Deutsche Bank agree $7.2 billion settlement with the U.S. Department of Justice

A statue is pictured next to the logo of Germany's Deutsche Bank in Frankfurt, Germany September 30, 2016. Deutsche Bank has agreed to a $7.2 billion settlement with the U.S. Department of Justice over its sale and pooling of toxic mortgage securities in the run-up to the 2008 financial crisis. The agreement in principle, announced by Deutsche Bank's Frankfurt headquarters early Friday morning, offers some relief to the German lender, whose stock was hit hard in September after it acknowledged the Justice Department had been seeking nearly twice as much.

Superfast broadband for extra 600,000 homes under Government scheme

(qlmbusinessnews.com via news.sky.com- – Fri, 23 Dec, 2016) London, Uk – –

The £440m project will connect properties in rural parts of the UK to services “which are at the heart of modern life”.

Around 600,000 extra homes and businesses are in line for superfast broadband services, it has been announced.

Some £440m will be used to connect properties in the hardest-to-reach parts of the UK under the Broadband Delivery UK programme (BDUK), Culture Secretary Karen Bradley said.

The announcement comes a month after Chancellor Philip Hammond pledged £1bn of Government investment in “full-fibre” broadband, a handout which means at least two million more homes and businesses could get access to speeds of more than 1Gbps.

Last week, the Government also faced calls to “play an active role” in the future rollout of 5G, as a report revealed that Albania and Peru have better mobile phone coverage than the UK.

Ministers set up the BDUK project to provide superfast broadband to 95% of the UK by December 2017.

Ms Bradley said the programme is providing homes and businesses with “fast and reliable internet connections which are increasingly at the heart of modern life”.

She said: “Strong take-up and robust value-for-money measures mean £440m will be available for reinvestment where it matters – putting more connections in the ground.

“This will benefit around 600,000 extra premises and is a further sign of our commitment to build a country that works for everyone.”
The fund is made up of £150m in savings from “careful contract management” and £292m released through a clawback system that reinvests money when people take up superfast connections installed under the scheme.

Ms Bradley added: “Broadband speeds aren't boosted automatically – it needs people to sign up.

“Increasing take-up is a win-win-win: consumers get a better service, it encourages providers to invest, and when more people sign up in BDUK areas, money is clawed back to pay for more connections.”

BT said the investment in superfast broadband is “a huge success story for the UK”, adding that the BDUK project “shows exactly what can be achieved through close partnerships between the public and private sector”.

Rupert Murdoch’s Twenty-First Century Fox to buy European pay-TV firm Sky

Rupert Murdoch's Twenty-First Century Fox is buying European pay-TV firm Sky, which has nearly 22 million viewers in Britain, Ireland, Italy, Germany and Austria.

The deal unites a media empire across two continents.

Murdoch – who has dominated Britain's media and political landscape for decades – is paying 11.7 billion pounds (13.96 billion euros) for the 61 percent of Sky that Fox does not already own.

It is his second go at taking control.

The FCA to revamp the way Financial Services Compensation Schemes are funded

(qlmbusinessnews.com via telegraph.co.uk – – Thu, 15 Dec, 2016) London, Uk – –

 

British banks
Michael Duxbury/flickr.com

Riskier firms will shoulder bigger contributions into the UK's £3.5bn financial compensation fund under a radical overhaul put forward by the City regulator, which has proposed lifting the cap on some claims to £1m.

The Financial Conduct Authority (FCA) has laid out a raft of measures to revamp the way the Financial Services Compensation Scheme (FSCS) is funded and to broaden the industries it covers.

The scheme pays compensation to consumers when financial services firms fail. It paid out £271m in the year to the end of March and received more than 46,000 new claims.

The FCA is now acting in response to concerns that levies have climbed “sharply” for some firms who are covered by the FSCS.

“This has caused concern about the unpredictability of the levies, and led to calls for a re-think of FSCS funding,” the FCA said. “Additionally, in some sectors, a relatively small number of firms have been responsible for a large proportion of FSCS compensation claims.”

While the FSCS should be a last resort, the City regulator is worried the scheme “has increasingly taken on the role of ‘first line of defence’ when a firm fails”.

As part of a sweeping revamp, the watchdog has proposed adopting the principle that the “polluter pays”, meaning those companies that sell products or undertake activities that the regulator deems to be riskier than others pay higher levies.

“Our aim would be for a greater proportion of the cost of the FSCS to be borne by those firms most likely to incur it,” the FCA said.

A so-called risk-based levy differs from the current FSCS funding model, in which the scale of the levies paid by firms are mainly based on their size.

