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Daily News Roundup: Wednesday, 20th June 2018

Posted: 20th June 2018


Rural residents hang up on mobile banking

A survey by the Financial Conduct Authority has found that consumers in rural areas of the UK are far less likely to use their smartphones for banking than their urban counterparts. The report also reveals there is greater reliance on bank branches in rural areas, but also more difficulty in reaching those branches owing, in part, to health conditions. However, the proportion of people in the countryside who said they were highly satisfied with their financial circumstances (27%) was greater than those in towns and cities (20%). The FCA said its report is intended to “encourage further discussion” rather than foreshadow any particular policy response. The FT’s Claer Barrett comments on the report and highlights how the bank branch is changing. She profiles a new Halifax bank in London which she likens between a crèche and a WeWork office.

Bankers and auditors accused of HBOS Reading fraud cover up

The Times reports on a leaked HBOS report written five years ago by former HBOS manager Sally Masterton alleging that former directors and executives of the bank breached their statutory and regulatory obligations to a “serious criminal nature” by failing to disclose fraud at the bank’s Reading branch. Ms Masterton claimed that Lloyds TSB had evidence of “serious financial irregularities” at HBOS’ Reading office at the time of their merger, but that this was not disclosed to shareholders.

MP calls for action over will-writing services

Tory MP Kevin Hollinrake has called for the FCA to investigate the "cosy cartel" in will-writing services provided by banks such as Lloyds Banking Group and Royal Bank of Scotland, which both use the same law firms - Hugh James in England and Wales and Brodie's in Scotland - to write wills for their customers. The wills name the banks as an executor of their customers' estates, entitling them to a percentage charge for the work based on the value of the estate. "It's not sufficient for the FCA to wash their hands of this," Mr Hollinrake said. "It would make sense for parliament and the regulator to make sure banks are not abusing that position of trust ... It's damaging for the most important thing, that is building confidence in the bank and building confidence in the economy."

Time runs out for £26tn financial contracts affected by Brexit

TheCityUK has warned that banks and insurers do not have time to rewrite all the financial contracts, including £26trn of derivatives, that may be disrupted by Brexit.

Reviewer to decide on future of RBS branches

An independent reviewer has been appointed to carry out a study into the future of 10 closure-threatened RBS bank branches. RBS personal banking director Simon Watson said that details of the contract with the assessors would be revealed in the "coming days".


Abu Dhabi fund takes stake in PIC

The Abu Dhabi Investment Authority is set to buy a 21.4% stake in the UK’s Pension Insurance Corporation Group (PIC). It will take the stake from funds advised by private equity investment company JC Flowers.


Citigroup renames Frankfurt office

Citigroup is renaming its Frankfurt office as the US bank prepares to turn its German operations into its post-Brexit EU headquarters. The bank is changing the name of the legal entity to “Citigroup Global Markets Europe”, replacing its previous “Deutschland” designation. Meanwhile, Royal Bank of Canada (RBC) Capital Markets has confirmed it will base its EU headquarters in Frankfurt. The bank expects to boost its local team by 20 to 40 staff. However, few staff are likely to be relocated from London, where the investment bank employs around 100 staff.

Goldman pledges to invest in businesses headed by women

Goldman Sachs has launched a $500m programme to invest in businesses founded or run by women. Launch at GS will invest client funds and the bank’s own capital in female entrepreneurs and investors. Stephanie Cohen, chief strategy officer, said that change “is going to take time and it's going to take a concerted effort by all organisations to foster environments that allow talent to thrive.”

Jefferies profit rises on back of investment banking

Jefferies Group has reported a 40.5% jump in quarterly profit as strength in its investment banking business helped offset weakness in its trading unit. Overall Jefferies' net revenue rose to $822.6m from $779.3m.


Government blocks aircraft deal

The British government has blocked Chinese-owned Gardner Aerospace from buying aircraft parts maker Northern Aerospace from private equity firm Better Capital, over national security concerns. The Competition and Markets Authority has until July 13th to complete a formal report.


London construction firms reliant heavily on EU workers

Figures from the ONS have revealed that 28% of construction workers employed in London between 2014 and 2016 were nationals of other EU countries, more than double the percentage of EU workers in other industries in London. The figures for London contrasted with the UK as a whole, where only 7% of the 2.2m construction workers were from elsewhere in the EU.

