(An item published at 1243 BST incorrectly stated the nature of the fine on Barclays. The correct version follows.)
LONDON (Alliance News) - The UK's Financial Conduct Authority has imposed its biggest-ever fine for client asset protection breaches on Barclays Tuesday, billing it GBP37.7 million for failing to properly protect GBP16.5 billion of clients' custody assets.
The fine was the biggest the regulator has handed out for a breach of this nature because it is the second time it has had to fine Barclays over not doing enough to protect client money. It fined the bank GBP1.1 million in 2011 for failing to segregate client money intra-day for over eight years.
"Barclays failed to apply the lessons from our previous enforcement actions, numerous industry-wide warnings, and exposed its clients to unnecessary risk. All firms should be clear after Lehman that there is no excuse for failing to safeguard client assets," FCA Director of Enforcement and Financial Crime Tracey McDermott said
The regulator said it found "significant weaknesses" in the systems and controls in Barclays' investment banking division between November 2007 and January 2012, meaning that clients risked incurring extra costs, lengthy delays or losing their assets if Barclays had become insolvent.
The fine exceeds a GBP33.3 million fine imposed by the FSA on JP Morgan in 2010 for similar failings.
Tesco has confirmed that incoming Chief Financial Officer Alan Stewart will now start immediately, over two months earlier than planned, as it tries to regain its reputation in the wake of its admission Monday that it had overstated its profit guidance. That news had wiped GBP2 billion off its market capitalisation, and its shares are down again Tuesday after the latest industry data showed it losing market share amid falling sales.
The US government has announced a crackdown on US companies that use mergers and takeovers to move their headquarters to countries with lower taxes. US Treasury Secretary Jacob Lew said the practice, known as corporate inversion, was an "unfair loophole" that puts a larger tax burden on all other taxpayers, including small businesses. The new rules include a ban on companies using foreign cash without paying US taxes.
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Markets: UK shares are trading significantly lower. The US government move against tax inversions brought down pharmaceutical stocks in particular, while the latest UK grocery sector data from the Kantar Worldpanel has hit the shares of the big listed supermarkets. Miners are rebounding after some stronger-than-expected Chinese economic data.
The euro has rebounded, hitting a four-day high against the dollar despite Eurozone manufacturing PMI showing the slowest rate of growth in fourteen months. The euro slipped Monday after European Central Bank President Mario Draghi indicated that the economic recovery in the eurozone "is losing momentum."
US Stock futures are pointing to a lower open on Wall Street. The DJIA is called to open down 0.3%, the S&P 500 down 0.4% and the Nasdaq composite down 0.4%.
FTSE 100: down 1.4% at 6,678.58
FTSE 250: down 1.3% at 15,533.78
AIM ALL-SHARE: down 0.6% at 755.45
GBP-USD: up at 1.6391
EUR-USD: up at 1.2891
GOLD: up at USD1,232.14 an ounce
OIL (Brent): up at USD97.48 a barrel
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Other Top UK Corporate News
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Heavy discounters and upmarket grocers are continuing to steal sales and market share from the UK's biggest supermarket chains, according to the latest figures from Kantar Worldpanel. Wal-Mart-owned Asda continues to fare better than its three other rivals, Tesco, J Sainsbury and Wm Morrison Supermarkets, the data showed. Tesco's market share in the 12 weeks to September 14 slid to 28.8%, down from 30.2% a year earlier, while its sales fell by 4.5% in the period. Sainsbury's, which had been outperforming the other two in recent years, saw sales decline 1.8% year-on-year and its market share shrink to 16.2%, from 16.6%. Morrisons saw its market share fall to 10.9%, compared with 11.1% in the same period last year, with sales declining 1.3% year-on-year.
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Standard Chartered is holding advanced talks over the sale of its Hong Kong consumer finance arm to Pepper Australia Pty Ltd, Reuters reported. Pepper and Hong Kong-based Chow Tai Fook Enterprises were the two top contenders to buy the PrimeCredit arm following two bidding rounds, Reuters said, citing people familiar with the deal. The sale could reach between USD500 million and USD700 million.
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Designer shoe maker Jimmy Choo and housebuilder Miller Homes added themselves to the London initial public offering pipeline, as analysts said they expect a pickup in new offerings after a summer lull and in the wake of the Scottish referendum vote. Jimmy Choo said it intends to float on the London Stock Exchange's main market in October, with current owner JAB Luxury selling part of its stake. Separately, housebuilder Miller Homes said it also intends to float on the London Stock Exchange's main market.
