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Daily News Roundup: Wednesday, 26th September 2018

Posted: 26th September 2018


UK Finance chief: Banks should not be automatically liable over scams

Stephen Jones, chief executive of trade body UK Finance, says it isn’t right that banks should be financially responsible when customers are hit by scams, a leaked letter reveals. The letter, sent to officials including Andrew Bailey, who heads the Financial Conduct Authority, saw Mr Jones say that while payment service providers are not opposed to consumers who have acted reasonably being reimbursed when they fall prey to fraud, they “do not accept they should or could be automatically liable for this risk.” Nicky Morgan, chairwoman of the Commons Treasury committee, commented: "Whilst we all have a responsibility to protect ourselves against fraud, financial institutions have a role to play." This comes ahead of the Payment Systems Regulator announcing new security standards.

RBS boss expects smaller banks to lose out to big lenders

RBS chief executive Ross McEwan predicts Britain’s challenger banks will struggle to compete against the resurgent big six lenders. Mr McEwan said small lenders would come under pressure as larger rivals picked up speed after a decade of restructuring and misconduct costs. “For the last 10 years we've had two hands tied behind our back - because we've had issues to sort out," he told the Bank of America Merrill Lynch Annual Financials CEO Conference. His comments come as challenger banks prepare to be briefed on the details of a contest for £833m of funding, provided by RBS, designed to boost competition in business banking.

Mainstream banks join blockchain project in drive to fight payment rivals

In a move which could speed up certain payments, banks including Société Générale and Santander are joining the Interbank Information Network, a blockchain project which JPMorgan, Royal Bank of Canada and ANZ have been testing.

Comment: Little sign of Brexit exodus

Katherine Griffiths in the Times says that while banks have begun to move staff to the Continent ahead of Brexit, “the numbers are lower than anyone thought likely and - crucially - many of those employees are going on short-term contracts.” She says that many banking employees believe that for a career in Europe, “the place to be is London” and the city is “where the best chances of career advancement and good jobs will be in future.”

Profit boost for Close Brothers

Close Brothers’ investment arm has seen assets under management exceed £10bn in the year to July 2018. Operating profit is up 33% to £23.1m for the division, while operating profit at the group climbed 5% to £278.6m. Adjusted profits from banking rose by 2% to £252m. Chief executive Preben Prebensen said: “All our businesses have continued to successfully make the most of current trading conditions, while focusing on maximising opportunities in future years.”

Skipton bank’s £1.5bn of assets

Skipton International has reported £1.5bn of assets. Managing director Jim Coupe attributed much of the bank's growth to its expanding expat customer base, saying: “We view the expat market as being underserviced, which is why we have continued to extend the reach of our products for those from the UK living abroad."

Nationwide’s statement intent

Nationwide has written to savers to inform them that if they hold a variable rate account they will no longer be sent an annual paper statement.


UK private equity deals decline

Just £17.01bn of private equity deals have been completed in the UK so far this year, according to new figures from Unquote Data, half of the 2017 total. There were 46 buyouts of UK firms in the third quarter of this year, and 149 this year – compared to 211 in 2017. European private equity buyouts so far this year have hit €146bn, while 2017’s total reached €148bn. Unquote head of data and research Julian Longhurst said: "As far as the UK is concerned, the countdown to Brexit and the persistent uncertainty that surrounds the manner of the country’s split from the EU, has done little to becalm the markets." “In fact, with almost two years of contingency planning under their belts, many investors may actually be focusing more on the opportunities that Brexit is creating,” he added.


Santander names Orcel chief executive

Banco Santander has announced that UBS' investment banking head Andrea Orcel will take over as its chief executive in early 2019. Current chief executive José Antonio Álvarez will become president of subsidiary Banco Popular and a vice president of Santander. Santander chairman Ana Botin said Mr Orcel had been working with the bank for the past two decades "in the development and execution of our strategy, and understands and is aligned with the Santander culture". UBS has named Piero Novelli and Robert Karofsky as the new co-heads of the investment bank. UBS chief Sergio Ermotti said: "Both are veterans of the industry with significant experience and I am certain they will further advance our business."

GAM: Whistleblower prompted misconduct probe

Swiss asset manager Gam says a whistleblower triggered an investigation that uncovered “a number of potential misconduct issues” and saw portfolio manager Tim Haywood suspended. Gam said a whistleblower had “expanded on” concerns over possible misconduct that prompted an internal investigation. The individual contacted the Financial Conduct Authority, it is noted. Alexander Friedman, GAM’s chief executive, said: "At the heart of every modern financial services firm's systems and controls should be a culture that encourages people to come forward with concerns about colleagues' behaviour."

Argentina’s central bank boss quits

Luis Caputo, governor of Argentina's central bank, has resigned after less than three months in the role and has been replaced by former economic policy secretary Guido Sandleris. This comes as Argentina and the International Monetary Fund continue talks over a bailout.

