Gas and electricity networks could be hit by fines
A number of gas and electricity networks, including the National Grid, could be hit by fines of more than £140m by the energy watchdog after they were accused of failing to put forward business plans that looked out for consumers.
Ofgem said in its recent price determination, in which it sets out how much networks are allowed to take in profits for the next five years, that a number of network companies should be fined millions of pounds for submitting plans that lacked sufficient detail and clarity.
National Grid confirmed in an interview that it was one of the companies fined by Ofgem.
Nicola Shaw, executive director of the National Grid, said: “Ofgem has told us that we didn’t provide what they asked for, but they don’t realise that maybe that has something to do with them.”
Ms Shaw said the regulator had only given its latest guidance one month before the company was due to submit its business plan.
She confirmed that the National Grid had been hit by “tens of millions of pounds” in fines.
London’s benchmark index closed 1.33pc higher at 6,176.19 while the FTSE 250 closed up 1.19pc as equity markets enjoed a bullish run on the back of Covid-19 vaccine hopes.
In the eurozone, the Frankfurt DAX and Paris CAC closed up 1.32 and 1.73pc higher respectively.
David Madden of CMC Markets says:
Pfizer and BioNTech are working together to produce drugs that will hopefully go on to be vaccines for Covid-19. Earlier today it was announced the Food and Drug Administration, the US regulatory body, has fast-tracked two of their four drugs.
There are no guarantees that anything will come of this, but it’s a step in the right direction, and that has lifted market sentiment.
On Friday, it was revealed that Remdesivir, the anti-viral drug produced by Gilead Sciences, can reduce the fatality rate in Covid-19 patients by 62%, so at the moment there is a sense of hope on the health front.
Convictions in Unaoil bribery case delivers win for SFO
Two former oil executives have been convicted for conspiring to give corrupt payments to secure valuable contracts in Iraq in a much-needed victory for the embattled Serious Fraud Office.
The convictions form part of a sprawling three-year investigation by the SFO into illegal payments made by the oil consultancy Unaoil in a saga that has already engulfed giants such as Rolls-Royce and Halliburton.
Ziad Akle, a manager at Unaoil, and Stephen Whitely, an executive at Dutch oil company SBM, were found guilty on Monday by a jury at Southwark Crown Court of paying bribes worth more than $500,000 to secure a $55m contract in Iraq following the ousting of Saddam Hussein.
Both men were ensnared in what has been described as one of the biggest corporate bribery schemes, centring on the Monaco-based oil and gas consultancy Unaoil and involving law enforcement agencies in Australia, the US and the Netherlands.
If not quite at their initial highs, the markets nevertheless remained strong all session, including, inexplicably, the Dow Jones.
Connor Campbell of SpreadEx says:
PepsiCo, one of the first major firms to update, helped set the stage for a potentially better than forecast season in general. Revenues at the drinks and snacks giant fell 3.1% in Q2 to $15.95 billion –far greater than the $15.38bn forecast. Adjusted earnings per share saw a similar beat, at $1.32 against analysts’ £1.25 estimates.
While the drinks division is suffering from the impact lockdown has had on restaurants, a snack-happy populace has lifted sales of Cheetos and the like.
Though not part of the Dow’s illustrious 30, PepsiCo’s report generated enough residual goodwill to help push the index 350 points higher, returning it to 26400.
PepsiCo’s performance could just be a one off, however. The bigger picture will start to emerge from Tuesday, when JP Morgan, Barnes & Noble and a surely dreadful Delta Air all report. Domino’s Pizza, Morgan Stanley and Bank of America are then on Thursday, with BlackRock on Friday.
Barclays gave Roger Jenkins £50m payoff, court hears
A star banker for Barclays was handed a £50m payoff when he left in 2009 after forging a crucial rescue deal for the bank at the height of the 2008 financial crisis, a court has heard.
My colleague Lucy Burton reports;
The bumper package for Roger Jenkins was in addition to his annual pay of about £39m.
Known as “Big Dog” by some of his colleagues, he was viewed as the gatekeeper to Barclays’ relationship with Qatari investors and played a crucial role in securing their cash as part of the rescue deal.
