BANKING
Mortgage war hits Santander UK’s profits
Profits at Santander's UK division fell by more than a third as the mortgage price war dragged down its income. The Spanish-owned lender saw its profits continue to be weighed down by intense pressure in the UK mortgage market, resulting in a 35% slump in earnings to £575m in the first quarter of the year. The UK division was also weighed down with restructuring costs. Earlier this year, the lender announced it would axe 140 branches across the UK – a move that would put 1,200 jobs at risk. Income was down by 8.4% to £2.1bn during the period, but the company held firm on its outlook for the rest of the year. Globally, Banco Santander reported an 18% fall in second-quarter net earnings, with net profits down to €1.4bn for the three months to June. This was down from €1.7bn a year earlier, while analysts had expected the quarter to bring net earnings of €1.3bn. Ana Botín, executive chairman, stated: “The bank has delivered its strongest underlying quarterly performance in eight years, reflecting the progress we have made in our commercial and digital transformation”.
RBS approaches top HSBC executive Ian Stuart for CEO role
Ian Stuart, the head of HSBC’s UK operation, has been approached by Royal Bank of Scotland about replacing Ross McEwan as chief executive, according to people familiar with the matter. Mr McEwan's move to National Australia Bank emerged last week, although neither HSBC nor RBS would comment on current speculation regarding Mr Stuart. Alison Rose, RBS’s head of commercial and private banking, is seen as the leading internal candidate.
Banks cannot escape the blame for PPI
Writing in the Times, Katherine Griffiths says that PPI has created widespread fraud, by individuals trying their luck by seeking compensation for bogus policies, and claims companies that have become expert at playing the system. However, she adds that banks have been the real culprits of PPI for creating a product that was more a method for boosting profit than insurance to cover people’s mortgages, credit cards or personal loans if they became ill, had an accident or lost their job. She says the way that banks have handled the fallout has been equally poor, noting that Lloyds and Clydesdale have been fined for mishandling claims.
Metro Bank hunts new chairman
The Times reports that Metro Bank will say at its half-year results today that it is planning to look for a candidate to replace Vernon Hill, the American billionaire who founded the bank, as chairman.
Paragon boosted by rise in lending
Paragon Banking Group has reported a rise in lending for the nine months to 30 June. New lending came in at £1.9bn in the year to date thanks to “strong new business growth”, CEO Nigel Terrington said.
Extensive ties found between Sanjeev Gupta bank and business empire
An investigation by the FT has uncovered extensive links between Wyelands Bank and its owner Sanjeev Gupta’s wider business empire.
INTERNATIONAL
Santander to challenge Orcel lawsuit
After withdrawing its offer to appoint Andrea Orcel as its new CEO, Santander has vowed to challenge a €100m (£90m) lawsuit he brought, claiming breach of contract. Santander’s Secretary of the board Jaime Perez Renovales commented: “The bank has acted with total transparency and will present and defend its position before the courts”.
Mixed set of results for UBS
UBS has posted a mix set of second-quarter results as its flagship wealth management unit and investment bank both posted double-digit declines in earnings, but held up better than feared in “challenging” global markets. Pre-tax profit at the Swiss bank’s wealth management arm dropped 12% to $886m (£711m), while at its investment bank earnings fell 23% to $440m.
BofA and UBS target private company deals in banker reshuffle
Bank of America and UBS are seeking to move into fundraising and advisory work for private companies, reshuffling their investment banking teams to focus on capital raising and advice.
Global regulators delay ‘big bang’ derivatives rules by a year
The Basel Committee on Banking Supervision and International Organization of Securities Commissions have agreed a postponement of the planned “phase five” rules for derivatives markets from September to beyond 2020.
Australian regulator proposes tougher rules on bankers’ pay
The Australian Prudential Regulation Authority has unveiled a number of measures designed to curb misconduct at financial institutions, including rules on pay.
AUTOMOTIVE
Chinese carmaker BAIC takes 5% stake in Daimler
China’s BAIC has bought a 5% stake in Daimler, cementing their long-standing alliance after Geely emerged as a potential rival by also taking a stake in the German firm.
AVIATION
Strike will cost BA up to £40m a day
British Airways has told the High Court that a proposed strike by its pilots will cost the airline up to £40m a day and prove “enormously disruptive” for passengers. BA added that the strike over pay, which could start in August, was timed to cause maximum chaos.
