(qlmbusinessnews.com via uk.reuters.com — Thur, 31st Oct, 2019) London, UK —
LONDON (Reuters) – British business minister Nadhim Zahawi on Thursday welcomed Spirit AeroSystems’ (SPR.N) purchase of Bombardier’s (BBDb.TO) plant in Belfast as great news for workers and a welcome investment in the United Kingdom.
Canada’s Bombardier said on Thursday it had agreed to sell its aerostructures business to Spirit for more than $700 million in cash and debt, including the Short Brothers Belfast plant which is the largest high-tech manufacturer in Northern Ireland with a workforce of around 3,500.
“I’m pleased that Spirit AeroSystems is boosting its investment in the UK,” Zahawi said in a statement.
“This will be great news for Short Brothers and its highly skilled and dedicated workforce, at one of the most important aerospace facilities in the country. I look forward to seeing this successful and ambitious business continue to go from strength to strength.”
(qlmbusinessnews.com via theguardian.com – – Thur, 31st Oct 2019) London, Uk – –
Lloyds Banking Group has put aside a further £1.8bn to cover a surge in payment protection insurance (PPI) complaints before the August claims deadline, which nearly wiped out its quarterly profit.
Including the PPI charge, the bank’s profit before tax slumped to £50m for the three months to 30 September, from a profit of £1.8bn in the third quarter last year. The result was weaker than expected.
The latest charge is at the top end of estimates, and takes the group’s total bill to £21.8bn. PPI has become the banking industry’s biggest mis-selling scandal and Lloyds accounts for the lion’s share of the total bill, which has risen to £48bn and is expected to top £50bn.
Lloyds shares were the biggest faller on the FTSE 100 index in early trading, dropping 2.7% to 56p.
The City regulator had set a 29 August deadline to make a claim for compensation for mis-sold PPI, which sparked a surge in complaints in the final weeks, prompting Lloyds to suspend a share buyback programme. PPI was sold alongside loans and mortgages to cover repayments if customers fell ill or lost their jobs, but the insurance was often sold to people who did not want or need it.
António Horta-Osório, the chief executive, said: “I am disappointed that our statutory result was significantly impacted by the additional PPI charge in the third quarter, driven by an unprecedented level of PPI information requests received in August.”
William Chalmers, the bank’s new chief financial officer, said the charge reflected its “best estimate of what PPI might come out as” but he could not rule out further provisions. “When George walked out the door he said: ‘Never say never’ on the issue,” he quipped about his predecessor, George Culmer.
Royal Bank of Scotland took a £900m PPI charge last week, which pushed the 62%-state-owned bank into a quarterly loss of £8m. Barclays set aside a further £1.4bn and reported an 80% plunge in profits.
Lloyds also said its chairman, Lord Blackwell, would retire at or before next year’s annual meeting, after serving nine years on the board, including seven as chairman. The firm’s chief operating officer, Juan Colombás, will step down in July after four years in the job.
Richard Hunter, head of markets at investment platform interactive investor, said: “The shares have had the benefit of a ‘Brexit bounce’ of late, rising 9% in the last three months as perception switched to ruling out the likelihood of a no-deal Brexit. That particular cloud will not be lifted in the immediate future, and on balance the third quarter numbers were largely uninspiring.”
(qlmbusinessnews.com via bbc.co.uk – – Wed, 30th Oct 2019) London, Uk – –
Facebook has agreed to pay a £500,000 fine imposed by the UK's data protection watchdog for its role in the Cambridge Analytica scandal.
It had originally appealed the penalty, causing the Information Commissioner's Office to pursue its own counter-appeal.
As part of the agreement, Facebook has made no admission of liability.
The US firm said it “wished it had done more to investigate Cambridge Analytica” earlier.
James Dipple-Johnstone, deputy commissioner of the ICO said: “The ICO's main concern was that UK citizen data was exposed to a serious risk of harm. Protection of personal information and personal privacy is of fundamental importance, not only for the rights of individuals, but also as we now know, for the preservation of a strong democracy.”
Harry Kinmonth, a Facebook lawyer, noted that the social network had made changes to restrict the information app developers could access following the scandal.
“The ICO has stated that it has not discovered evidence that the data of Facebook users in the EU was transferred to Cambridge Analytica,” he added.
“However, we look forward to continuing to cooperate with the ICO's wider and ongoing investigation into the use of data analytics for political purposes.”
Researcher Dr Aleksandr Kogan and his company GSR used a personality quiz to harvest the Facebook data of up to 87 million people.
Some of this data was shared with London-based Cambridge Analytica.
The ICO argued that Facebook did not do enough to protect users' information.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 30th Oct 2019) London, Uk – –
PSA Group, the French owner of Peugeot, is exploring a merger with its US-Italian rival Fiat Chrysler, it has confirmed.
A deal between the two carmakers would create a business with a combined market value of nearly $50bn (£39.9bn).