The huge payoff meant Mr Jenkins, who co-hosted a lavish charity party with actor George Clooney at his £30m Mayfair mansion just after securing the deal, would have taken home almost £80m just a year after the crash and been one of the world’s best-paid bankers.
Details of his exit package were discussed in court just days after it emerged that he had referred to financier Amanda Staveley, who was also involved in the crisis-era fundraising and is suing Barclays, as “the tart” and “that dolly-bird” while discussing the cash injection with a colleague at the time.
Ms Staveley’s client, Abu Dhabi royal Sheikh Mansour bin Zayed Al Nahyan, became the bank’s largest shareholder after contributing £3.5bn to the rescue deal. She is suing Barclays for £1.6bn over claims that Sheikh Mansour and her firm PCP Capital Partners were unfairly treated.
City watchdog takes legal action over claims gang illegally repossessed property from struggling mortgage customers
The City watchdog has launched legal action against two property investment companies and their owner over claims they swindled vulnerable borrowers out of hundreds of thousands of pounds.
My colleague Michael O’Dwyer reports:
The Financial Conduct Authority (FCA) is demanding the return of properties to the alleged victims and the repayment of money it claims they lost as part of a scam.
The watchdog has secured an interim injunction to halt the firms’ activities and freeze 17 homes worth about £3.9m. Another £867,770 worth of the defendants’ assets have also been frozen.
The regulator is taking civil proceedings in the High Court against London Property Investments (UK) Limited (LPI) and NPI Holdings Limited as well as Daniel Stevens, their owner and sole director, and his father Anthony Kafetzis.
It claims the firms were not authorised to offer high interest loans to customers who were at risk of losing their homes to lenders.
The FCA claims the loans increased victims’ debts and that their terms and the relationship between the two firms was not explained. When customers wanted to sell their homes, LPI would tell them NPI was willing to buy the house and rent it back to them, it is claimed.
Brexit paperwork chaos leaves hauliers in the dark
Mass confusion over freight paperwork could trigger long tailbacks at Britain’s borders and damage the flow of vital goods, Whitehall officials have admitted in a leaked document.
My colleague Lizzy Burden reports:
Lorry drivers without the right details risk being stopped from boarding ferries bound for the European Union or when they land at EU ports, according to the 206-page study – with hauliers fined or sent back to Britain as a result.
The Border With The European Union document acknowledged this could “lead to significant queues and delays on the roads approaching ports in the UK if a high volume of HGVs do not have the correct documentation”. It is due to be made public later today.
Haulage groups said that the new Brexit guidance fails to answer critical questions about the customs checks which more than 10,000 lorries will face every day as they head through UK ports after the transition period ends.
There are particular concerns around the Smart Freight System, a web portal where every lorry driver leaving Britain will be required to submit information about goods travelling to the EU from January, regardless of whether there is a trade deal.
Pepsi reported a stronger-than-expected spring as homebound consumers looking for comfort stocked up on snack foods.
Bloomberg has the details.
As Covid-19 raged across the US, Americans seeking out familiar flavours filled their shelves with salty, crunchy treats, driving double-digit sales growth for brands like Tostitos, Fritos and Cheetos.
Even newer snacks like fruit-chips line Bare and Off The Eaten Path, a maker of black bean and chickpea crisps, saw double-digit growth as households loaded up.
Beverage sales were one key weakness, as both in-restaurant and grab-and-go gas station sales lagged during the lockdowns.
“Our snacks and food business has performed very well, while our beverage business was challenged but continued to improve its competitive positioning,” Chief Executive Officer Ramon Laguarta said in pre-recorded remarks about the second quarter.
“Consumer eating habits continue to evolve with consumers spending more time at home, which benefits the at-home breakfast, snacking and dinner occasions.”
PepsiCo shares rose as much as 3.3% in early U.S. trading. The stock was little changed this year through Friday.
As one of the first big packaged-food companies reporting results for the spring months, PepsiCo is being closely watched by investors for a look at how consumers are responding to 2020’s upheaval. The company is well-positioned because of its high global share of the market for snack foods, according to Bloomberg Intelligence.
Wetherspoon is set to slash the price of food and drink
Wetherspoon is set to slash the price of food and drink across the majority of its pubs as it prepares to pass on the Chancellor’s VAT cut to customers.
