This weeks includes; EU launches probe into UK tax rules, BrightHouse ordered to pay £15m by the FCA, Law firms begin buying Bitcoin, GSK to build EU drug testing facilities
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. 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 looks at McKinsey’s claim that Banks should be worried about Amazon rather than fintech
- Bloomberg claims that Frankfurt doesn’t want London’s bankers.
- City A.M explores Michael Bloomberg claim that London will keep rising as a global capital
1. EU LAUNCHES PROBE IN UK TAX RULES
The European Commission has launched an investigation in tax changes introduced by the UK government in 2013. The former Chancellor George Osborne introduced the “controlled foreign company” rules which permitted large multinational companies based in the UK to move parts of their taxable income to their offshore subsidiaries.
The European Commission is investigating whether these rules breach competition laws by giving an unfair advantage to smaller companies who do not have such subsidiaries. The loss in tax revenue suffered as a result of these rules is estimated to be £850 million.
The Guardian looks closer at the probe and recent multinational tax issues.
2. BRIGHT HOUSE ORDERED TO REPAY NEARLY £15M
BrightHouse a rent-to-own retailer has been ordered to pay out £14.8 million by the Financial Conduct Authority to 249,000 customers. The FCA says the firm had acted as an irresponsible lender. The cheapest washing machines cost over £1000 over three years despite the cheapest similar products on the market being sold for a minimum of £250 including delivery and a three-year breakdown plan.
They also found that some customers’ ability to repay loans had not been sufficiently assessed before the lending agreement so when they defaulted they had to return the products. Affected customers will have their outstanding balances written off and receive interest and fees back where applicable.
Read The Guardian’s report analysis for more analysis on the fine.
3. DEUTSCHE BANK PAYS OUT $220m OVER LIBOR
Deutsche Bank has agreed to settle a US Libor lawsuit for $220 million following an investigation. The investigation established that the German bank defrauded charities and government organisations but misleading them about key interest rates, including Libor. LIBOR (the London Interbank Offered Rate) is the rate at which banks lend to each other. This allowed them to make profit from trading positions based knowledge gained from this manipulation.
The German bank had already paid out over $2.5 billion to regulators in 2015 over the same issue but this fine will go directly to affected parties.
Read BBC News’ report for more on the issue of Libor.
4. LAW FIRMS BUYING BITCOIN
A number of law firms across the world are pre-emptively purchasing Bitcoins in case of ransom cyber attack. This is a strong contingency plan according to president of cyber security Firm Logic Firm, John Sweeney.
Many cyber criminals request Bitcoin as payment during Denial of Service cyber attacks because wallets are anonymous so the true identity of owners cannot be verified. Sweeney claims that firms must do more to deal with the increasing risk of cyber attacks.
This could however, lead them to become a target for cyber criminals. In addition, as with any ransom, payment is no guarantee of resolving the issue so it will be interesting to see how effective this contingency plan actually is.
Business Insider looks closer at this new trend and Sweeney’s comments.
5. MERRILL LYNCH FINED BY FCA
Bank of America Merrill Lynch has been fined £35 million by the Financial Conduct Authority. The bank failed to report 69 million transactions between 2014 and 2016. This is the first enforcement action taken by the FCA under rules introduced after the financial crash
The fine was reduced from £50 million because the bank chose to settle early. The bank said that it had since improved its systems and there had been no monetary losses as a result.
BBC News’ report for more information on this matter.
6. BAT AIMS FOR £1 BILLION VAPE BUSINESS
British American Tobacco has outlined its plans to increase revenue from new generation tobacco products. It aims to double its revenues to over £1 billion from “next generation products” over the next year. This is clear statement of intent to move away from traditional to supposedly less harmful vapour devices and e-cigarettes.
BAT had revenue of £14.75 billion last year and recently has purchase one its rivals Reynolds. Read City A.M’s analysis for more information.
7. UK ECONOMY GROWS 0.4%
The UK economy grew by 0.4% in the third quarter of the year. This growth marginally exceeded expectations of 0.3%. One of the notable points was the 1% growth of the industrial production sector, the best performance of the year.
The expectation is that this will further encourage the bank of England to raise interest rates. The pound rose to $1.33 in response to the news.
For further information read Sky News’ report
8. GSK TO BUILD EU DRUG TESTING FACILITIES
GlaxoSmithKline has announced potential plans to build drug testing facilities in the EU. This will be contingent on the nature of the Brexit deal but the firm has reiterated the need for greater clarity as soon as possible. GSK are in support of a transitional period of up to two years to mitigate the effects of any Brexit related disruption.
While GSK has not said that it will shift operations from the UK, it has stated that would duplicate UK testing facilities in the EU post-Brexit in order for it to produce marketable drugs in both the UK and EU.
Read The Guardian’s report for more commentary on GSK’s Brexit plans.
9. PUREGYM POTENTIAL SALE
Harris Williams and Jefferies are advising the owners of PureGym to facilitate a potential sale of the fitness chain. They are currently looking to obtain £400 million of debt financing Goldman Sachs Private Equity, Pamplona, Providence and Leonard Green are just some of the parties interested in getting involved.
PureGym was founded in 2009 but its £190 IPO fell through in 2016. It currently has over 180 gyms nationwide.
City A.M looks further at the potential sale.
10. FORD PROFITS RISE
Ford posted strong profits for the third quarter of in spite of increasing challenges faced China. Profits rose by over 60% to £1.2 billion compared to the same period last year as it saw an increase in demand for its F-Series pickup trucks in America.
In China, General Motors sold over three times as many vehicles as Ford in the last quarter as Ford’s sales fell by 5% to 833,000.
Read BBC News’ analysis for more on the automotive market.