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Daily News Roundup: Wednesday 26th February 2020

Posted: 26th February 2020

BANKING

Bramson renews attack on Barclays’ governance

Edward Bramson, the activist investor whose Sherborne Investors is the third-biggest Barclays shareholder, has opened fire on Barclays since it was revealed its CEO Jes Staley was being probed over his relationship to Jeffrey Epstein. Bramson said in a letter to shareholders that the investigation by the FCA and the PRA was “another example of governance weakness” and he urged chairman Nigel Higgins to “indicate what long-term governance changes the board will make to end this cycle of disruption”. Jes Staley has since confirmed that he will be stepping down and expects to leave by the end of next year.

Andrew Bailey’s Bank of England appointment faces challenge

The appointment of Andrew Bailey as the next Bank of England governor should be reviewed by the Government urgently, Gina Miller has said. The anti-Brexit campaigner claimed a “litany of financial scandals” that occurred during his stewardship of the regulator made him an unsuitable choice. But the FCA rejected Mrs Miller’s report saying it contained numerous inaccuracies, one of which was the suggestion that the FCA regulated commercial lending, which it does not.

HSBC to close 27 branches

HSBC is to shut 27 branches this year with 50 jobs at risk from the move. The bank said it would invest almost £34m in its remaining network of 594 branches, 49 of which are to be refurbished this year. Last week, HSBC announced it would cut 35,000 jobs around the world as annual profits plunged by a third.

First Direct most recommended

First Direct has overtaken Metro Bank as most likely to be recommended by customers to friends and family, according to the CMA. Royal Bank of Scotland was voted bottom for overall service, with just 46% of customers willing to recommend it to others.

In barmy world of fintech, $5.5bn for Revolut is not so bonkers

The FT’s Lombard comments on the latest funding raise by Revolut, valuing the fintech at $5.5bn, and suggests with the right strategy the neobank could grow into that valuation.

Metro increases overdraft charges

Metro Bank is more than doubling its overdraft rate from 15% to 34% from April. The move follows changes to FCA rules which have led to some banks putting their rates up to 49.9%.

PRIVATE EQUITY

London leads venture capital in Europe

London-based companies more than doubled the amount of venture capital they raised last year from £2.5bn in 2018 to £5.6bn. Research by Refinitiv shows the number of deals in the capital increased from 293 to 319. UK-wide £8.1bn was raised - an 85% increase year-on-year - with 560 rounds completed. Paris raised £1.7bn across 128 deals while Berlin came in behind with £1.5bn across 83 deals.

FINANCIAL SERVICES

Hidden eurozone debt a global threat

City lawyer Barney Reynolds has published a paper claiming the eurozone is saddled with huge levels of hidden debt which have the potential to trigger a global financial crisis. London’s financial system has helped mitigate against the systemic flaws so far, he adds, but unless the EU agrees enhanced equivalence with the City the UK and US “must act to protect the integrity of the global financial system.” Iain Duncan Smith was at the launch of the report and said Brussels “has got to understand that there is a limited amount of time they can get away with being a Ponzi scheme.”

FCA data breach reveals thousands of complaints

The Financial Conduct Authority (FCA) has reported itself to the Information Commissioner's Office after revealing that it mistakenly published the personal records of 1,600 complainants on its website, where anyone could access the information. The data was visible between November 2019 and February this year and covered complaints recorded between January 2018 and July 2019. The watchdog, which asserted that no financial information was leaked and urged any concerned individuals to make contact, said in a formal statement: “Our primary concern is to ensure the protection and safeguarding of individuals who may be identifiable from the data.”

Shareholders cast doubt on Third Point plan for Pru

The US hedge fund Third Point, run by activist investor Daniel Loeb, has called for the break-up of Prudential and argued that the company should shut down its UK head office. But investors are not that keen, saying the move would be unlikely to bring the benefits Loeb says it will.

Intuit agrees deal to acquire Credit Karma

Intuit has announced that it plans to buy privately held personal finance portal Credit Karma in a cash-and-stock deal for about $7.1bn (£5.5bn). Credit Karma was valued at about $4bn based on its last funding round in March 2018, led by private equity firm Silver Lake.

Pollen Street Secured Lending fires manager

Pollen Street Secured Lending, which specialises in loans to peer-to-peer lending platforms, has sacked Pollen Street Capital, its manager and has accused it of obstructing takeover talks with American rival Waterfall.

M&G investors to remain locked in property fund

M&G has extended its suspension of withdrawals from its £2.5bn property fund in order to help the fund manager dispose of properties to boost cash reserves.

Mastercard announces Michael Miebach will be new chief

Michael Miebach is to take over from Ajay Banga as CEO of Mastercard at the start of 2021 with the latter then moving into the role of executive chairman.

MEDIA & ENTERTAINMENT

Disney chief moves on

Bob Iger has resigned as CEO of Disney to be replaced by Bob Chapek, the head of Disney's parks and travel business. Disney said Mr Iger would remain at the company as executive chairman and continue to direct the company's creative output until his contract expires at the end of 2021.

REAL ESTATE

Store closures eat into Hammerson's rental income

Shopping centre operator Hammerson has lowered its 2020 dividend by 46% after reporting an 11.2% drop in annual net rental income to £308.5m for the full year to December 31st, with occupancy rates flat at 97.2% and 48% of tenants renegotiating rents to their original levels. Losses widened to £573.8m from £173.3m in 2018. Over the course of the year, Hammerson cut net debt 27% to £2.8bn, fuelled by disposals amounting to £975m, far above a targeted £500m, including the sale of seven retail parks for £400m.

RETAIL

Tesco sells stake in Chinese JV for £275m

Tesco has completed its exit from China, with the sale of a 20% stake in a joint venture to a unit of its state-run partner China Resources Holdings, raising £275m. The disposal allows Tesco to further simplify and focus the business on its core operations, it said on Tuesday, with the proceeds used for general corporate purposes.

UK retail sales inch up

British retail sales inched up in late January and early February, according to the CBI’s monthly retail sales gauge, which rose to +1 in February from zero in January, its best performance since April last year. The survey also indicated that retailers were planning to raise investment in the year ahead for the first time in two years.

SPORT

New York pips London to world's sporting capital

After seven years at the top, London has been pipped by New York as the sporting centre of the world, according to Burson Cohn & Wolfe’s 2020 Ranking of Sports Cities. Paris, which is set to host the summer Olympics in 2024, came third, ahead of Los Angeles and Lausanne, with Tokyo, the venue for this summer’s Olympics and Paralympics, in sixth place.

HSBC ends cycling sponsorship deal

HSBC has decided to end its multi-million pound sponsorship of British Cycling four years early. The bank said the decision was due to a “shift in its UK marketing and partnership priorities”.

ECONOMY

Markets fall again on coronavirus fears

Tuesday saw investors sell off shares for the second day as fears of the economic impact of the coronavirus continued to grow. The Dow Jones was down 3.1%, the Nasdaq 2.7% and the S&P fell 3%. In London, the FTSE 100 closed down 1.9% - its lowest level in a year – while Germany’s Dax fell 1.8% and in France the CAC fell 1.94%. In Japan, the Nikkei 225 index fell 3.3%. The sell-off continued after new cases were reported in Europe and the Middle East and the Center for Disease Control and Prevention warned that the coronavirus will impact the US. "We are asking the American public to prepare for the expectation that this might be bad," said Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases.

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