This weeks news includes; RBS reachS $3.5 billion settlement deal, Google wins legal tax case in France and Sports Direct buys shares in Game.
Below are our top 10 stories that you need to know about. Be sure to check our twitter page and Facebook page for regular posts of important headlines. Click on the links for full stories. Get all the important stories and insights straight into your inbox by subscribing to our mailing list here.
Opinion articles of the week:
- City A.M argues Britain’s legal system can and will survive Brexit.
- Investopedia lists 6 Growth Stocks That Will Outlast a Bear Market.
- City A.M claims that the UK’s digital economy is better than any other country in the west
1. RBS AGREES $3.5 BILLION SETTLEMENT WITH US FEDERAL HOUSING AGENCY
The Royal Bank of Scotland has paid out $3.5 billion settlement for its part in the sale of high risk mortgage-backed securities, a key cause of the 2008 financial crash. The deal was reached with the Federal Housing Agency, the body that monitors the secondary mortgage market.
RBS has set aside $6.7 billion for this settlement and a separate settlement with the Department of Justice expected to be finalised later this year. This is not the highest sum paid off with Bank of America: $16.7bn, settled with DOJ and others in 2014 and $9.5bn, settled with FHFA in 2014
RBS was bailed out by the government in 2008 and is still 72% state-owned. RBS’s shares are worth roughly half of what they were in 2008 but the Chancellor has claimed the UK may sell have to begin selling shares at a loss. The government recently sold off all of its shares in Lloyds bank for an overall profit.
For more on the issues of mortgage-backed securities read BBC News’ analysis.
2. GOOGLE WINS LEGAL TAX CASE AGAINST FRANCE
Google will not be required to pay £1.1 billion to France after winning a court case in France. A Paris court has ruled that Google’s Irish subsidiary was not liable to pay additional taxes in France. Google argued that because they do not have a sufficient taxable presence in France and this was accepted by the court
Google only paid €6.7 million in French corporation tax in 2015. It employs 700 people in France but advertising contracts are booked through its Irish subsidiary. This legal win comes as welcome news for Google after last month it was fined over £2 billion for abusing its market position.
BBC news looks further at the case.
3. THOMAS COOK WINS FAKE SICK CLAIM LEGAL CASE
A Liverpool county court has ruled that a couple who lodged a fake sickness claim while on holiday were liable to pay a £4,000 legal bill. The couple attempted to fraudulently claim £10,000 in damages for food poisoning while on a holiday in the Canary Islands but the court ruled that they were not sick.
There has been a significant rise in fake sickness claims by UK holiday makers. Most claims amount to roughly £4000 but this has become a growing issue for holiday package companies.
To find out more about this issue read the International Business Times’ analysis.
4. SPORTS DIRECT BUYS STAKE IN GAME
Mike Ashley’s Sports Direct has bought a 26% in gaming retailer GAME. GAME recently issued a profit warning due to a number of supply issues and a tougher consumer market. Its share price fell by 36% in response to the warning. On announcement of Sport Direct’s share purchase however, prices rose again by as much as 23%, an indicator of confidence in the future of GAME.
Mike Ashley has been embroiled in controversy recently but this acquisition marks another step towards his vision of a world renowned business empire. In recent years he has acquired stakes in retailers such as French Connection and Debenhams. Ashley sees potential in the future of e-sports and GAME has an established presence in this market making this stake acquisition a logical strategic move.
For more on GAME and tycoon Mike Ashley, read Sky New’s analysis.
5. UK AND EU M&A ACTIVITY DOUBLES
The value of merger and acquisitions between UK and European companies has doubled in the first six months of 2017. The value of deals reached £25.2 billion compared to £11 billion over the same period in 2016.
Despite this rise, the business uncertainty before the referendum is argued to be the cause of the lack-lustre values of deals in 2016. There were over £70 billion worth of deals in the first six months in 2015, so these latest figures are still a long way off what they were.
As Brexit negotiations get underway, it is clear that the nature of the final deal will significantly affect the volume of mergers and acquisitions. City A.M looks further at the figures.
6. WAREHOUSE GLP FIRM BOUGHT FOR $16 BILLION
Global Logistics Partners, a firm that rents warehouses to online retailers is to be sold for £9 billion. A China-Led consortium will purchase the firm. GLP’s business has been booming due to the rise of e-commerce. GLP rents to companies such as Amazon and Alibabi and 55 million square miles of logistics facilities. This deal is one of the largest private equity deals ever in Asia.
Read the BBC’s analysis of the deal for more information.
7. SOUTHERN RAIL TO PAY OUT £13 MILLION
Govia Thameslink Railway (GTR), the owner of Southern rail has been ordered by the government to pay out £13.4 million for improvements after causing months of travel chaos. The Transport Secretary Chris Grayling argued that even the industrial action could not account for the consistently inadequate service faced by consumers for months.
GTR will pay £4m to fund 50 on-board supervisors for two years from next January, £7m will be put into a fund for the Department for Transport to allocate projects and improvements for passengers. The remaining £2.4m will fund general performance improvements and GTR must submit plans to the Government.
The RMT Union claimed that the measures were wholly insufficient and not even a slap on the wrist.
For more on the issue, read Sky New’s report.
Southern’s Work Experience wonder kid
Southern has been largely criticised however its image has begun to transform all thanks to a 15 year old intern. The boy known as Eddie was set up on southern’s social media account and won over Twitter users with the hashtag #AskEddie. The hashtag quickly took off and users digressed from transport related issues and began asking Eddie general and sometimes random questions questions. For example:
“ Twitter user: Hi Eddie, serious question this time How do you cook the right amount of pasta so you don’t end up with enough to feed the street? #AskEddie
@SouthernRailUK – Eddie: Hi, if you need the correct amount, always start off with around 200g per person, then build up depending on how much ½”
It brought out a fun human side to a once despised company. For more tweets click here. (The Telegraph)
8. TRIPADVISOR AGREES PARTNERSHIP WITH DELIVEROO
Deliveroo has teamed up with TripAdvisor and it will now be incorporated into TripAdvisor. Customers will soon be able to order from restaurants on Deliveroo within the TripAdvisor website. The partnership will be implemented across 12 countries and will connect over 20,000 restaurants.
The new feature will be implemented in the following countries; United Kingdom, Ireland, France, Germany, Spain, Italy, Belgium, the Netherlands, United Arab Emirates, Singapore, Hong Kong and Australia.
To find out more about the agreement read BBC News analysis.
9. WIMBLEDON SEAT PROVIDER ARENA GROUP LAUNCHES IPO
Arena Group, the company that provides seating and facilities for major sporting events is launching its IPO on the London Stock Exchange. It hopes to raise £60 million from the flotation.
The company was founded in 1761 and has provided services and facilities for the London 2012 Olympics, the US Open the Commonwealth games and most recently Wimbledon.
Find out more about the company and its flotation read City A.M’s analysis.
10. CARILLION ISSUES SALES WARNING
Construction firm Carillion’s shares fell by 39% last Monday after it issued a sales warning. The company has announced that its sales figures would fall below expectations and would require a “comprehensive view” of the company. Carillion’s has worked on a number of major UK projects including the Battersea Power Station development and the extension of Liverpool’s Anfield football ground.
KPMG has been reviewing its businesses and Carillion has set aside £845m in provisions, of which £375m relates to the UK and £470m to overseas markets.
To find out more about Carillion’s struggles read BBC New’s report.
City A.M looks at how hedge funds made £80 million in one day from predicting the Carillion crash