McCarthy & Stone lowers expectations

McCarthy & Stone has forecast a fall in profit after a period of disappointing spring sales - blaming economic uncertainty and the slow property market. Announcing that chief executive Clive Fenton will be retiring at the end of August, the retirement home builder now expects to see operating profit in the range of £65m-£80m compared with £96m reported last year.


City Brexit plans are impossible

Mark Boleat, the former policy director of the City of London Corporation, has said the City’s Brexit plans are “impossible” and should be abandoned in favour of continued membership of the European Single Market. Boleat will today push for the group to U-turn on its plans for “mutual market access” between the UK and the EU after Brexit. He will say that staying in the EEA would be the “least bad” option to give the UK time to negotiate a better deal in the longer term.

GPS banks bumper investment

Payments processing firm Global Processing Services (GPS) has banked £44m in funding from Dunedin, in what is one of the largest fintech deals of the year so far. GPS already works with clients including Starling Bank, Revolut, Pockit, Volt Bank, Loot, Stocard, Glint, Osper and Curve.

NS&I seeks younger savers

Ian Ackerley, National Savings and Investments’ chief executive, has said the bank is looking to move away from its traditional customer base and attract more younger clients. He was speaking after NS&I reduced the limit in its two most popular bonds from £1m to £10,000 to try to stem the flow of customers.

Visa Europe to hire independent experts

Visa Europe has said it will hire an independent body to investigate the outage of its card payment services which affected as much as a third of all payments in the UK.


CVC in talks over €3bn stake in Recordati pharma business

CVC Capital Partners is in talks to acquire a more than €3bn controlling stake in Italian pharmaceutical company Recordati Pharma.


Cineworld looking to crack America

UK-listed Cineworld has partnered with US rival Cinemark to increase its stake in a cinema advertising firm National CineMedia (NCM). The shares are currently owned by AMC Entertainment, which acquired Carmike Cinemas for $1.1bn in 2016.


Bombardier to contest Piccadilly Line contract loss

Transport for London’s (TfL) decision to award the £1.5bn contract to design and manufacture the new Piccadilly Line trains to Siemens Mobility could now be contested by Bombardier. “Together with our partner on this project, Hitachi Rail, we believe we submitted a competitive bid - on technology, strength of product, deliverability and cost,” said Richard Hunter, chairman and managing director UK at Bombardier Transportation.


Mortgages cheaper than renting

New research from Santander Mortgages has found that owning a home is cheaper than renting in every part of the country, but the £51,000 deposit required to get on the property ladder means many are trapped in rented accommodation. Santander found that prospective first-time buyers could make a saving of £2,268 per year on average if they move from renting to owning.


BoE would need to commit to productivity growth, says Labour

A Labour government would require the Bank of England to commit to a 3% productivity growth target if it wins power, according to plans set to be outlined by Shadow Chancellor John McDonnell. He will tell the Royal Institute of British Architects today that the current "economic architecture" of the UK is not fit for the "economy of the future" and promise institutional reform and strategic investment towards areas where there could be greatest productivity gains. As well as having an expanded remit, the BoE should also move to Birmingham, Mr McDonnell will say. However, detail on whether the Bank’s productivity target would be annual or over a five-year parliament has not been made clear.

Bank of England to hold rates, analysts agree

The Bank of England will not raise interest rates this week, according to economists polled by Reuters. Just two policymakers, Ian McCafferty, whose term ends in August, and Michael Saunders, are expected to recommend that rates should rise.


Growing number of HNWIs

The global number of high-net-worth individuals has hit 18.1m, according to Capgemini’s 2018 World Wealth Report, up from 16.5m in 2016. The combined wealth of the HNWI – those whose assets are worth at least $1m (£750,000) excluding their primary residence – hit an all-time high of $70.2tn, while the number of wealthy people who tipped over the threshold to become ultra-high-net-worth individuals, with investable assets of more than $30m, rose by 11.2% last year, leaving 174,800 people globally in the ultra-HNWI bracket.

Banking details up for sale on Google

The fraud prevention service Cifas has warned that criminals are using websites available via Google to buy and sell the bank details, passwords and email addresses of British consumers. Cifas said the trade was fuelling an identity theft epidemic, adding that the number of reported cases has soared by 125% in the past decade, with almost 500 cases a day logged last year - a total of 175,000.

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