Under the plan put forward by the FCA, firms whose “behaviour reduces risk” would be eligible for discounts on their levies. It wants to start collecting more data from companies about their higher risk products to measure the potential impact of the new model.

In what represents an extensive overhaul of the FSCS, the regulator has also proposed hiking the compensation cap for investments from £50,000 to £1m, as well as lifting the £50,000 limit on pension and life products, in the wake of the recent overhaul of the pensions market.

Furthermore the FCA wants to broaden the compensation scheme to cover some parts of the fund management industry and debt management firms. It has suggested that a company that provided products to an intermediary that subsequently fails should contribute to the fund.

It has also proposed that the Lloyd’s of London insurance market starts paying into the scheme and is examining whether professional indemnity insurance (PII) should be improved, as well as whether buying cover should be mandatory for financial adviser firms.

This would help to relieve pressure on the FSCS by ensuring PII acts as “front stop” when a business is failing before claims are made to the compensation scheme.

A consultation on the FCA’s proposals closes at the end of March and the watchdog aims to issue its new rules next autumn.

By Ben Martin

Make sure business gets the maximum access to the European Union’s single market -Brexit minister

(qlmbusinessnews.com via uk.reuters.com – – Wed, 14 Dec, 2016) London, UK – –

Brexit Vote
Rareclass/flickr

British Brexit minister David Davis said on Wednesday the government would do all it could to make sure business gets the maximum access to the European Union's single market while minimising disruption in its talks with the bloc.

Davis also said the government was still doing policy work to prepare for the negotiations with the EU and had yet to take all of its decisions, but did not rule out the possibility of a “transitional arrangement” to help business avoid a cliff edge after two years of talks.

“Whatever the transitional arrangement is, we need to know where we're going before we decide on the transition,” he told members of parliament at a question-and-answer session.

“It seems to me that it will be perfectly possible to know what the end game will be in two years.”

(Reporting by Elizabeth Piper

Crowdfunding faces crackdown by Watchdog

(qlmbusinessnews.com via telegraph.co.uk – – Tue, 13 Dec, 2016) London, Uk – –

Crowdfunding platforms need tougher rules and restrictions in order to protect investors, the Financial Conduct Authority has said.

The financial watchdog has raised concerns about loan-based businesses, which allow borrowers and lenders to join up without involving banks, and investment platforms, through which members of the public invest in a business or campaign directly.

The FCA said it was difficult for investors to compare crowdfunding investments with other assets given it was often unclear exactly what was being offered.

As a result, investors struggle to assess the risk and returns of giving their money to crowdfunding platforms, and there were some conflicts of interest that were not being managed properly.

Additionally, crowdfunding schemes did not always meet the FCA’s requirements to be “clear, fair and not misleading”, it said.

Firms’ plans for winding down in the event of their failure were also insufficient to allow for repayment of loans, it warned.

According to research by AltFi Data released last month, there have been just five successful ‘exits’, where investors’ capital was returned plus a premium, out of 955 funding rounds across 751 companies and six platforms analysed.

The FCA said it would consult on strengthening rules for wind-down plans, and tighten restrictions on cross-platform investment.

For loan-based platforms, the FCA said it would look to impose standards currently applied to mortgage lending in order to more tightly monitor the conditions in which loans are made.

Andrew Bailey, chief executive of the FCA, said: “Our focus is ensuring that investor protections are appropriate for the risks in the crowdfunding sector while continuing to promote effective competition in the interests of consumers. Based on our findings to date, we believe it is necessary to strengthen investor protection in a number of areas.”

Mr Bailey said the FCA planned to consult next year on new rules to address the problems it had found.

It is the second market intervention by the FCA in a week, after it announced major plans to crack down on spread betters amid fears ordinary investors are losing money. Shares in spread-betting firms – which sell so-called contracts for difference that allow people to trade on price movements in financial markets – slumped after the announcement.

By Rhiannon Bury

The David Rubenstein Show: Features Microsoft co-founder Bill Gates

The David Rubenstein Show: Peer-to-Peer Conversations” explores successful leadership through the personal and professional choices of the most influential people in business. Renowned financier and philanthropist David Rubenstein travels the country talking to leaders to uncover their stories and their path to success. The first episode features Microsoft co-founder Bill Gates.

Coca-Cola announced CEO Muhtar Kent will step down from that role in 2017

On Friday, Coca-Cola announced that its CEO Muhtar Kent will step down from that role in 2017 and be succeeded by the beverage company's No. 2 executive, COO James Quincey. Quincey, who's worked with Coca-Cola for nearly two decades, has led the company's recent drive to cut down sugar in its drinks. In an announcement Friday, Quincey claimed that he'll continue to follow that same as CEO. Wall Street analysts said they had expected Quincey to be promoted to the top job, but originally predicted that it would be announced early next year. Quincey is expected to begin his tenure as CEO on May 1, 2017.

