BANKING
Ethical investors pressure Barclays over fossil fuel investments
Barclays has come under pressure from a group of institutional investors who have demanded the bank cease financing fossil fuel companies. The investors, which have more than £130bn under management, have filed a resolution to be voted on at Barclays' AGM in May which calls for the bank to “set and disclose targets to phase out the provision of financial services” to energy and utility companies that are not aligned with the Paris agreement on climate change. The move was co-ordinated by Share Action which says Barclays has provided more than $85bn in finance to fossil fuel companies and high-carbon projects since the Paris agreement was signed in 2015, making it the world's sixth largest backer of fossil fuels and the biggest of any European bank.
Savers piled into UK funds after Tory victory
British savers ploughed £153m into equity funds on the day the general election results were announced and a further £181m when markets opened the following Monday, according to Calastone. The firm said it was the biggest increase in investment since it started collecting data in 2015. Investors poured a net total of £1bn into UK-focused funds in December, more than double the previous largest monthly inflow in July 2015. Edward Glyn, head of global markets at Calastone, said the removal of the threat of a Jeremy Corbyn-led Labour government released pent-up demand as did bringing an end to the Brexit deadlock.
S&P predicts easier time for banks in 2020
British lenders will not “roar” into the 2020s due to low rates and tech disruption, Standard & Poor’s (S&P) have said, but they will have an easier time compared with 2019, which saw Brexit uncertainty and misconduct charges hurting their bottom line. The ratings agency added that although some political certainty has arrived, the UK’s future relationship with the EU remains uncertain and so any benefit from Boris Johnson’s election victory could be “transitory”.
Businesses need greater SDG ambition
HSBC’s Natalie Blyth writes in City AM on the bank’s work on sustainable investment and how businesses need to recognise their own role in meeting the UN’s Sustainable Development Goals (SDG). Financing will increasingly depend on SDG performance, says Ms Blyth, so those that fail to do so will be left behind.
Fintech users just can’t get enough of traditional banks
The FT drills into consumer data on challenger and traditional banks, concluding that users of the likes of Monzo and Revolut still maintain traditional accounts and will need more convincing to ditch them completely.
Regulators to spend more on tech
The Bank of England and the Financial Conduct Authority are to increase spending on new technology to improve their analytics and automation of reporting by companies, the Times reports.
INTERNATIONAL
Central banks running low on ways to fight recession
The outgoing Bank of England Governor has warned that central banks were running out of the ammunition needed to combat a downturn. Mark Carney said the global economy is heading towards a “liquidity trap” that would undermine central banks’ efforts to avoid a future recession.
Singapore receives 21 applications for five digital bank licences
The Monetary Authority of Singapore (MAS) is set to issue five digital banking licences later this year after receiving 21 applications from some of Asia’s biggest tech firms.
UBS to cut 500 jobs in wealth management overhaul
Iqbal Khan, the new chief of UBS wealth management, is set to cut 500 jobs at the division to improve efficiencies and improve client focus. The cuts will remove three management layers and split the firm's Europe, Middle East and Africa (EMEA) business into distinct entities.
Goldman’s consumer unit still accounts for small sliver of profits
Goldman Sachs remains heavily reliant on its traditional businesses as its consumer division was shown to have generated just 3% of the group’s pre-tax earnings in the first nine months of 2019. The bank also said it has renamed its main business units ahead of its quarterly results next week to provide greater transparency for investors into its financial performance.
AUTOMOTIVE
Aston Martin shares dive after another profit warning
Aston Martin shares fell 14% yesterday after the company issued its fourth profit warning since it came to market. The carmaker’s float in October 2018 valued Aston Martin at £4.3bn but its market cap now stands at just £1bn. Sales were down 7% and pre-tax profits are expected to come in at around £130m to £140m, below analyst forecasts of £200m.
Rolls-Royce sales leapt 25% last year
Luxury carmaker Rolls-Royce saw sales rise 25% last year with worldwide demand for the marque’s Cullinan SUV driving an increase from 4,107 in 2018 to 5,152 in 2019. The company also said it was making a "significant" investment in its Goodwood factory, hiring new workers and more apprentices.
