BANKING
Standard Chartered unveils cost-cutting plan
Standard Chartered has announced plans to cut costs by $700m and focus on underperforming countries. The emerging markets bank will concentrate on India, Korea, the UAE and Indonesia as it attempts to remove a “drag” on its revenues and profits. The announcement came as Standard Chartered reported that its pre-tax profit rose by 6% to $2.5bn in 2018 as operating income increased by 5% to $15bn. The results were dented by a $900m provision the bank took to cover the impact of regulatory investigations in the UK and the US. Boss Bill Winters said he was confident that Standard Chartered could hit its targets because the better parts of its business were already performing at the improved level. The FT’s Lex notes that Mr Winters challenge has been made harder by slowing economic growth in China.
BoE gives banks extra liquidity to alleviate Brexit cash shortfall risk
The Bank of England is to offer to lend banks money every week in the two months surrounding the Brexit withdrawal date to protect solvent institutions from any associated volatility. The Bank of England governor, Mark Carney, played down the significance of the move, saying it was part of “normal contingency planning”. Meanwhile, finance minister Robert Jenrick has said that Britain’s financial sector will continue to function properly whatever form Brexit takes. He noted that Britain was putting EU law onto its statute books. “This will ensure that whatever the outcome of the exit from the European Union, we have a functioning financial services regime,” Jenrick said.
Metro Bank to raise £350m as regulators probe accounting error
Metro Bank is fighting to contain the crisis caused by a misclassification of commercial loans last month, releasing its full-year results early in a bid to quell investor concern following the surprise announcement of a £350m cash call. Metro also revealed that the Financial Conduct Authority and Prudential Regulation Authority are set to investigate the circumstances that led to the accountancy error. CEO Craig Donaldson said he had offered to resign, but gained the full support of the board, and has requested that his 2018 bonus be forgone.
RBS handouts could be good for the economy
The Times’ Katherine Griffiths comments on the decision to hand Metro Bank, Starling and a joint bid between ClearBank and Tide £280m of cash from RBS. She says the biggest puzzle in the lenders claims about how they will spend the cash is that they can snap up about 8% of the small business market by 2025. She says in all likelihood, not all will succeed. Ms Griffiths adds, however, that it will be strongly in the interests of the economy if, on balance, this project in directed competition works.
Open banking at NatWest
Customers at NatWest can now view current accounts from 15 different banks through its iPhone and iPad apps. The open banking service is expected to be rolled out to Android apps in the near future.
Barclays executive unaware of £320m fees paid to Qatar
Gay Huey Evans, Barclays’ former head of sovereign wealth funds, has said she was unaware of deals for additional services from Qatar after it invested in the bank during the financial crisis.
PRIVATE EQUITY
Tech startups remain private for longer
Technology startups are remaining as private companies for longer due to the availability of capital from private equity and venture capital investors, expected to lead to a spate of high-value listings this year. The median age of venture capital backed technology companies at the time of IPO has risen from 10.9 years in 2018 from 7.9 years in 2006, research from Pitchbook shows, meaning when the firms do launch an IPO they have a higher valuation.
INTERNATIONAL
JPMorgan Chase warns of ‘high teens’ fall in trading revenue
JPMorgan Chase’s president Daniel Pinto has warned trading revenue will fall by a “high teens” percentage in the first quarter of this year. Low trading activity is believed to have taken its toll.
ECJ strikes down sacking of Latvian central bank governor
The EU’s Court of Justice has overturned Latvia’s suspension of central bank Governor Illmars Rimsevics as part of a bribery probe.
AUTOMOTIVE
Volkswagen’s SEAT leverages IBM's Watson supercomputer
Volkswagen’s Spanish unit SEAT and IBM have partnered to launch a standalone app which aims to predict what route and mode of transport is best for urban users. The artificial intelligence app, called Mobility Advisor, will utilise the power of IBM's Watson supercomputer to present commuters with the best way to navigate cities through public transport, scooters, bicycles or cars.
AVIATION
MSCI to drop British Airways parent IAG from Spanish index
US-based MCSI is to exclude British Airways-owner IAG from its Spanish index as of March 1, prompting IAG shares to fall in both London and Spain.
CONSTRUCTION
Investors banking on Interserve refinancing plan
Shares in Interserve soared yesterday, with investors remaining confident on its emergency financial rescue plan. The outsourcer’s biggest shareholder, Coltrane Asset Management, demanded it make changes last week after rebelling earlier this month over Interserve's proposal to hand 97.5% of its market value to lenders including RBS, BNP Paribas and HSBC, as well as rival hedge funds Emerald Investment and Davidson Kempner.