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Sweeteners and starches company Tate & Lyle said it faced a challenging first half, and warned that supply chain issues will hit its annual profit. In a trading statement, the company, known for its low-calorie sweetener Splenda, said supply constraints due to a severe winter in the US caused operational difficulties in its US corn plants, which left it with much-lower inventories than usual, wiping around GBP10 million off its profit for the first quarter. The company's supply chain was also hit by an industrial accident at it Singapore facility, which drove up costs.
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Old Mutual has launched the initial public offering of its US-based institutional asset management business OM Asset Management Ltd, and plans to sell 22.0 million shares, or an 18.3% stake, at between USD15.00 and USD17.00 a share.
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Engineering group IMI has appointed Daniel Shook as its next finance director. Shook will join the company on January 1, 2015 as finance director designate and will then succeed Douglas Hurt in the role in early 2015. Hurt will step down from the board and retire from IMI following its annual general meeting on May 7, 2015. Shook is currently chief financial officer at Borealis AG, the Austria-based chemicals and plastics producer.
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Meggitt said it has been selected by Bell Helicopter, a Textron Inc company, to provide an oil sensing package for the new 525 Relentless commercial super-medium helicopter, in a deal expected to generate USD30 million in gross sales over the production life of the helicopter.
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British Land Co said it has fully let the recently completed 39 Victoria Street development in Victoria, London, meaning its West End portfolio is nearly fully let. Its 10-30 Brock Street and 10 Portman Square properties are both also fully let or under offer. The company's West End office portfolio now has a 96% occupancy rate, up from 88% at March 31, it said.
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Close Brothers Group reported a 19% increase in pretax profit in its recent financial year, driven by the performance of its banking division, which showed loan book growth and was helped by an improved credit environment. The FTSE 250 financial services group said it made a GBP195.7 million pretax profit in the year ended July 31, compared with GBP163.8 million in the prior year.
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Scottish soft-drinks maker AG Barr said an increase in volume and strong demand for its Strathmore water brand and its iconic Irn Bru drink, drove an increase in its first half profit and revenue, as it also announced a new 10-year franchise deal to sell the Snapple brand in the UK and EU. The company raised its interim dividend by 10% to 3.11 pence.
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Perform Group's independent directors again urged the company's minority shareholders to reject the GBP701.6 million takeover offer from Access Industries Group, reiterating that they think the offer undervalues Perform, which has already proved a strong track record of growth and has strong prospects going forward as a standalone business. At the start of the month, Access made a 260 pence a share offer for the 57.5% stake in Perform that it doesn't already own. That price values the remaining stake in Perform at GBP410.3 million and values the whole company at GBP701.6 million. It has said its bid is final and will not be increased.
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Mother and baby products retailer Mothercare saw its shares tumble after it declared a heavily discounted GBP100 million rights issue to help fund its new strategic plan to modernise its store estate and invest in IT. The company declared a 9-for-10 rights issue at 125 pence per share, and said it plans to raise around GBP95 million in net proceeds, after expenses.
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AIM Movers
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Panmure Gordon & Co is doing well after its interim pretax profit rose sharply, boosted by a 25% increase in net commission and fee income, and it reiterated that it could start paying a dividend again for the current fiscal year, having last paid a dividend in 2007 ahead of the financial crisis. Ilika is up after it said the pilot line for the production of prototype batteries has successfully completed a factory acceptance test as part of its deal with the University of Southampton to build a solid-state battery scale-up facility. Monitise is another gainer after UBS initiated analyst coverage of the mobile payments company with a Buy rating and a price target of 80p, which suggests a 146% upside from Monday's close of 32.5p. Anglo Asian Mining has fallen sharply after it said it made a pretax loss of USD7.5 million in the six months to June 30, compared with a USD4.2 million profit a year earlier. Revenue rose to USD32.7 million, from USD27.6 million last year, but this was offset by a near doubling in the group's cost of sales to USD33.5 million, from USD18.3 million, as fuel costs rose and it commissioned its agitation leaching plant in June 2013. Regenersis is another big faller after pretax profit in its last financial year halved, as a jump in acquisition and restructuring costs offset revenue growth that was also held back by the strength of sterling. Starcom is down after it said its pretax loss widened in the six months to June 30, as it was hit by the loss of sales to Ukraine and slower-than-expected revenue from its WatchLock arm. CA Sperati is also down after it raised money through a discounted share subscription, said it would exit its apparel business, and will move into a completely new business by subscribing to shares in Kentucky Oil & Gas. Beacon Hill Rescurces is another faller after its pretax loss in the six months to June 30 widened to USD10 million, from a USD7.6 million loss last year, as revenue fell and administrative expenses rose. The company is not anticipating any production in the second-half as its Minas Moatize coking coal project remains in care and maintenance until the construction of the expanded washplant is completed in late 2015 or early 2016.