This is Fiat Chrysler's second attempt at a merger this year after it pulled out of an agreement with Renault in June.
Fiat Chrysler shares jumped 7.5% on Wall Street.
The potential merger would face significant political and financial hurdles.
Discussions remain in the early stages and there is no guarantee of a final deal.
However, if the two companies do combine, PSA chief executive Carlos Tavares is expected to lead the enlarged group.
John Elkann, Fiat Chrysler's chairman and the head of Italy's Agnelli industrial dynasty which controls the business, would retain the same position at the new company.
A merger of the two groups would bring a number of brands under one roof including Alfa Romeo, Citroen, Jeep, Opel, Peugeot and Vauxhall.
The talks come months after a proposed tie-up between Fiat Chrysler and French carmaker Renault collapsed.
Fiat Chrysler had described its bid for Renault as a “transformative” proposal that would create a global automotive leader.
Industry shifts toward electric models, along with stricter emissions standards and the development of new technologies for autonomous vehicles, have put increasing pressure on carmakers to consolidate.
(qlmbusinessnews.com via theguardian.com – – Tue, 29th Oct 2019) London, Uk – –
BP’s profits have fallen sharply as global oil prices tumble amid gloomy forecasts for the global economy.
The oil major reported underlying profits of $2.3bn (£1.76bn) for the last three months on Tuesday morning, compared with $3.8bn in the same months last year.
The decline comes just weeks after BP announced its chief executive Bob Dudley would step down after almost a decade at the helm.
Dudley blamed weaker global oil prices, a string of one-off financial costs and the impact of Hurricane Barry, which dealt a “significant” blow to BP’s oil production in the Gulf of Mexico in July.
Dudley will end his four-decade career at BP early next year and be replaced in February by Bernard Looney, currently head of exploration and production.
The profits from Looney’s business division fell to $2.1bn for the last quarter, from $3.4bn in the same months last year following a fall in the global oil price.
The oil price has slumped to an average of $62 a barrel in the last quarter, from more than $75 a barrel a year ago.
The oil price slide comes a year after the oil major agreed to buy a $10.5bn stake in the US shale boom from BHP Billiton, in a deal seen as a show of confidence that global oil prices would remain at about $70 a barrel.
Brian Gilvary, the BP chief financial officer, told Bloomberg the company was able to get the deal over the line due to higher oil prices over last summer – and he expected oil prices to remain at about $70 a barrel.
There has been growing public opposition in recent months to the fossil fuel giant’s contribution to the climate crisis. Earlier this month the Royal Shakespeare Company ended its sponsorship deal and protesters targeted the National Portrait Gallery over BP’s ongoing support.
An investigation by the Guardian revealed that 20 oil and gas companies – including BP, Shell, Chevron, ExxonMobil and Total – could be directly linked to a third of greenhouse gas emissions since 1965.
The companies are planning to keep increasing their oil production, despite global efforts to avoid a runaway climate crisis by limiting carbon emissions, in large part from US shale reserves.
(qlmbusinessnews.com via theguardian.com – – Tue, 29th Oct 2019) London, Uk – –
Twin brothers own diverse array of faltering firms, from luxury Ritz hotel to budget retailer Shop Direct
The decision by the billionaire Barclay brothers to put the Daily and Sunday Telegraph up for sale could herald the breakup of a vast but faltering business empire that ranges from luxury hotels to budget retail.
Bidders are already circling the newspaper group after the identical twin brothers, who were 85 on Sunday, launched a sale process expected to recoup less than a third of the £665m they paid for it in 2004.
Potential buyers include the publisher of the Daily Mail, foreign media groups and even the world’s richest man – Amazon tycoon Jeff Bezos.
The sale also comes in the context of a wider review of the Barclays’ business interests, which include the loss-making online retailer Shop Direct and the Ritz hotel in London.Advertisement
Sir David and Sir Frederick Barclay boast a combined wealth of £8bn, putting them 17th on the Sunday Times Rich List, but the financial performance of their sprawling network of businesses has proven patchy of late.
The largest companies in their investment portfolio – Telegraph Media Group; the Spectator magazine; delivery firm Yodel; Shop Direct; the Ritz and the Beaumont hotel – are managed by Sir David’s son Aidan and reported combined losses of £290m on revenues of £2.8bn, in the latest year for which financial records are available.
As losses have mounted, the brothers were reported this month to have put the Ritz up for sale at £800m, more than 10 times the £75m they paid for it in 1995.
Telegraph Media Group is expected to have a price tag of about £200m, according to media industry sources. That would be less than a third of the £665m they paid in 2004, although that purchase included the Spectator, which is not part of the current sale process.
One reason for any fall in the value of the Telegraph group is whether it is still perceived as a “trophy” asset worth more than the sum of its parts, given a decline of profits and sales in recent years.
