Lloyds buys Tesco Bank’s mortgage book in £3.8bn deal
Lloyds Banking Group has agreed to buy Tesco Bank’s mortgage book in a £3.8bn deal, representing a 2.5% premium compared to the loans’ outstanding book value. Tesco’s 23,000 customers will transfer to Lloyds subsidiary Halifax in a deal that is expected to be completed by the end of March 2020. Lloyds reportedly beat competitors including Santander and Royal Bank of Scotland to secure the portfolio. The portfolio generated customer income of £81m and a pre-tax profit of £9.1m in the year to February. Lloyds said the new portfolio would achieve “good returns” for the company, “in excess of current organic market opportunities”. Tesco Bank said it is writing to customers to outline what the switch to Halifax will mean to them.
Banks warm to ‘lesser of two evils’ Corbyn
The Telegraph’s Tim Wallace reports that analysts at Citibank and Deutsche Bank may be “warming to” Labour leader Jeremy Corbyn, saying that he may be seen as “the lesser of two evils” when compared to a no-deal Brexit. Christian Schulz at Citi commented: “Is Corbyn as bad as no-deal? Perhaps no longer,” while Deutsche’s Oliver Harvey said: “Any market-unfriendly policies instigated during a Labour government are temporary … and must be set against the permanent shock caused by a no deal Brexit”.
Mortgage prisoners take £22k hit
Analysis for Money Mail reveals more than 100,000 mortgage prisoners - former borrowers of Northern Rock who have been stuck on the lender's standard variable rate - have each been overcharged more than £22,000. The report shows that if these borrowers had been able to remortgage and paid the average tracker rate between January 2009 and May 2017, those with a typical £200,000 interest-only mortgage would have saved £22,398 in the period.
Experts question Barclays security
Security experts have voiced concern over the amount of information Barclays asks for when enabling customers to access accounts over the phone. Its telephone banking customers only need to provide their card number, date of birth and mother's maiden name to access their balance and latest transactions, while many rivals ask for a password and account number and cross-check the number being called from with that registered to the user. Chris Underhill, of Equiniti Cyber Security, said: “As a minimum, banks should ask for a password or code, or use biometrics such as voice recognition.”
Goldman offers 1.45% for Marcus
Goldman Sachs has cut the rate of its Marcus easy-access account to 1.45%, which includes a 0.1% bonus for the first 12 months. The cut applies to new customers, while existing customers will continue at 1.5%.
UK deals rise, with PE value up 124%
UK firms led European private equity and venture capital activity during H1 2019 according to new research by Refinitiv. Private equity deal values for UK firms hit €23.3bn in the first half, an increase of 124% on H1 2018, with UK activity representing 56% of the European total. UK firms raised €4.3bn of venture capital funding during the first six months of the year, more than double the €2.1bn seen in the same period in 2018.
Advent's Cobham bid wins backing
Advent’s £4bn bid for Cobham has won the backing of shareholder advisory group ISS, who have advised investors support the 165p-a-share bid at a vote on September 16. ISS said Cobham’s offer represents “an acceptable level in terms of valuation multiples versus peers, particularly when accounting for execution risk related to the company's ongoing turnaround”.
Marty Chavez to leave Goldman Sachs
Marty Chavez, co-head of Goldman Sachs’ securities division, is leaving the firm and will retire at the end of the year, CEO David Solomon has announced in an internal memo seen by Reuters. Mr Chavez will be replaced by Marc Nachmann, previously co-head of Goldman’s global investment banking division.
China gives full onshore debt access to Deutsche Bank and BNP
China’s National Association of Financial Market Institutional Investors has given Deutsche Bank and BNP Paribas approval to lead underwriting for renminbi-denominated debt for both local and foreign companies.
India bank mergers plan triggers sell-off
Shares in major Indian state banks tumbled on Tuesday, as investors reacted to government plans to combine 10 state banks into four new entities to boost lending and combat a liquidity squeeze.
Mediobanca to study options for Cerved’s bad loan unit
Mediobanca has been appointed by Italian credit data and information group Cerved as an adviser to study options for its bad loan unit. Cerved is evaluating possibilities after losing in June a 10-year bad loan management contract with Monte dei Paschi di Siena.
Construction industry output drops
Britain’s construction industry suffered its sharpest decline in new work in more than a decade last month, with clients delaying projects as they await clarity over Brexit. The IHS Markit/CIPS UK construction Purchasing Managers’ Index (PMI) fell to 45, from 45.3 in July, below forecasts for 45.9, and below the 50-mark separating expansion from contraction. The measure of new orders declined from 44.6 to 40, the lowest since March 2009. The decline on the construction index follows what the Times describes as “equally dismal figures” for manufacturing released earlier in the week. If the services sector follows the trend, GDP would be set to see a second consecutive quarterly decline, officially putting the UK into recession.
