Ex-RBS boss Fred Goodwin under scrutiny in court hearing

Former Royal Bank of Scotland boss Fred Goodwin is set to come under scrutiny in court for the first time since the bank’s near-collapse in 2008. Some 9,000 people who lost money on shares are demanding £520m in compensation from the bank and four former directors, including Mr Goodwin. They say they were misled over the bank’s financial health in the run up to its £45bn government bailout. The bank and former directors deny any wrongdoing. Mr Goodwin, who was stripped of his knighthood in 2012, oversaw the multi-billion-pound deal to buy Dutch rival ABN Amro at the height of the financial crisis in 2007, which led to the RBS bailout. The case at London’s High Court is expected to last 14 weeks and centres on the rights issue aimed at funding the deal which asked existing shareholders to pump £12bn into the bank in exchange for discounted extra shares.

Brazil’s stock market plunges after corruption claims

Brazil’s Bovespa stock market was briefly halted as investors reacted to corruption allegations against Brazilian President Michel Temer. Stocks plunged more than 10% at the start of trading, prompting circuit breakers to kick in and halt dealings. President Temer was forced to deny a newspaper report that he had given consent to paying off a witness in a huge corruption scandal. The Supreme Court has authorised an investigation into the allegations. On Thursday Mr Temer said in a TV statement: “I never authorised any payments for someone to be silent. I did not buy anyone’s silence. I fear no accusations.” “I have nothing to hide. I never authorised anyone to use my name” “We cannot throw so much hard work [on reforms] done for our country in the rubbish bin.” “I will not resign. I will not resign. I know what I have done.” Investors are concerned that Mr Temer’s reform plans could be derailed. The Ibovespa index closed more than 8.8% down at 61,575 points. Mr Temer is trying to get pension reforms through Congress that would mean men would have a minimum retirement age of 65, and women 62, and most people would contribute more. There is currently no minimum retirement age. There are also labour reforms on the cards to weaken trade union bargaining powers and make hiring and firing workers easier.

Forward Diary: 22nd – 26th May 2017

Company and economic announcements planned for the week commencing 22nd May 2017

Greeks walk out in general strike over cuts

Hospitals, transport services and government offices across Greece have been severely affected by a general strike over new austerity measures. Industrial action began on Tuesday but was ramped up nationally by members of the big trade unions. Thousands of people stopped work on Wednesday and marched through Athens to demonstrate over the measures being demanded by international lenders. There were isolated clashes, but the most of the protest were peaceful. Elsewhere in the country ferry services stopped and buses and trains were limited. Flights were also hit for several hours by the strike.

Share sale returns Lloyds to private sector

The government has confirmed its remaining shares in Lloyds Banking Group (LLOY.L) have been sold, eight years after pumping in £20bn to save it. Lloyds Bank said the government will see a return of £21.2bn on its investment. At the height of the financial crisis taxpayers owned 43% of Lloyds. Its return to the private sector is in stark contrast with the other bailed-out bank – Royal Bank of Scotland – that is still 73% owned by taxpayers. The government has been slowly selling down its stake in Lloyds for the past five years. Ministers have claimed that all the public money used to buy Lloyds shares has been returned.

Labour ‘plans water industry nationalisation’

Labour would nationalise the multi-billion pound water industry if elected. Under proposals to be outlined in its manifesto on Tuesday, Labour would create nine new public bodies to run the water and sewage system in England. By ending the practice of paying dividends to shareholders, party sources say bills would be reduced by around £100 a year per household. Labour will also promise 30 hours free childcare for two to four-year-olds. Jeremy Corbyn will unveil a “radical and responsible” plan for government, pledging to change the country and govern “for the many not the few”. He will vow to reverse the austerity of recent years but also to “manage within our means”. A draft version of the document, which was leaked last week, committed a future Labour government to taking the railways and the Royal Mail back into public ownership while also nationalising the electricity distribution and transmission networks. Labour’s plans would also see the water industry, which was sold off by the government of Margaret Thatcher in 1989, return to public hands. If elected on 8 June, it would create nine new public bodies to run the water and sewage system in England and Wales, that would be publicly accountable, retaining the existing workforce.

Microsoft: Cyber-attack a ‘wake-up call’

A cyber-attack that has hit 150 countries since Friday should be treated by governments around the world as a “wake-up call”, Microsoft says. It blamed governments for storing data on software vulnerabilities which could then be accessed by hackers. It says the latest virus exploits a flaw in Microsoft Windows identified by, and stolen from, US intelligence. There are fears of more “ransomware” attacks as people begin work on Monday, although few have been reported so far. Many firms have had experts working over the weekend to prevent new infections. The virus took control of users’ files and demanded $300 (£230) payments to restore access. The spread of the virus slowed over the weekend but the respite might only be brief, experts have said. More than 200,000 computers have been affected so far.

