Bank watchdog the Financial Conduct Authority on Tuesday clamped down on overdraft fees in what it called the biggest market shake-up “for a generation”. Consumer groups cheered the moves, which mean banks won’t be able to charge higher fees for unarranged overdrafts. Banks will be forced to charge a single interest rate on overdrafts, with no fixed daily or monthly fees. Last year banks made £2.4 billion in profits from overdrafts, of which a third came from unarranged deals when cash-strapped consumers stray into debt. The FCA says people in deprived areas are worst hit by the bank charges and that unarranged overdrafts can be 10 times dearer than payday loans. Banks have tended to argue that the fees they charge the few who overspend allow them to offer “free” banking to those who remain in credit. Critics point out that free banking is a myth anyway, since banks always pay less on deposits than they charge for loans, a fee in effect.
Energy shakeup could cut bills by £45 a year. Ofgem says consumers should pay less towards networks such as National Grid (NG.). The energy regulator has provided some relief from rising energy costs by announcing measures that will reduce bills by about £45 a year from 2021. Ofgem said it would “drive a hard bargain” with companies that run the wires and pipes that supply the UK’s electricity and gas, halving the level of returns they can make. Consumer groups welcomed the move, saying networks had “had it too good for too long” and urging the regulator to “hold its nerve” against the inevitable industry pushback. National Grid shares fell by nearly 4% and the company said it was disappointed by the decision, which it believes does not reflect the “level of risk borne by transmission networks”. The company runs the national electricity grid and accounts for about 3% of a typical bill.
Kromek to break-even for the first time since its float. A biological attack may feel like something that only happens in sci-fi films but trying telling that to anyone living in Salisbury. Could the attack have been prevented and the nerve agent detected in advance? Perhaps AIM-listed Kromek Group (KMK) equipment could have. The firm was spun out of Durham University and listed in 2013, selling equipment which can detect nuclear radiation. Since floating, it has won plenty of work with the US Department of Defense and last week it was awarded a £1.6 million contract to develop a vehicle capable of quickly identifying the pathogens used in any biological attack. The medical sector also uses Kromek. Its probes can evaluate whether cancer is spreading and highlight conditions ranging from osteoporosis to heart disease. Kromek is working with top medical suppliers to make its products available in hospitals. Though the firm’s tech is impressive, a major criticism is that orders tend to be lumpy in nature, and therefore difficult to forecast. Nevertheless, the firm is on course to break even this year, which analysts believe will be a pivotal moment for the company’s share price. Robin Byde, analyst at Cantor Fitzgerald, says: “The group is well capitalised and extensive R&D is now being converted into strong sales with blue-chip customers. “Kromek is on track to achieve break-even this financial year, the first time since [it floated] in 2013. We forecast strong growth thereafter reflecting a well-invested manufacturing platform, a healthy contract pipeline and high operational gearing.”
Property giant Land Securities Group (LAND) got an early Christmas present on Tuesday, as it landed a tenant for the final bit of remaining office space at its huge Nova development in Victoria. Nord Anglia Education, which operates 56 international schools across the globe, has signed a 10-year lease for 10,000 square feet it will use for its new headquarters. The deal at the Nova South building means the total development, comprising some 480,000 square feet across two properties, is fully-let for the first time since construction completed in April 2017. The latest letting will be welcome against a backdrop of Brexit-induced jitters in the commercial property market, as some businesses freeze or scrap office moves until there is more political certainty in Britain.
John Lewis sales rebound as it cuts clothing prices. Chain bucks retail gloom after profit warnings at ASOS (ASC), Bonmarche Holdings (BON) and Superdry (SDRY). John Lewis has bucked the trend for gloomy retail trading updates, reporting a sales rebound last week after discounted clothing lured shoppers back into stores. The department store group, which is owned by staff, said fashion and beauty sales rose 9.3% in the week to 15 December compared with the same period last year. The improvement at John Lewis, which has reported several weeks of declining sales, will steady nerves after days of dire trading updates from retailers in the crucial pre-Christmas period.Monday was a particularly tough day for retail stocks as investors were panicked by an unexpected profit warning from Asos. That came after similar warnings from Bonmarché and Superdry last week, when the Sports Direct boss, Mike Ashley, said the high street risked being “smashed to pieces” by dismal trading in the run-up to Christmas.
Fishing equipment retailer Angling Direct (ANG) seems to be doing way better than its competitor Fishing Republic (FISH) that went bust last week, as it reeled in rising sales. The company – the largest specialist retailer for in the field with a strong online presence and 21 UK stores – said group sales rose by 31.5% to £14.6 million in the four months to November 30 despite a ‘difficult trading environment’. The update comes at a time when swathes of retailers are struggling to perform in the face of a number of headwinds. The biggest contribution to revenue growth came from online, with sales up by nearly a quarter at £6.7million. But in-store sales were also higher than last year – having increased by 7.2% to £4.9million. Angling Direct also said it profited from Black Friday last month, with sales rising a record 56% to £1.29million.
Asos bosses put their money where their mouths are today, pocketing some shares after the company took a tumble on Monday. CEO Nick Beighton has bough 3,645 shares at £27.35 each – nearly £100,000 worth. Meanwhile, chairman Adam Crozier splurged more than £100,000 on his first 3,750 shares in the online fashion firm, at £26.71 each. ASOS (ASC) had a torrid day on Monday after issuing a big profit warning.
BT is planning to make changes to the way it pays its senior managers after shareholders staged a protest over the bonus awarded to outgoing chief executive Gavin Patterson earlier this year. The telecoms company said on Tuesday that its remuneration committee would now take steps to implement a “more structured process” that will take into consideration a “broader range of performance factors and wider circumstances” when setting pay. The decision follows a bruising vote at the company’s annual general meeting in July, when 34% of investors rejected its remuneration report. BT Group (BT.A)said it was “naturally disappointed” with the outcome, and having spent time speaking to investors since, it had found that most of their concerns were about the amount Mr Patterson received for his bonus. Mr Patterson’s £2.3m pay packet comprised a £1m hike in his annual pay and included a £1.3m annual bonus, £997,000 in basic salary and £299,000 in pension payments.
Oil prices fell more than 3% in morning trading amid ongoing worries about supplies and a slowdown in global growth. The price of Brent crude fell to $57.78 per barrel in early London dealing as investors worried that production cuts from the Opec cartel of producer nations would not be enough to offset rising US stockpiles and output. Energy stocks tracked oil prices lower. Premier Oil (PMO) fell 2¼p to 62¾p; Royal Dutch Shell ‘B’ (RDSB) dipped 46p to £22.93; BP (BP.) edged down 6p to 502¾p.
