UK financial system ready for no-deal Brexit, says Bank
The Bank of England has asserted that the UK’s financial system is prepared for a no-deal Brexit, while the European Union stands greater risk of a systemic financial shock because of the failure of EU regulators to protect continental banks. The Bank said that without further guidance to EU banks and insurers and greater urgency to put in place rules before March 29th, traders on international money markets could raise the costs of lending to the banking sector. “Some disruption to cross-border services is possible and, in the absence of other actions by EU authorities, some potential risks to financial stability remain,” the Bank’s Financial Policy Committee said. The Bank also warned that despite UK preparations, a period of “significant market volatility” is expected if the country leaves the EU without a deal this month. The BoE has announced a new liquidity facility, Liquidity Facility in Euros (LiFE), to lend euros after Brexit to make sure banks do not run out of the currency.
Cash system on brink of collapse, report warns
A major report warns that the UK’s cash system is at risk of "falling apart" and needs a new guarantee to ensure notes and coins can still be used. The Access to Cash Review predicts that “Sleepwalking into a cashless society" would leave eight million people struggling to manage their finances. The report calls on the government and regulators to step in to ensure cash remains viable. Suggestions include ensuring rural shops offer cash-back. The review predicts the current rate of decline would mean cash use would end in 2026. However, it concluded that notes and coins would still be used in 15 years' time, but would account for between 10% and 15% of transactions.
Banks face tougher stress test amid mounting threats
Britain’s biggest banks will have to prove they can withstand any fallout from the growing risks from China’s economy, the US corporate debt boom and fraught eurozone politics in this year’s Bank of England stress test. The test features a hypothetical 2.6% fall in global GDP - worse than the 2.4% scenario last year and far deeper than the 1% drop following the financial crisis. This year’s test will also include a simulated 30% fall in the pound against the dollar, a 4.7% dive in UK GDP, house prices collapsing by a third, inflation of almost 5% and the Bank of England base rate jumping from 0.75% to 4%.
Barclays fundraising 'about saving jobs'
Former Barclays chief executive Bob Diamond wanted to raise funds privately in the financial crisis to preserve his own job, a court has heard. Mr Diamond reportedly told a meeting "This is all about saving jobs - mine and John's", referring to then chief executive John Varley. The quote was recalled by former Barclays executive Richard Boath, currently on trial at Southwark Crown Court together with Mr Varley. Mr Boath told the Serious Fraud Office Mr Diamond was concerned he might have to leave his job if the bank raised funds publicly, for example through a "rights issue".
HSBC investors call for action on coal financing
HSBC shareholders are calling on the bank to stop coal industry financing. In an open letter released this morning, investors with more than $1trn (£760bn) in assets under management in total, including Schroders and Edentree, have demanded HSBC stop financing coal-reliant companies and ban financing of coal projects in certain emerging markets.
Bank hackers hit mobile infrastructure
Criminals are exploiting an agreement called System Signalling 7 (SS7), which enables users of different mobile phone networks to call and text each other, to hack the codes financial firms send via text messages to verify transactions. Earlier this month hackers broke into messages sent by Metro Bank, while Santander has also been affected.
A Telegraph investigation has found that some of Britain's biggest banks are short-changing loyal savers by paying less interest than the Bank Rate on their cash. It claims hundreds of high-profile accounts, including some offered by Barclays, HSBC, Lloyds Bank, NatWest and Santander are returning 0.75% or less, well below the market average.
Private equity group acquires majority Morgan stake
Italian investment firm InvestIndustrial is acquiring a majority stake in British sports car maker Morgan for an undisclosed amount. The Morgan family, which has owned the company for 110 years, will retain a minority shareholding.
Blackstone slaps golden handcuffs on Bennett Goodman
Blackstone has agreed a ‘golden handcuffs’ deal with senior executive Bennett Goodman, in a bid to prevent the co-founder of the investment group’s $130bn credit business from departing.
BIS suggests Libor replacement requires multiple benchmarks
The Bank of International Settlements has suggested the Libor interest rate may be impossible to replace and multiple benchmarks could be needed. The BIS said it was proving difficult to find a successor to Libor, which is being phased out by regulators by the end of 2021.
