Moody’s cuts outlook on banking system
The UK banking system’s outlook has been reduced from stable to negative by Moody’s. The ratings agency said Brexit uncertainty has eroded “the country’s growth prospects”, with this likely to hit banks. It added that low interest rates are hitting lenders’ profitability, while renewed competition in the mortgage market will also have an impact. Moody’s said a weakening economy could put pressure on lenders after Brexit and make it harder for the government to rescue any of those which collapse in a crash. Moody's made its decision to reduce its outlook on the assumption that the UK and EU will reach a free trade agreement and that the UK economy will grow 1.2% this year.
Zopa secures £140m investment
Peer-to-peer lender Zopa has raised £140m from US investor IAG Capital, with the investment announced just hours before the firm’s provisional banking licence was due to expire. Zopa said it was now working closely with regulators, including the Bank of England, to gain the banking licence which means it will be able to offer savings products with Financial Services Compensation Scheme cover. Chief executive Jaidev Janardana said: “This new funding means we have concluded the fundraising phase of our bank mobilisation.” “We are excited that that once approved, Zopa will be able to launch its bank alongside its peer-to-peer business and offer a broader set of products to our customers,” he added.
RBS in payment fob trial
Royal Bank of Scotland is trialling a key fob which can be used to make purchases of up to £100, with 250 customers testing the device which has a fingerprint reader that ensures only the account holder can use it. The bank is working with Visa and Giesecke+Devrient Mobile Security on expanding biometric services. Visa’s Jeni Mundy said: “Our research tells us that people have a strong interest in biometric technologies which can make their lives easier as well as increasing the security of their payments.”
Overdraft change confuses users
Some consumers have been left confused and concerned they have lost money after HSBC, First Direct and M&S Bank stopped counting overdrafts as available funds in line with new rules set by the Financial Conduct Authority designed to make it clear that overdrafts are a debt. Barclays, Co-op Bank, Monzo and Nationwide already exclude overdrafts from customers' available balances.
Savers see rates cut
Virgin Money is cutting interest rates for savers, with some dipping by as much as 0.8%. HSBC, Halifax, Barclays, Tesco Bank, TSB, along with Skipton, Coventry and Newcastle building societies, have all cut rates for savers in recent weeks. Moneyfacts has suggested that with banks embroiled in a mortgage price war, they will continue to favour borrowers over savers.
HSBC axes switch cash
HSBC has scrapped a deal offering people switching to its Advance or Premier accounts £175. It was the last bank offering customers a three figure sum if they switched.
Inmarsat deal approved as hedge funds drop challenge
A private equity consortium of Apax Partners, Warburg Pincus and the Canada Pension Plan Investment Board can push ahead with its takeover of satellite company Inmarsat after hedge fund investors dropped a plan to legally challenge the value of the deal. Oaktree, Kite Lake and Rubric Capital wanted the High Court to block the deal's scheme of arrangement because they said the price did not reflect the value of spectrum assets used by Inmarsat’s US partner Ligado. Lawyers at Herbert Smith Freehills, representing the hedge funds, said they had considered their position carefully and opted not to raise objections to the scheme.
UniCredit to cut 8,000 jobs
UniCredit CEO Jean Pierre Mustier has announced plans to cut 8,000 jobs at the Italian lender and seek regulatory approval for a share buyback in an effort to revive its moribund stock. Mr Mustier said low valuations for banking shares make buybacks a better option than mergers, which would be necessary for European banks to grow in size. He ruled out a deal for UniCredit and said it would only consider small, bolt-on acquisitions.
Court directs banks to hand over Trump’s financial records
The 2nd US Circuit Court of Appeals has directed Deutsche Bank and Capital One to comply with subpoenas from congressional Democrats demanding President Donald Trump’s financial records, including records of accounts, transactions and investments. The President is expected to appeal the case to the US Supreme Court.
Sweden to buck trend with interest rate rise
Sweden's central bank is expected raise interest rates this month, moving away from negative interest rates while Bank of Japan and the European Central Bank continue with loose monetary policy.
Commonwealth Bank issues scam warning
Australia’s Commonwealth Bank has issued an urgent warning to its customers over a phishing scam. The scam, which always contains the words 'CommBank', was detected last week by anti-virus software company Mailguard.
Construction sector shrinks amid political uncertainty
New survey data has shown that the UK construction sector contracted for the seventh month running in November as new work fell sharply amid yet more political uncertainty. The IHS Markit/Cips UK construction PMI came in at 45.3 in November, compared to 44.2 in October. A figure below 50 indicates contraction. Economists had predicted a score of 44.5, meaning November’s figure beat expectations and was the slowest drop in overall construction for four months.
