Search

Next week, UK banks will be in focus during Europe's reporting season. Barclays Plc will give a long-awaited strategy update, while Lloyds Banking Group Plc's results may be subdued due to weakened revenue prospects and potential increases in loan provisions. Rising defense spending in Europe likely boosted income for Rolls-Royce Holdings Plc and BAE Systems Plc. Additionally, reports from Carrefour SA, JDE Peet's NV, Danone, and Nestle SA will provide insight into shopper sentiment as inflation slows. [Extracted from the article]

Goldman Sachs is expanding its presence in Birmingham, UK, by hiring more workers for its new office in the city. The move is part of the bank's strategy to expand in lower-cost European cities outside of traditional financial hubs like London. The company already employs about 400 people in Birmingham and plans to attract more local talent after relocating to new premises that can accommodate up to 1,000 staff. This expansion reflects Goldman Sachs' efforts to reshape its operations geographically while reducing expenses. Other banks, including JPMorgan, Citigroup, Bank of America, and Bank of New York Mellon, have also been hiring in cheaper locations outside of London. The presence of these financial institutions in Birmingham has been beneficial for the city, which has faced challenges such as high youth unemployment and a financial crisis. Despite Brexit, Goldman Sachs has reaffirmed its commitment to the UK by opening a new building in London that employs 6,000 workers. The UK government is seeking to attract more investment to the country, and the presence of companies like Goldman Sachs is seen as crucial for developing a tech-based economy and creating new jobs. Other banking giants, such as JPMorgan and Barclays, have also been expanding their operations in cities outside of London. The availability of talent in these smaller cities is a significant attraction for these companies. [Extracted from the article]

Vista Equity Partners, led by billionaire Robert F. Smith, is considering selling one of the divisions within fintech company Finastra. The potential sale of Finastra's TCM business could fetch a valuation of at least $2 billion. Other financial software firms, stock exchanges, and financial institutions may be interested in acquiring the TCM unit. Vista previously attempted to sell Finastra's treasury and capital markets unit in 2021. Finastra, formed through a merger in 2017, generates approximately $1.85 billion in revenue, with the TCM business accounting for about $400 million of that. The TCM unit provides software for financial institutions to manage various aspects of their operations. [Extracted from the article]

Vista Equity Partners, led by billionaire Robert F. Smith, is considering selling one of the divisions within fintech company Finastra. The potential sale of Finastra's TCM business could fetch a valuation of at least $2 billion. Other financial software firms, stock exchanges, and financial institutions may be interested in acquiring the TCM unit. Vista had previously attempted to sell Finastra's treasury and capital markets unit in 2021. Finastra, formed through a merger in 2017, generates about $1.85 billion in revenue, with the TCM business contributing approximately $400 million. The TCM business provides software for financial institutions to manage various aspects of their operations. Competitors in this space include Nasdaq Inc., Murex, Fidelity National Information Services Inc., and Ion Group. [Extracted from the article]

Shares of EFG International AG spiked after rumors circulated that Julius Baer Group Ltd. may announce a takeover of its rival. The private bank's shares rose 10% and were temporarily halted due to excessive volatility. Bloomberg previously reported that Julius Baer had held preliminary discussions with EFG about a potential combination, but there is no certainty that a deal will be reached. If a deal were to occur, it would create a wealth manager with over 500 billion Swiss francs in assets under management. Analysts are divided on the potential deal, with some seeing it as financially beneficial and others expressing concerns about unattractive returns and departures of relationship managers and client money. [Extracted from the article]

WH Ireland Group Plc, a financial adviser, is in discussions to sell its capital markets division to British investment bank Zeus Capital. This potential deal comes as UK stockbrokers face challenges due to a slow market for initial public offerings and a decrease in smaller UK-listed firms. WH Ireland, which has a history dating back to 1872, advises over 60 smaller listed companies and reported a pretax loss of £3.9 million ($5 million) for the six months through September. The shares of WH Ireland were valued at 4 pence per share on Monday. [Extracted from the article]

WH Ireland Group Plc, a financial adviser, is reportedly in talks to sell its capital markets division to British investment bank Zeus Capital. This move comes as UK stockbrokers face challenges due to a slow market for initial public offerings and a decrease in smaller UK-listed firms. WH Ireland, which has a history dating back to 1872, advises over 60 smaller listed companies and reported a pretax loss of £3.9 million ($5 million) for the six months through September. The company's shares are currently valued at 4 pence apiece, with a market value of approximately £9.4 million. [Extracted from the article]

