15th Oct 2015 10:25
LONDON (Alliance News) - The following is a summary of top news stories Thursday.
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COMPANIES
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The Bank of England said the largest six UK banks may need to bolster their capital levels under incoming ring-fencing rules that require the separation of retail operations from investment banking activities. The ring-fencing rules could mean that banks with more than GBP25 billion in core deposits - money held for from individuals and small businesses - could be faced with additional capital requirements of up to GBP3.3 billion in total, the Bank of England's Prudential Regulation Authority said. Barclays, HSBC Holdings, Lloyds Banking Group, and Royal Bank of Scotland Group are the London-listed banking groups likely to be affected by the rules.
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Hundreds of workers in the investment banking arm of HSBC Holdings have had their pay cut by 10% and have been ordered to take two weeks of unpaid leave by the end of the year, The Times reported. The bank, currently under pressure to cut costs, told staff about the changes last week and is understood to have told managers that there would be no exceptions to the cuts, The Times said. The move is understood to effect financial analysts and others in core parts of the investment bank, as well as IT workers.
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Unilever reported a rise in sales in the third quarter of 2015 and said it expects underlying sales to grow at the upper end of its guided range for the full year. The maker of consumer products said revenue in the third quarter of the year grew 9.4% to EUR13.4 billion, while rising 11% to EUR40.4 billion in the first nine months of the year. Unilever said growth was helped by soft comparatives in China, strong ice cream sales, and price increases in Latin America. The company added however, that consumer demand remained fragile, while volume growth was "barely positive" in the markets in which it operates.
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Burberry Group said its second quarter was hit by a challenging environment for the luxury goods industry, particularly in China, and said it will take further cost-control actions in the second half to minimise the impact on its profit for the full year. Still, the group said it expects its adjusted pretax profit for the full year to be in line with analyst expectations, despite the tough environment. Burberry said its retail revenue was up 2% on an underlying basis in the first half to the end of September to GBP774.0 million, with like-for-like sales growth of 1.0% in the period.
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Anglo-Australian miner BHP Billiton said it has priced USD3.25 billion in subordinated fixed-rate reset notes in the dollar market. BHP said the note issue has been completed in two tranches, one of USD1.0 billion and one of USD2.25 billion. The dollar issuance follows euro and sterling deals announced late Wednesday. BHP said it had priced EUR2.0 billion of subordinated fixed rate reset notes in the euro market across two trances, and GBP600 million of subordinated fixed rate reset notes in the sterling market. The proceeds of all the note issuances will be used for general corporate purposes including, but not limited to, repaying BHP's debt, the company said.
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BHP also has said it has no plans to cut production and denied that a series of recent mine closures will spur higher commodity prices, days after peer Glencore slashed its zinc production by a third, the Financial Times reported. Arnoud Balhuizen, head of marketing at BHP, said that the Anglo-Australian mining group would not reduce output because its operations were generating cash, even as some rivals struggle with commodity prices close to six-year lows.
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Tesco said it has agreed to sell 14 Spenhill development sites in London, the South East and Bath for GBP250.0 million. The development sites are suitable for mixed-use and residential development and have been sold to clients advised by Meyer Bergman, the European real estate investment manager. Spenhill is Tesco's property arm.
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Supermarket J Sainsbury said it will close its mobile phone service from January 2016, having only launched the joint venture with Vodafone Group back in 2013. According to The Times, the service has added only 150,000 customers since its launch and Sainsbury's has decided to pull out of the market due to the slow take-up, with plans for the Mobile by Sainsbury's service to go dark on January 15, 2016.
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Virgin Money Holdings said it is on track to realise its targeted returns after seeing mortgage and credit card growth, net interest margins, and return on tangible equity all perform in line with expectations in the first nine months of 2015. The bank is targeting a net interest margin - a key driver of profitability - slightly ahead of 160 basis points at the full-year, and a mid-teens return on tangible equity by the end of 2017, having absorbed a new 8% bank surcharge introduced by the UK government. As part of its plans to assess entering the small business banking sector, Virgin Money said it has hired George Ashworth to oversee the project. He joins from ABN Amro Lease.
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WH Smith announced a share buyback as it reported a rise in pretax profit in its recently-ended financial year, boosted by strong sales in its travel division, and it said its struggling high street business also picked up in the second half. The company reported an 8% rise in pretax profit in the year ended August 31 to GBP121 million from GBP112 million the year before. WH Smith said it will buy back shares in the company of up to GBP50 million, following the completion of a share buyback for the same amount which it announced in October last year. It also will pay a total dividend of 39.4 pence for the year, a 13% increase on the 35.0p it paid the prior year.
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Man Group said it had USD1.4 billion of net inflows in the third quarter, driven by flows into its quant strategies, although overall funds under management fell due to negative investment movements of USD2.7 billion and a USD600,000 hit from the strength of the US dollar.
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Rank Group said its revenue grew both on a total and like-for-like basis in the first 15 weeks of its current financial year, with a particularly strong performance from its Grosvenor Casinos brand. The company said its total revenue growth in the 15 weeks to October 11 was 7.0%, with 12% of that growth coming from Grosvenor and 1.0% from Mecca, its bingo operation. Like-for-like revenue for the group in the period was up 8.0%, with 12.0% growth from Grosvenor and a 3.0% rise at Mecca. Rank said its remains confident it will meet its expectations for the full year.
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MARKETS
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UK indices were trading higher, tracking gains seen in Asian equities, with Unilever among the best performers after it reported a rise in sales in the third quarter of 2015.
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FTSE 100: up 0.9% at 6,325.34
FTSE 250: up 0.5% at 16,889.00
AIM ALL-SHARE: up 0.4% at 735.07
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GBP: up at USD1.5490 (USD1.5442)
EUR: flat at USD1.1447 (USD1.1432)
GOLD: up at USD1,184.78 per ounce (USD1,178.05)
OIL (Brent): down at USD48.45 a barrel (USD48.98)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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European Central Bank Governing Council member Ewald Nowotny said new measures are required to achieve price stability as core inflation is clearly below the target. "The ECB is using the monetary policy instruments available - but it is quite obvious that in the current macroeconomic situation additional sets of instruments are necessary," Nowotny who also heads Austria's central bank, said at a conference in Warsaw. "These include structural measures," he added.
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Immigrants will make up half of Switzerland's population by 2030, the nationalist Swiss People's Party (SVP) warned in one of its campaign newsletters for Sunday's parliamentary election. "The SVP is the only party that wants to curb immigration and to end abuse of the asylum system," party chief Toni Brunner declared on the first page. Pollsters say that Switzerland's strongest party is set to become even stronger, with nearly 28% of the votes expected for the SVP, up from the 26.6% of the previous election in 2011. However, Switzerland's complex consensus-oriented political system will prevent the SVP from taking over the government.
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The Syrian regime and its Iranian and Lebanese allies are set to launch an offensive around the key northern city of Aleppo, taking advantage of rebel moves to bolster their front lines in central Syria, sources told dpa. The offensive would first of all seek to relieve a siege by Islamic State fighters on the Kuweires military airbase east of Aleppo, and then focus on areas north of the city, a source close to a coalition led by Lebanese Shiite movement Hezbollah said.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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