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Daily News Roundup: Wednesday 19th June 2019

Posted: 19th June 2019


Facebook reveals digital currency details

Facebook has unveiled plans to launch a new digital currency, called Libra, next year. It said people would be able to make payments with the currency via its own apps, as well as on messaging service WhatsApp. Firms such as Uber and Visa are also likely to accept it in future, Facebook added. The social media network said Libra was particularly aimed at the 1.7bn adults worldwide who do not have a bank account. It said the issue of being “unbanked” disproportionately affected people in developing countries, and in particular women. An editorial in the FT says there are good reasons to be wary of Facebook, but a digital shake-up of banking is long overdue. Laura Noonan adds in a separate FT article that banks were notably absent from the list of initial backers in Libra. She examines how the tech giant’s entrance into finance will change the financial services landscape. Meanwhile, Bruno Le Maire, the French finance minister, has demanded that Libra is scrutinised by G7 central banks, and said it was “out of the question that it becomes a sovereign currency”.

Huge cyber-attack inevitable

Anil Kashyap, an external member of the financial policy committee, has warned that Britain will face a cyber-attack from a hostile state soon that could bring down the financial system. Kashyap said the Bank of England was vulnerable despite preparing its defences. He said that a state actor wishing to do maximum damage would likely carry out a data integrity breach, which involves someone in the system for months. He added that he did not expect an individual firm to be able to defend itself against such an attack. Ciaran Martin, chief executive of the National Cyber Security Centre, added that a “category one” attack that would disable the financial system and national energy supplies was a matter of “when, not if”.

Open Banking start-ups warned over data leak

Nicky Morgan, the chair of the Treasury Select Committee, has warned that a single data breach at an Open Banking start-up could “fatally” damage the developing sector. Speaking at a conference run by TheCityUK, she said: “Having rightly been told to never hand over personal banking data to third parties, consumers are extremely reluctant to hand over very sensitive personal data, such as their own spending habits, to third parties, many of which will be relatively new start-ups that don't have a track record in handling data of that kind. Let me at this point offer a warning, it may only take one data breach of financial records from an open banking start up for the entire retail Open Banking proposition to be damaged, perhaps fatally.”

RBS names Marieke Flament head of business-focused digital bank

Marieke Flament has been appointed head of RBS’s digital bank Mettle, which focuses on smaller businesses. She joins RBS from Circle, a financial technology company that uses bitcoin technology, where she has been its European managing director and chief marketing officer.

Identity fraud linked to plastic cards rises sharply in UK

Figures from Cifas show that identify fraud related to plastic cards rose by two-fifths in 2018. Cifas said there were 82,608 incidents of attempted or successful ID card fraud last year.


Private equity groups prepare to raise mega funds

The FT reports that several private equity funds, including CVC Capital Partners, EQT and BC Partners, are planning to raise new mega funds to tap into investor demand in Europe.


Bank Mellat wins damages claim

The UK government has made an out-of-court deal to settle a £1.3bn damages claim made by Bank Mellat over a UK trading ban. The Iranian bank argued that the sanctions had tarnished its reputation in the UK and overseas, causing it “significant” loss and prompting others to impose sanctions on it. The government declined to comment on suggestions yesterday that it had spent £35m defending itself against Bank Mellat's claim.

Global banks agree framework to promote green shipping

A group of global banks including Citi, Société Générale and Danske Bank have agreed a deal that will limit lending to shipping companies that fail to uphold tough environmental standards.


Heathrow reveals expansion ‘masterplan’

According to its ‘masterplan’, Heathrow Airport has said it will construct a third runway by 2026 and complete its expansion by 2050. The plan includes diverting rivers, moving roads and rerouting the M25 through a tunnel under the new runway. The proposals, which have previously faced fierce opposition, will be open to public consultation until September 13.

BA owner signs deal to buy 200 planes

IAG, the owner of British Airways, has signed a letter of intent to buy 200 Boeing 737 Max planes. IAG said it was confident that the Boeing planes would return to service in the coming months. Boeing is currently trying to develop a software fix for 737 Max planes after two deadly crashes.


Ashtead Group reports profits

Ashtead Group has reported another quarter of solid growth, putting its annual profits and revenue well ahead of last year. The construction equipment rental firm said it had seen revenue rise 17% to £1.1bn in the three months to 30 April.


