Grant Thornton’s failure to spot Patisserie Valerie ‘fraud’ is ‘extraordinary’. The auditor of Patisserie Holdings (CAKE) owner has been accused of having “fingerprints all over the crime scene” after it failed to identify a £40 million fraud. Grant Thornton audited Patisserie Holdings for 12 years but did not spot an alleged significant manipulation of its accounts that resulted in the café chain going bust this month. Peter Kyle, a member of the parliamentary business committee, told the boss of Grant Thornton at a hearing yesterday it was “extraordinary” that the accountancy firm did not notice that Patisserie bank accounts were artificially inflated by bounced cheques worth millions of pounds, which may have allowed it to hide its true position.
Barclays shifts €190bn assets to Ireland. Barclays (BARC) has won court approval to transfer €190 billion of assets belonging to 5,000 clients to its Irish business as it prepares for the threat of a hard Brexit. The high street bank has already set up an Irish subsidiary and won regulatory approval in order to operate some of its business from the Republic. It will have about 300 people in Dublin, up from 150, with most of the additions coming from new recruits. The High Court gave the green light to the final part of its plan yesterday, which is to transfer billions of pounds of assets to Ireland. The plan was drawn up to enable the bank to operate inside the EU if Britain crashes out without an agreement.
Fee could ‘look like a bung’, said Barclays banker. A former top banker at Barclays (BARC) was concerned that a secret fee that the bank paid to Qatar during the financial crisis could look like a “bung”, a court was told yesterday. Richard Boath told Judith Shepherd, a Barclays internal lawyer, in July 2008 that he was worried how the payment would appear to journalists, Edward Brown, QC, for the prosecution, told Southwark crown court in London. Mr Boath, who had been the head of the European financial institutions group at Barclays’ investment bank, told Ms Shepherd that the fee could be described with a word that started with the letter “B”. The former senior Barclays banker later told the Serious Fraud Office (SFO) during an interview that he was probably referring to a “bung”, Mr Brown said on the sixth day of the trial.
Shareholders rebel against bank chief’s huge pay rise. More than a third of shareholders have rebelled against a 133% increase in the maximum pay package awarded to the chief executive of the banking group that owns Clydesdale Bank, Yorkshire Bank and Virgin Money. At the annual meeting of CYBG (CYBG) in Melbourne yesterday, 34.2% of voting shareholders opposed the remuneration report, many in protest over the size of the potential pay rise for David Duffy. The revolt followed CYBG’s plan to increase his maximum possible package from £1.8 million to £4.2 million if he met all targets in full. The maximum package of the chief financial officer Ian Smith, 51, was also raised — from £914,000 to £2.1 million.
London exchange extends its reach with stake in Euroclear. London Stock Exchange Group (LSE) has paid £242 million for a stake in Europe’s biggest financial trading settlement business. The LSE has acquired a 4.92% stake in Euroclear for €278.5 million and expects to take a board seat at the Brussels-based settlement house in the first big move by David Schwimmer, a former Goldman Sachs banker, since he became chief executive last August. The LSE is one of the world’s oldest exchanges, dating back almost 450 years. When a veteran investment banker was hired to lead it, there was speculation that it could pursue more mergers and acquisitions. It has grown into a FTSE 100-listed giant with interests across the infrastructure of financial markets, including indices, the Milan exchange and a controlling stake in LCH, the world’s largest clearing house.
The party’s Ophir after takeover. A London-listed oil and gas explorer has agreed to sell itself to an Indonesian rival for £391 million. Ophir Energy (OPHR), which is focused on Asia and Africa, said its board had unanimously recommended the 55p-a-share cash offer from Medco Energi, after rejecting a 48½p bid this month. Shares in Ophir rose 7% to 54¼p yesterday on the back of the agreed takeover, which analysts said was in line with or above their valuations for the company’s assets. The deal, which is subject to shareholder approval by June, would end eight years on the stock market for Ophir, a one-time FTSE 250 darling whose fall from grace coincided with the collapse in oil prices.