“It may have been a trophy asset when the Barclays bought it but you would struggle to say that now,” said one City source.
Potential suitors include DMGT, owner of the Mail titles, Mail Online and Metro, which is understood to have previously expressed an interest, although it would likely face regulatory scrutiny.
Sources also pointed to Belgian group Mediahuis, which earlier this year paid €145.6m (£125.2m) to buy Independent News & Media, publisher of the Irish Independent and Sunday Independent. INM is chaired by Murdoch MacLennan, a former chief executive of Telegraph Media Group who is rumoured to have encouraged a bid for his former employer.
Interest is also expected from publishing investment vehicle National World, run by David Montgomery, the former chief executive of the publisher of the Mirror titles. Montgomery advised venture capital firm 3i in a bid to buy the Telegraph in 2004, in a bidding war that ultimately saw the Barclays triumph.
Amazon founder Jeff Bezos, who paid $250m to buy the Washington Post in 2013, was linked to a potential bid for the Telegraph last year. Selling both the Telegraph and the Ritz could raise up to £1bn for the Barclay brothers, who live in a castle on the Channel island of Brecqhou. They have insisted they do so for health reasons, rather than for tax purposes.
Neither business has been a huge money-spinner of late, with profits at Telegraph Media Group down from £14m to £900,000 last year, while the Ritz reported earnings of £7m, a slowdown from £12m. But both are at least profitable, which is more than can be said for some of the larger cornerstones of the Barclay edifice.
Their biggest business by revenue is online retailer Shop Direct, which includes Very and the bones of Littlewoods, the department store chain for which they shelled out £750m in 2002 but which no longer has a bricks and mortar presence.
Liverpool-based Shop Direct racked up revenues of just under £2bn last year, an increase of nearly 2% on the previous year. But accounts released last week showed that it slumped £185.5m into the red, a loss seven times greater than that reported last year, due to £310m in exceptional costs.
The bulk of those relate to a surge in claims from customers who said they were mis-sold payment protection insurance (PPI). The company said it had been forced to set aside cash to cover “customer redress payments for historical shopping insurance sales” and was looking at funding alternatives to cope with the liability. The poor performance for 2018 came a year after the Barclays lost a £1.25bn lawsuit against HM Revenues & Customs, after the supreme court ruled that Littlewoods had not overpaid its taxes.Advertisement
Parcels and courier business Yodel, built on the foundations of Shop Direct’s delivery network, has fared no better than Shop Direct of late. It suffered a pre-tax loss of £116.4m last year on revenues of £481.5m, as customers deserted a business that struggled to shake off a reputation as one of the UK’s most complained-about companies. Directors insisted it had turned a corner thanks to improve service and IT upgrades.
The Barclays’ recent travails come in the context of a decades-long saga that has made billionaires of the twins, born in humble circumstances in west London to Scottish parents who had six other children. They began making money by converting boarding houses into hotels according to a glowing piece written by a Telegraph writer when the brothers bought the newspaper.
In 1983 they bought shipping and brewing company Ellerman for £45m and later made more than £240m by breaking it up and selling it, using the money to invest in hotels. Other money-spinners included the sale of Handbag.com for £22m and the sale of the Scotsman group of newspapers in 2005 for £160m, having paid £85m 10 years earlier.
Their success brought them high-profile friends including former prime minister Margaret Thatcher, who lived out her final months at the Ritz. The brothers were knighted in 2000 for their services to charity. Now, they are preparing to sell a piece of the British media establishment.
(qlmbusinessnews.com via bbc.co.uk – – Mon, 28th Oct 2019) London, Uk – –
US-based Tiffany says it is “reviewing” a takeover offer worth about $14.5bn (£11.3bn) from the world's biggest luxury goods company, LVMH.
The companies confirmed the offer in separate statements on Monday, with the 182-year-old Tiffany saying there are currently no talks.
LVMH, owned by France's richest man, Bernard Arnault, has brands including Christian Dior, Givenchy, and Bulgari.
Jewellery has been one of the fastest growth spots in the luxury sector.
In a two-sentence statement early on Monday, LVMH said it “confirms that it has held preliminary discussions regarding a possible transaction with Tiffany,” adding that there is no certainty of a deal.
A few hours later Tiffany, listed on the New York Stock Exchange, said it “has received an unsolicited, non-binding proposal from LMVH” of $120 per share in cash.
Reports at the weekend said cash-rich LVMH, which also owns Kenzo, Tag Heuer, Dom Pérignon, Moet & Chandon, as well as Louis Vuitton handbags, made a preliminary offer for Tiffany earlier this month. A takeover would be LVMH's biggest deal since buying the Bulgari brand in 2011 for $5.2bn.
“LVMH's attempt to put a $14.5bn ring on Tiffany, having already added Bulgari a couple of years ago is likely to take the fight in this sector to its closest rival Richemont, who owns Cartier, and would help LVMH in gaining better access to US markets,” said Michael Hewson, chief market analyst at CMC Markets UK.