My colleague Hannah Uttley reports:
The pub chain will begin reducing prices on pints of real ale, coffee, soft drinks, breakfasts, burgers and pizzas from Wednesday, with the price cuts to be fully implemented by July 20.
Tea and coffee at Wetherspoon’s pubs will cost an average of 16p less at £1.29, while breakfasts will be reduced to £3.49, down 41p.
The Chancellor’s VAT cut from 20pc to 5pc only applies to hot food, coffee and soft drinks, but Wetherspoon has chosen to reflect some of the savings in the price of its real ale.
As a result of the VAT cut, a pint of Ruddles Bitter will cost £1.29, an average reduction of 50p, while Doom Bar will be an average of 31p lower at £1.79. Abbot Ale will be reduced by an average of 40p and guest beers by 26p to £1.99.
The price reductions on real ale will apply to 764 of Wetherspoon’s pubs, with the price of an equivalent pint £1 higher at its remaining 103 pubs which are located in town and city centres, airports and stations.
However, these pubs will have price reductions of at least 10p per drink and 20p per meal, Wetherspoon said.
Founder and chairman Tim Martin said the reduction in VAT would help create more jobs and support struggling high streets.
“Lower VAT and tax equality will eventually lead to lower prices, more employment, busier high streets and more taxes for the government,” he said.
“Congratulations to Chancellor Rishi Sunak for a sensible economic initiative, which is long overdue.”
Bermuda is set to unmask the true owners of companies in the territory following years of criticism and fears that secrecy could fuel international crime.
My colleague Michael O’Dwyer reports:
The beneficial owners of Bermuda’s 15,000 companies will be disclosed on a new register as international pressure grows on regulators to do more to combat and prevent financial crime.
The British Overseas Territory plans to publish proposals within a year of a review of the EU’s fifth anti-money laundering directive, due in January 2022.
The Atlantic island previously resisted naming the owners of its companies fearing such a move would damage its economy.
Bermuda is one of the world’s largest insurance hubs, offering low tax, favourable regulation and easy access to the US.
UK-registered companies have been required since 2016 to keep a register of people with significant control to help boost transparency and combat fraud, corruption and money laundering.
Former British prime minister David Cameron campaigned for Bermuda and others to remove a “cloak of secrecy” by maintaining a public register. He argued that opaque ownership structures facilitated questionable practices and illegality.
On Monday, Curtis Dickinson, Bermuda’s current finance minister, said the move “underpins our commitment to ensure that Bermuda remains a jurisdiction of choice for quality and compliant business”.
He said: “Bermuda has always led by example. We have a long-standing commitment to compliance with international standards on tax cooperation, transparency, and combatting money laundering, terrorist financing, and other related threats to the integrity of the international financial system.”
Rise in retail footfall more than doubled to 10.6pc last week
The reopening of the hospitality industry led to a 10.6pc rise in footfall across all UK retail destinations last week, more than double the 4.1pc increase in the previous week.
There were also positive signs for the UK’s embattled high streets, with footfall jumping 16.5pc on the previous week, according to new data from Springboard.
However, footfall is still more than 50pc below the level it was at for the same period last year.
Diane Wehrle at Springboard said:
The first complete week following the reopening of hospitality in England demonstrates the contribution that this sector makes to footfall in retail destinations. The result was also supported by the positive impact on footfall from the easing of restrictions in other nations.
The file contained a list of available jobs and the salaries for each role. While recipients read through the list of highly paid positions, their computers were silently taken over by hackers who implanted software that allowed them to peer through all of their files and emails.
The lucrative jobs weren’t real, and neither were the recruiters.
Ripping out Huawei could cause outages and risk fibre rollout, warns BT boss
Ripping out Huawei from the UK’s telecoms infrastructure could cause mobile outages and take 10 years to complete, the boss of BT has warned.
Earlier, we reported:
Philip Jansen said: “If you get into a situation where [replacing] things need to go very, very fast, then you’re into a situation where potentially service for 24 million BT group mobile customers is put into question – outages would be possible.”
Speaking on BBC Radio 4’s Today programme, he added that Huawei had been part of the telecoms infrastructure for about 20 years, and is a big supplier to BT and many others in the industry. Therefore the Government’s decision on whether to ban it is “all about timing and balance”.
It comes as the Government looks set to halt the involvement of the Chinese tech giant in the UK’s 5G network over security concerns.