Fyffes Shares Soar in $798 Million Japanese Banana Bid

(qlmbusinessnews.com via bloomberg.com – – Fri, 9 Dec, 2016) London, Uk – –

Japan’s Sumitomo Corp. agreed to buy banana importer Fyffes Plc for 751 million euros ($798 million) in cash, expanding its reach in the global fruit market and sending the Irish company’s shares soaring.

Sumitomo offered 2.23 euros a share for Dublin-based Fyffes, 49 percent more than Thursday’s closing price, in a deal it said furthers its position as one of the most globally diverse companies. Fyffes stock surged to near the offer price.

Founded in 1888, Fyffes will become a small part of a group with operations on all corners of the globe spanning steel trading and shipbuilding to cable television and nickel mining. The purchase will give Sumitomo a business that distributes about 46 million cases of bananas in Europe annually, and also markets pineapples, melons and mushrooms.

For Fyffes shareholders, the takeover represents a “superb, albeit unexpected outcome,” said David Holohan, chief investment officer at Merrion Capital in Dublin. The bid brings “a positive conclusion to several years of impressive share price performance.”

The stock was up 49 percent at 2.23 euros as of 10:09 a.m. in Dublin. The shares have risen sixfold in the last five years as sales and profit have advanced.

The deal comes just over two years after Chiquita Brands International Inc. shareholders rejected a proposed takeover of Fyffes that would have created the world’s largest banana producer.

Small Fare

Fyffes is small fare for Sumitomo. The deal will add annual annual sales of about $1.3 billion for the Japanese company, which in its last financial year had revenue of about $66 billion. Fyffes’ 17,000 workers compares with more than 65,000 employed by Sumitomo.

Sumitomo has been active in the fruit industry since the 1960s, and imports about 30 percent of bananas into the Japanese market. The proposed takeover has secured irrevocable undertakings from investors owning about 27 percent of Fyffes’ shares.

Funding for the transaction will come from a new bank facility or Sumitomo’s existing cash resources, which stood at $8 billion as of its March year-end, the Japanese company said.

JPMorgan Chase & Co. acted for Sumitomo, while Fyffes was advised by Lazard and Davy Corporate Finance.

By Paul Jarvis

McDonald’s to relocate it’s International Tax Base to Britain

After coming under increased scrutiny from European Union regulators over its tax arrangements in the small country, McDonald's said on Thursday it would move its international tax base to the United Kingdom from Luxembourg. McDonald's said it would create a new international holding company domiciled in the UK that would receive the majority of royalties from licensing deals outside the United States.

Big changes are coming to UK rail network

Big changes are coming to England's much maligned railway network. The Transport Secretary is to strip Network Rail of complete control of the tracks, instead making it share responsibility with private companies. Chris Grayling says it'll lead to more reliable services and a better experience for passengers. Unions though, say it'll put safety at risk.

Lidl Supermarket chain to create 500 new jobs in Doncaster

(qlmbusinessnews.com via news.sky.com — Mon, 5 Dec, 2016) London, UK —

Lidl
DennisM2/Flickr

The news is the latest sign that international companies have not been put off investing in the UK following the Brexit vote.

Supermarket chain Lidl has announced plans to build a new depot in Doncaster, creating 500 jobs in the process.

The warehouse, the brand's 13th distribution centre in the UK, will cost £70m to build.

It is the latest sign that international companies have not been put off investing in the UK following the Brexit vote, despite warnings from pro-EU campaigners that businesses would be wary of increasing their presence in Britain while its position in Europe is uncertain.

These include an announcement from Nissan that is is to build two new models in Sunderland and the confirmation of plans for a new Google site in north London.

Lidl, which is based in Germany, has made gains in the extremely competitive grocery market in recent years, winning market share from larger rivals including Tesco and Asda.

It has however seen growth slow slightly this year.

The new distribution centre will cover 53,400 square metres, with construction due to begin in 2017.

It will form part of a previously announced £1.5bn investment in stores and depots across the UK over the next few years.

The investment will also see 400 new jobs created at a new warehouse in Southampton, as well as a further 100 at the Eurocentral industrial park in Lanarkshire, Scotland.

It was announced last year that Lidl would be extending the independent recommended living wage to its lowest-paid staff, with employees receiving at least £8.45 an hour outside of London and £9.75 within the city – a higher rate than the Government mandated living wage.