As part of its push for a bigger share of the US market, LVMH has opened a factory in south Texas, which was officially inaugurated this month in ceremony attended by Mr Arnault and US President Donald Trump and his daughter Ivanka.
Tiffany's flagship New York store is next to Trump Tower on 5th Avenue. Founded in 1837 by Charles Lewis Tiffany, the company's fame was sealed after the release of the 1961 film Breakfast at Tiffany's, staring Audrey Hepburn and loosely based on Truman Capote's novella of the same name.
Global demand for LVMH's products has held up well in recent years, but the same cannot be said for Tiffany, which has seen worldwide sales fall.
Like several luxury firms, analysts say Tiffany may have been caught out by the US-China trade dispute and rise in tariffs. It has also been hit by lower spending in its retail outlets by Chinese tourists.
LVMH has 75 brands, 156,000 employees and a network of more than 4,590 stores. Tiffany employs more than 14,000 people and operates about 300 stores.
News of LVMH's offer sent Tiffany's shares surging 22.8% in pre-market trading ahead of the official Wall Street open later. A $14.5bn offer is worth about $120 a share, but analysts said LVMH could afford to go higher, and Credit Suisse estimated that Tiffany was worth about $140 a share.
LVMH rival Kering has been looking to expand in the jewellery sector too, and has launched high-end jewellery lines for its fashion brand Gucci.
Switzerland's Richemont, meanwhile, a sector leader with labels such as Cartier, has also been adding to its portfolio, and recently acquired Italy's Buccellati.
But, said analysts at Jefferies, “Tiffany is potentially the biggest prey and the only US global luxury brand”.
(qlmbusinessnews.com via bbc.co.uk – – Mon, 28th Oct 2019) London, Uk – –
HSBC is planning to restructure its business after the banking giant said its performance in parts of Europe and the US was “not acceptable”.
Interim chief executive Noel Quinn said plans to improve these divisions were “no longer sufficient” and that it was “accelerating plans to remodel them”.
Earlier this month, the bank, which employs 238,000 people, was reported to be planning up to 10,000 job cuts.
On Monday, Mr Quinn said there was “scope” for potential cuts,
“There is scope throughout the bank to clarify and simplify roles, and to reduce duplication,” he told Reuters. However, Mr Quinn did not provide any further details on potential job cuts.
Mr Quinn took over as HSBC's acting chief executive in August following the shock departure of John Flint.
His remarks came as the bank reported worse-than-expected third-quarter profits.
Europe's largest bank said profit before tax fell 18% to $4.8bn (£3.8bn) in the three months to September, and also warned of a “challenging” environment ahead.
HSBC has been navigating uncertainty arising from Brexit, the US-China trade war and ongoing unrest in Hong Kong.
However, Mr Quinn praised the bank's performance in Asia – the region where it makes most of its profits.
“Parts of our business, especially Asia, held up well in a challenging environment in the third quarter,” said Mr Quinn.
“However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US.”
Analysis: By Dominic Oconnell
HSBC's dual nature – listed in London and Hong Kong and standing astride the trade flows between east and west – has often been a source of comfort for investors, who like a bank that doesn't have all its eggs in one basket.
It has also, however, been a source of discomfort for the bank and its shareholders. A dozen years ago, activist investor Knight Vinke led a campaign against HSBC's board, accusing it of corporate governance failings and urging it to stop spending money on western markets and concentrate on Asia, where there were more and more profitable opportunities for growth.
Fast forward to today and those same themes run through the first financial results from Noel Quinn, the bank's interim chief executive.
Mr Quinn, a battlefield promotion after the abrupt departure of John Flint in August, is clearly making his pitch for the getting the job full-time.
Statements from bank chief executives are normally bland in the extreme, but Mr Quinn pulls no punches, saying performance in the UK, Europe and US was “not acceptable” and that restructuring plans to focus on the Asian operations would be accelerated.
The bank has also warned there will be one-off financial hits in the next quarter to pay for the restructuring – which is likely to be shorthand for big job cuts to come.
The Financial Times reported earlier this year that HSBC would cut as many as 10,000 jobs; given the language in which Mr Quinn has couched his warnings about the bank's performance, that looks a likely outcome.
HSBC said the revenue environment was “more challenging” than in the first half of the year, and predicted “softer” revenue growth than previously anticipated.
It also warned of “significant charges” in the fourth quarter – including those related to restructuring – if the backdrop worsened further.
While HSBC warned earlier this year that profits would be hit by a slowdown in China, the broader region was profitable for the bank in the third quarter.
The bank said profit before tax in Asia rose 4% to $4.7bn in the period, citing “resilience” in Hong Kong.
It follows months of unrest in the territory that have raised concerns about the impact on the economy and the reputation of the Asian financial hub.
