BANKING
FCA announces overdraft fee clampdown
The Financial Conduct Authority is to force banks to charge a single interest rate on overdrafts - with no fixed daily or monthly fees. The FCA said that 30% of the £2.4bn made by banks through overdrafts in 2017 came from unarranged borrowing costs which, in some cases, could be 10 times as high as payday lender’s fees. Andrew Bailey, chief executive of the FCA, said that the proposals represented the “biggest intervention in the overdraft market for a generation”. The FCA is also proposing new rules on doorstep lending, catalogue credit and store cards to cut interest costs. The proposals were widely welcomed by debt charities, but analysts said banks may retaliate with higher fees for mainstream customers if their earnings from unarranged overdraft fees came to an end. James Moore in the Independent says the changes are a welcome move against what, he argues, has amounted to profiteering.
Tech firms pose risk to banks
The FCA has said that Amazon, Google and other big tech firms could compete with banks in basic products and undermine their ability to offer free accounts. Publishing its report into retail banking business models, the regulator said new payment services could attract retailers such as Amazon into banking. Christopher Woolard, executive director for competition at the FCA, commented: “We suspect that many of those firms will not want to take capital on their balance sheets, they won't actually want to become a bank as such, but they may well want to offer products that compete directly with banks, like simple lending products.”
RBS lines up Murray for CFO role
RBS is reportedly preparing to name interim CFO Katie Murray as its permanent head of finance, after several months of serving as interim replacement to outgoing Ewen Stevenson, who left to join HSBC. Chairman Sir Howard Davies said Ms Murray had “already contributed significantly to RBS over the last three years as the bank has resolved its last major legacy issues, returned to profit and restarted paying dividends.” She will receive £750,000 a year as a base salary, as well as a fixed share allowance of another £750,000 each year.
Barclays fined by U.S. regulators
The New York Department of Financial Services has fined Barclays $15m (£11.87m) over its attempts to unmask a whistleblower two years ago. An investigation by the regulator found that Barclays’ CEO Jes Staley personally told the bank’s head of security to try to identify the author of two whistleblowing letters in an attempt to protect a colleague from unwanted publicity.
Banks launch campaign for lighter tax burden
UK Finance has suggested banks should face lower taxes, highlighting new research which shows that the tax burden for banks operating out of London stands at 50.6% of commercial profit.
BoE lays out framework for UK bank ‘living wills’
The Bank of England has set out its stall for ensuring that the seven large UK banks, with over £50bn, can wind themselves down without the need for taxpayer bailouts.
Credit Suisse advises clients to consider moving assets out of UK
Credit Suisse has reportedly advised its high-net worth clients to think about moving assets out of the UK due to the uncertainty surrounding Brexit.
Cashless crisis?
The Mail considers whether Britain is heading for a “cashless crisis” as banks move away from cash and towards payment by cards and mobile phones. Mike Cherry, chair of the FSB, says the decision to go cashless should be a proactive one for small business owners, and “shouldn't come about as the result of unreasonable banking fees.”
Fooy steps up in the North East
The British Business Bank has named Shaun Fooy as senior manager for its UK network for the North East.
PRIVATE EQUITY
Private equity buyouts expected to increase
Analysts are expecting private equity buyouts of public companies worth over $1bn to increase next year as firms look to find value. Figures from Pitchbook show that the median size of take-private deals this year was $977m, compared to the average non-take private deal size of $175m. Analyst Wylie Fernyhough said: “We expect take-privates, including carve-outs from public companies, to increase in prominence - as more mega-deals are occurring, the number of take-privates above $1bn will rise.”
INTERNATIONAL
Malaysia pursues Goldman across borders in 1MDB criminal probe
The Malaysian government is set to pursue Goldman Sachs units based in the UK, Singapore and Hong Kong in connection with the 1MDB fraud probe, according to the FT.