Thousands of UK restaurants could go bust due to a higher cost of importing food and wine

(qlmbusinessnews.com via theguardian.com/UK – – Mon, 5 Dec, 2016) London, Uk – –

Higher cost of importing food and wine – due to weaker sterling – and rising wage bills could hit over 5,000 companies

Food Wine
aJ Gazmen/Flickr

Thousands of restaurant businesses in Britain could go bust because the fall in sterling since the Brexit vote has sharply raised the cost of imported food and wine, an accountancy firm has warned.

Moore Stephens says that 5,570 restaurant businesses have at least a 30% chance of insolvency in the next three years, due to inflationary pressures and stagnating disposable incomes.

The UK imports 48% of its food, according to government figures, and many restaurants rely heavily on imported food and wine. The cost of labour has also gone up, after the government raised the national minimum wage from £6.70 to £7.20 in April, with a further rise to £7.50 to take place next April.

The restaurant sector is fiercely competitive, with 200 new restaurants opening in London last year alone. This gives consumers a lot of choice and forces restaurants to cut prices or come up with special offers.

Many diners are also suffering from flatlining disposable incomes – the amount households have left to spend after tax and bills have been paid. The average gross disposable household income increased just 0.5% over the last year, from £17,872 to £17,965, Moore Stephens said, quoting official data.

Even some of the biggest restaurant companies are struggling. For example, The Restaurant Group is closing 33 outlets across the UK, including 14 Frankie & Benny’s and 11 Chiquito branches. It also plans to close its flagship Garfunkels restaurant on the Strand in London.

The company, which also owns Coast to Coast, has blamed its poor performance on unpopular new menus, higher prices and poor customer service, and vowed to listen more to its customers.

The business’s new chair Debbie Hewitt, who took over in March as part of a boardroom shake-out, has said the drop in the value of the pound following the referendum would push up the price of imported food next year but added that the company cannot afford to pass this on to customers.

There have been a growing number of warnings over dearer food prices, from Britain’s biggest supermarket, Tesco, and others, and the impact on poor families. The Bank of England, the International Monetary Fund and City economists all believe that inflation will rise to at least 3% by the end of next year, from 0.9% in October.

Mike Finch, restructuring partner at Moore Stephens, said: “It’s been a tough year for many restaurants in the face of rising costs and fierce competition. It is unrealistic to expect UK restaurant groups to avoid the impact of the fall in the pound by substituting for UK produce – they are going to face a big hit. Restaurants have to make tough decisions as to how much they try to pass on to consumers; too much and they risk losing business, too little and they lose margin.”

He said that sterling’s wild swings in the currency markets had hit small and medium-sized restaurant businesses particularly hard as they operate on tighter budgets and are less likely to negotiate long-term supply contracts. All this comes at a time when many consumers are likely to be very price conscious.

Food Wine
Uncalno Tekno/Flickr

“The high number of potential insolvencies over the next year shows just how fragile finances can be in this sector and demonstrates the importance of careful financial management,” Finch added.

“There may be further challenges to come as the UK’s trading agreements with Europe remain uncertain. Many in the restaurant industry would consider the idea of additional import tariffs on foodstuffs with horror.”

A separate report showed the strain many UK consumers are under. The number of those who have taken on more debt over the last five years has risen to 37% from 27% a year ago. The findings come from a survey of 2,008 consumers with debt, including 804 defaulters who have fallen behind with payments, by FTSE 250-listed Arrow Global, which buys and manages debt portfolios.

The most common form of personal debt is credit cards that are not paid off in full every month. The fact that credit cards have overtaken mortgages as the most frequent form of debt, alongside an increase in overdraft borrowing, suggests that the nation’s habits have changed to favour short-term borrowing. More people than ever are renting as they cannot afford to buy a home.

Almost half of borrowers (48%) have a credit card which is not cleared in full each month, compared with 39% a year ago. Almost a third have an overdraft, up from 23%, while the number of those with a mortgage has fallen to 42% from 46%.

One in 10 debt defaulters who fall behind on repayments never catch up.

The latest Bank of England figures showed credit-card borrowing reached an all-time high of £66.2bn in October.

Arrow Global has arranged an industry roundtable this Friday to discuss what the industry can do to support debt defaulters. Tom Drury, the firm’s chief executive, said: “Consumer credit is vital for the smooth-functioning of the economy, but it is clear that British consumers are taking on a heavy debt burden at the moment that is not going to be sustainable for some.

“The low interest rate environment means that debt is cheap, but that doesn’t help consumers who have struggled with their monthly budgeting or suffered from a shock event like losing their job. When borrowers do fall behind on repayments, it is vital that they get all the support they need to rehabilitate their debt.”

By Julia Kollewe