UK virtual reality firm Improbable raises $500m

A London-based virtual reality firm has raised $500m (£388m) in one of the biggest investments in an early stage European technology business. Japan’s Softbank is backing Improbable in a funding round that values the business at more than $1bn. The deal is further evidence that the UK’s technology sector can now compete with the best. There may also be relief that despite the cash injection from Japan, Improbable will stay independent. Improbable was founded just five years ago by Herman Narula and Rob Whitehead, who had studied computer science together at Cambridge University. Their aim was to build large-scale virtual worlds and simulations – mainly for games developers but also for other clients who could use them in applications such as modelling transport systems. The company believes it has developed revolutionary technology with its Spatial OS operating system, which it has opened up to other developers. It has partnered with Google to put its system on the search giant’s cloud, allowing small developers to create massive simulations without much infrastructure of their own.

Forward Diary: 15th – 19th May 2017

Company and economic announcements planned for the week commencing 15th May 2017

Snap shares slide as growth slows

Shares in Snapchat’s owner have sunk after it reported disappointing growth in the first three months of the year. In its first results since floating, Snap said the number of daily active users rose just 5% to 166 million compared with the last three months of 2016. That was two million fewer than expected, but 36% higher than the same period last year. The news sent shares tumbling more than 20% in after-hours trading in New York. Snap’s adjusted loss of $188.2m was about $10m higher than analysts had expected, while the net loss soared to $2.2bn from $104.6m due to costs associated with the IPO earlier this year. Revenue rose 286% for the quarter to almost $150m, but was also short of forecasts by about $9m.

Beaufort named as one of this year’s ‘1,000 Companies to Inspire Britain’ by the London Stock Exchange

1,000 Companies to Inspire Britain is an annual celebration of some of the fastest-growing and most dynamic small and medium-sized enterprises (SMEs) in the UK. As well as identifying 1,000 companies, the annual report examines in detail the opportunities and challenges facing SMEs and looks at the sectors and trends that will shape the future of the UK economy.

Investors ‘need bigger say in exec pay’

Investors should be given a bigger say over executive pay to help rebuild trust in business, the Institute of Directors (IoD) has said. The IoD is calling for pay strategies to be rethought, if they are rejected by 30% of shareholders. Remuneration should then be put to a fresh vote, it said. Despite some high profile rebellions in recent months, executive pay is usually approved at annual general meetings, the IoD added. “There is still a pressing need to rebuild public trust in big business, to work in the long-term interests of investors and employees, rather than the short-term interests of managers,” said Oliver Parry, head of corporate governance at the IoD. “Now is the time for sensible reforms which increase transparency and draw more engagement from shareholders.” At present, shareholders have a binding vote on future remuneration policy once every three years. If the policy is rejected by 51% of shareholders, it must be revisited. The IoD is arguing that threshold should be lowered to 30%.

UK house prices in first quarterly fall since 2012

UK house prices are “stagnating” and have actually fallen in the last three months, according to the Halifax. In the three months to April, prices fell by 0.2% – the first quarterly fall since November 2012. Over the past month alone, prices fell by 0.1%, the Halifax said. However, for the year to April, prices rose by 3.8%, the same figure as in March. It leaves the average cost of a house or flat at £219,649. Martin Ellis, Halifax housing economist, said one reason why prices were slowing was that property had become too expensive for many people. “Housing demand appears to have been curbed in recent months due to the deterioration in housing affordability caused by a sustained period of rapid house price growth during 2014-16,” he said. Last week rival lender Nationwide said house prices were growing at 2.6% annually – their lowest rate for four years.

Euro strengthens as ‘pro-business’ Macron wins French presidency

The euro has risen after pro-EU Emmanuel Macron won France’s presidential vote by a large margin. The single currency strengthened 0.2% against the dollar as investors were reassured over the future stability of the European project. The reaction was muted, however, as investors were expecting Mr Macron, a former investment banker and an economic liberal, to prevail. He has proposed cutting corporation tax and changes to the labour market. “Voters elected for Emmanuel Macron’s pro-business policy proposals, which have the potential to unlock long-held-back investment and stimulate French markets,” said Stephen Mitchell at London-based fund manager, Jupiter Asset Management. His opponent in the race for the presidency, Marine Le Pen, is a critic of globalisation and had proposed withdrawing France from the single currency.

