BANKING
BoE’s Cunliffe hints at less rigid regulation
Sir John Cunliffe, the Bank of England’s deputy governor for financial stability, has warned policy makers not to cut financial regulation after Brexit, saying: “Pressure to weaken regulation post Brexit would create financial stability risks.” He added that there may be scope for making regulation less rigid, however, saying that much of the UK’s financial sector legislation and regulation has been made at the EU level, adding that efforts to prevent divergences between member states has resulted in “an over complex and rigid regulatory framework.” "At some point, post Brexit, we will, I think, need to address this rigidity and hard wiring of detail to ensure we have a coherent, effective and flexible regulatory system with appropriate accountability,” Sir John added. His comments come after Financial Conduct Authority chief executive Andrew Bailey said the UK could benefit from a “lower burden” regulatory regime once Britain exits the EU.
Lloyds criticised over pay
Lloyds Banking Group has been criticised by trade unions for giving boss Antonio Horta-Osorio a stealth pay rise. The bank cut Mr Horta-Osorio’s annual pension payments by £154,000 following a City outcry. However, it has hiked other elements of his pay by £175,000 – leaving him better off. Mark Brown, of trade union Affinity, said: “Mr Horta-Osorio is trousering pension allowances which bear no relation to those available to everyone else in the bank.” The Investment Association has recommended that shareholders register a protest vote at the bank’s annual meeting if they feel unhappy with Lloyds’ decision.
Banks yet to win back trust on PPI
Writing in the Times, Katherine Griffiths argues that banks have yet to win back public trust over the mis-selling of PPI. Ahead of a cut off point of August 29 for new claims, she says it is a shameful episode for the banks, and also for shareholders, who have largely disregarded the issue rather than holding senior leadership to account. Ms Griffiths adds that although some lessons have been learnt – lenders have largely scrapped sales incentives for staff in their branches – banks should at least ensure that the claims currently in the system and those which flood in before the deadline are dealt with well.
Give bonus accounts the swerve
Sylvia Morris in the Mail suggests that savers should consider ignoring accounts that come with a temptingly high initial rate that plummets further down the line. Instead, customers should pick a deal that continues to pay a competitive rate. The so-called bonus accounts typically pay high rates for the first year or so before the return drops sharply to as little as 0.2%.
INTERNATIONAL
Société Générale chief says banking mergers make sense in Europe
Frédéric Oudéa, the CEO of Société Générale, has said that mergers between big European lenders make sense. He believes consolidation will start once the eurozone banking union is completed.
Proxy adviser ISS slams Deutsche Bank boards
ISS has urged Deutsche Bank’s shareholders to vote against the bank’s management and supervisory boards, saying the boards should be held accountable for “many years of substantial monetary and representational costs”.
Prosecutors charge ex-Danske Bank chief in money-laundering probe
Thomas Borgen, the former CEO of Danske Bank, has been charged by Danish prosecutors investigating a €200bn money-laundering scandal at the bank’s Estonian branch, charging him with failure to prevent certain transactions.
Probe launched into UBS German unit
German prosecutors are looking to fine UBS €83m (£71m) for helping clients to evade taxes. According to Bloomberg, managers at the Swiss bank helped clients to evade tax by making cross-border bank transfers appear to be from within Germany.
Where now for the rules that rocked European finance?
The FT reports that bankers and regulators are expressing fears that Mifid II, which was implemented last year, needs to be amended.
AUTOMOTIVE
Car sales fall
Official figures have revealed that the number of new cars registered in the UK fell 4.1% in April compared to the year before, as demand among consumers shrank. Some 161,000 new cars were registered last month compared with 168,000 during April 2018, the Society of Motor Manufacturers and Traders said. It was the second worst April performance since 2012. Sales of petrol and diesel models dropped by 3.0% and 9.4% year-on-year respectively last month.
McLaren in pole position for Brexit
Supercar manufacturer McLaren is preparing to Brexit-proof its business, according to filings. The documents show that the company is in the process of being accredited as an Authorised Economic Operator (AEO), enabling it to move through customs controls quickly. It is also holding cash reserves to stockpile parts if necessary but admits “the current uncertainty regarding the way the UK leaves the EU makes it very difficult to plan”.