The tiny Smart car was meant to be a revolutionary new idea in urban mobility. But more than 20 years after its creation, the Smart car pulled out of the U.S. after years of increasingly dismal sales. Now, its parent company, Daimler, is looking in a new direction.
There are millions of asteroids in our solar system. Because some are full of materials that are rare on Earth, they have been valued at stupendous amounts. But the most valuable resource in space may be something that's abundant back on the ground.
(qlmbusinessnews.com via uk.reuters.com — Fri, 25th Oct 2019) London, UK —
LONDON (Reuters) – Britain’s four mobile network operators have agreed to build a shared rural network, backed by government funds, banishing countryside “not-spots” where consumers are unable to get an adequate signal.
EE, Vodafone, O2 and Three will collectively spend 532 million pounds ($684 million) over 20 years, according to the plan published on Friday, potentially supported by a 500 million pound investment from the government.
The operators would invest in new and existing phone masts they would all share under the proposal, which the government hopes will be formalized early next year.
Digital Secretary Nicky Morgan said she is determined to make sure no part of the country is left behind in mobile connectivity.
“Brokering an agreement for mast sharing between networks alongside new investment in mobile infrastructure will mean people get good 4G signal no matter where they are or which provider they’re with,” she said.
“But it is not yet a done deal and I want to see industry move quickly so we can reach a final agreement early next year.”
The operators have agreed to share existing masts and infrastructure in areas where there is coverage from at least one but not all operators.
If this is delivered, the government will then commit up to 500 million pounds of investment to eliminate total not-spots – the hard-to-reach areas where there is no coverage from any operator.
The agreement will bring high-quality 4G coverage to 95% of Britain by 2025, the government said.
Poor mobile coverage in rural areas has been a problem in Britain for many years, affecting residents and visitors including former Prime Minister David Cameron, who has said he had to cut short holidays in Cornwall, in England’s south west, because of poor communications.
The government has pushed operators to come up with a solution, including proposing “in-country roaming”, where customers would switch to rival networks if they could not connect to their own.
Vodafone UK’s Chief Technology Officer Scott Petty said the networks started working on the plan a year ago, before engaging with government and the regulator Ofcom.
“It will result in great coverage for the country in the most cost-effective way,” he said. “We are sharing our infrastructure as much as possible, it’s great for consumers, who will have maximum choice wherever they live in the UK.”
The allocation of costs had been agreed between the operators, depending on existing levels of coverage, he said.
The infrastructure sharing plan was far superior to in-country roaming, which was technically difficult, would drain users’ batteries and hamper competition and investment, he said.
(qlmbusinessnews.com via bbc.co.uk – – Fri, 25th Oct 2019) London, Uk – –
The UK's biggest remaining payday loan provider is to close, with thousands of complaints about its lending still unresolved.
QuickQuid's owner, US-based Enova, says it will leave the UK market “due to regulatory uncertainty”.
Compensation claims have been made from customers who said they were given loans they could not afford to repay.
It is the latest firm offering short-term, high-interest loans to close after regulations were tightened.
QuickQuid has been the biggest payday lender in the UK for the past few years. It was bigger than household name Wonga even before the latter folded in August last year. The Money Shop closed earlier this year.
‘Sometimes you don't have any other choice'
Kenneth Barker took out 11 consecutive loans in less than a year when he was a barman in Essex in 2012.
“The initial one was for £100. I paid back £160, but then needed a £150 loan to tide me over for the next month. It gradually worsened,” said the 28-year-old, who now lives in Leeds.
“To be honest, I knew what I was getting myself into, but sometimes you don't have any other choice.”
He submitted a complaint nine months ago, claiming he was given unaffordable loans, and was offered £50 in compensation by the company.
He said: “I then went to the financial ombudsman. That was accepted and I was offered £2,000. I was told I'd get it within 28 days. I'm hoping I will still get that money!
“I have no idea how this is going to proceed or whether I will receive this money.”
Despite waiting for his compensation, he said he was pleased that a business such as QuickQuid would be closing.
QuickQuid is one of the brand names of CashEuroNet UK, which also runs On Stride – a provider of longer-term, larger loans and previously known as Pounds to Pocket.
“Over the past several months, we worked with our UK regulator to agree upon a sustainable solution to the elevated complaints to the UK Financial Ombudsman, which would enable us to continue providing access to credit,” said Enova boss David Fisher.
“While we are disappointed that we could not ultimately find a path forward, the decision to exit the UK market is the right one for Enova and our shareholders.”
New rules brought in five years ago limited the interest rates and fees payday lenders can charge and introduced enhanced affordability checks. Since then there has been a wave of complaints from customers who say they were mis-sold loans they could not afford.
QuickQuid has been facing as many as 10,000 or more outstanding complaints from borrowers.
Such legacy loan complaints, many of which came via claims management companies, were the key reason for the demise of Wonga last year.