Review of FCA needed in wake of Woodford suspension

Wealth manager SCM Direct has called for a “root and branch” review of the FCA following the suspension of Neil Woodford’s Equity Income fund. SCM told the financial regulator that funds with daily or weekly trading should be banned from investing in unquoted investments such as private equity or unlisted shares, physical property or listed shares that are “rarely traded”. Meanwhile, the FCA has said that it has launched an investigation into the circumstances surrounding the crisis that engulfed Woodford’s investment firm. Anil Kashyap, an external member of the Bank's financial policy committee, told MPs the Woodford saga was being watched closely for signs of “spill over”. Commenting on the FCA’s involvement in the Woodford case, Alex Brummer in the Mail suggests that its remit is too vast and its legalistic, rules-based approach no substitute for intervening early, harshly and often. Separately, it has emerged that Woodford has sold a chunk of shares in Oakley Capital Investments, raising around £54m for investors who want their money back from the troubled Equity Income fund.

Old Mutual fires chief executive

The CEO of South African insurer Old Mutual, Peter Moyo, has been sacked over £1.7m dividend payments to NMT Capital, a private equity group he founded. Moyo was suspended last month after concerns were raised, but has now been fired after he was unable to agree terms with the board for a parting of ways. Old Mutual added that Moyo did not offer an acceptable explanation for the payments.

Domestic & General shelves float plans

CVC Capital Partners has shelved plans to sell or float insurer Domestic & General. CVC had been looking for a valuation of around £1.2bn for the business. In summing up its reasons for not pushing ahead with an exit, CVC said: “It's a very fickle market right now.” Domestic & General generated underlying earnings of £101m in its last financial year, up 2.3%, and underlying revenue of £811m, up 4.3%.

UK fintech vacancies rise

According to the UK Fintech Revolution: 2019 Salary Survey from Robert Walters and Vacancy Soft, the UK fintech sector experienced a 61% rise in job vacancies in 2018. Compliance-related positions experienced the biggest surge in growth, with the number of roles up 85% year-on-year, followed by marketing jobs which climbed 63%. The report also revealed that rising demand pushed salaries as much as 25% higher in 2018.

EU prepares to take sanctions against Switzerland

Brussels is preparing to cut off Swiss stock exchanges from the EU’s single market to send a “warning shot” to Bern but also to Brexit Britain. Internal documents suggest that the European Commission is prepared to take a hard line with Switzerland to send a message to the UK that the EU is not prepared to compromise on its single market rules. The Swiss exchanges will lose direct access to European investors on July 1 unless the country signs up to a EU draft partnership treaty.


Canary Wharf owner eyes Earls Court site

Canary Wharf Group is in talks to buy the majority of the Earls Court site from Capital & Counties. The group is eyeing Capco’s 63% interest in the 70-acre west London regeneration project, the value of which has fallen amid the downturn in prime residential property prices in the capital.


Tesco could launch ‘Finest’ stores

Tesco is considering launching a new chain of upmarket convenience stores that would stock its ‘Finest’ range, putting it in direct competition with M&S Simply Food. It presented the idea of ‘Finest’ stores to investors yesterday, as it works to build on its recent recovery in sales growth and profit margins. Tesco said the new chain could generate a profit margin of 7%, roughly double the margin being generated by the company as a whole.


Investors most bearish since the financial crisis

Bank of America Merrill Lynch's closely watched monthly survey of fund managers has found that global investors are now more rattled and risk-averse than at any time since the financial crisis. The shift out of equities into bonds this month was the second biggest on record. Investors raised their allocations to cash from 4.6% last month to 5.6%. Meanwhile, the balance of respondents expecting growth to weaken over the next 12 months increased by 46 percentage points to 50%. Profit expectations also have taken a big knock: a net 41% of respondents expect corporate profits to fall over the next 12 months.

Forward guidance has given Europe bright future

Mark Carney has said that the evolution of monetary policy in recent years has helped give Europe's economy “a bright future”. The Bank of England governor highlighted in particular the development of forward guidance in the wake of the financial and Eurozone crises.


JP Morgan sets aside £1.3m for digital skills

JP Morgan, in collaboration with social change charity Good Things Foundation, is committing £1.3m to Power Up, an initiative which will help people in underserved communities build digital skills to qualify for in-demand jobs. Glasgow and Edinburgh have been identified as two of the four areas to receive support. Dan Zinkin, MD of global technology for digital investment banking at JP Morgan, said: “Digital skills are essential today and have the potential to change lives - Through Power Up, the impact of today's initiative will be to enable more people in Edinburgh and Glasgow to contribute to and share in the rewards of a growing economy.”

Best bosses named

CEOs in the water, rail and banking industries have been named the best in the UK after a survey of employees by jobs website Glassdoor. Anglian Water's Peter Simpson came in first spot with a 99% approval rating, followed by Andrew Haines, the boss of Network Rail, and Metro Bank's Craig Donaldson, who both had a 98% rating.

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