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Top Economics And General
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UK mortgage approvals declined unexpectedly in August, data from British Bankers' Association, or BBA, revealed. The number of mortgage approvals fell to 41,588 in August from 42,715 in July. Economists had expected the number of approvals to rise to 42,913. Meanwhile, gross mortgage borrowing rose to GBP11.1 billion in August, from GBP10.9 billion in July.
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UK public sector net borrowing excluding interventions increased in August, data from the Office for National Statistics showed. PSNB excluding public sector banks totaled GBP11.6 billion in August versus GBP11 billion in the same period of last year. This increase in net borrowing was partly a result of central government net borrowing which increased by GBP0.4 billion. Public sector net debt excluding public sector banks was GBP1,432.3 billion in August, an increase of GBP96.7 billion compared with August 2013, the ONS said.
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The eurozone economy slowed in September, with a key business indicator released slumping to a nine-month low. The purchasing managers index for the currency bloc's manufacturing and service sectors edged down to a lower-than-forecast reading of 52.3 this month, from 52.5 in August, the London-based Markit research group said.
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China's manufacturing sector expanded at an accelerated pace in September, the preliminary PMI reading from HSBC and Markit Economics revealed - showing a score of 50.5. That was up from 50.2 in August, and it topped forecasts for an even 50.0. A score above 50 signals expansion in a sector, while a reading below 50 means contraction. "Economic activity in the manufacturing sector showed signs of stabilization in September. However, overall the data still point to modest expansion," said Hongbin Qu, Chief Economist, China & Co- Head of Asian Economic Research at HSBC.
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A second video purportedly of British hostage John Cantlie was released by the Islamic State as the US and Arab allies hit the extremist group's targets inside Syria for the first time. Journalist John Cantlie has been held hostage for almost two years. In the video, entitled Lend Me Your Ears: Message from the British Detainee John Cantlie: Episode 1, he is critical of the military campaign against the militant group. He is seen wearing an orange jumpsuit in the video, in which he warns US President Barack Obama against joining the war.
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Defense forces of the US and Arab partner nations have begun airstrikes inside Syria targeting terrorists from the Islamic State of Iraq and the Levant, the Pentagon announced. The nations fighting alongside the US include the United Arab Emirates, Bahrain, Jordan, Qatar and Saudi Arabia, which has a Sunni majority. Overnight, a mix of fighters, bombers, remotely piloted aircraft and Tomahawk Land Attack Missiles conducted 14 strikes against ISIL targets, the US Central Command said in a news release.
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The US Secret Service is reviewing security at the White House after an armed intruder managed to scale a fence and enter the executive mansion, White House spokesman Josh Earnest said Monday.
The intruder, Omar Gonzalez, who was armed with a knife, also had 800 rounds of ammunition, two hatchets and machete in his car, and posed a threat to US President Barack Obama, prosecutors said in court, according to the Washington Post.
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Afternoon Watchlist (all times British Summer Time)
13:55 US Redbook index
14:00 US Housing Price Index
14:20 US FOMC Member Powell Speech
14:45 US Markit Manufacturing PMI Preliminary
15:00 US Richmond Fed Manufacturing Index
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Wednesday's Key UK Corporate Events
S&U - Half Year Results
32Red - Half Year Results
United Utilities - Trading Statement
Bango - Half Year Results
Metal Tiger - Half Year Results
Clinigen Group - Full Year Results
Scisys - Half Year Results
Personal Group Holdings - Half Year Results
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Wednesday's Key Economic Events (all times British Summer Time)
00:50 Japan Corporate Service Price
02:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index Preliminary
09:00 Italy Consumer Confidence
09:00 Germany IFO - Business Climate
10:00 Italy Trade Balance non-EU Preliminary
12:00 US MBA Mortgage Applications
15:00 US New Home Sales
15:30 US EIA Crude Oil Stocks change
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