Deutsche Bank's takeover of British investment bank Numis has resulted in changes to the way Numis bankers can interact with their firm's stock analysts. Before the merger, Numis dealmakers had easy access to their colleagues in research, but now analysts and sales staff will be located in different workplaces. While some Numis bankers see this as a loss of advantage in the competition for mandates, others have benefited from Deutsche Bank's balance sheet capabilities. This acquisition highlights the challenges global banks face when acquiring boutique firms with different cultures. [Extracted from the article]

Deutsche Bank's takeover of British investment bank Numis has resulted in changes to the way Numis bankers can interact with their firm's stock analysts. Before the takeover, Numis dealmakers had easy access to their colleagues in research, but now Deutsche Bank is moving Numis analysts into its London office. The integration also involves combining equity sales teams and expanding the firm's coverage of UK stocks. While some Numis bankers feel they have lost a competitive advantage, the acquisition highlights the challenges global banks face when acquiring boutique firms with different cultures. [Extracted from the article]

Peel Hunt, a UK investment bank, is cutting some roles within its workforce due to the ongoing slump in capital markets activity. The reduction will affect less than 10 employees. Peel Hunt is a corporate broker, which has been impacted by the lack of initial public offerings and a decrease in smaller UK-listed firms. The company expects to report a loss for the second consecutive year and has recently lost its head of corporate broking and equity capital markets to a rival firm. The market is expected to remain slow until there are signs of recovery in the UK economy. [Extracted from the article]

Vanquis Banking Group Plc has experienced a significant increase in third-party complaints, resulting in higher administration costs and a profit warning. The company's shares dropped by 45% at the market open and were trading down 38% at 77.2 pence. While the majority of the complaints were not upheld, Vanquis is considering legal action to address the situation. This comes as major banks in the UK are facing a surge in complaints, particularly related to car finance. MoneySavingExpert.com has received over one million complaints through its tool, averaging 30,000 per day. [Extracted from the article]

Nationwide Building Society has agreed to acquire Virgin Money UK Plc for £2.9 billion, a move that would increase consolidation among mid-sized lenders in the UK. Virgin Money has struggled to compete with the dominant "big four" banks, and the merger would make Nationwide and Virgin the second-largest provider of home loans in the UK. The deal would bring together Nationwide's existing offerings with Virgin's 6.6 million customers, business lending arm, and 8.6% market share in UK credit cards. The terms of the deal include a 38% premium to Virgin Money's closing share price on Wednesday. [Extracted from the article]

The Financial Conduct Authority's review of commissions for car loans is impacting the valuations of British banks and causing uncertainty in the industry. Lloyds Banking Group has set aside £450 million for potential compensation and costs related to the review, while Barclays has not taken a provision due to uncertainty. Close Brothers Group has canceled its dividend and was downgraded by credit rating firm Fitch. Smaller players like Blue Motor Finance may also be affected. The FCA is expected to provide an update on the review in September, and there is speculation that some lenders may be forced to exit the market. The practice of discretionary commission arrangements, which allowed dealers to earn higher interest rates, was banned in 2021. The FCA estimates that the ban is saving customers £165 million per year. The legal industry is compiling country court cases to construct a class action case against lenders. The economic fallout of the review, combined with high interest rates and falling used car prices, may pose challenges for banks, especially those lending to less affluent customers. Some banks may slow down lending and trim their workforces in this space. However, Lloyds reported that motor finance continued to grow last year. The future impact of the FCA's decision on banks and non-bank lenders remains uncertain. [Extracted from the article]

The Financial Conduct Authority's review of commissions for car loans is impacting the valuations of British banks and causing uncertainty in the industry. Lloyds Banking Group has set aside £450 million for potential compensation and costs related to the review, while Barclays has not taken a provision due to uncertainty. Close Brothers Group has canceled its dividend and was downgraded by credit rating firm Fitch. Smaller players like Blue Motor Finance may also be affected. The FCA is expected to provide an update on the review in September, and there is speculation that some lenders may be forced to exit the market. The practice of discretionary commission arrangements, which incentivized dealers to push up interest rates, was banned in 2021. The FCA estimates that the ban is saving customers £165 million per year. The legal industry is compiling country court cases to construct a class action case, and law firms are setting up portals for customers to submit claims. The economic fallout of the review, combined with high interest rates and falling used car prices, may pose challenges for banks, especially those lending to less affluent customers. Some banks may slow down lending and trim their workforces in this space. However, Lloyds reported that motor finance continued to grow last year. The FCA's decision may influence the future products and services of banks and non-bank lenders, but the exact impact remains to be seen. [Extracted from the article]

