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Daily News Roundup: Wednesday, 9th May 2018

Posted: 9th May 2018

BANKING

CYBG bids for Virgin Money

CYBG has made a £1.6bn offer to take over rival Virgin Money, which is reviewing the bid. Analysts have said the deal would combine CYBG's more extensive branch network with Virgin’s stronger brand, but that the initial offer would likely be rejected as it is too low. CYBG said it believed that a tie-up of the two businesses “would create the UK's leading challenger bank offering both personal and SME customers a genuine alternative to the large incumbent banks”. The Times notes that any deal could put 1,000 jobs at risk. Meanwhile, the Financial Conduct Authority is reportedly probing a significant jump in Virgin Money's share price in the run-up to the takeover offer.

RBS boss vows to proceed with branch closures

Appearing before the Scottish Affairs Committee, RBS CEO Ross McEwan has vowed to press ahead with planned branch closures in rural areas, claiming the decision had not been taken “lightly” but was a response to a “stark” change in how customers bank. Although the decision to shut between 52 and 62 branches would not be revisited, he stressed that RBS would not look at closing any more until at least 2020. Elsewhere, the Telegraph claims that RBS’s branch managers are “escorting” customers to post offices to show they do not need the bank's own sites any more.

Scottish National Investment Bank debated

Scottish Government plans for a Scottish National Investment Bank have been debated in Holyrood, with Economy Secretary Keith Brown saying the publicly-owned bank could be operational by 2019 and provide £2bn of investment in a decade. He also said the Cabinet had agreed to accept all recommendations in an implementation plan drawn up by Benny Higgins. However, the Scottish Conservatives warned they would not support legislation to create the bank unless the Government streamlines business support, and Scottish Labour described the plans as "timid", claiming their party would invest 10 times as much. Green MSP Andy Wightman said the new bank could play an important role in funding more affordable housing developments.

Open banking app to warn spenders

HSBC’s Connected Money app will warn users when they are spending too much. The lender said customers can currently add accounts from up to 21 different banks, letting them track their spending across 30 categories.

Paragon eyeing housebuilders' lender Titlestone

Challenger bank Paragon is looking into acquiring Titlestone, a firm which lends to residential developers and has already committed in excess of £2bn across more than 300 UK development facilities. Titlestone is currently owned by Oaktree Capital Management.

PRIVATE EQUITY

Apollo’s lack of interest hurts FirstGroup shares

FirstGroup shares declined 12% yesterday after Apollo Management ruled out a further bid, having had last month’s rejected.

INTERNATIONAL

ECB fears sparked by Deutsche Bank’s US role

European Central Bank and German banking regulator BaFin warned about Deutsche Bank's US investment banking division over a year before new chief executive Christian Sewing decided to cut it back.

EU court complaint started by ABLV

Latvian bank ABLV and its principal shareholders have filed a complaint against the European Central Bank and the Single Resolution Board with the EU Court of Justice, over decisions made to compel investors to vote on a voluntary liquidation of the lender.

JPMorgan chief predicts US Treasury yields will hit 4%

Jamie Dimon, chief executive of JPMorgan, has warned investors that Treasury yields could hit 4%, with increasing US inflation piling pressure on the Federal Reserve to increase interest rates.

Danske Bank blinded to warning signs

Jesper Berg, director general at the Financial Supervisory Authority in Copenhagen, said Danske Bank may have let its "efficient machinery" blind it to years of warning signals that something was wrong, following anti-money laundering breaches at the lender’s Estonian branch.

UniCredit capital complaints from hedge fund

Caius Capital has said over 60% of UniCredit's equity capital is invalid under European Union regulations, if the Italian bank fails to convert €3bn of complex instruments into ordinary shares.

Capital buyback fine of €1.6m for Sabadell

The European Central Bank has fined TSB owner Banco de Sabadell €1.6m (£1.4m) for buying back capital without the permission of the banking supervision authority. Sabadell has appealed the penalty.