Goldman Sachs boss: City ‘will stall’ over Brexit risk

The chief executive of the world’s second largest investment bank has warned that London “will stall” because of the risks from the Brexit process. Lloyd Blankfein said that his firm, Goldman Sachs, which employs 6,500 people in the UK, had “contingency plans” to move people depending on the outcome of the negotiations. Mr Blankfein said he hoped the bank would not have to trigger the plans. He wants to keep as much of its activities in the UK as possible.

Forward Diary: 8th – 12th May 2017

Company and economic announcements planned for the week commencing 8th May 2017

HSBC profits fall as bank bids to restore flagging revenues

Bank giant HSBC has reported a 19% fall in profits for the first three months of 2017 as it bids to restore flagging revenues after a restructuring. But the fall in profits to $5bn (£3.9bn) beat analysts’ forecasts, and HSBC’s shares rose 1.5% in Hong Kong. The lower profits were due mainly to accounting changes, while the results last year included proceeds from the sale of its Brazilian business. Chief executive Stuart Gulliver called the figures a “good set of results”. Revenues for quarter rose to $12.84bn from $12.57bn, while adjusted pre-tax profit – which excludes one-off items – rose to $5.94bn from $5.3bn a year earlier. The figures are the first since Europe’s largest bank announced the appointment of a new chairman in March. The move was part of a management overhaul that will also see HSBC choose a new chief executive. Following a big drop in profits in 2015, HSBC embarked on a restructuring that led to thousands of job cuts, branch closures, asset sales, and a bigger focus on Asia.

Apple sees surprise fall in iPhone sales

Apple sold fewer iPhones than a year ago in the first three months of 2017, the company said in its latest results. The California firm, which is due to release a new phone later this year, said it sold 50.8 million iPhones in the period, down 1% year-on-year. Apple boss Tim Cook blamed a “pause” as customers wait for the next iPhone. Shares in the firm fell nearly 2% in after-hours trading after earlier hitting a record high on expectations of better results. Apple reported a 4.6% rise in revenue across the whole company to $52.9bn (£41bn), slightly below analysts’ forecasts. The dip in iPhone sales was offset by services, including Apple Pay, iCloud and the App store, which recorded an 18% increase in sales to $7bn. Mr Cook also pointed to growth in sales of Apple Watch, as well as its AirPods and Beats earphones. Despite falling unit sales, revenue from iPhones still climbed 1% to $33.2bn due to “robust” sales of its bigger, more expensive iPhone 7 Plus.

BP profits helped by higher oil prices

The recent increase in oil prices has helped BP (BP..L) to record a healthy profit for the three months to March. The $1.4bn (£1.1bn) profit, on the replacement cost measure, compared with a $485m loss a year earlier. Oil prices have been about 35% higher in the first three months of the year compared with a year ago, boosting revenue from BP’s core oil and gas production division. BP chief executive Bob Dudley said: “Our year has started well.” He added: “BP is focused on the disciplined delivery of our plans. First quarter earnings and cash flow were robust.”

RBS reports first quarter profit as turnaround continues

Troubled Royal Bank of Scotland (RBS.L) made a profit of £259m in the first three months of 2017, up from a £968m loss in the same period last year. The bank said that after stripping out fines and settlements, the core operating business made a profit of £1.3bn, up from £1.02bn. RBS, majority-owned by the government after being bailed out, added its cost-cutting plan was ahead of schedule. It has already stripped out 37% of the £750m cuts planned for this year.

Forward Diary: 1st – 5th May 2017

Company and economic announcements planned for the week commencing 1st May 2017

Trump won’t scrap Nafta trade deal ‘at this time’

US President Donald Trump has told Mexico and Canada he wants to renegotiate – not scrap – the North American Free Trade Agreement. Media reports on Wednesday had suggested Mr Trump was drafting an executive order to end the pact. During his election campaign Mr Trump called Nafta the “single worst trade deal ever” and a “killer” of US jobs. The reversal surprised markets, sending the Mexican peso and Canadian dollar higher after losses earlier this week.

Boohoo online fashion retailer sees its profits double

Annual pre-tax profits at online fashion retailer Boohoo (BOO.L) have almost doubled to £31m – up from just under £16m last year. Its sales have jumped by 51% to almost £300m, thanks to new overseas markets. The Manchester-based firm puts its success down to “combining cutting-edge, aspirational design with an affordable price tag”. Its booming sales growth has also been reflected in its share price, which has more than trebled in the past year. On its stock market flotation in 2014, it was valued at £560m. It is now worth about £2bn. The firm has gone from strength to strength in recent years, while its High Street rivals have had to deal with increasing competition from Boohoo and other online retailers.