Virgin Money UK Plc has announced plans to cut more jobs as part of its efforts to reduce annual expenses by £200 million ($251 million) and increase returns. The company has already eliminated around 150 full-time positions, closed 39 branches, and reduced its office space by 35%. Virgin Money, the sixth-largest lender in Britain, has been facing challenges in competing with larger domestic rivals. In addition, the company has received approval to extend the term of its board chairman, David Bennett, until October 2026. [Extracted from the article]

According to a Bloomberg article, the cost of a traditional English breakfast, or "fry-up," has risen by 5.4% in the past month, surpassing the recent drop in inflation. The article also mentions that the UK budget deficit has increased by 27% in the first eight months of the fiscal year, and activist group PrimeStone is urging Smurfit Kappa to abandon its plan to acquire WestRock. Additionally, the article discusses Frasers Group's acquisition of luxury online retailer Matches and the challenges faced by British banks in 2023. The article concludes by mentioning that Barclays' upcoming strategy update may include job cuts. [Extracted from the article]

Metro Bank Holdings Plc, a UK lender, has announced plans to cut around 800 jobs and review its branch opening hours as part of a cost reduction plan. The bank aims to achieve potential cost savings of up to £50 million per year, an increase from the previous target of £30 million. The changes are expected to reduce headcount by 20% and will be implemented in the first quarter of 2024. Metro Bank will also focus more on higher yielding corporate and commercial lending. These measures come after shareholders approved a capital raise as part of a £925 million rescue deal. Metro Bank, which launched in 2010 as the UK's first new high-street bank in over a century, has faced financial challenges in recent years. [Extracted from the article]

Deutsche Bank CEO Christian Sewing stated that the bank will continue to make gradual improvements next year, but still needs to convince shareholders of its successful turnaround. Sewing emphasized the need for better communication with investors regarding the stability of the bank's investment-banking revenue. He also discussed the possibility of consolidation among European banks, stating that regulatory changes would be necessary for large deals to occur. Sewing further commented on the UK's decision to lift the cap on bankers' bonuses, suggesting that Europe should consider a similar move if risk cultures within firms have changed. [Extracted from the article]

Metro Bank Holdings Plc shareholders have approved a capital raise as part of a £925 million ($1.2 billion) rescue deal. This allows Colombian billionaire Jaime Gilinski to increase his stake in the bank to about 53%. The vote is seen as a crucial step for Metro Bank as it aims to improve its performance by increasing interest rates on customer deposits, implementing cost-cutting measures, and focusing on higher-margin specialist mortgages. There are also reports that Barclays Plc is in exclusive talks to potentially buy a £3 billion mortgage portfolio from Metro Bank. [Extracted from the article]

Virgin Money UK Plc has announced plans to buy back £150 million ($188 million) of its shares, as the bank's margins continue to benefit from higher interest rates. This buyback is larger than expected, as the bank previously stated it would announce £125 million of buybacks. Virgin Money's net interest margin for the year through September met analysts' expectations, and the bank expects it to reach between 1.9% and 1.95% in the coming fiscal year. The bank also reported a higher impairment charge compared to last year, but stated that customers are still paying back their loans on time. Virgin Money is the sixth-largest lender in Britain and is part of the challenger banks seeking to gain market share from larger lenders. While all UK lenders have benefited from the Bank of England's rate hikes, smaller banks often struggle to match the profit margins of larger banks due to their lack of current account bases. [Extracted from the article]

Metro Bank Holdings Plc has increased its interest rates on customer deposits in an effort to attract funds following a recent £925 million rescue deal. The challenger bank is offering a variable rate of 5.22% on new instant-access deposits for a limited period of 12 months, up from the standard 1.65%. It has also raised its rate for one-year fixed savings accounts to 5.91% from 5.21%. Despite facing a challenging fundraising environment, the bank has seen deposit flows return to normal ranges since the rescue deal. Additionally, Metro Bank plans to implement a cost-cutting program and focus on higher-margin specialist mortgages. [Extracted from the article]