AVIATION

Surf Air launches blockchain rewards programme

Subscription-based private airline Surf Air is launching a secure blockchain-powered loyalty programme for small businesses. Using Blockchain, its Voy platform will eliminate issues which prevent smaller businesses from taking up a traditional loyalty programme, including the need to spend months negotiating conditions of entry.

Heathrow to host UK's largest chauffeur-driven EV fleet

To further its case for expansion, Heathrow has partnered with Jaguar Land Rover to roll out 200 electric I-Pace SUVs for airport passengers to use this summer, the largest chauffeur-driven fleet of electric vehicles (EVs) in the UK. With travel services company WeKnowGroup, up to 1,000 EV chauffeur services will run each day from central London, including key tourist sites, to the airport.

FINANCIAL SERVICES

Hiscox reveals strong first quarter results

In the face of a series of natural disasters, insurer Hiscox has announced solid first-quarter results, increasing its gross written premiums by 24% on a constant currency basis to $1.155bn (£855m), up from $929m in the same period last year. Hiscox UK and Ireland increased gross written premiums by 12.9% on a constant currency basis to $197.7m. Chief executive Bronek Masojada said: "Our long-term strategy of investing in less volatile retail lines continues to provide balance and opportunity for growth".

Standard Life Aberdeen fights Lloyds to keep its biggest contract

Standard Life Aberdeen has claimed that its client Lloyds Banking Group had “no right” to pull over £100bn of its Scottish Widows portfolio from the recently merged asset manager.

Goldman to take stake in e-mortgage broker Trussle

Goldman Sachs’ Principal Strategic Investments (PSI) division is taking part in a £14m fundraising by British online mortgage broker Trussle.

Munich Re unveils bumper first quarter

Despite being ravaged by natural catastrophes, reinsurance giant Munich Re has posted a 48% increase in profit in the first quarter, to €827m (£727m). Gross premiums written increased by 1.6% to €13.126bn. Munich Re had previously said 2017 marked the biggest losses for the sector on record - with costs for natural catastrophes hitting $135bn (£100bn).

IPO for iZettle with $1bn valuation

Swedish payments company iZettle has announced its intention to launch an initial public offering this year, aiming for a valuation of more than $1bn with a listing on Nasdaq Stockholm.

HEALTHCARE

Takeda agrees to buy Shire in £46bn deal

Japan's Takeda Pharmaceutical has finally struck a deal to buy Irish drugmaker Shire for £46bn in what will be the largest overseas takeover by a Japanese company to date. Takeda was said to be particularly interested in Shire's cancer, stomach and brain drug portfolios.

MEDIA

21st Century Fox bid by Universal

Brian Roberts, chief executive of Universal Pictures owner Comcast, is preparing to challenge Disney's takeover of 21st Century Fox with a £45bn counter-bid.

Vodafone bid for Liberty Global

Vodafone is reportedly about to make a £16bn bid for US rival Liberty Global as it seeks to expand across Europe.

RETAIL

Retailers suffer sharp fall in sales

Britain's retailers suffered the sharpest drop in business in more than two decades last month with sales down by 3.1%, according to a report from the British Retail Consortium. Sales of items other than food fell by 4.9% on a like-for-like basis in the three months to April, another record low since this measure was introduced in January 2013. Online sales growth also receded slightly, growing by 6.7% compared to 10.3% in the same month last year.

Burberry £520m stake for sale

Belgian billionaire Albert Frère is seeking to sell his £520m stake in British fashion house Burberry, planning to use funds raised from the sale to pursue new investments.

ECONOMY

UK trade deficit almost £10bn lower than estimated

Research from the ONS indicates the UK trade deficit was almost £10bn lower during 2016 than the £40.7bn first estimated. The change was because of an improvement in the estimate of trading margins at the banks that identified more financial service exports. The same "net spread earnings" effect also increased nominal GDP by £6.2bn, the ONS said, which could translate into a £2.3bn annual windfall for the chancellor.

OTHER

Fingerprint payment trial

Mastercard and Visa are both trialling bank cards that contain tiny scanners able to read fingerprints, in Cyprus and Bulgaria, with experts saying the technology could be brought to Britain and other countries soon if successful.

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