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Daily News Roundup: Wednesday, 9th October 2019

Posted: 9th October 2019

BANKING

Barclays’ withdrawal from Post Office undermines cash infrastructure

The decision by Barclays to stop allowing its customers to withdraw cash from Post Office branches risks the stability of the entire cash system, says James Daley in the Telegraph. He says if more of the Big Four banks walk away it will make the service uneconomical for the Post Office and it could be withdrawn altogether. Consumer association Which? says Barclays’ decision is "shocking” while the Payment Systems Regulator warned it was "concerned about the impact". However, a Barclays spokesman said: "None of our customers will be without access to cash." The Telegraph’s Harry de Quetteville points to statistics suggesting the value of cash transactions is expected to fall to £50bn in the next decade and the UK's cash network will need one pound for every 10 spent to prop it up, a situation one senior source said would be unsustainable for banks.

Bank of England to stress test banks with ‘catastrophic’ climate scenario

Bank of England governor Mark Carney has repeated the Bank’s intention to stress test banks against climate change, warning companies that fail to adapt to moves towards net zero carbon economies “will cease to exist”. Speaking in Japan, Mr Carney said the “climate pathways” the financial system will be stress tested against will include “the catastrophic business as usual scenario and the ideal – but still challenging – transition to net zero by 2050 consistent with the UK’s legislated objective”. Tests are due to begin in 2021.

Metro on the hunt for new chairman

The Telegraph considers the candidates that could be in the frame to replace Vernon Hill as chairman of Metro Bank. Banking sources think Benny Higgins, the former boss of Tesco Bank, is likely to be on a list along with Richard Pym, ex-chairman of UK Asset Resolution as well as Co-operative Bank. An internal candidate could be senior independent director and audit committee chair Sir Michael Snyder. One senior City source tells the paper he already "sees his name on the chair's door".

Lloyds contractors face job loss or pay cuts over tax changes

HMRC’s continued targeting of disguised employment has spooked Lloyds with the bank informing thousands of contractors they face losing their jobs or taking pay cuts of up to 30% after March 2020. Lloyds has told its contractors that they will have to provide work through third-party "umbrella companies". This most likely would mean contractors taking a pay cut or joining the PAYE system through which direct employees are paid.

Bank of England governor selection on track

The Chancellor has insisted the search for the new Bank of England governor remains on track despite the prospect of an imminent election that could delay the process. Sajid Javid told the Treasury select committee that he would "make the announcement in due course, ahead of the start of the next governor's term on February 1, 2020".

HSBC's cuts are an early warning signal to banks

HSBC’s plans to cut 10,000 jobs suggest the group is ahead of the curve, the FT says, adding that “other banks would do well to heed the early warning signal.”

PRIVATE EQUITY

BlackRock launches fund to cash in on recycling push

BlackRock has teamed up with the Ellen MacArthur Foundation to help fund a shift towards a “circular economy”, a move it says could boost companies such as aluminium can makers and plastics recyclers.

Bessemer raises first fund for later-stage tech start-ups

Bessemer Venture Partners has raised $525m to invest in later-stage start-ups following a slew of disappointing tech IPOs this year.

INTERNATIONAL

‘Ruthless’ Deutsche Bank retail boss faces costs fight

The FT considers how Deutsche Bank’s new retail tsar, Manfred Knof, is facing the challenge of rejuvenating revenue at the bank’s domestic retail operations while also making €1.4bn in annual cost savings. The Telegraph reports that the bank intends to make about half of its planned 18,000 job cuts in Germany with London also hit hard.

German banks start merger talks to create €260bn giant

Merger discussions between Frankfurt-based lender Helaba and asset manager Deka could drive future consolidation within Germany’s fragmented public banking sector.

AVIATION

Strikes boost easyJet profits

Strikes at British Airways and Ryanair have helped lift profits at easyJet as passengers sought alternative airlines. The airline said it expects pre-tax profits for the year to September 30 to come in at between £420m and £430m. However, the company cautioned that costs will rise by around 12% as it grapples with factors such as higher fuel costs and currency headwinds.