Pimco eyes taxpayer-owned loan portfolio
Global investment firm Pimco is reportedly among the bidders looking to snap up the final tranche of taxpayer-owned customer loans issued by Bradford & Bingley and Northern Rock following the financial crisis. The £5bn loan portfolio will be the final disposal carried out by Government-owned bad bank UK Asset Resolution (UKAR). Hedge funds such as Cerberus Capital are also tipped to be interested in the deal. A UKAR spokesperson said: “Any eventual transaction would be subject to receiving assurances around the ongoing fair treatment of customers and maximising value for the taxpayer.” An agreement is set to be reached by UK Asset Resolution and its advisers at Credit Suisse before the end of the year.
Spencer builds stake in Numis
Michael Spencer, founder of Nex Group and its predecessor ICAP, has built up a 6% stake in Numis Securities, the company he once chaired.
UK biotech Achilles secures £100m funding for lung cancer trials
Achilles Therapeutics, a biotech firm focused on personalised immunotherapy for cancer, has closed a £100m Series B funding round that gives the company a post-money valuation close to £190m. The round was led by incoming US investor RA Capital Management, and also included cash from new investors Forbion, Invus, Perceptive Advisors and Redmile Group, as well as Achilles's founding investor, FTSE 250-listed Syncona.
LEISURE AND HOSPITALITY
The Restaurant Group to close more than 100 outlets
The Restaurant Group is to close at least 124 of its Frankie & Benny’s, Chiquito, Garfunkel’s and Coast to Coast branches over the next six years. The announcement came alongside a first-half report revealing that a pre-tax loss of £87.7m, compared with £12.2m profit this time last year, although stripping out exceptional costs, profits rose 35.7% to £28.1m. Total sales in the six months to June 30 rose 58.2% to £515.9m.
Hedge fund takes aim at £9bn Just Eat merger
New York-based hedge fund Eminence Capital, which holds a 4.4% stake in Just Eat, has said it will vote against the company’s planned £9bn merger with Takeaway.com. Eminence chief executive and chief investment officer Ricky Sandler said the terms are “far too favourable” to Takeaway shareholders.
MEDIA AND ENTERTAINMENT
Independent Digital News and Media appoints new chairman
Independent Digital News and Media, publisher of The Independent, has appointed John Paton as chairman. Mr Paton joins from Guardian Media Group, where he served as director for the past six years.
UK law firms’ partner profits at record high
Average partner profits at the UK’s top 50 law firms reached £750,000 last year, with nine firms posting average profit per equity partner (pep) of over £1m. According to the new research by Legal Week, partners at Slaughter and May led the way with an estimated pep of £2.3m, followed by Freshfields Bruckhaus Deringer and Macfarlanes with pep of £1.8m and £1.7m respectively. Linklaters, Allen & Overy and Clifford Chance posted pep of £1.69m, £1.66m and £1.62m respectively, and other top performers included DLA Piper (£1.4m), Travers Smith (£1.2m) and Mishcon de Reya (£1m).
Hammerson may offload stake in outlet business
Hammerson is considering offloading its £1.9bn stake in the Value Retail, the outlet business that owns Bicester Village. The property firm has multiple stakes in the outlet business. Hammerson could sell its entire stake, which amounts to about 40%, or offload parts of it, according to reports. Hammerson has been working with advisers at Lazard and JP Morgan Cazenove to sell segments of the business in a bid to cut debt and make cost savings of £500m this year. Hammerson reported a half-year loss of £319m at the end of July following a £423m decline in the value of its properties.
M&S set to drop out of FTSE 100
Marks and Spencer is expected to be relegated from the FTSE 100 index of Britain’s listed companies today. If the retailer is demoted, it will be the first time M&S has not been a FTSE 100 member since the index was launched back in 1984.
Record spend for top five football leagues
Analysis shows Europe’s five biggest football leagues spent a combined £5bn on players during the summer transfer window, a record total. Spanish clubs spent £1.24bn, breaking the €1bn mark for the first time, with record outlay also seen in Italy (£1.06bn), Germany (£670m) and France (£605m). Premier League clubs led the way with a total spend of £1.41bn – with the net spend of £575m the lowest since 2015.
Former BoE adviser warns over QE and negative interest rates
Huw van Steenis, head of investor relations at UBS and a former senior adviser to Bank of England governor Mark Carney, has warned that negative interest rates and quantitative easing may see economies shrink. He said central bankers may "end up doing more harm than good" by cutting interest rates below zero as it distorts markets, erodes commercial lenders' profitability and could be "contractionary for the economy". He warned that quantitative easing may see banks holding government bonds, tying the state and financial sector in a potential "doom loop".
Senior bankers warn over SMEs not ready for no-deal Brexit
Sky News reports that senior bankers have warned Chancellor Sajid Javid that the majority of UK SMEs remain largely unprepared for a no-deal Brexit. It is understood that they told Mr Javid that while they had made the necessary contingency plans if the UK leaves the EU without a deal next month, many of their SME clients had not. Bosses of major UK lenders including HSBC and Lloyds Banking Group were reportedly among those highlighting concerns. Among those present at the meeting were Jes Staley, Barclays chief executive, Goldman Sachs International chief executive officer Richard Gnodde, and David Schwimmer, CEO of the London Stock Exchange Group. Bruce Carnegie-Brown, chairman of Lloyd’s of London, John Kingman, chairman of Legal & General, and Howard Davies, chairman of RBS, also attended.