BANKING
HSBC signals mass job cuts as profits plunge
HSBC has said its profits for 2019 fell by 33%, mainly due to $7.3bn in write-offs related to its global banking and markets and commercial banking operations in Europe. Noel Quinn, the bank's acting interim chief executive, said restructuring was likely to lead to 35,000 job losses over three years. HSBC employs more than 235,000 people around the world, with more than 40,000 based in the UK. Mr Quinn told Reuters that the restructuring would mean "that our headcount is likely to go from 235,000 to closer to 200,000 over the next three years." The lender is facing the impact of the coronavirus, the effect of which it said has not been fully accounted for in yesterday’s earnings, Britain's protracted withdrawal from the European Union, and historically low interest rates around the world. The Telegraph’s Ben Marlow says while the loss of 35,000 jobs appears brutal, HSBC may have to go further still to appease investors. One of HSBC's 20 largest shareholders dismissed the job cull as "not that big a number" and argued there are "better and more advanced recovery stories [such as] Barclays or Standard Chartered".
Access to Cash review urges action by chancellor
The authors of the Access to Cash review, led by the former Financial Ombudsman Service boss Natalie Ceeney, are urging new chancellor Rishi Sunak to include measures protecting access to physical money in the budget, cautioning that over 8m adults in the UK would struggle to adapt to a cashless society. With around 13% of free-to-use ATMs in the UK closing and the proportion of ATMs which charge a fee increasing from 7% to 25%, Ceeney remarked: "The UK is fast becoming a cashless society - without knowing what this really means for consumers or for the UK economy.” Jenny Ross of consumer group Which? noted that: "Without legislation many more communities will be cut off from cash or forced to pay hefty fees to access their own money. The new chancellor must seize this opportunity and guarantee long-term access to cash in the budget, while developing a clear strategy to ensure that the transition to digital payments doesn't leave anyone behind."
Remortgages jump
Remortgages with additional borrowing increased 5.9% at the end of last year, according to the latest figures from UK Finance, which pegs the average additional amount borrowed in the month at £50,702. There was a 0.5% decline in the number of remortgages (16,490) with no additional borrowing. There were 29,400 homemover mortgages completed in December last year, up 3.2% on 2018, while the number of new first-time buyer mortgages completed in the month rose 0.3% year-on-year.
PRIVATE EQUITY
SoftBank touting second Vision Fund
SoftBank has pumped $2.5bn of its own money into its second Vision Fund. Existing stakeholders in the Japanese technology conglomerate's original $100bn Vision Fund, which was hammered last year amid the WeWork fallout, such as Saudi Arabia’s Public Investment Fund Abu Dhabi’s Mubadala, have yet to give their backing.
INTERNATIONAL
Management changes at JP Morgan
JP Morgan has named Viswas Raghavan and James Casey as global co-heads of its investment bank, with head of global banking Carlos Hernandez to become executive chair of global investment. Dorothee Blessing and Conor Hillery were appointed co-heads of EMEA investment banking.
Intesa Sanpaolo launches €4.9bn bid to buy Italian banking rival UBI Banca
Italian lender Intesa Sanpaolo has launched a €4.86bn ($5.26bn) takeover bid for UBI Banca, with the latter’s shares up 24% on Tuesday and Intesa shares rising 2.4%.
Buyers drop out of Kleinwort sale
After last year selling its Belgian private banking business to ABN Amro, Société Générale’s sale of Kleinwort Hambros has been abandoned after potential purchasers dropped out, reports suggest.
AUTOMOTIVE
Jaguar issues warning on coronavirus effect
With the ongoing coronavirus affecting supply chains, Jaguar Land Rover has cautioned that its British factories could run out of parts at the end of next week. Chief executive Ralf Speth commented: “We are safe for this week and we are safe for next week and in the third week we have … parts missing,” explaining that: “We have flown parts in suitcases from China to the UK.”
New Nissan chief tells investors change is coming
Makoto Uchida, new Nissan chief executive, told shareholders at the carmaker’s annual meeting yesterday: “We will make sure that we steer the company in an effective way that is visible,” going on to claim: “I will commit to this. If the circumstances remain uncertain, you can fire me immediately.” This comes amid falling sales and a scandal surrounding former head Carlos Ghosn, who was accused of funnelling millions of dollars out of the company and later fled Japan while awaiting trial.
