December 5, 2017

Pegler’s market report – 05.12.17: Changing face of banks on the high street

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (05.12.17) Business section under the title Pegler’s Market Report:

Changing face of banks on the high street

The Royal Bank of Scotland has announced that it is closing 259 branches – around a quarter of its network. There has been an increasing number of bank closures this year, as more customers move to online and telephone banking. Lloyds, HSBC and Barclays have all closed branch networks across Britain in 2017. Industry analysts puts the number of branch closures in 2017 at 661. According to Government figures, there were 20,583 bank branches in 1988, while today the figure is around 10,000. With many of the remaining branches unevenly spread around the UK, scores of towns and villages have no local branch and must rely on internet banking or a local Post Office.

On a positive note, British banks all passed a key Bank of England stress test for the first time, and were deemed resilient enough to withstand a disorderly Brexit, although they must put more money aside in reserves in case of an economic downturn.

The US market is bracing itself for further ramifications of the probe into Russian interference in the US election. Donald Trump’s ex-national security advisor, Michael Flynn, pleaded guilty to misleading the FBI. The concern will be if the President himself is found to be directly involved.

UK manufacturing activity ticked up in November to its highest level since August 2013. The data clearly shows growth of output, new orders and employment all gathering pace. It is currently on course for a quarterly growth rate of 2%, providing a real boost to the pace of the broader economy.

Other high street news includes an update from Thomas Cook, which plans to close 50 stores in the UK as part of an ongoing review of its retail network. The travel operator said that if the plans went ahead, it would close the Thomas Cook and Co-operative Travel branded stores by March 2018. The shops affected are either near other Thomas Cook locations or are experiencing a hit to profits due to declining footfall. The expected closures will affect up to 400 staff members, but the company has plans to redeploy many of them.

No such worries with fantasy figurine retailer Games Workshop, which has been given another boost after its revenue was lifted by its shift towards digital gaming. The Nottingham-based firm is one of the UK’s stock market darlings, having seen its share price soar over 190pc this year.

The excitement about the ever-increasing price rise of Bitcoins is still of great interest to many speculators. A number of industry commentators still believe the digital currency is a “vehicle to perpetrate fraud”, adding that the wild swings in price have knocked its status as a viable currency. The Bitcoin first got a mention in the media in the International Herald Tribune six years ago, the author apparently said that its rise to $8.74 was looking a little on the frothy side. Recently the share price moved above $10,000!

By David Pegler, Brighton Capital Management