FINANCIAL SERVICES

HKEX drops £32bn bid for LSE after charm offensive fails

Hong Kong Exchanges and Clearing (HKEX) confirmed yesterday that it had abandoned its £32bn takeover bid for the London Stock Exchange (LSE), which had firmly rebuffed the bid in favour of pursuing its £22bn acquisition of financial data company Refinitiv, saying it contained “fundamental flaws”.

Most Scots concerned over ethical finance

Two-thirds of Scots say it is important that banks and other financial institutions take into account ethical, environmental and social issues when undertaking investments, according to a YouGov poll of more than 1,000 adults north of the Border. The research was commissioned by the Ethical Finance Hub to coincide with the Ethical Finance 2019 global summit taking place in Edinburgh.

Libra needs leader independent of Facebook, says Vodafone

Vodafone boss Nick Read has called for Facebook’s cryptocurrency project, Libra, to be separated from the social network company and run by an independent chief executive. The telecoms firm is one of the founding members of Facebook's Swiss-based Libra Association, the body that will run the international digital coin. Mr Read made the comments as the company announced the closure of over 1,000 Vodafone stores in Europe as part of a shake-up of the group's estate.

HEALTHCARE

Deal will help care home group grow

H&H Care Homes has refinanced its Caledonia, Westerfield and Swny-Mor developments in Scotland and Wales in a £12.8m deal with Clydesdale Bank. The deal will enable the company to make further acquisitions in the sector while raising the number of beds it operates.

LEISURE & HOSPITALITY

Hollywood Bowl enjoys double figures profit growth

UK bowling alley operator Hollywood Bowl said it expected profit growth to be over 10% in the year to 30 September, declaring that product innovations, new bowling alley openings, refurbishments and a rebrand had all paid off.

MANUFACTURING

Steelmakers call for cheaper electricity bills to stay competitive

UK Steel has called on the government to “act now to provide that level playing field the sector desperately needs” as it struggles with electricity costs 80% and 60% higher than competitors in France and Germany, respectively.

MEDIA & ENTERTAINMENT

S4 Capital buys Firewood

Sir Martin Sorrell’s S4 Capital has bought US digital marketing firm Firewood for $150m. S4 will merge the company with its biggest division - Amsterdam-based MediaMonks.

Spain’s Cellnex buys Arqiva telecoms unit for £2bn

Arqiva has sold its mobile towers portfolio to Spain's Cellnex in a £2bn deal. The group will maintain its large broadcast towers business.

PROFESSIONAL SERVICES

Recruiters warn profits will be dented by global political uncertainty

Global political uncertainty from Brexit, Hong Kong protests and US-China trade friction, will hit profitability this year, two of the UK’s biggest recruiters have warned. PageGroup downgraded its profit outlook, while rival Robert Walters said its full-year profits would be flat compared with last year. Robert Walters insisted the turmoil was simply political adding that continued Brexit uncertainty would be worse than no-deal.

REAL ESTATE

Heven sees higher sales

Foxtons founder Jon Hunt’s property development business Heven has reported a 5% rise in turnover to £19.7m for 2018, while pre-tax profits fell to £5.7m from £6.2m on smaller rises in property values than in previous years.

IWG acquires new London sites as WeWork falters

IWG has acquired more London sites, after completing a deal to buy The Clubhouse. It is also fitting out a new City site of 65,000 sq ft at the new 40-storey 100 Bishopsgate tower. This comes as US-founded competitor WeWork falters, with some London landlords believed to be hesitant to lease space to WeWork after it this month shelved plans for a New York float.

ECONOMY

Fall in UK labour productivity is worst in 5 years

Labour productivity in the UK fell at its fastest annual pace in five years in the second quarter, according to the Office for National Statistics (ONS). The figure fell by 0.5% after two previous quarters of zero growth. Factories saw the biggest decline in output per hour, dropping 1.9% while services saw productivity slide 0.8%.

OTHER

IMF boss warns of debt time bomb

The new head of the International Monetary Fund has issued a warning over a global debt time bomb and said the world's economy faces a "synchronised downturn". Kristalina Georgieva said: "Our new analysis shows that if a major downturn occurs, corporate debt at risk of default would rise to $19trn, or nearly 40% of the total debt. This is above the levels seen during the financial crisis." Ms Georgieva urged central banks to keep interest rates low "where appropriate" to tackle the weakest growth in almost a decade, but she also voiced alarm over the potential side-effects of the stimulus.

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