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Daily News Roundup: Wednesday, 28th February 2018

Posted: 28th February 2018


Standard Chartered profits climb six-fold in 12 months

After posting a six-fold increase in annual pre-tax profit, Standard Chartered has resumed paying dividends, indicating that the bank is on its way to returning to revenue growth after a two-year restructuring under chief executive Bill Winters. The lender said pre-tax profit for 2017 increased to $2.41bn (£1.73bn) from $409m in the previous year, leading it to propose a full-year dividend of 11 U.S. cents per ordinary share. Operating income rose nearly 3% to $14.43bn, but the results were dampened by a 4% drag in the financial markets business. Mr Winters noted “significant improvement in underlying profits, a strong capital position and emerging clarity on regulatory capital requirements allowing us to resume paying dividends”. He said that the bulk of the bank’s income increase had been from “good underlying business momentum”.

Virgin Money profits surpass City forecasts

Virgin Money’s Jayne-Anne Gadhia has said that the bank is “very confident” about its expanding £3bn credit card book. This comes despite increasing worries about the sustainability of Britain's consumer credit sector. Virgin Money posted a 35% leap in pre-tax profits to £262.6m for 2017, beating analyst expectations. Mortgage balances and retail deposits climbed 13% and 10% respectively. Total income rose by 14% to £666m in 2017, up from £586.9m the year before. Ms Gadhia said: “We maintained our uncompromising focus on asset quality and we continued to improve our operating leverage. In doing so, we met or exceeded all of our financial targets for the year.”

FCA aims to wipe £1.3bn in credit card fees

Banks and credit card lenders stand to lose up to £1.3bn every year as the City watchdog announces a clampdown on high fees. The Financial Conduct Authority (FCA) said the changes will help over 4m credit card customers with persistent debt. “Under these new rules firms will have to help customers to break the cycle of persistent debt and ensure customers who cannot afford to repay more quickly, are given help,” said Christopher Woolard, the FCA’s executive director of strategy and competition.

Bank bonus caps could do wonders for gender equality

Brooke Masters champions HSBC’s decision to cap discretionary payments to junior staff in compliance, legal, IT and other non-client focused divisions, at two-and-a-half months’ salary, as "perfect sense".

Barclays’ ring-fence plan will not get rubber-stamp from judge in court

Lord Justice Vos, who will rule on whether Barclays can go through with a sweeping restructuring, has cautioned that he will not “rubber stamp” the plan, with only five weeks left before Barclays wants it to become operational.

Aldermore names new group MD

Sue Hayes has been appointed to the newly-created role of group managing director - retail finance at specialist bank Aldermore. She will be responsible for managing the existing bank’s mortgages and savings businesses and expansion into new areas.


£80m for Kindred in one of largest-ever seed fundraises

Kindred Capital has closed one of Europe's largest-ever seed funds with £80m, as it pioneers a new "Equitable Venture" model in which every entrepreneur backed gets a stake in the fund as well.

First fund dedicated to fighting superbugs set for launch

The Repair Impact Fund, the first venture fund dedicated to investing in companies fighting superbugs, is to launch with $165m from Novo Holdings of Denmark.


JPMorgan Chase calls for capital shackles to be loosened

JPMorgan Chase has said the Federal Reserve should relax capital rules on the biggest banks. Meanwhile, chairman and CEO Jamie Dimon has deemed annual shareholder meetings a waste of time.

Libor Deutsche settlement agreed

Deutsche Bank has agreed to pay $240m to settle private US antitrust litigation in which it was accused of conspiring with other lenders to manipulate the Libor benchmark interest rate.

Fresh Estonia probe for Danske Bank

Amid a growing scandal for Danske Bank, the Estonian Financial Supervision Authority said that it will probe whether Danske had failed to provide information about money-laundering allegations linked to Russia.


British demand for new cars falls

Demand for new cars in Britain has continued to slow, with vehicle production for the UK market falling in turn. The Society of Motor Manufacturers and Traders said that the 28,229 cars built for Britain in January represented a 6% decrease on a year ago.


Ryanair to axe Glasgow Airport base

Glasgow Airport has said it was "bitterly disappointed" by Ryanair's decision to close its base there, with 300 jobs at risk as a result. Chief commercial officer David O'Brien blamed the change on the cost of air passenger duty and said Glasgow “simply could not bear the burden”. The airline, which also operates out of Prestwick, Edinburgh and Aberdeen, will cut the number of routes out of Glasgow from 23 to just three.

