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Daily News Roundup: Wednesday, 25th April 2018

Posted: 25th April 2018


TSB meltdown leads to compensation promise

Paul Pester, the CEO of challenger bank TSB, has pledged to compensate customers who have found themselves frozen out of their accounts after an IT system upgrade went wrong. Mr Pester apologised as MPs demanded answers over the incident. Mr Pester commented: “This isn't what our customers have come to expect from TSB, and for that I'm truly sorry. Of course, customers can rest assured that no one will be left out of pocket as a result of these service issues.” The Financial Conduct Authority is investigating the IT problems. A spokesman said yesterday: “We will be talking to the company to understand exactly what went wrong and the steps it is taking to ensure something like this does not happen again.”

Santander UK results disappoint despite profits jump

Banco Santander saw strong performance in most of its operations with a 10% rise in first-quarter profits to €2.1bn (£1.8bn), but there were disappointing results from its UK business, with a 21% fall in profits to €320m on a constant currency basis. Mortgage lending jumped £1.9bn over the first quarter to £156.8bn, but savings deposits dropped £700m to £60.1bn. Santander added that it would miss its target of hitting 4.7m “loyal” retail customers by the end of this year.

Metro Bank avoids shareholder revolt

Metro Bank shareholders have voted for the re-election of chairman Vernon Hill, following complaints about over payments made by the bank to his wife's architecture company, as well as his use of an expense account to travel between the US and London.

Savers £600m a year worse off

Analysis by Which? has found that nine out of 10 lenders failed to pass on last year's interest rate rise to savers in full, with the cost to Britons in lost interest believed to be an estimated £600m a year. Gareth Shaw, of Which?, commented: "The last base-rate rise saw clear double standards from some financial institutions, hiking the bills of mortgage holders while denying savers the full benefit and withdrawing some of the most competitive deals altogether."

Pimco to buy the Bradford & Bingley loan-book

Pacific Investment Management Co (Pimco) is expected to sign a binding contract to buy £5bn worth of residential mortgages from UK Asset Resolution (UKAR) today. The majority of the mortgages were issued by Bradford & Bingley, while a smaller tranche relates to assets acquired from GMAC-RFC and Kensington Mortgages‎.

Business ‘devastated’ by bank closures

Pete Cheema of the Scottish Grocers Federation has told MSPs that bank closures’ impact on local firms is "devastating", adding: “It's going to cause the Scottish economy big issues if we are not careful."


Deutsche Bank investment arm to be restructured

Paul Achleitner, chairman of Deutsche Bank, has announced his support for plans for another restructuring of the firm’s investment bank. Meanwhile, the lender has named Frank Kuhnke as its new chief operating officer as a management shake-up continues.

Global investment banks complain China not opening fast enough

The Asia Securities Industry & Financial Markets Association has warned that global investment banks are being hindered from taking controlling stakes in their securities joint ventures in China.


Lorry company investment for Northedge

Private equity firm Northedge has invested in lorry fleet services company Prohire as part of its management buyout. Northedge's Phil Frame commented: “The fleet management market continues to grow, underpinned by increasingly complex compliance requirements and technological developments”.

PSA boosts revenues with Opel-Vauxhall acquisition

Revenue at Peugeot and Citroen owner PSA grew by 42% in the first quarter, following last year's acquisition of Opel Vauxhall, with sales up over 44% and PSA selling over 1m vehicles. Revenue was pushed up to €18.2bn, from €12.7m, the previous quarter.


City rejects unilateral power over UK financial services post-Brexit

European Commission Vice President Valdis Dombrovskis, responsible for financial services, told an audience at the CityWeek conference in London that the EU would be sticking with its position that a system of "equivalence" should be used post-Brexit, giving the EU “unilateral and discretionary” power over any agreement. However, Andrew Bailey, head of the Financial Conduct Authority, said afterwards that a “mutual recognition” deal should be sought declaring it to be "eminently achievable". City of London Corporation's Catherine McGuinness agreed: "The unilateral mechanism of the current system [of equivalence] does not take into account the deep level of integration which global markets need; only a bilateral deal would sufficiently cover the breadth of two-way financial services that are traded daily," she said. "Notice periods as short as 30 days under the current equivalency framework do not give firms in the UK or the EU the certainty or clarity they need in order to continue doing business."