FINANCIAL SERVICES
FCA warns of too much risk for retail investors
The Financial Conduct Authority (FCA) has issued a warning in its annual report on how consumers could be harmed that the retail investment sector is seeing investors pushed into purchasing more risky products, stating: “These are often marketed directly to retail consumers, often with poor communication of the real risks and implying that the investments are regulated, when they are not.” FCA head Andrew Bailey, who is to succeed Mark Carney as Bank of England governor in March, said recently that this was “one of the things that worries me most”. The regulator’s executive director of strategy and competition and interim chief executive Christopher Woolard noted: “We expect firms to be similarly focused on preventing harm and assisting us where they can, and we will continue to actively supervise all firms to ensure they achieve this.”
Investors want say in selecting new FCA boss
Representatives of investors in London Capital & Finance, Lendy and Connaught have teamed up with Whistleblowers UK to write a joint letter to chancellor Rishi Sunak, calling for a say in who is appointed to succeed outgoing Financial Conduct Authority chief Andrew Bailey. The letter states that confidence in the regulator has fallen to a low point not seen since the financial crisis over a decade ago, with its failure to “protect whistleblowers or act appropriately on their evidence" cited as one reason.
Franklin Templeton to buy Legg Mason
Franklin Templeton is set to acquire rival asset manager Legg Mason for $50 per share in an all-cash transaction of $4.5bn. The combined business will become one of the largest asset managers in the world, with more than $1.5trn in assets.
Suitors circle Amigo
Loans company Amigo is seeing increased attention from firms interested in buying the business. Amigo, which caters for people with poor credit histories, opened to offers at the end of January and has since entered into non-disclosure agreements with several interested parties - news of which took shares up 11.5% on Tuesday.
Cenkos appoints female chair
Cenkos has appointed Lisa Gordon as its new chairman, the second female to be appointed as chair of a UK stockbroker.
HEALTHCARE
Schoen Klinik in running for Priory Group
German healthcare firm Schoen Klinik, which operates a London orthopaedic and spinal hospital, has joined the bidding for rehab clinic owner Priory Group for around £1.2bn, with backing from US private equity group Carlyle. Other companies in the race include Australian hospital group Ramsay Health Care, buyout firm Capvest and Canadian investment fund Brookfield.
LEISURE AND HOSPITALITY
Coronavirus to damage Intercontinental Hotels profits
InterContinental Hotels expects profits for its Chinese operations to take a $5m (£3.8m) hit this month due to the coronavirus, even though four of its hotels remain open in Wuhan, where the epidemic is centred. Meanwhile around 170 of its 470 hotels in the country have been shut or partly closed as the disease spreads.
MANUFACTURING
Jingye to cut hundreds of British Steel jobs
British Steel bidder Jingye is set to axe 400 jobs at the firm’s Scunthorpe plant, as it nears a takeover of the group. Jingye has begun sending out new contracts to staff detailing updated terms and conditions, however, under its cost-saving plan, 10% of British Steel's 4,000 employees will not get an offer.
MEDIA AND ENTERTAINMENT
Cityfibre chosen for Three's 5G rollout
Three has chosen challenger broadband firm Cityfibre to help build its 5G network outside London. The first phase of the agreement will connect the mobile company’s 5G network in the 23 cities where the broadband company provides full-fibre by the end of the year.
US film studio plans Reading base
US movie studio group Blackhall Studios is to build and run a £150m Hollywood-style production complex in Reading, creating as many as 3,000 jobs and contributing more than £500m to the British economy each year.
REAL ESTATE
Legal & General asserts affordable housing push
For the first time, Legal & General has allocated £100m of UK pension money to be spent on a portfolio of 3000 UK shared-ownership, social and affordable rental properties per year by 2023. The insurer has a 3500-homes pipeline it can develop in areas such as Croydon, Wembley and Enfield, and a further £175m of loans agreed with external lenders.
ECONOMY
UK wages top 2008 peak as employment hits record high
UK wages topped their pre-financial crisis peak for the first time at the end of 2019, according to the Office for National Statistics (ONS), as UK employment hit a record high of 32.9m people. The employment rate reached 76.5% over the three months, while unemployment fell by 16,000 to 1.29m. Average regular pay rose to £512 per week in December, which in real terms is £1 higher than it was in August 2007.
OTHER
Budget will go ahead on March 11
The Budget will go ahead on 11 March as planned, new Chancellor Rishi Sunak has confirmed. He is due to meet Boris Johnson today to discuss the Budget, amid expectations that the Prime Minister wants more leeway to borrow large sums to fund infrastructure projects in the North.