BANKING
New chairman for Monzo
Monzo is reportedly set to appoint Gary Hoffman, who took charge at Northern Rock during the financial crisis, as its non-executive chairman. He will replace Labour peer Denise Kingsmill who left Monzo in May having chaired the bank since it was founded in 2015. Market watchers suggested that the appointment will fuel speculation that Monzo is gearing up for a flotation. Monzo raised £105m in a fundraising round last year, taking the digital bank's valuation above £1bn and landing it with so-called unicorn status. Separately, Monzo has announced it will open a new customer operations centre in Cardiff, creating more than 300 jobs.
Investors shun Bramson
The Mail claims that institutional investors have been left unimpressed by Edward Bramson’s proposals to break up the board of Barclays. One major Barclays investor, who also owns Sherborne stock, said: “He raises some good points but they're maybe overly aggressive. Barclays is doing a good job overall.” Writing in the Mail, Alex Brummer suggests that the Bank of England will look at Bramson’s raid unfavourably. He says it is unthinkable that the Bank would regard Bramson as a proper person to grace Barclays' board.
Pay gap at HSBC widens
New figures from HSBC have shown that pay for female staff at the bank’s British business has fallen further behind that of their male colleagues in the past year. Women at the bank earned 61% less on average compared with male employees, a wider gap than the 59% reported last year. Elaine Arden, group head of human resources at HSBC, said in a filing with the latest gender pay gap figures: “Our overall share of women in global senior leadership roles has increased year-on-year over the past five years and was 26.8% at the end of 2017.” She added that “We recognise that there is more work to do to address our gender balance at senior levels.”
Fintech start-up has big banks interest
James Hurley in the Times profiles fintech start-up 11:FS which has helped to build digital banks from scratch for the likes of RBS. The firm has also developed a software platform to help lenders to replace their tired legacy systems. 11:FS has also delivered a new service for Standard Chartered in Hong Kong and has teams building digital banks in the United States and Africa. CEO David Brear believes that the giants of the banking world remain in a strong position. “If there’s an organisation with loads of customers and all the money to invest, our money is on them,” he said. Separately, Laura Noonan in the FT examines how former banking executives are moving into the world of fintech, notably Antony Jenkins and former Citigroup CEO Vikram Pandit.
Small firms hit by mortgage squeeze
Secure Trust Bank and Fleet Mortgages have said they will halt property lending, as competition has made it harder to turn a profit. A consultation has been launched at Secure Trust on whether to axe its entire range of mortgages for the general public, which is focused on the self-employed, older people and customers who have limited options. Meanwhile, Fleet Mortgages has withdrawn all its products while it seeks extra funding.
Banks must learn to weather instability
Kuangyi Wei, director of strategy and external affairs at Parker Fitzgerald Group, contends in City AM that banks need to fully understand how the confluence of shifting politics, economics and technology will shape future legislation and regulation, as well as impact their digital transformation strategies, operating models and risk management frameworks.
Griffiths: Government must set RBS free
Katherine Griffiths argues in the Times that the Government should sell more shares in RBS to get the taxpayers’ holding below 50% - a move which would let the bank finally be free of state control. She says that although investors are facing uncertainty over the global economy and Brexit, the UK banking system is much better capitalised and prepared for problems than it was back in 2007.
INTERNATIONAL
Deutsche Bank slashes bonuses after lacklustre year
Investment bankers at Deutsche Bank are preparing for a 10% cut in their bonus pool following the unit’s poor performance over the past year. The Times notes that the cuts could be more severe in some areas and come after significant job cuts in the investment banking division. In the third quarter of 2018, Deutsche said that adjusted costs had dropped by 1% from a year ago to €5.5bn. The aim for the year is to bring adjusted costs down to €23bn and to €22bn in 2019. The FT’s Lex remarks that Deutsche must cut its costs without revenues falling even faster. Something it says has not been the investment bank’s forte.
Italy’s ailing Banca Carige to seek state bonds guarantee
Banca Carige has revealed that its administrators have begun a process to reduce its bad loans, while the lender is also looking for a state-backed guarantee on the loans it sells. The FT’s Lex suggests that the problems at the Italian bank are emblematic of the problems at many EU banks, but not systemic.
Malaysia investigates 1MDB China allegations
The Malaysian government is investigating claims that China offered to help to try and bury probes into the 1MDB scandal in exchange for infrastructure contracts in the country.
AUTOMOTIVE
Currency woes drag on Triumph
Triumph Motorcycles has revealed its first sales decline for eight years, with the number sold for the year ending June 30 down from 63,404 to 61,505. Total turnover from bike sales hit £502.7m from £498.6m but profits were hit by foreign exchange losses. “Selling in markets like the USA, manufacturing in Thailand and assembling in Brazil means we need to hold significant bike and component stock in those currencies,” a spokesman said.
AVIATION
Brussels casts doubt on IAG’s no-deal Brexit flight plan
The European Commission has warned IAG that plans for its airlines to continue flying freely in and around Europe in the event of a no-deal Brexit do not work.
CONSTRUCTION
SIG suffering ‘challenging’ construction market
SIG has warned of a “challenging” construction market as the building materials group reported a drop in revenues of 4.7% for the second half of 2018, an acceleration from the 3.6% drop between July and October. Like-for-like revenues were down 8.8% in the UK and Ireland, while the group’s business across the channel dropped 1.4%.