FINANCIAL SERVICES
Looming fines for market makers could hit City again
The Standard's Russell Lynch underlines mounting concerns surrounding new European Union regulations governing the settlement of trading in "everything from shares to bonds" following the financial crisis. While regulators aimed to harmonise the rules across Europe under the Central Securities Depositary Regulations regime which took effect in 2014, he acknowledges, industry observers note the irony of the European Securities and Markets Association’s drive to improve settlement with a penalties regime which could hike costs and squeeze more companies out of capital markets, Lynch adds, all at a time when the MiFID II rules have "devastated analyst coverage of smaller stocks" by forcing brokers to charge.
Standard Life Assurance fined for annuity sales failings
The Financial Conduct Authority (FCA) has hit Standard Life Assurance (SLA) with a £30.7m fine for failings around its sales of annuities. SLA, which the FCA said had failed to properly monitor the quality of calls between its call handlers and its customers, also offered staff large financial incentives to sell annuities, which the regulator said encouraged them to place their financial interests ahead of their customers.
Firms must do more to help vulnerable customers, FCA warns
Banks, insurers and other financial firms must do more to help customers who are in financial difficulty or may be suffering from poor health, according to the Financial Conduct Authority (FCA), which has urged financial firms to better serve struggling consumers. Proposed improvements include better training to help front-line staff identify vulnerable customers and Christopher Woolard, of the FCA, said: “The guidance should drive improvements across the industry, improving outcomes for millions of vulnerable consumers."
Bundesbank issues wary welcome to Libra
The German Bundesbank has issued a wary welcome to Facebook’s plans to launch a digital currency, saying that it could reform finance by driving down the costs for consumers looking to move money around. However, the German central bank said it would “closely monitor” the risks associated with Libra, suggesting that it could be used for money laundering or terrorism financing.
Beazley sees stronger than expected premium rises
Beazley has posted profit before tax of $166.4m for its first half, after years of expensive payouts for natural disasters, an increase of 189% on the same period last year.
HEALTHCARE
Biotech group Biogen boosted by sales of key drugs
Biogen has raised its full-year guidance and beat earnings and revenue expectations due to strong sales of its key drugs to treat multiple sclerosis and spinal muscular atrophy.
MANUFACTURING
Manufacturing output lowest since financial crisis
The CBI has published figures showing that British manufacturing output shrank at the fastest pace since the financial crisis over the last quarter. With 19% of manufacturers reporting that output increased and 30% saying it fell, this gave output a minus 11% balance for the three months to mid-July. CBI chief economist Rain Newton-Smith remarked: “It’s being hit by the double-blow of Brexit uncertainty and slower global growth.”
MEDIA AND ENTERTAINMENT
Newspapers can share staff
News UK has been given final approval to share resources across the Times and the Sunday Times, paving the way for journalists to work across both titles and raising the prospect of possible job losses.
PROFESSIONAL SERVICES
SFO launches probe into De La Rue
De La Rue, which prints the Bank of England's money, has confirmed that the Serious Fraud Office had opened an investigation into the group and "associated persons". It said the claim relates to “suspected corruption in the conduct of business in South Sudan”. Shares in the firm dived by 15% following the announcement.
REAL ESTATE
House sales held back by Brexit
Monthly HMRC statistics have shown that British residential property sales fell to 84,490 in June, over one-sixth down on the same period last year. With the property market apparently taking a “wait-and-see” attitude as Brexit-related uncertainty continues, house sales were down 16.5% last month.
RETAIL
Grocery sales down for first time in three years
Overall sales in the grocery sector have declined 0.5% in the 12 weeks to July 14, fresh figures suggest, with sales at Tesco, Sainsbury's, Asda and Morrisons falling. The decline has been attributed to last year's record summer and football World Cup, which saw sales of goods such as beer and ice cream increase.
ECONOMY
Global growth forecast cut by IMF
The IMF has cut its growth forecasts for the global economy for this year and next. It predicts growth of 3.2% in 2019, down from its April forecast of 3.3%. Growth next year is set to pick up to 3.5% next year, although that is below its earlier forecast of 3.6%. The Fund has raised its growth forecast for the UK this year to 1.3% from 1.2%. The revision for the UK reflects what the report calls a stronger-than-expected first three months of the year, boosted by pre-Brexit stockpiling.
Haldane warns against cutting rates
Andy Haldane, the Bank of England’s chief economist, has said that Britain needs to end its cheap money “dependency culture”, but ruled out interest rate cuts unless there was a sharp downturn after a no-deal Brexit. He said that monetary policy was no longer the right medicine because the economy was almost at potential, inflation was at target, unemployment was at an historic low and real wage growth was returning.