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Daily News Roundup: Wednesday 28th November 2018

Posted: 28th November 2018

BANKING

Banks struggling with tech outages

Figures from the FCA show UK financial services firms reported a 138% increase in tech outages during 2018 while cyber-attacks increased 18% in the year to October. Noting the fact that this is the first year where the total number of debit card transactions has outstripped cash transactions, Megan Butler, the FCA’s executive director for wholesale and specialist supervision, said the FCA is “deeply concerned that the number of technology incidents reported to us has increased, with many outages linked to re-platforming and outsourcing failures.” The survey also found that one-third of firms do not engage in regular cyber assessments while close to half don’t upgrade or retire older technology in a proper time frame. Barclays, HSBC, RBS, Visa and TSB are among those to have faced technology problems this year, with TSB still battling to rebuild confidence after its botched IT revamp led to weeks of outages.

Open banking headache for operators

Katherine Griffiths in the Times examines how open banking has affected customers and operators. She notes that requests for data under open banking have steadily risen the introduction of the scheme back in January, with nearly 7m requests from customers in September. She highlights that the main threats to established banks are that people who become comfortable with open banking will allow fintechs to take their deposits and move them between institutions offering the best rate. She adds that banks may also find that newer operators can beat them in mainstream lending on price and service. Ms Griffiths also says the big drawback with open banking is trust – with customers largely not comfortable with entities that they have never heard of having access to their data.

Bank of England tweaks plans for release of bank stress tests

The Bank of England's annual stress tests of lenders’ balance sheets will now be published at 4:30pm today rather than at 7am as previously planned.

PRIVATE EQUITY

Private equity funds seek legal advice on life under Labour

British hedge funds and private equity funds are seeking detailed legal advice on how to deal with any return to power of the opposition Labour Party, which has shifted sharply to the left since it was last in government. The prospect of a left-wing Labour government run by Jeremy Corbyn has raised concerns - real or imagined - about just how tough a line he would take on the financial industry. One partner at a law firm commented: “Views range from scepticism as to whether Corbyn is a problem, to outright conviction that Corbyn will happen and it's a problem - for tax, capital controls, currency volatility.”

INTERNATIONAL

Malaysia’s Anwar demands more than $600m in reparations from Goldman

Malaysia’s incoming PM Anwar Ibrahim has condemned Goldman Sachs’ role in the 1MDB scandal as “disgusting”. He has also demanded more than $600m in reparations.

Ukraine declares division of Russian bank VTB insolvent

Ukraine’s central bank has declared VTB Ukraine’s operation as insolvent, adding that the lender had ‘failed to comply with banking law and regulations’.

AUTOMOTIVE

Carmakers warn no-deal Brexit would be ‘catastrophic’

Three quarters of businesses in Britain’s auto industry think leaving the EU without a transition deal will be bad for business, with the Society of Motor Manufacturers and Traders demanding a “frictionless” trading with Europe in the future, as it warns about the “catastrophic” consequences of a “no-deal” Brexit.

AVIATION

Airlines losing altitude over Brexit

Bloomberg claims that UK airlines are starting to see the first evidence to suggest sales are taking a hit due to Brexit. Virgin Atlantic and discount operator Jet2 have said demand is being depressed by the weaker pound, a trend that could deepen as UK political opposition threatens to derail the exit settlement that Theresa May has negotiated with the EU.

Lufthansa boss expects further consolidation

Carsten Spohr, the CEO of Lufthansa, has said he expects the airline to take part in more consolidation in the industry that will eventually leave three global carriers in Europe. He said: “There are way too many players in Europe.”

Surf Air closes European arm

Surf Air, the California-based airline, has placed its European arm into liquidation less than two years after launching in the region.

FINANCIAL SERVICES

Brussels aims for London's businesses

Belgium's government has launched a campaign to lure financial services companies away from London and to the Belgian capital after Brexit. Cécile Jodogne, secretary of state for foreign trade for the federal region of Brussels, said: “Insurance and financial services businesses that want to be at the centre of the decision-making process and help to shape the future of the UK-EU relationship should consider Brussels as their European headquarters.”

Amigo profits from Wonga collapse

Amigo Loans has reported that pre-tax first-half profits surged 66% after an increase in customer numbers. CEO Glen Crawford said the lender has indirectly done well out of the collapse of payday giant Wonga amid a regulatory crackdown on high-cost providers. Amigo lends up to £10,000 to people with bad credit histories if payments are guaranteed by friends or family.

City sell-off is merely reinvention

Writing in the light of news that Australian bank Macquarie is in talks to buy City broker Liberum for a rumoured £100m, the Standard's Simon English says the broking business has been ripe for overhaul for some time. “It is just part of the Square Mile reinventing itself, as it routinely has to,” he contends.

LEISURE AND HOSPITALITY

Thomas Cook issues profit warning

Thomas Cook has issued its second profit warning in three months. The travel operator said profits will be £30m lower than expected as recently as September, when the guidance was cut from £323m to £280m. In the year to September sales were up 6% to £9.58bn, but “underlying” profits are down £58m to £250m. Thomas Cook presented the profit warning - issued two days before its annual results are due - as largely an accounting issue caused by “a number of legacy and non-recurring charges”.

REAL ESTATE

Shaftesbury defies retail woes

West End landlord Shaftesbury Group has reported lower vacancies with net income up by 6.2% to £93.8m in the full year to the end of September. Net asset values increased 4% to 991p in the period, below consensus estimates that predicted a figure in excess of £10 a share but bucking a broader downward trend in UK portfolio values. Pre-tax profits were down 42% to £176m because of lower gains from property revaluations than in the previous year.

RETAIL

Profits fall for Pets at Home

Pets at Home has said that overall group revenue rose 6.7% year-on-year to £499m in the six months to October 11th, up from £468m in the same period last year. Like-for-like revenue rose 5.5% despite spending £4m on cutting prices to remain competitive with online retailers. Profit before tax plummeted 80.5%, falling from £40.8m last year to just £8m.

SPORT

Clubs close to reaching agreement

According to the Times, Premiership rugby clubs have edged closer to a deal to sell a shareholding of the league to CVC Capital Partners for more than £200m.

ECONOMY

Minimum wage rises have not led to job losses

Employment levels have been sustained despite increases in the minimum wage, according to the Low Pay Commission. Business had raised concerns over the costs of rising wages, but most have absorbed them and restructured workforces. The National Living Wage for those aged 25 and over stands at £7.83 an hour and is due to rise to £8.21 from next April. The Guardian reports that about 23% of all of those over the age of 25 who are covered by the national living wage were underpaid this year. Meanwhile, ONS data show one in three new jobs created in the UK over the past decade has been in London. The north-east of England saw the lowest percentage increase in new jobs of any UK region or nation.

OTHER

Credit Suisse: Global stock markets to “regain their footing”

Credit Suisse has predicted that global stock markets will “regain their footing” in 2019 and shareholders will see increased returns. The Swiss bank said the emerging market equities would recover from this year's weakness, while innovation would make the tech and healthcare sectors more attractive. Credit Suisse said that UK equities would give shareholders 5% total returns next year compared with the -4.04% returns so far this year led by “unexpected political developments” impacting financial markets. It said those uncertainties would likely continue but the economic cycle would remain a key driver of markets.

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