(Bloomberg) -- Many people working at Britain's major banks may be glad the week is drawing to a close. Leisure demand was strong in the three months through September, helped by demand for summer travel, and IAG is carrying more passengers across all airlines relative to 2022. [Extracted from the article]

In this balance sheet exercise, large UK banks hedge these accounts using swap contracts. Shareholders will now be scrutinizing figures from HSBC Holdings Plc on Monday, the final major listed UK bank to report third-quarter results. [Extracted from the article]

Still, lenders would still face the same regulatory hurdles as well as competitive pressures from both incumbent lenders and digital-only banks such as Monzo and Starling. (Bloomberg) -- Metro Bank Holdings Plc's glitzy branches made it the poster child for the UK's smaller banks. [Extracted from the article]

(Bloomberg) -- Jaime Gilinski, the Colombian billionaire banker who will take a controlling stake in Metro Bank Holdings Plc as part of a financing deal, is seeking an exemption from UK takeover rules that would normally require him to bid for the entire company. But the announcement said shareholders that aren't involved in the equity raise will be asked to approve a waiver of rule nine of the takeover code, which would exempt Spaldy from having to make a full bid. [Extracted from the article]

(Bloomberg) -- Metro Bank Holdings Plc has clinched a £925 million ($1.1 billion) financing package, a deal that will impose a 40% haircut on some bondholders and see Colombian financier Jaime Gilinski take a controlling interest. Equity Raise The equity raise will be led by Gilinski's Spaldy Investments, Metro Bank's largest shareholder, which is contributing £102 million. Metro Bank Secures £925 Million Funding Package. [Extracted from the article]

(Bloomberg) -- Metro Bank Holdings Plc has clinched a £925 million ($1.1 billion) financing package, a deal that will impose a 40% haircut on some bondholders and see Colombian financier Jaime Gilinski take a controlling interest. The equity raise will be led by Gilinski's Spaldy Investments, Metro Bank's largest shareholder, which is contributing £102 million. [Extracted from the article]

The agreement would buy the lender some much-needed breathing space after a tumultuous week that saw its share price whipsaw and EY approach a number of lenders to submit offers for Metro Bank before the markets opened on Monday. (Bloomberg) -- Metro Bank Holdings Plc is closing in on a provisional agreement with investors over a financing package, according to people with direct knowledge of the deal. [Extracted from the article]

(Bloomberg) -- Santander UK is among the lenders approached by regulators about a possible bid for Metro Bank Holdings Plc, according to Sky News. The lender hired the investment bank Robey Warshaw for advice on any potential offer, Sky reported Sunday, citing people in the City of London whom it didn't identify. [Extracted from the article]

The first one - called "caterpillar" - doesn't see a bank take a view on future interest rate moves, while the other, "dynamic" approach is employed by banks that make calls on the market and time purchases of swap contracts accordingly. (Bloomberg) -- The UK's biggest banks stand to gain billions this year from hedging against rising rates. [Extracted from the article]

Next week's batch of high-profile results includes HSBC Holdings Plc, BP Plc, consumer health firm Haleon Plc, Johnnie Walker maker Diageo Plc and the London Stock Exchange Group Plc. (Bloomberg) -- It's been a tough week for Britain's banks. [Extracted from the article]

(Bloomberg) -- Soaring mortgage costs and the end of the government's Help-to-Buy programme saw first-time buyers' home reservations halve in the past year, the UK's biggest homebuilder Barratt Developments said in a trading update this morning. Venture capital firms have poured billions of dollars into fast-growing fintech firms, but as many incumbent providers adapt their own business models for the digital age, many predict banking startups will need to consolidate in order to achieve scale and stay competitive. [Extracted from the article]

(Bloomberg) -- Britain's top lenders got a clean bill of health in the Bank of England's latest stress test, with no firm being required to strengthen its capital position. Here's the key business news from London this morning: In The City UK Banks: The Bank of England said the UK's eight largest lenders all passed its latest stress test, which examined their resilience to a severe economic downturn. [Extracted from the article]