Airlines reporting larger gender pay gaps

Airlines have been exposed as having some of the largest pay gaps between men and women, with reporting a median pay gap of 49.7%. Several airlines have claimed that the exaggerated pay gap is largely due to companies having a higher number of female cabin crew, with males dominating the higher paid roles, such as pilots and flight officers.


MPs say Carillion bosses “delusional” to have expected bailout

Meg Hillier, chair of the Public Accounts Committee, has told Carillion's former interim chief executive, Keith Cochrane, and former chairman Philip Green that the company’s former bosses were “delusional” to believe that taxpayers would bail the company out right up until its collapse last month.

Private infrastructure funding

Rishi Nihalani, head of advisory for Europe, the Middle East and Africa at MUFG, writes in the Telegraph on British infrastructure and its funding by the European Investment Bank (EIB). Lord Adonis, former chairman of the National Infrastructure Commission (NIC), has noted that the EIB's withdrawal from Britain could mean the country’s ageing infrastructure comes “ever closer to overload”.


Provident's Vanquis unit to return £169m

Provident Financial's Vanquis arm has been told to pay almost £169m in compensation to customers by the Financial Conduct Authority, which said the unit failed to properly disclose charges on one of its popular repayment plans. It was also fined £2m. Provident itself announced a £123m loss for 2017 and plans to raise £331m from shareholders to meet the extra costs and bolster the firm's finances.

Disruption presents a wealth of investment opportunities

Simon Webber, a global equities lead portfolio manager at Schroders, champions disruption as a driving force behind investment opportunities “across the spectrum”, from the disrupters themselves to “incumbents” willing to invest in the future. Soon, he argues, artificial intelligence and cloud computing will disrupt traditional consumer and technology businesses, while driverless cars will threaten longstanding automotive manufacturers.

Chief risk officer appointed by Hitachi Capital

Hitachi Capital UK has appointed John Shiels as chief risk officer. He will be responsible for overseeing the assessment and mitigation of risk across all business channels.

Rothschild’s chairman to hand bank’s dynastic reins to son

Alexandre de Rothschild is set to take over as chairman of Rothschild this summer from his father David.


Private equity firms increasing care home interests

A Guardian report on private equity companies’ involvement in the care home sector notes that “investors have pounced on a £16bn industry, attracted by a steady stream of income in the shape of fees from a growing population of older people.” Some 95% of Britain's 11,300 care homes are run by independent providers.


Pirc tells GKN shareholders to oppose bid

Pirc has advised GKN shareholders to oppose the hostile bid from Melrose. The advisory group said there were "various issues" surrounding the proposed takeover that "cannot be overlooked", including the lack of cooperation Melrose has received from the GKN board.


Murdoch's Sky bid challenged

US cable TV giant Comcast has made a £22.1bn bid for Sky, challenging 21st Century Fox's existing £18.5bn offer to buy the 61% of Sky it does not already own. Comcast chief executive Brian Roberts called Sky “an outstanding company” and said he was confident the offer would be cleared by regulators.

Pinterest considers IPO and hires first head of operations

Pinterest has hired its first chief operating officer as the visual search engine tries to grow its advertising business and prepare for a potential flotation.


Iris could sell for more than £1bn

Payroll and accountancy software business Iris is being put up for sale by its private equity owners in an auction which could rake in more than £1bn.


London office demand boosts Derwent

Office developer Derwent London has seen rising property sales and better than expected growth in the value of its buildings. Reporting its final results for 2017, the company said its net asset value per share increased 4.6% from £35.51 to £37.16, while rental income increased 10.4% to £161.1m thanks to a record number of new lettings. The firm also said it more than doubled the size of its development pipeline.

Stamp duty changes slowing first-time buyer market

Estate agents have warned that stamp duty changes are slowing down the first-time buyer property market. Mark Hayward, chief executive of the National Association of Estate Agents, said many people are now choosing to wait and save for a larger property, in order to reduce their tax bill and maximize on the new stamp duty exemption.


Toys R Us and Maplin at risk of calling in administrators

The Guardian reports that Toys R Us is expected to go into administration in the near future, while talks designed to save electronics chain Maplin are believed to have broken down, leaving over 5,500 retail jobs at risk across the two companies.


Household confidence stalls

British households were still wary in February, waiting for wage acceleration and the next step in Brexit talks, according to the consumer confidence index from GfK. This showed a fall of one point to a negative reading of 10, about the same level seen since June 2017.


Confidence jumps for Scottish companies

Business confidence in Scotland rose 17 points during February to reach 35%, the latest business barometer from Bank of Scotland's commercial banking arm shows. A net balance of 27% of businesses in the country now expect to hire more staff during the next year, an increase of 23 points over last month.

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