AVIATION
Lufthansa bids for Condor
Lufthansa has confirmed its intention to launch a takeover offer for Condor, the German airline owned by Thomas Cook, and it could potentially bid for the holiday company’s entire airline business. Lufthansa’s CEO Carsten Spohr said: “We decided yesterday . . . to bid for all of Condor with the option to be able to extend this to all Thomas Cook airlines.” Shares in Thomas Cook soared on the back of the developments rising by 6.1% to 23p, valuing the company at £354m.
CONSTRUCTION
End of the road for Kier's finance boss
Bev Dew, the finance boss of Kier, will step down from the construction outsourcer later this year. He will leave the firm after it delivers its full-year results for the year ending 30 June. Dew has overseen Kier lurching from one crisis to another in the last 12 months, after mounting debt levels caused it to become the most shorted stock on the London Stock Exchange late last year.
FINANCIAL SERVICES
FCA seeks changes to mortgage advice rules
The Financial Conduct Authority (FCA) will force financial advisers to explain themselves if they do not offer homebuyers the cheapest mortgage available. The proposals, outlined in a consultation paper on improving mortgage advice and standards, will also see the FCA change its guidance to clarify what should be considered financial advice by lenders or brokers. UK Finance said that the proposals “provide helpful clarity on the boundary between execution-only sales channels and mortgage advice”.
Schroders backs Provident Financial in hostile takeover battle
Schroders, Provident Financial’s third-largest shareholder, says it will reject Non-Standard Finance’s hostile takeover bid, suggesting the deal is against the interest of minority investors and risked “destabilising” the business.
LEISURE AND HOSPITALITY
Travelodge looks to hire 3,000 students
Travelodge is looking to recruit 3,000 students this summer with contracts that allow them to fit work around their studies. The hotel chain said its student recruitment drive was part of its plans to be "Brexit-ready" and it is seeking to fill roles across its existing 560 UK hotels. The jobs are in addition to a further 3,000 roles Travelodge is planning to create over the next five years as it opens 100 new hotels.
REAL ESTATE
Purplebricks founder Michael Bruce quits
Shares in Purplebricks have dropped more than 5% after founder and chief executive Michael Bruce left the company. Vic Darvey, who had been the online estate agent's chief operating officer, will succeed him. Purplebricks also said it was pulling out of Australia and placing its US business under review. The company said the prospective returns from Australia were "not sufficient to justify continued investment", while in the US, it does not expect revenue to meet expectations. Purplebricks remains optimistic about its UK performance and confirmed that it expects revenue to be within the £130m to £140m range it guided for in February.
RETAIL
Retail sales “below expectation”
The latest BRC Retail Sales Monitor has found that retail sales were “below expectation” for April, despite the long Easter weekend. Like-for-like sales increased by 3.7% in April compared to the same period in 2018, when they registered a 4.2% downturn year-on-year. Total retail sales for the month rose by 4.1%, against a drop of 3.1% in April 2018. The BRC said the April figures were “positively distorted by the timing of the run-up to Easter”, which fell later in April this year compared to 2018. It said it was then more accurate to look at the two-year averages.
New CFO for the Co-op
The Co-op Group has appointed Shirine Khoury-Haq as its new CFO, replacing Ian Ellis. Ms Khoury-Haq, who will start her role in the summer, is the former chief operating officer for Lloyd’s of London.
ECONOMY
Economic gaps set to expand
A study by the Centre for Economics and Business Research suggests Brexit will see a widening gap emerge between the economies of the South-East and the North. The report suggests the 10 slowest growing economies will be in locations outside the South-East and that by the end of 2020 Milton Keynes, Reading and Oxford will be in the top three areas for economic growth, while no locations in the North or the Midlands will make the top 10.
OTHER
CBI boss says rates harm regions
CBI chair John Allan has called for a reform of the business rates system, arguing it is “entrenching regional inequalities”. Speaking in London today, he will tell business leaders that revaluations of property do not occur often enough to keep pace with regional economic cycles. This means firms in some areas are paying excessive rates during a period of downturn. Mr Allan also will call for an independent review of the system.