Brexit: Worries for small businesses with EU staff

More than half of small firms employing workers from the EU are worried that Brexit will stop them recruiting sufficiently skilled staff. A report from the Federation of Small Businesses (FSB) has found that only 21% of small firms currently employ staff from an EU country. But of those, 59% are concerned they will not be able to recruit the right staff in the future. The FSB said securing the right of EU staff to remain in the UK was vital. Without that, said the FSB’s chairman Mike Cherry, small firms feared they would lose skilled staff who would be difficult to replace. “EU workers are a vital part of our economy, helping to plug chronic skills gaps across a wide range of sectors, and filling jobs in an already tight labour market,” he said. “From packers, to mechanics, to graphic designers, small employers need to be able to hire the right person, for the right job at the right time.”

Euro jumps after French vote

The euro jumped to a five-month high after the first round of voting in the French presidential election on Sunday. Centrist Emmanuel Macron topped the voting, going through to the final round with far-right Marine Le Pen. Investors had worried that far-left Jean-Luc Mélenchon would beat Mr Macron, giving voters a choice between two Eurosceptic candidates. The euro initially rose 2% to its highest level since mid-November before giving up some ground.

UK’s online shoppers top global spending survey

Online shoppers in the UK spend more per household than consumers in any other country, a report says, amid a shift from stores to the internet. UK households spent the equivalent of $5,900 (£4,611) using payment cards online in 2015, the UK Cards Association said. This was higher than Norway ($5,400), the US ($4,500) and Australia ($4,000). The association suggested the frequency of debit and credit cards and the ease of delivering items drove online buys. New figures from the association showed that £154bn was spent on the internet using cards in 2016 – up by a quarter in two years.

Tesco to offload opticians’ business to Vision Express

Tesco (TSCO.L) is to sell its in-store optician business in the UK and Republic of Ireland to Vision Express, who will continue to run the eyeglass outlets. Tesco – which says the sale will “simplify” its business – has 206 optical stores in the UK and three in Ireland, as well as an online outlet. It employs about 1,500 staff, who will be transferred to Vision Express, owned by Dutch-based Grand Vision. The deal is expected to be completed this year, pending regulatory approval. No financial details about the sale have been given. Tesco UK chief executive Matt Davies said: “This allows us to further simplify and strengthen our UK business and ensures our customers are still able to enjoy high quality eye care services from Vision Express in our larger stores.” Tesco Opticians, which opened its first opticians in Peterborough in 1998, had revenues of about £90m in 2016. Tesco has been selling off businesses including restaurant chain Giraffe, Dobbies Garden Centres and music streaming service Blinkbox. Vision Express has 389 stores in the UK and about 4,500 staff.

Forward Diary: 24th – 28th April 2017

Company and economic announcements planned for the week commencing 24th April 2017

RBS stake may be sold at a loss, chancellor admits

The chancellor has admitted for the first time that the government is prepared to sell its stake in Royal Bank of Scotland (RBS) at a loss. The Treasury bailed out the bank by buying a 72% stake for £45bn, at 502p a share, at the height of the financial crisis in 2008. Shares in the loss-making lender are now trading at less than half that price at 223p. Philip Hammond told MPs on Tuesday: “We have to live in the real world.” He added: “Our policy remains to return the bank to private hands as soon as we can achieve fair value for the shares, recognising that fair value could well be below what the previous government paid for them. “We have to live in the real world and make decisions on the future of our holding in RBS in the best interests of taxpayers.”

Weetabix to be sold to US company Post Holdings

UK cereal firm Weetabix is to be bought by US firm Post Holdings for $1.8bn (£1.4bn), its owner has confirmed. Weetabix – made in the UK since 1932 – was put up for sale in January by China’s Bright Food, which bought a 60% stake in 2012. Bright’s acquisition was the largest by a Chinese firm at the time, but it is believed to have struggled to build significant market share in China. Chinese consumers prefer a hot, rice-based breakfast to cold cereal. While Weetabix doubled sales in China in 2016, the UK still accounts for the majority of its sales. Post Holdings is the third-largest cereal firm in the US and owns brands including Great Grains, Golden Crisp and Cocoa Pebbles. Some of the world’s biggest names in food, including the UK’s Associated British Foods and Italy’s Barilla, had been named as possible suitors for Weetabix. Northamptonshire-based Weetabix, which has a royal warrant, was family-owned until 2004, when it was bought by private equity firm Lion Capital.