Do I stop making repayments?
The closure of QuickQuid might lead some to think their loan is invalid – but it is not.
“While you may be tempted to stop your repayments, it is crucial to keep to your regular schedule, because if you have entered into a loan agreement you must fulfil it,” said Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service.
“If you miss any repayments you could be hit by fees and additional charges, and it could also harm your credit rating.”
Those who are owed money in compensation must wait to see what the next move is for the business.
The Money Advice Service website has a guide on alternatives to payday loans.
As well as historic complaints, QuickQuid was also the subject of compensation claims for more recent loans.
The UK's Financial Ombudsman Service said that it had received 3,165 cases against CashEuroNet in the first half of the year. It was the second most-complained about company in the banking and credit sector during that six months.
The ombudsman upheld 59% of cases against the company during the same period, but a backlog of cases is thought to have built up.
Anyone with eligible complaints who is entitled to compensation will now see the level of any payouts depend on the process of closing the company.
Debt adviser Sara Williams, who writes the Debt Camel blog, said: “I feel incredibly sorry for those people with complaints that they may have had in with the ombudsman for years.
“The current system does not give adequate protection for these borrowers.”
(qlmbusinessnews.com via theguardian.com – – Thur, 24th Oct 2019) London, Uk – –
Bank slid to an operating loss of £8m for the three months to September
Royal Bank of Scotland has swung to a quarterly loss after being forced to put aside an extra £900m to cover a surge in payment protection insurance complaints before the claims deadline.
The extra charge means RBS slid to an operating loss of £8m for the three months to September, compared with a profit of £961m in the same quarter last year.
PPI has become by far the banking industry’s biggest mis-selling scandal and this latest charge for RBS is at the top end of its estimates in September, after the August claims deadline.
The bank had forecast a third-quarter provision of between £600m to £900m.
The RBS finance director said it was too soon to say this was the end of the PPI saga, given the volume of claims the lender was still working through. “I think it would be very brave … to say the line was completely drawn under it but this is certainly our best estimate,” Katie Murray said.Advertisement
RBS, which is still 62%-owned by the government, said its PPI provisions total was £6.2bn to date. The bill for the industry as a whole has already exceeded £42bn.
Despite the third-quarter losses, RBS said it remained on track for full-year expectations in uncertain times.
The economic outlook forced RBS to take a £55m charge, but Murray said the “slight strain” was due to more than just Brexit jitters. She said it reflecteddeteriorating global growth forecasts in recent months, as well as ongoing volatility.
“The economic indicators have got that much worse since the end of June,” she said. “It really is sort of the growing volatility in the economics that we see rather than something politically tied towards Brexit, I think it’s important to have the separation.”
The lender said it was on track to cut costs by £300m by the end of the year, but Murray refused to speculate on the future of RBS’ investment bank, NatWest Markets, which suffered a £193m loss for the quarter.
“As for job cuts, you know we always prefer to talk to our own staff, before we spoke externally.”
RBS said it cut 900 jobs, approximately 6% of its total headcount, in the third quarter to about 65,700 staff.
The figures are the last for the chief executive, Ross McEwan, who hands over to Alison Rose next week. Rose, who has been with the bank for 27 years, will become the first woman to head a British high street bank.
She is the deputy chief executive of NatWest Holdings, RBS’s retail and commercial banking division, and also runs RBS’s commercial and private banking business, including Coutts.
Rose is expected to deliver a new strategic plan for the entire bank in February.
(qlmbusinessnews.com via bbc.co.uk – – Thur, 24th Oct 2019) London, Uk – –
The government is facing calls to overhaul its High Street policies after estimates were made of 85,000 retail sector job losses on a year ago.
The British Retail Consortium made the calculation after finding that the number of retail employees in the third quarter fell by 2.8% on a year earlier.
This is the 15th consecutive quarter of year-on-year decline, the BRC said.
Helen Dickinson, BRC boss, said it was time to overhaul business rates and the apprenticeship levy.
“Weak consumer demand and Brexit uncertainty continue to put pressure on retailers already focused on delivering the transformation taking place in the industry.
“While MPs rail against job losses in manufacturing, their response to larger losses in retail has remained muted,” she said.
She said reforms to business rates and the apprenticeship levy would allow retailers to focus on enhancing their online presence and adapt to changes on the High Street.
The Treasury did not immediately respond to a request for comment.
“The government should enact policies that enable retailers to invest more in the millions of people who choose to build their careers in retail,” Ms Dickinson said.
The figures are released at time when shops are closing on the High Street with clothing retailer Karen Millen and Coast among the recent outlets to shut.
In July the proportion of all shops that are empty reached 10.3%, its highest level since January 2015, according to a BRC and Springboard survey.
The BRC used data from the Office for National Statistics to calculate that a 2.8% fall in jobs in the third quarter was the equivalent of 85,000 jobs being lost in a year.
