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LONDON MARKET OPEN: Tesco bank sold to Barclays for GBP600 million

Fri, 09th Feb 2024 08:49

(Alliance News) - Stock prices in London lacked direction on Friday, after Barclays announced plans to buy the retail banking business of Tesco Bank.

The FTSE 100 index opened up 5.17 points, 0.1%, at 7,600.65. The FTSE 250 was marginally up 2.72 points at 19,105.44, and the AIM All-Share was up 0.52 of a point, 0.1%, at 751.62.

The Cboe UK 100 was up 0.1% at 760.08, the Cboe UK 250 was down slightly at 16,532.89, and the Cboe Small Companies was up slightly at 14,581.40.

In European equities on Friday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.1%.

Consumer price inflation in Germany cooled to 2.9% in January, numbers from Destatis confirmed on Friday.

According to a Destatis, the consumer price index rose by 2.9% in January from a year before, slowing from a 3.7% annual rise in December. This came in line with a previous estimate.

On a monthly basis, consumer prices rose 0.2% in January from December, picking up speed from a 0.1% rise in December from November and also in line with preliminary data.

The pound was quoted at USD1.2626 early on Friday in London, higher compared to USD1.2609 at the equities close on Thursday. The euro stood at USD1.0779, up against USD1.0763. Against the yen, the dollar was trading at JPY149.56, higher compared to JPY149.39.

In the FTSE 100, Tesco rose 1.4%, whilst Barclays fell 0.2%.

The companies announced an agreement for Barclays to buy the retail banking business of Tesco Bank, as the big UK supermarkets scale back their forays into financial services.

London-based Barclays and Welwyn Garden City, England-based Tesco also announced a 10-year exclusive partnership that will see Barclays market Tesco-branded credit cards, unsecured personal loans and deposits to customers through Tesco's distribution channels as well as on the open market.

Tesco said it will sell to Barclays all of its banking operations in credit cards, loans and savings to Barclays, while retaining other activities of Tesco Bank including insurance, automatic teller machines, travel money and gift cards. The supermarket noted that these businesses are capital-light, profitable, and have a strong connect to its core retail offer.

Barclays will pay about GBP600 million for the business, which has been in operation for more than 25 years. Tesco noted it will receive about GBP1 billion in cash in total, including a special dividend of GBP250 million paid by Tesco Bank back in August.

Rival UK supermarket chain J Sainsbury last month announced a phased withdrawal from its core banking business. This followed a review of its Financial Services division as part of its 'Food First' strategy.

Shares in Sainsbury were down 0.4% early Friday.

In the FTSE 250 index, Victrex lost 7.2% in early trade.

The Lancashire, England-based polymer solutions company noted a "soft start" to its financial year, as it updated markets on its first quarter, ended December 31.

Quarterly revenue fell 22% to GBP61.2 million from GBP78.8 million a year earlier. Volumes fell 21% to 751 tonnes from 948 tonnes.

Looking ahead, Victrex noted an improvement seen in January, the start of its second quarter, but warned that "visibility remains limited."

Elsewhere, Air Astana on Friday announced the price for its "multiply oversubscribed" initial public offering in London and on two local exchanges in Kazakhstan.

The Almaty, Kazakhstan-based airline group operating in the Central Asia and the Caucasus region said the offer price has been set at USD9.50 per global depositary receipt, within its previously announced range of USD8.50 to USD11.00.

The share price is set at KZT1,073.83 per share, about USD2.40 and within its previously posted range of KZT956 to KZT1,237.

This will give Air Astana a market capitalisation at the IPO price of USD847 million, within its previously announced range of USD770 million to USD996 million. Aerospace firm BAE Systems PLC will sell 7.5 million GDRs in the domestic offering and 14.2 million in the global offering.

BAE shares were up 1.1%.

On Friday, financial markets in Shanghai are closed for the Chinese New Year. Markets in Hong Kong will have an abbreviated session.

The Nikkei 225 index in Tokyo closed up 0.1%. In China, the Hang Seng index in Hong Kong closed down 0.8%. The S&P/ASX 200 in Sydney closed up 0.1%.

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average and the S&P 500 were both up 0.1%, and the Nasdaq Composite up 0.2%.

Brent oil was quoted at USD81.72 a barrel early in London on Friday, up from USD81.02 late Thursday.

"Crude oil leapt higher as Israel took hope for a ceasefire agreement off the table, triggering a wave of buying as geopolitical risk went on the boil again. Prime Minister Benjamin Netanyahu said that he sees no other solution than total victory following a counteroffer from Hamas for a ceasefire. This comes amid a military escalation against Iranian-backed 'terrorist' factions by the US and UK concerns," said SPI Asset Management's Stephen Innes.

Gold was quoted at USD2,033.11 an ounce against USD2,029.31.

Still to come on Friday's economic calendar, there is Irish industrial production data at 1100 GMT.

By Sophie Rose, Alliance News senior reporter

Comments and questions to newsroom@alliancenews.com

Copyright 2024 Alliance News Ltd. All Rights Reserved.

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