Mr Jansen also said that removing all Huawei products from the network would take about 10 years, while taking it out of the 5G infrastructure could be completed in five to seven years.
The BT chief executive also stressed that removing Huawei from the network poses security risks in the short term and it could jeopardise full fibre rollout by 2025.
German economic recovery only in early stages, says government
Germany’s economy continues to recover following the easing of coronavirus-related restrictions, but remains well below capacity, according to a government report.
Bloomberg has the details:
While the recovery began in May, the second quarter will still show negative growth.
“The economic recovery is still at the beginning,” the economy ministry said Monday. “Capacities are still clearly under-used.”
“Only in the third quarter will gross domestic product register positive rates again,” the ministry said in a statement.
Chancellor Angela Merkel’s administration has launched a €130bn (£117bn) stimulus plan that includes tax incentives, aid for childcare and municipal governments as well as spending on cleaner energy and digitalization, to help pull the country out of its worst recession since the end of World War II.
Short-term initiatives include a temporary cut in value-added tax and a cash bonus for parents of €300 per child.
The package of measures will raise €218bn euros in new debt this year.
According to preliminary figures from the labor ministry, some 6 million workers were enrolled in the government’s short-term employment program in May, down from 6.8 million a month earlier.
Germany’s economy is projected to contract by more than 6pc this year due to the fallout from the coronavirus crisis.
European Commission approves €3.4bn Dutch bailout for KLM
The European Commission has approved the €3.4bn (£3.1bn) bailout package promised by the Dutch government to airline KLM last month.
Reuters has the details:
After months of wrangling with France over the role each country should play in a coronavirus rescue deal, the Netherlands said it would support the Dutch arm of Air France-KLM with €2.4bn in bank loans with guarantees, and a €1bn direct loan.
Heathrow passenger traffic still down 95pc in June
Heathrow’s passenger numbers were still down 95pc in June compared to the same month last year, with just 350,000 people travelling through the airport.
The transport hub said demand for inbound travel was “immediately” hit when the Government’s controversial quarantine policy came into force on June 8.
Across all destinations, the number of flights fell 82pc, with its North American and African markets seeing the biggest declines.
John Holland-Kaye, Heathrow’s chief executive, said:
Travel corridors were a great first step and now we need to go further to protect jobs and kick-start the economy, by allowing healthy passengers to travel freely between the UK and the rest of the world.
We’re ready to pilot a testing system on arrival for passengers from ‘red’ countries as an alternative to quarantine, but even better would be to test passengers before they get on a plane. “This requires a common international standard for testing, which the UK government could take a global lead in setting up.
Total passenger numbers for the first half of the year were down 60pc.
The stock has shed another 12pc in early trading after the Guardian reported over the weekend that its co-founder has links to the Leicester factory accused of paying less than the minimum wage and failing to protect staff from coronavirus.
The Aim-listed stock has lost nearly two-fifths of its value since the beginning of the month.
European budget carrier Wizz Air has joined forces with ADQ, one of the Middle East’s largest holding companies, to launch Wizz Air Abu Dhabi – a national airline of the United Arab Emirates.
The joint venture will launch in October with two Airbus A321neos to six new routes including Alexandria, Athens and Odesa.
József Váradi, Wizz’s chief executive, said:
This announcement is the first step of a long and much awaited journey as we are dedicated to developing our presence in Abu Dhabi, contributing to Abu Dhabi’s economic diversity strategy while offering ever more affordable travel opportunities on our low fare network.
We much appreciate the support we have been given by the government, its affiliated organizations and our local business partners in Abu Dhabi.
Asian shares crept toward five-month peaks today as investors wagered the US earnings season would see most companies beat forecasts given expectations had been lowered so far by coronavirus lockdowns.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.15pc, having climbed sharply last week on the back of surging Chinese stocks, which added another 1pc on Monday.
Japan’s Nikkei gained 1.7pc and South Korea 1.2pc. E-Mini futures for the S&P 500 rose 0.5pc even as some US states reported record new cases of Covid-19, a divergence that shows no sign of stopping.
EUROSTOXX 50 futures added 1.1pc and FTSE futures 0.8pc.
Coming up today
Andrew Bailey delivers speech on Libor
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