June 6, 2017

Pegler’s market report – 06.06.17: Corporate activity in the banking sector

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (06.06.17) Business section under the title Pegler’s Market Report:

Corporate activity in the banking sector

The UK market continued to move forward during last week, mostly buoyed by persistent pound weakness and despite a slightly tepid US jobs report on Friday. Pressure on the local currency has been building in recent days, as opinion polls pointed to a tighter-than-expected race in next week’s general election.

Gains across worldwide stock markets were capped by a slide in oil prices. Brent crude tumbled below $50 a-barrel after Donald Trump’s decision to withdraw the US from the Paris climate change accord sparked fears the US could expand its oil production more rapidly. In its wake, oil companies were dragged lower.

Shares in Metro Bank, which has a high-street presence in Brighton, climbed higher after it snapped up a mortgage portfolio from US private equity firm Cerberus Capital Management for £596.7m. The portfolio of UK mortgages increases the size of its mortgage book by around 15pc. Around 92pc of the Cerberus book is buy-to-let mortgages, with the remainder held by people who occupy their own homes. Metro Bank said the portfolio was secured on property spread across the UK and has a similar credit risk profile to mortgages it already holds.

According to the firm’s latest figures released at the end of March, it currently has around £4bn of residential mortgages on its balance sheet. Metro bank has been looking to expand its customer base through acquisitions, and earlier this year hinted that it could look at parts of rival Co-operative Bank that are up for sale. Last month it celebrated its millionth customer.

Keeping with banks, Barclays announced that it is selling about half of its shares in its African business. The bank said it is looking to offload a 22% stake in Johannesburg-listed Barclays Africa Group (BAG), whose main operation is Absa Bank. The deal, worth about £1.5bn, will be an important step to exiting this business as Barclays looks to refocus on the UK and US markets. It will reduce Barclays’ stake in BAG to around 16%. Its stake will fall further to 15% following a contribution of shares to a black economic empowerment scheme. A substantial minority of the shares on offer will be acquired by South Africa’s Public Investment Corporation, the government pension fund manager.

Intel believe that self-driving cars will revolutionise the way we travel, work and live and create a $7 trillion-a-year industry by 2050. The US tech giant is forecasting what it terms a “passenger economy” that will create massive opportunities for new businesses as people transform from drivers into riders with time – rather than a steering wheel – on their hands.

Some of the more outlandish predictions from the Intel research include what it calls “car-venience” applications such as onboard beauty salons in cars, as well as mobile health clinics and treatment pods.

By David Pegler, Brighton Capital Management