Daimler investors seek €900m in damages over diesel scandal
Over 200 institutional investors claim Mercedes-Benz owner Daimler failed to disclose the use of diesel emissions cheat devices and are seeking €900m in damages.
FINANCIAL SERVICES
Woodford partners shared £14m ahead of collapse
Neil Woodford and his partner at Woodford Investment Management, Craig Newman, shared a £14m dividend in the run-up to the collapse of the group, newly released accounts show. Three months after the year to March 2019, Mr Woodford trapped customers of his flagship Equity Income Fund into continuing to pay fees after he blocked withdrawals after running out of cash to pay redemptions. In October the entire operation was shut down. News of the payouts has left savers, who still cannot access their cash and face massive losses, seething. One investor said the payments to Mr Woodford and Mr Newman were “reward for absolute and abject failure”. Experts said the scandal represented a failure of regulation, governance and of the intermediaries like Hargreaves Lansdown which helped “create a myth” around Mr Woodford and bolster his “hubris”.
Comment: New FCA chief needs to bare teeth
The Times’ Katherine Griffiths comments on the incoming Bank of England governor Andrew Bailey, who she says had been “tough but fair” whilst at the Financial Conduct Authority. His replacement “should go further in acting swiftly and decisively against a few bad apples to send a clear message to everyone else,” suggests Griffiths, which means “being prepared to bare the watchdog’s teeth”. Ms Griffiths goes on to argue that he most credible insider candidate is Megan Butler, the FCA’s director of supervision and a barrister, while outsiders include Legal & General’s chief executive, Nigel Wilson, or chairman, Sir John Kingman.
Insurers warned over poor behaviour
The Financial Conduct Authority has warned insurers they face penalties including a ban from the industry if they fail to improve the culture at their businesses. Jonathan Davidson, the regulator’s executive director of supervision, retail and authorisations, said in a letter to CEOs: “Poor culture in financial services can lead directly to harm to consumers, market participants, employees and markets. It was a key root cause of recent major conduct failings within the industry.”
Hackers hold Travelex to ransom
Foreign exchange giant Travelex was forced to switch off its computer systems after suffering a cyber-attack on New Year's Eve, it was revealed yesterday. The company took down its websites across 30 countries to contain "the virus and protect data" with staff forced to resort to pen and paper. A ransomware gang called Sodinokibi claims to be behind the attack and is demanding $6m (£4.6m) from the foreign exchange company.
Bank of England Governor optimistic about City’s prospects after Brexit
Mark Carney has said it is “not desirable at all” for the City to align its regulations with Brussels after Brexit, “effectively [handing] supervision of the world’s leading complex financial system to another jurisdiction”.
REAL ESTATE
Cost of living 'outstripped house prices in 2010s'
UK house prices rose slower than the general cost of living in the last decade, according to the Nationwide Building Society, bucking the trend of the previous decade. In pure cash terms UK house prices rose by 33% during the period but property values were down by 1% from the start to the end of the 2010s, after taking inflation into account, while wages were also little changed under the same measure. House prices rose fastest in London during the 2010s, outstripping inflation by 24%, but fell 24% in Northern Ireland.
RETAIL
Morrisons sales suffer amid ‘unusually challenging’ Christmas period
Morrisons has reported that total sales in the 22 weeks to January 5th fell 1.8%, or 2.9% if fuel sales are included, amid “unusually challenging” market conditions. Like-for-like sales declined 1.7%. Despite the drop in sales, the retailer said that it had managed to offset some of the impact of the weaker sales and expected full-year results to be within the range forecast by analysts.
ECONOMY
Britain will be “the winner” after Brexit, says Blackstone
Equity strategists at asset manager Blackstone predict that the pound will rally after Brexit and stock markets will rise once a deal has been secured. The UK being the winner from its divorce from the EU is one of ten “surprise” outcomes for 2020 predicted by Blackstone’s private wealth chairman Byron Wien. Of all European markets, only Britain will outperform the United States and Asia, Blackstone said.
OTHER
Anniversary of Boris bikes marked by TfL and Santander
Santander and Transport for London (TfL) are to mark the tenth anniversary of London’s bicycle hire scheme, dubbed “Boris bikes”, with a series of events and competitions to be held over the next half a year.