The largest impact was on full-time jobs with a 4.5% fall year-on-year and a 1.5% fall in part-time roles.
The figures were released ahead of the all-important Christmas season and while the BRC said the retailers it surveyed were not planning on cutting more jobs – unlike a year ago – it was only a temporary seasonal pick-up.
“We expect the long-term decline in employment to continue due to a combined effect of the on-going structural change, weak consumer spending and fierce competition in the industry,” the BRC said.
It said 62% of retailers had plans to increase staff in the coming quarter, higher than the 43% last year.
The lobby group contrasted the state of the job market in the retail sector with the broader economy where it said ONS data showed employment increased 0.3% on the year.
(qlmbusinessnews.com via bbc.co.uk – – Wed, 23rd Oct 2019) London, Uk – –
WeWork leaders have warned staff to expect major job cuts after a shake-up at the struggling co-working company.
Softbank, the firm's biggest outside investor, has agreed to invest billions in the firm after the collapse of WeWork's flotation plans and ouster of co-founder Adam Neumann.
Its chief operating officer said WeWork must now “right-size” the business to stem its losses.
Media reports say the firm would cut thousands of workers.
The Financial Times put the figure at as many as 4,000 – about a third of its staff, which numbered more than 12,500 as of June.
WeWork did not respond to a request for comment on the figures.
Major cuts had been expected but postponed, as the cash-strapped company, which lost $900m in the six months to June, needed money to pay severance, the Wall Street Journal has reported.
On Tuesday, WeWork's board accepted a financing offer from Softbank that includes $5bn in debt.
As part of the deal, Mr Neumann is to receive an exit package worth nearly $1.7bn – a move that had spurred anger among workers fearing for their jobs.
‘Right-size the business'
In a memo to staff posted by CNBC, Softbank's chief operating officer Marcelo Claure, who was named to lead WeWork's board, said those affected by the cuts would be “treated with respect, dignity and fairness”.
“I am totally committed to open and transparent communication with you,” he wrote. “Yes, there will be layoffs – I don't know how many – and yes, we have to right-size the business to achieve positive free cash flow and profitability. But I will promise you that those that leave us will be treated with respect, dignity and fairness.”
WeWork, which rents office space on flexible terms to companies and freelancers, grew rapidly from its founding in New York City in 2010 to more than 500 locations around the world.
For years, the focus on growth overrode concerns about profitability and led the company to experiment beyond office rentals, opening apartments and schools. Those businesses are among the units expected to be sold.
WeWork is also likely to focus on the US, Europe and Japan, pulling back from regions that include China and much of Latin America, the Financial Times reported.
“To be candid, what we are lacking is focus on our core business,” Mr Claure wrote.
“The past two months have been challenging, and I am not going to minimize those challenges,” he wrote. “Fortunately, we have all the necessary ingredients to make this one of the most amazing comeback stories ever, and prove our detractors wrong.”
(qlmbusinessnews.com via uk.reuters.com — Tue, 22nd Oct, 2019) London, UK —
LONDON (Reuters) – Accounting firms have not shown a “learning curve” from the collapse of travel company Thomas Cook and builder Carillion, with urgent reform the only way to improve audit quality, a senior British lawmaker said on Tuesday.
Rachel Reeves, a Labour lawmaker who is chair of parliament’s business committee, said the failure of Thomas Cook showed again that accountants were not proactive in “doing the right thing”.
Reeves was holding a hearing with representatives of EY – formerly known as Ernst & Young – and PwC, who audited Thomas Cook in the years before it collapsed in September, triggering the repatriation of 150,000 British holidaymakers – the biggest in peace time for Britain.
Addressing the Big Four auditors, which also include Deloitte and KPMG, Reeves hit out at the slow pace of change.
“How many more cases of egregious accounting do we need before your industry opens its eyes and recognizes that you are complicit in this and that you need to reform?” she said.
“We can’t rely on you to do the right thing and that legislation is needed to have tougher regulation because… your industry is not willing to make the changes needed.”
EY, which replaced PwC as auditor of Thomas Cook in 2016, is being investigated by its regulator, the Financial Reporting Council.
EY and PwC representatives told the hearing they stood by their audits of Thomas Cook, complying in full with rules at the time, though with full hindsight some things could have been done differently.
Conservative lawmaker Antoinette Sandbach expressed incredulity at how the auditors “blithely” agreed that Thomas Cook was a “going concern”, with no recent writedown in goodwill until May this year despite profit warnings and the need for cash injections.
PwC’s UK head of audit Hermione Hudson said there were considerable “challenging discussions” over the going concern issue, prompting Thomas Cook to delay its annual report.
Richard Wilson, an audit partner at EY, said EY had publicly noted “material uncertainty” on the company being a going concern. The auditor is still owed 900,000 pounds from Thomas Cook for work completed.