LSE profits rise 13% on higher financial market volatility

London Stock Exchange Group's total income for the three months to March 31 rose 13% to £520m year-on-year, with revenues at its information unit up 11% to £201m. Meanwhile, a report into the departure of former chief executive Xavier Rolet has recommended that board members confront management behavioural issues when they encounter them. It was also found that the board should consider more than financial performance alone when assessing pay levels for senior management.

Lloyd's of London on EU hiring spree

Lloyd's of London is advertising vacancies in Brussels for frontline underwriters as well as support staff across compliance, finance and operations, ahead of Brexit. Vincent Vandendael, Lloyd’s chief commercial officer, said: "[Work will] ensure that whatever the outcome of the Brexit negotiations, our partners across the European Economic Area will continue to have access to our specialist, innovative policies, and benefit from the security of the Lloyd’s market".


Takeda sweetens Shire approach

In what constitutes the Japanese pharmaceuticals giant's fifth approach, Takeda has improved its offer for London-listed rival Shire. Under UK takeover rules Takeda, whose last proposal valued Shire at £44bn in a cash and shares deal, has until 5pm today to make a formal offer or walk away.


Leon founder downbeat on casual dining sector

Fast food chain Leon’s chief executive John Vincent has said overexpansion in the casual dining sector has stalled as costs increase. He commented: “Casual dining is in a recovery ward… I think that what's happened is private equity piled in and thought they could just press a button, open lots of sites, and sell it to the next private equity company and that's been a challenge.”

Gambling firms see over £1bn wiped off value on government pledge

Chancellor Philip Hammond’s plans to reduce the maximum stakes for fixed odds betting terminals from £100 to £2 have seen the value of Britain's biggest betting gambling firms fall by over £1bn.


GKN spent £150m on failed Melrose defence

Following its failed defence of Melrose's hostile takeover, GKN's net debt has risen to more than £1.1bn, as of the end of March, from £889m at the end of December. Adviser fees hit almost £150m, while first quarter profits fell from £215m to £182m. Meanwhile, Business Secretary Greg Clark has dismissed claims of a “predatory” takeover as he confirmed the sale of GKN to Melrose Industries.

Revival hopes down as manufacturing slows

The three months to April saw Britain's manufacturing sector struggle, with the pace of growth slowing, according to the CBI's industrial trends survey.


Goldman Sachs-led takeover leads to 90% share price jump for CityFibre

Broadband firm CityFibre has seen its shares jump 90% after it agreed to a Goldman Sachs-led £537.8m takeover.


Slow market hits Grosvenor Group

A drop in Grosvenor Group’s returns in 2017 has been blamed on a slowdown in the London property market, alongside the weakened value of the pound. Chief executive Mark Preston commented that the firm had foreseen a reduction in the value of its London holdings, noting and that the decline in the value of sterling after the Brexit referendum had contributed.


Hamleys owner in talks to acquire House of Fraser stake

C.banner International Holdings, the Chinese company that owns Hamleys, has entered into negotiations to acquire a stake in House of Fraser, and has signed a memorandum of understanding with Nanjing Xinjiekou department store, a company affiliated with House of Fraser’s owner Sanpower. Nanjing is also in discussions with tourism company Wuji Wenhua over selling a 51% stake in the British department store.


Hammond hits budget surplus

Chancellor Philip Hammond has achieved the UK's first current budget surplus since 2002, according to the latest Office of National Statistics data, which shows that public borrowing fell to £1.35bn in March, £0.8bn lower than the same time last year. Government borrowing for the full 2017/18 financial year hit £42.6bn, the lowest since 2007.

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