Lendy investors suffer blow
Funds recovered from failed peer-to-peer platform Lendy will be shared with the firm’s creditor’s, dealing a blow to investors in the platform. Lendy, authorised by the Financial Conduct Authority (FCA), began crowd-sourcing funds from retail investors to write secured loans to property developers in 2014. It experienced a sharp rise in defaults before its collapse in May, at which point about 9,000 investors were owed close to £152m. Investors thought they had a direct link with borrowers and, as such, almost all recoveries would be due to them, as FCA rules require. However, insolvency practitioners have revealed that Lendy’s “costs and expenses” and a certain “dividend” for creditors from default interest charges will sit above lenders in the repayment queue.
P2P loans secured against inappropriate assets
Administrators of collapsed online lending platform Funding Secure have spoken out over “significant failings” which allowed loans to be secured against a range of hard-to-sell assets. The inappropriate assets include a loan secured against a library of 5,000 Italian books which has received wildly different valuations of between £760,000 and £6m. Funding Secure, a peer-to-peer lender which collapsed into administration in October, matched 3,500 investors who wanted to lend money to businesses and property developers.
FCA rethink call
The Mail’s Alex Brummer suggests the Treasury needs to rethink the role of the Financial Conduct Authority (FCA), saying that while it is “gallantly still struggling” to achieve closure on cases of wrongful behaviour dating back to the financial crisis, its ability to do so while keeping track of current concerns “has been found wanting.” Mr Brummer says that while the FCA has “a huge amount on its plate” with matters such as the London Capital & Finance mini-bond scandal and issues at the Woodford fund empire, there is “no excuse for taking its eye off the ball with peer-to-peer lending.” He urges FCA chief executive Andrew Bailey to compose letters to the Chancellor and the Treasury Select Committee urging reform of the watchdog.
Bridgewater’s co-chief executive Eileen Murray to leave hedge fund
Co-chief executive Eileen Murray is leaving hedge fund Bridgewater in Q1 2020, with former Treasury official David McCormick set to take the reins as sole CEO.
MEDIA AND ENTERTAINMENT
Box office flops hit Cineworld
Cinema group Cineworld has reported that total group revenue fell by 9.7%, with revenue losses in the US and UK divisions at 10.9% and 9.7% respectively. Box office takings fell 12.8% overall, which Cineworld said was due to postponement of some highly anticipated movies to 2020. However, the group added that integration benefits from the acquisition of Regal had been greater than expected, increasing from $150m (£115.8) to $190m.
Sky to create new complex
Sky is to build a new film and TV studio complex in north London. The media company said the move will create more than 2,000 new jobs and generate an additional £3bn in production investment.
Banks cutting mortgage fees
The average fixed-rate mortgage fee has fallen by 2.5% in the past 12 months, according to Moneyfacts. The typical mortgage now has a fee of £1,022 compared with £1,047 a year ago. Meanwhile, there are 1,715 loans available which do not charge mortgage fees. Rachel Springall, of Moneyfacts, commented: “Lenders may well be cutting fixed-rates to enticing lows, but not all borrowers will be drawn in by the initial rate alone. Indeed, there could be borrowers who want to save on the upfront cost of the deal, such as with fees or paying out on other fundamentals.”
Black Friday boosts retailers
UK retailers have been boosted by Black Friday sales, according to Barclaycard. It said sales volumes from November 25 to December 2 were up 7.1% compared with 2018, while sales value rose by 16.5%. Barclaycard's Rob Cameron commented: “Consumers have not only been buying more, but also spending more than last year.” He added: “On Black Friday itself, sales volumes were 7.2% higher compared to last year. This continued right though to Cyber Monday where we saw sales increase 6.9% compared to 2018 data."
Retailers could save millions by going cashless
A new report has claimed that UK retailers could save £7m a year each by only accepting card and digital payments. According to the Global Payment Trends report, major retailers could save as much as £48m annually by going cashless. Savings would come from costs associated with accepting cash at tills, and transporting it securely to and from banks, with customers required to use card or mobile payments.
Debt warning over interest fees and card rates
The Money Charity has warned that Britons are taking on unmanageable debt, with a person declared insolvent or bankrupt every four minutes and 17 seconds between July and September. The analysis shows that Brits are paying an average of £963 a year in interest fees and that four in ten working people have less than £100 in savings. Figures highlight that average credit card rates have risen by a quarter over the past decade, from 16% in 2009 to a record 20% this year, while outstanding balances on credit card lending have risen 40%, from £51.6bn in 2009 to £72.4bn. Baroness Altmann is calling on the Financial Conduct Authority to investigate borrowing levels in the economy and to crack down on lenders that charge high interest rates.
Unused card concern
A Daily Mirror investigation has found that almost 40m credit cards are lying unused or forgotten, with analysis suggesting that a third of people have at least one card they rarely or never use. This has prompted concern that these could be used for fraud or ID theft, with fintech Credit Karma saying unused cards are twice as likely to be defrauded, losing an average of £1,100.