After the Carillion and BHS collapse, two government-backed reviews have proposed setting up a new regulator, forcing companies to hire two auditors, and requiring the Big Four to run their audit and advisory services separately to avoid treading softly on audit to win lucrative advisory business.
But Britain’s business minister Andrea Leadsom said last week the government would wait until early 2020 to propose legislation after a third review into the role of audit reports back before the end of 2019.
PwC and EY officials said reform should be implemented as a package drawing on all three reviews. If legislation is proposed in early 2020, change may still take a year or two, with even the regulator sceptical of planned reforms like joint audits.
(qlmbusinessnews.com via bbc.co.uk – – Tue, 22nd Oct 2019) London, Uk – –
Shares jump by a quarter on the prospect of a bidding war but Just Eat urges investors to reject the approach from Prosus.
Just Eat has called on shareholders to reject a takeover offer as it presses ahead with its planned £8.2bn merger with Takeaway.com.
It emerged on Tuesday that investment firm Prosus, whose interests in the wider food delivery sector already include Delivery Hero, would pay £4.9bn at 710p-per share.
The offer, Prosus said, represented a 20% premium on the 594p-per-share that Just East agreed with Dutch-based Takeaway in the summer – a deal that was first reported by Sky News.
The technology firm said it was making its offer public for shareholder consideration after Just Eat rejected its advances on value grounds.
Just Eat said it had received three Prosus bids to date.
Its stock surged by more than 25% on the news, to 738p-per-share.
Prosus chief executive, Bob van Dijk, said: “We believe our global experience and resources can help Just Eat to achieve its significant potential.
“We believe that Just Eat's customers and restaurant partners will ultimately benefit from more delivery options, greater restaurant choice as well as improved service and delivery speeds driven by the combined group's expertise in product and technology innovation supported by increased capital investment in the business.
“We presented this idea to the board of Just Eat, in good faith, but we have been unable to engage constructively in what we see as a compelling proposition for Just Eat shareholders.”
Just Eat responded: “The board of Just Eat has considered the terms of the Prosus offer and believes that it significantly undervalues Just Eat and its attractive assets and prospects both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com.”
It added: “The board believes that the Takeaway.com combination provides Just Eat shareholders with greater value creation than the terms of the Prosus offer.
“Accordingly, the board of Just Eat continues to recommend the Takeaway.com combination to Just Eat shareholders.”
They are due to vote on the merger in December but Neil Wilson, chief market analyst at Markets.com, said the prospect of a bidding war was now on.
He wrote: “Prosus has sniffed an opportunity as the all-stock offer from Takeaway.com has left JE shareholders nursing paper losses due to a drop in Takeaway.com shares.
“Having initially valued JE at 731p, the latest implied offer for the company prior to the Prosus bid was a more meagre 594p.
“The more Takeaway.com shares fell after the bid the less attractive the offer and the greater the likelihood of a cash counter bid.”
(qlmbusinessnews.com via theguardian.com – – Mon, 21st Oct 2019) London, Uk – –
Rightmove says sluggish market and Brexit uncertainty are putting potential sellers off
UK house prices have registered their lowest October rise since the 2008 financial crisis as Brexit uncertainty continues to take its toll, according to the property website Rightmove.
Its data also showed that some parts of London are continuing to see asking prices fall, in some cases by £15,000 or more in a month.
The price of property coming to market at this time of year usually experiences an “autumn bounce,” with an average rise of 1.6% recorded in the month of October over the last 10 years – but this year saw a “more sluggish” monthly rise of 0.6%, which was the lowest since October 2008.
The current state of the housing market combined with the ongoing political uncertainty from Brexit appears to be putting off many would-be sellers. Rightmove’s average number of new house sale listings per week has fallen to just over 24,000 – its lowest at this time of year since October 2009. This is down 13.5% on the same period a year ago.
By contrast, many buyers “seem undeterred”, with the number of sales being agreed virtually unchanged on a year ago, according to the site, whose latest data was based on the asking prices of more than 122,000 properties put on sale between 8 September and 12 October.
Miles Shipside, a Rightmove director, said: “With upwards pricing power now pretty flat, some sellers who are motivated by maximising their money seem to be holding back. They may be waiting for more certainty around both achieving their price aspirations, and also the Brexit outcome.”
Marc von Grundherr, at the estate agent Benham & Reeves, said that while the sector was more subdued than usual, “the UK property market is yet to disappear down the Brexit abyss”.
Rightmove’s detailed data paints a mixed picture for London, with some boroughs seeing sizeable price falls and others experiencing price growth.
The average price of a home in Kingston upon Thames, south-west London, has fallen by more than £17,000 in a month – from £605,000 in September to £587,000 in October. Wandsworth in south London recorded a typical £16,000 price fall. But in other boroughs, including Britain’s most expensive area, Kensington and Chelsea, average prices continued to climb.
By Rupert Jones