Profit hit warning

German financial services consultant Zeb has warned that European banks' profits will take a 40% hit due to red tape, bad loans and ultra-low interest rates by 2022.


BMW warns of tough headwinds

BMW has lowered its guidance for car profit margins and warned of falling profits, as it grapples with competition, rising costs and new emissions rules. BMW chair Harald Kruger said the company “remains fully committed to its goal of leading the transformation of the industry”.


Ryanair facing strike showdown

Ryanair is facing a fresh clash with the Civil Aviation Authority after insisting that passengers affected by a strike by cabin crew this week would be ineligible for compensation. The CAA has warned that airlines must pay compensation for strikes taken by a carrier’s own staff, but Ryanair insists the strikes are outside of its control.


McCarthy & Stone to curb spending

McCarthy & Stone is to curb expansion and focus more on cost-cutting as part of a wider overhaul. Chief operating officer John Tonkiss is to take over as boss, in the wake of Clive Fenton’s retirement late last month, as the retirement housebuilder moves to save more than £40m annually by 2021 - while still constructing 2,100 new homes per year.


Mercer accuses CMA probe of data errors

Mercer chief executive Fiona Dunsire has scolded the Competition and Markets Authority (CMA) for using inaccurate data in its probe into an alleged lack of competition in the pensions sector. Mercer, one of the largest firms in the fiduciary management sector, highlighted flaws in the data used to show how engaged trustees of pension funds were, and that correcting the data demonstrated there was "no statistically significant difference in the fiduciary manager fees paid by engaged and disengaged clients".

Aquis Exchange disrupting European trading

Subscription-based trading platform Aquis Exchange has increased revenue by 54% since listing in London this year - reaching a 3% share of the European continuous trading market. Revenue hit £1.5m in the six months to June 30, from £1m the previous year, while underlying earnings hit £1.8m from £1.5m. The firm, which also licenses and sells trading technology through its Aquis Technologies brand, increased revenue by 112%, to £300,000, for the period after signing an agreement with crypto exchange Archax.

CMC Markets hit by increased regulation

CMC Markets has indicated that tighter regulation, and low market volatility, has hit trading. The European Securities and Markets Authority this year squeezed contracts for difference (CFD) offerings by limiting the amount clients can borrow to leverage their bets and, in a trading update, the online spread better warned that income for 2019 would be lower than expected.

LSE Group names LCH Group chairman

London Stock Exchange Group has appointed Marshall Bailey as chairman of its clearing business LCH Group. Mr Bailey, who has 30 years of experience in the financial services sector, will replace Lex Hoogduin, who steps down after three years in the role.


Novartis to close Grimsby site

Drugs firm Novartis is to close its factory in Grimsby, with the loss of around 400 jobs, as part of a major restructuring of operations. Novartis said the move was not linked to Brexit.


Reach4entertainment posts hefty loss

Theatre communications group Reach4entertainment has indicated that revenues are on the decline after a difficult 2017. Revenue slipped to £36m for the six months to June 30, from £41.9m the same time last year, and though adjusted earnings rose 25% to £500,000, it posted a total operating loss of £500,000.


Harvey Nash brushes off Brexit fears

Recruitment firm Harvey Nash, which specialises in IT outsourcing, has posted a strong set of results despite Brexit concerns. Revenues grew 14.8% in the six months up to July 31, to £292.2m, while gross profit rose 7.2% to £51.7m.


Isa confusion hits first-timers

Research from financial services provider One Family suggests around 45,000 property purchases have been delayed with first-time buyers confused over the Help to Buy Isa and the fact that a 25% bonus on savings cannot be used towards the deposit as it is paid after the purchase is completed. One Family surveyed 800 homeowners who had bought using the Help to Buy Isa and found 15% had not been able to use the money in the account in the way they had expected.


Next upgrades profit forecast

Next has lifted its full-year profit forecast by £10m to £727m, following a summer trading season that saw better sales than anticipated. Half-year pre-tax profit was £311m, up slightly from £309m last year; retail sales fell by 6.9% to £925.1m, and online sales jumped by 16.8% to £892.3m. The company added that preparations for a no-deal Brexit are “well-advanced”, and that such a scenario does not pose a "material threat to the ongoing operations and profitability" of Next in the UK or EU.


Pension fund deficits set to worsen as rates stay low

Pension funds are facing bigger deficits for the foreseeable future after the Bank of England warned interest rates will not return to the levels seen in the second half of the 20th century. Gertjan Vlieghe, a policymaker at the Bank of England, has warned that even when quantitative easing is unwound long-term interest rates will stay low. The Pensions and Lifetime Savings Association has said the industry is prepared for low rates but more freedom to choose unconventional investments would help.

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