2bn. The bank "had a strong Q1 as higher interest rates continued to boost its net interest margin despite rising deposit costs," David Fanger, senior vice president at Moody's Investors Service, said. "This, together with strong sales and trading revenues and the seventh consecutive quarter of positive operating leverage, more than offset the adverse impact of modest deposit outflows."
GS hit by trading slowdown as it accelerates retail pullback
Goldman Sachs suffered an 18% fall in first quarter profits after a disappointing performance at its fixed-income trading unit, where revenues fell 17% to $3.9bn. The bank’s trading arm reported revenues of $6.9bn for the first three months of the year, just missing analysts’ expectations, while revenue was up at its asset and wealth-management business. The bank also sold part of a portfolio of Marcus personal loans at a cost of $500m and put the rest up for sale. Overall, Goldman’s first-quarter profit was $3.23bn, beating investor expectations.
EU plans to limit taxpayer bank bailouts
The European Union has put forward several proposals to make it harder for states to bail out banks, including requiring lenders to hold more resources that can be written down to release cash in a crisis and updated EU resolution rules to “enable authorities to organise the orderly market exit for a failing bank of any size and business model.” The proposals also make it harder for governments to inject state aid into struggling banks, known as precautionary capital, and will require an explicit date for paying back the money or selling the bank to be set.
BNP Paribas to launch wealth management unit in Thailand
BNP Paribas has named Daniel Peter as chief executive of its new wealth management unit in Thailand as the bank expands its presence in Asian markets.
AVIATION
EasyJet lifts expectations as summer bookings soar
EasyJet has lifted its profit outlook for this year following a surge in summer bookings. Johan Lundgren, the chief executive said: “Demand for easyJet's flights and holidays has continued to grow in the half, resulting in…a £1bn revenue improvement year on year. We see continued strong booking momentum into summer as customers prioritise spending on travel.”
FINANCIAL SERVICES
Coinbase mulls move to UK
Coinbase is considering a move to the UK as the US continues to “punish” crypto firms and fails to draw up a regulatory framework for cryptocurrencies. The boss of the crypto exchange, Brian Armstrong told the Innovate Finance Global Summit on Tuesday that American lawmakers “have the golden goose…and yet they want to punish these things...they take it for granted and try to extract as much as they can.” He added: “The UK is our second largest market. We are not seeing regulatory clarity in the US. We may have to consider investing elsewhere. Anything is on the table, including relocating.”
Abrdn cuts jobs as cost pressures grow
Following a review of its multi-asset solutions unit, UK investment group Abrdn has decided to cut at least 27 roles, including fund managers and investment specialists, sources told the FT.
Liontrust in talks to buy Swiss rival GAM
UK fund manager Liontrust is holding talks with Swiss rival GAM, highlighting the pressure facing smaller asset managers to consolidate as a means to secure growth.
HEALTHCARE
GSK buys Bellus Health for £1.6bn
GSK has acquired Canadian biopharma company Bellus Health for £1.6bn giving GSK access to a potential blockbuster treatment for refractory chronic cough. The deal is expected to boost GSK’s profits from 2027 and to help it hit its longer-term target of generating sales of more than £33bn by 2031.
LEISURE & HOSPITALITY
Sales rise at City Pub Group
City Pub Group's co-founder and executive chairman, Clive Watson, has stated that the company is now in its best shape and is adopting a more ambitious approach after weathering the storm of the pandemic. The group, which owns 43 premium pubs in southern England and Wales, reported a 13% increase in like-for-like sales in the first three months of the year, which was ahead of expectations.
Cineworld scraps plan to sell cinemas outside UK and US
Cineworld has abandoned plans to sell its businesses outside the UK, US and Ireland after proposals received from prospective buyers failed to meet the value level required by its lenders.
MEDIA & ENTERTAINMENT
Netflix warns of revenue slowdown
Streaming video giant Netflix said it was delaying the rollout of its new “paid sharing” service after a launch in some markets resulted in a rise in cancellations. It will also wind down its DVD-by-mail service at the end of September. Revenue and earnings for the first quarter came in roughly in line with estimates and the company said it was confident it could hit its full-year targets.
Nvidia surges after HSBC analyst flips position
Shares in Nvidia rose sharply on Tuesday after HSBC reversed its recommendation on the stock, acknowledging its potential as a dominant chip supplier in an emerging wave of artificial intelligence computing. The company has rallied 91% so far this year.
RETAIL
THG reports £496m operating loss despite record revenues
THG has reported a £496m operating loss for 2022, despite posting record revenues of £2.2bn, which rose 2.7% thanks to a 9.1% growth in its Ingenuity arm and 4.5% in its beauty business. THG’s margins suffered from a reluctance to pass on inflationary price increases and investments in customer retention.
ECONOMY
Labour market pressures are easing but wage growth remains strong
New figures from the Office for National Statistics (ONS) suggest labour shortages in the UK labour market are starting to ease, with the unemployment rate rising slightly from 3.7% to 3.8% in the three months to February while job vacancies fell for the ninth time in a row. The employment rate rose by 0.2% from the previous three-month period to 75.8%, driven chiefly by an increase in self-employed and part-time workers. However, the hoped-for slowdown in wage growth was more gradual than expected with public sector pay increasing by 5.3% - the largest amount since 2005, while private sector pay rose by 6.9%, down from growth of 7.3% in the final quarter of 2022. The ongoing wage growth will add to fears of greater persistence in inflation, and could put pressure on the Bank of England to raise rates again. Ashley Webb, UK economist at Capital Economics, said March’s CPI inflation data will be crucial to the Bank’s decision.
OTHER
Sunak aims to woo Britain’s business leaders in corporate reset
The Prime Minister is launching a new business engagement initiative to counter Labour’s growing success in wooing corporate Britain. Rishi Sunak has brought in former Morgan Stanley executive Franck Petitgas as his new business and investment adviser and will attend several corporate events next week with cabinet members. Petitgas had run Morgan Stanley’s international operations since 2018 before he stepped down last year.