Read More: HSBC Buys SVB's UK Unit for £1 in Reprieve for Tech Sector All but £155 million ($192 million) of the £6.7 billion in deposits at Silicon Valley Bank UK were uninsured when the BOE took control of the lender in early March. (Bloomberg) -- The Bank of England is drawing up plans to recapitalize failing banks through the industry's deposit protection program under reforms designed to address shortcomings exposed by the collapse of Silicon Valley Bank earlier this year. [Extracted from the article]

Here's the key business news from London this morning: In The City Numis Corporation Plc: Deutsche Bank AG agreed to buy the broker in a deal valuing it at £410 million, a premium of 72% to the company's closing price on Thursday. (Bloomberg) -- A slump in M&A can actually beget M&A: Deutsche Bank announced this morning the purchase of boutique investment bank Numis, a City household name, in a £410 million-deal. [Extracted from the article]

(Bloomberg) -- Shares in British lenders gave up much of their 2023 gains in the recent upheaval that saw HSBC Holdings Plc rescue Silicon Valley Bank's UK unit shortly before Credit Suisse Group AG was swallowed by UBS Group AG. Read More: Barclays Directors Should Be Probed Over Staley, Says Bramson HSBC Battle Along with HSBC's exposure to Chinese commercial real estate, capital returns will be in focus for Europe's largest lender, which said earlier this year it would consider resuming share buybacks in May. [Extracted from the article]

(Bloomberg) -- Barclays Plc shareholders could use the firm's annual meeting to press directors about their support for former boss Jes Staley, according to a report by proxy firm Institutional Shareholder Services. These ties, cultivated when Staley led the investment bank at JPMorgan Chase & Co., are now at the center of legal proceedings. [Extracted from the article]

Staley stepped down from the British bank in 2021 after UK regulators shared with Barclays the preliminary findings of a probe into what he disclosed about his relationship with deceased pedophile financier Jeffrey Epstein. (Bloomberg) -- Barclays Plc shareholders could use the firm's annual meeting to press directors about their support for former boss Jes Staley, according to a report by proxy firm Institutional Shareholder Services. [Extracted from the article]

JPMorgan Chase & Co.: The bank hired hedge fund manager Sean George into a senior role on the leveraged finance desk in London, a person familiar with the matter told Bloomberg. (Bloomberg) -- Another crisis is the last thing the events sector needs. [Extracted from the article]

(Bloomberg) -- Britain's major banks look set to post bumper results this month following a year of back-to-back interest rate hikes. However, "while they're not seeing huge outflows to challenger banks, the UK's largest banks can be pretty disciplined and pass on less to consumers.". [Extracted from the article]

(Bloomberg) -- It's not just London's streets experiencing a big freeze -- its capital markets, too, are locked in a state of inaction. Danny Blanchflower, a former BOE policy maker, said "collapsing" house prices will push the UK central bank into a rapid pivot toward interest rate cuts. [Extracted from the article]

Credit Mutuel "and its subsidiary CIC pursue 100% of their activities in the UK through CIC London, their British unit that has been present in London for more than 127 years", the French lender said in an emailed statement. (Bloomberg) -- The UK has revoked permission for a unit of a French bank to carry out regulated activity in the City of London after the lender decided not to apply for a permanent post-Brexit authorization. [Extracted from the article]

The regime was designed as a stopgap to ensure that European firms operating in the UK before the Brexit transition period ended in 2020, could continue to do business while seeking full authorization. (Bloomberg) -- The UK has revoked a French bank's permissions to carry out regulated activity in the City of London after the lender failed to apply for a permanent post-Brexit authorization in time. [Extracted from the article]

London-based Brevan Howard Asset Management's new digital currency fund escaped with a single-digit loss after it held cash during some of this year's crypto meltdown. (Bloomberg) -- It's Bank of England rate-decision day, with investors and economists expecting the central to likely dial down the pace of increases. [Extracted from the article]

(Bloomberg) -- UBS Group AG expects the coronavirus pandemic to further boost consolidation in the banking sector amid increasing threats from low interest rates and intensified competition. Switzerland's biggest bank also said it sees further disposals of non-core businesses and assets as banks seek to simplify their business models to reduce operational and compliance risks. [Extracted from the article]

(Bloomberg) -- Crypto Broker AG received a securities house license from Swiss financial regulator Finma that will allow the company to offer services to more institutional investors. "With this license, Finma has made it easier for institutional clients to trade crypto assets", a representative of the firm said. [Extracted from the article]