FINANCIAL SERVICES
Fund manager attacks platform over perceived bias
Terry Smith, one of the City’s star fund managers, has criticised Hargreaves Lansdown after the funds platform excluded him from its new list of top 50 fund managers that it recommends to clients. Smith accused Hargreaves Lansdown of making recommendations based on their potential to maximise its own profits rather than because they performed well for investors. Mr Smith’s Fundsmith Equity fund has produced a 270% return in nine years, while Neil Woodford, who was included, has struggled with underperformance for three years. Hargreaves denied that it was acting improperly, saying that its recommendations were based solely on investment performance and fees charged to its clients.
Richard Buxton steps down as CEO of investment boutique
Richard Buxton has stepped down as chief executive of Merian Global Investors, which was spun off from Old Mutual last year, though he will continue to manage his UK Alpha fund. He will be replaced by Mark Gregory, the former chief financial officer of Legal & General who joined the Merian board in October.
London’s financial sector will take a knock in 2019
The FT says London-centred business will be gradually lost to competitors post-Brexit and regardless of a deal or no-deal, 2019 will mark a fundamental knock to the City’s pre-eminence.
UK financial watchdog steps up plans for no-deal Brexit
The FCA has proposed that EU financial institutions will have a grace period of up to 15 years after a no-deal Brexit to wind down or transfer their contracts with UK customers.
MetLife names Michel Khalaf as chief executive
US insurer MetLife has named Michel Khalaf as its next CEO. He will take over from Steve Kandarian, who is retiring on May 1st.
HEALTHCARE
Takeda completes Shire takeover
Takeda has completed its $59bn (£46bn) takeover, the largest ever for a Japanese firm, of London-listed Shire months ahead of schedule. Now one of the world’s ten biggest pharmaceutical companies, the deal creates a $30bn pharmaceutical giant focused on oncology, gastroenterology, neuroscience, rare diseases and plasma-derived therapies.
LEISURE AND HOSPITALITY
Greene King toasts bumper Christmas
Pub chain Greene King has been cheered by strong Christmas sales growth, with like-for-sale sales over the last two weeks up 10.9%. While sales hit a record £7.7m for Christmas day itself. The chain saw a 3.2% increase in like-for-like sales in the 36 weeks to January 6 and is on track, amid plans to close around 100 pubs, to limit cost inflation to between £10m and £20m in the year.
Catering group on the menu
Clayton, Dubilier & Rice is reportedly in advanced talks to acquire a significant stake in British catering group Westbury Street Holdings, valuing the firm at about £780m.
MANUFACTURING
German industry hits brakes
According to statistics from Destatis, the German federal statistics office, German industrial production fell by 1.9% in November, the third consecutive monthly fall. Year-on-year, the manufacturing sector shrank by 4.7% in November. A recession, defined as two consecutive quarters of contraction, is now likely to have occurred in German manufacturing in 2018 following a 1.7% fall in the third quarter.
MEDIA AND ENTERTAINMENT
Sandhu becomes JPIMedia chairman
JPIMedia has appointed Parm Sandhu, a former chief executive of the German cable operator Unitymedia, as its new chairman. JPIMedia purchased the I national newspaper along with 200 local titles in a pre-packaged deal last year.
REAL ESTATE
House prices set to recover, Halifax says
Halifax has asserted that stability will return to the UK housing market this year, with growth of between 2% and 4%. Managing director Russell Galley cautioned: “However, this expectation will clearly be dependent on the Brexit outcome, with risks to both sides of our forecast.” Halifax said house prices stabilised in December, with annual growth up 1.3%, boosting the average house price to £229,729.
First-time buyers waiting for Brexit outcome
Experts have suggested that the housing market will pick up after Brexit as more than half of first-time buyers are waiting until April to purchase their homes. Research by OneFamily showed that 55% of first-time buyers believe property prices will drop and they will be able to get more for their money after March 29th. However, property chiefs said those holding off were “misguided”, as prices are actually expected to increase. Henry Pryor, property buying agent, said: “House prices are predicated on the cost and availability of credit, not on huge macroeconomic things like leaving the EU. As long as they can continue to borrow at today's rates, people will continue to buy at today's prices.”
ECONOMY
World Bank warns of ‘darker skies’ for global economy
The World Bank has warned of increasing risks, or what it calls “darkening skies”, for the world economy. In its annual assessment of global prospects the World Bank predicts continued, though somewhat slower, growth this year and next. The Bank's forecast for the global economy is expansion this year of 2.9% and 2.8% in 2020. The predicted slowdown is focused on the rich countries, particularly the US, although it will continue to expand more rapidly than either the Eurozone or Japan according to the Bank's forecasts. The US slowdown is the result of the fading impact of President Trump's tax cuts and by 2021 its growth will have almost halved - to 1.6% compared with 2.9% last year. In contrast, growth in emerging markets and developing economies is likely to gather pace somewhat despite the continued cooling down in China.
OTHER
Central banks move towards digital currencies
A survey by the Bank for International Settlements has found that around 70% of central banks are researching how to use digital currencies and proceeding cautiously with plans. The research found that almost a quarter of the 63 survey participants have or will soon have the authority to issue a central bank digital currency. However, more than 85% said they were unlikely to issue any type of digital currency in the short term.