Goldman relaxes dress code
Goldman Sachs is relaxing its employee dress code to reflect the “more casual environment” of the modern workplace. In a memo from new chief executive David Solomon, the bank announced its new “firm wide flexible dress code”, while also reminding employees to dress “in a manner that is consistent” with client expectations.
Austrian banks dragged into Russian money-laundering scandal
Prominent Kremlin critic Bill Browder has filed a complaint urging Austrian prosecutors to investigate suspicious money flows from Danske Bank to Raiffeisen and other lenders in the country.
Carmakers warn no-deal Brexit could hit UK investment
Toyota and BMW have both warned a no-deal Brexit threatens the production of their cars in the UK. BMW said it could consider moving production of its Mini from the UK in a no-deal scenario. Separately, the head of Toyota's European operations said a negative outcome could put future investment at its UK factory near Derby at risk.
New car registrations on the rise
New car registrations in the UK rose for the first time in five months in February, up by 1.4% to 81,969 vehicles, according to figures from the Society of Motor Manufacturers and Traders.
Interserve shares soar amid rescue deal considerations
Shares in Interserve surged almost 30% on Tuesday morning on the back of news that the outsourcer was considering a counter-proposal on its controversial rescue deal made by US hedge fund Coltrane Asset Management - its largest shareholder. It demands shareholders retain 37.5% of the company, significantly more than the 5% suggested in Interserve’s draft rescue deal.
Direct Line beefs up Brexit buffer
Direct Line has beefed up its Brexit contingency plans by allocating more money to protect against market disruption. The car insurer, which owns the Churchill and Green Flag brands, said it would raise capital buffers to a ratio of 170%, equivalent to an extra £120m - a “prudent” measure, it suggested, in the face of the continued political uncertainty.
Lord Rothschild warns on market volatility
Lord Rothschild has said 2018 was the “most difficult and treacherous year for investors” in a decade, as his investment trust RIT Capital Partners reported shrinking net asset value. He added that declining global growth and geopolitical tensions would continue to be a risk going forward.
Authorities assess Revolut transaction
Revolut is facing a possible police investigation over an alleged botched transaction involving one of its customer’s accounts. The Met Police is investigating after a customer complained that a payment of more than £70,000 had not been credited to their account. The National Fraud Intelligence Bureau, part of City of London police, is also looking into the complaint.
Insurer Phoenix raises key targets from Standard Life Aberdeen deal
Life insurer Phoenix has raised the targets from its acquisition of Standard Life Aberdeen’s insurance business, saying it will deliver higher capital benefits and slash costs more than expected.
Aon says it is considering bid for Willis Towers Watson
Insurance brokerage Aon is weighing up an all-stock combination with Willis Towers Watson, in a move that could create the largest group in the industry.
LEISURE AND HOSPITALITY
Ladbrokes-Coral owner GVC looks to US and online for growth
GVC is focusing on the US for growth following its third consecutive annual loss. The Ladbrokes-Coral owner reported a pre-tax loss of £18.9m for 2018 and £434.2m in one-off costs.
Increase in remortgage approvals
Research by Moneyfacts has found that lenders are responding to an increase in remortgage approvals with increasingly competitive rates. Bank of England data shows that remortgage approvals were up from 48,900 in November to 50,400 December 2018. In response, the average two-year fixed rate now stands at 2.49%, down from 2.53% in November last year but still above the low of 2.39% seen in March 2018.
Watchdog announces rent-to-own price cap
The Financial Conduct Authority has announced that a price cap of 100% on the interest customers can be charged in rent-to-own arrangements will come into force next month. Rent-to-own firms will have to meet benchmark base prices set by three mainstream retailers and will be banned from increasing insurance premium prices to recoup lost revenue from the curbs.
Services sector struggling amid Brexit uncertainty
The UK services sector is set for its weakest quarter since 2012, according to the IHS Markit / CIPS purchasing managers’ index (PMI), after new work fell for a second consecutive month amid the continuing Brexit uncertainty. Employment numbers declined at the fastest pace since November 2011, as businesses continued to delay hiring staff amid concerns over the UK’s economic outlook.
Private sector growth slows
Growth in the UK’s private sector stagnated in the quarter to February, according to a CBI survey. It found the balance of distribution, manufacturing and services firms reporting growth had fallen to -3% - its weakest since April 2013. The majority of the 650 companies surveyed also expect activity to fall slightly in the three months to May, with services volumes falling at a sharper pace.