JPMorgan tries to streamline spending in tech arms race
JPMorgan Chase is streamlining tech investment at its Corporate & Investment Bank, indicating that those looking to use its $10.8bn fund would need to find only scalable successful projects.
AUTOMOTIVE
AA wins contract to service VW cars
The AA has secured a two-year extension to its contract with Volkswagen in a deal worth tens of millions of pounds. The contract extension is a major boost in a difficult year for the AA. The company reported a 65% drop in profit before tax to £28m for the six months to the end of July.
AVIATION
BA to resume flights to Pakistan
British Airways is to restart flights to Pakistan next year, more than 10 years after it halted services following a bombing on the Marriott hotel in Islamabad. BA will be the first Western airline to resume services to the country.
FINANCIAL SERVICES
SEC chief urges action to prevent no-deal Brexit causing havoc
The U.S. Securities and Exchange Commission has warned leaders in the UK and EU to ensure that a no-deal Brexit scenario does not disrupt markets. Boss Jay Clayton urged action.
Swiss Re forecasts $79bn in catastrophe losses for insurers in 2018
Swiss reinsurer Swiss Re has estimated that natural and man-made disasters have resulted in the loss of over 11,000 lives this year, along with over $155bn in damages.
LEISURE AND HOSPITALITY
Bridgepoint makes bid for Cherry
Bridgepoint has made a takeover offer of 9.19bn Swedish kronor (£802m) in cash for Swedish gaming company Cherry. An independent panel set up by shareholders has recommended that the bid be accepted.
MANUFACTURING
Michelin secures future of factory
Michelin has agreed a deal with Scottish ministers to “transform” its Dundee tyre factory in an effort to secure a future in low carbon transport and manufacturing. The joint commitment will see Michelin work with Scottish Enterprise, Dundee City Council and other strategic partners to help protect jobs at the site.
RETAIL
John Lewis bounces back
John Lewis appears to be on the rebound, with total sales for the week to December 15 up 1.8% compared to the same period last year. The penultimate Christmas shopping week brought a 9.3% increase in fashion sales, boosted by price-matching promotions, while beauty, wellbeing and leisure sales rose 15.7%, and womenswear and menswear enjoyed a rise of 8.5% and 7.2% respectively.
ECONOMY
Economy set for slowest growth since 2009
The British Chambers of Commerce has warned that UK economic growth could slow to its lowest level since 2009 over the next two years, 1.2% in 2018, 1.3% in 2019 and 1.5% in 2020. BCC director general Dr Adam Marshall said: “While Brexit isn’t the only factor affecting businesses and trade, it is hugely important – and the lack of certainty over the UK’s future relationship with the EU has led to many firms hitting the pause button on their growth plans.”
Credit markets indicate recession
Credit experts have warned that surging borrowing costs for companies in the U.S. and Europe threaten to bring recession within months and resemble events leading to the global credit ‘heart attack’ back in 2007. Simon Ward from Janus Henderson said his leading indicator for the health of U.S. companies - real non-financial business M1 - has turned deeply negative for the first time since the Lehman crisis. He explained that this points to a sharp slowdown next year. “When this measure of cash contracts it means companies plan to cut back,” he added.
OTHER
Probe highlights failings at the BoE
An investigation by the National Audit Office has found that the Bank of England made £10m worth of purchases without following proper procedures and has 800 desks sitting empty at its Threadneedle Street HQ. The probe unearthed 200 purchases above £25,000 in the year to December 2017 that were made without staff consulting the Bank's central procurement team. The NAO said going forward the Bank would make a bigger contribution to the Treasury if it could put its house in order. It found that systems at the Bank were out of date and its management too slow, despite efforts by Mark Carney to modernise the institution.
Banking at breakfast
Santander, Lloyds, NatWest and RBS have revealed that their websites and mobile apps receive the most traffic between 7am and 8am on weekdays, suggesting many customers are checking their balances on the way to work or while having breakfast. In contrast, Barclays said most of its customers log in to bank online at 10am and from 12pm on its mobile app.