Persimmon posts £1bn-plus profits
Persimmon built 16,450 homes in 2018, an increase of 400 on the previous year, helping profits rise from £966m to £1.1bn. Revenues grew from £3.6bn to £3.7bn. CEO Dave Jenkinson defended the company’s record in the face of mounting criticism of its use of the Government-backed Help to Buy scheme.
Travis Perkins posts first loss in years
Travis Perkins has posted a loss for the first time in years amid what it called a “challenging” market. The builders’ merchant grew revenues 4.8% to £6.7bn in 2018, with like-for-like revenue growth up 4.9%, but pre-tax profits dropped from £290m to a loss of £49m.
FINANCIAL SERVICES
CMA set to investigate Provident bid
The Competition and Markets Authority is set to investigate Non Standard Finance’s (NSF) £1.3bn takeover bid for rival sub-prime lender Provident. Executives at Provident have described the bid from NSF as “irresponsible and highly opportunistic”, and now the CMA has launched an inquiry into what it called the “anticipated acquisition” and its impact on the market. The watchdog has issued both firms with an initial enforcement order, preventing NSF from taking steps to integrate the two businesses.
New finance boss for RSA
RSA has hired Charlotte Jones as its new CFO from Jupiter Fund Management. Ms Jones will replace Scott Egan who moved to become CEO of RSA’s UK and International division earlier this month. Jupiter’s CEO Maarten Slendebroek said it was “disappointing to lose someone of Charlotte’s calibre.”
Wonga customers might need assistance
Nicky Morgan, the chair of the Treasury Select Committee, has said that the Government might have to step in and help Wonga customers who have been left seeking compensation after the collapse of the payday lender. Ms Morgan is seeking answers from Wonga’s administrator amid concerns that those who had complaints open at the time of the company’s collapse are being ignored.
Brussels pushes for EU bank system for fast payment
The European Commission is considering rules to speed up the adoption of an instant-payment system the ECB introduced last year. The ECB's Target instant payment settlement (TIPS) system will let people and companies in Europe transfer euros to each other within seconds, regardless of the opening hours of their local banks.
EU agrees tough post-Brexit financial services rules
The UK’s financial services industry will have to stick closely to new rules handed down by the European Parliament and the bloc’s governments to operate in the EU after Brexit.
Goldman hires 100 staff for new cash management business
Goldman Sachs plans to leverage new technology to boost its fledgling cash management business and has hired 100 staff to “man the decks” and help the bank diversify its earnings.
New boss for Direct Line
Direct Line has appointed its current CFO Penny James as its next chief executive, with effect from May 9. She will succeed Paul Geddes.
MANUFACTURING
Babcock dives after a £10m Brexit restructuring hit
Defence contractor Babcock is to take a £10m-a-year hit from Brexit, after restructuring its aerial firefighting businesses to meet European operating requirements. In a trading update, the firm also revealed that it is to pay £30m relating to the adjustment of pension liabilities to equalise men’s and women’s guaranteed minimum pension benefits. Underlying revenue for the year would be around £5.2bn, down 3% from £5.4bn last year.
Meggitt builds up inventory to prepare for no-deal Brexit
Aerospace firm Meggitt has spent around £5m on inventory stockpiling ahead of Brexit. The defence contractor has also hired a raft of new staff to help with increased customs administration.
RETAIL
Shop price inflation increases
The British Retail Consortium has reported that shop price inflation in February rose to 0.7%, its highest level since March 2013 and up from 0.4% in January. Prices for clothes, consumer goods and other non-food items increased for the first time in six years, with retailers passing on higher costs that built up recent years on the back of Brexit, the falling pound and higher oil prices.
ECONOMY
No-deal impact assessment published
The government has published its assessment of the impact of a no-deal Brexit on business and trade. The report said “some food prices are likely to increase” and customs checks could cost business £13bn a year in a no-deal scenario. It also said there was “little evidence that businesses are preparing in earnest”. The government repeated analysis suggesting a no-deal scenario could leave the UK economy 6.3% to 9% smaller after 15 years, compared to what it would have been. It said the worst-hit areas economically in a no-deal scenario would be Wales (-8.1%), Scotland (-8.0%), Northern Ireland (-9.1%) and the north east (-10.5%).
Wealth gap widening
Data from the ONS shows that income inequality between the richest and poorest in the UK widened last year, with the wealthiest fifth of the population seeing incomes rise by 4.7% while the average income of the poorest fifth shrunk by 1.6%. The growing gap is a reversal of the trend seen in the past decade. The rise among the top earners was driven by improvements in pay, while the fall in income among the poorest came from a squeeze in benefits.