Sacked TP Icap boss loses £7.5m bonus. The former chief executive of TP ICAP (TCAP), the broking firm, will not receive a payoff of up to £7.5 million after he was classified as a “bad leaver”. John Phizackerley, 57, was sacked in July after it warned of a string of problems and concerns about cost targets. TP Icap, a member of the FTSE 250 index and the biggest interdealer broker in the world, was formed in 2017 through the merger of the voice-broking operations of Icap and Tullett Prebon, a fierce rival. It helps financial institutions to take opposing bets and hedges in the currency, commodity and bond markets. There had been speculation since his departure about whether Mr Phizackerley would be handed a multimillion-pound bonus due as part of an incentive scheme created during the merger of Tullett and Icap. If he had kept his job until the end of 2019, the end of the three-year integration period of the two firms, he could have received up to £15 million, but he was fired halfway through.
Staffline suspends shares after auditor questions its accounts. Staffline Group (STAF) has suspended trading of its shares after PWC, its auditor, raised concerns with the recruiter’s board about some of its accounting practices. “The company can confirm that concerns were brought to the attention of the board relating to invoicing and payroll practices within the recruitment division,” Staffline said in a statement last night. The Aim-listed business earlier warned investors that it would delay publishing its annual results but gave no reason. The announcement sent its shares down by 327p, or nearly a third, to 673p, a low not seen since early 2014. The shares had already fallen by about a fifth this month after the company warned of one-off costs and an increase in borrowing.
It was another bad day for Metro Bank (MTRO) as fears about the ambitious challenger bank’s capital strength and ability to raise funds from its shareholders continued to grow. Shares in Metro fell 122p, or just over 9%, to £12.23, continuing a highly volatile run during which its shares tumbled from £14.87 in five days. Metro’s most recent volatility comes after its shocker of a profit warning last week when it revealed it had misclassified £900 million of commercial property loans and buy-to-let mortgages as much less risky than they were. This means it vastly overstated its capital strength with its total capital ratio not 19.1% as previously claimed but 15.8%. Yesterday, an analysis by Reuters claiming that lenders faced a funding crunch and increasing strain as a chaotic no-deal Brexit loomed further spooked investors and a downbeat outlook statement from Santander, which is the first of the large British banks to report 2018 numbers, prompted yesterday’s fall in Metro’s shares.
Rico Back, chief executive of Royal Mail (RMG), snapped up nearly £400,000 of stock in the postal network. A heartening sign of confidence a day after Royal Mail issued a profit warning that sent its shares tumbling to 260¾p, its lowest level since privatisation in autumn 2013, the purchase helped the shares recover 8¼p to 269p. Of course, Mr Back is able to stump up for shares having received a £6 million “golden hello” even though he was an internal appointment.
Shares in Domino’s Pizza Group (DOM) also rallied, rising 15p to 265p a share after a poorly received fourth-quarter trading update on Tuesday when it said it expected its underlying 2018 profits before tax to be low in the consensus range of £93.9 million to £98.2 million. Investors have been concerned about problems in the pizza chain’s international business and ability to fulfil its pledge to break even this year.
Shares in British American Tobacco (BATS) and Imperial Brands (IMB) rose after the fall in sterling on Tuesday night when Theresa May defeated efforts by MPs to delay Brexit. As a large proportion of London’s main index is made up of multinational companies earning revenue abroad, a weaker currency can boost the stock price. BAT rose 122p to £26.32 while Imperial Brands added 78p to £24.89½.
WPP (WPP) is selling its stake in the organiser of last year’s “Davos in the desert” conference back to the existing shareholders. The transaction is thought to value WPP’s stake in the conference operator Richard Attias & Associates in the tens of millions of pounds, according to Sky News. It was set up ten years ago by Richard Attias, 59, a Moroccan businessman who is also the co-founder of Clinton Global Initiative.
Tempus – CRH (CRH): Avoid. The company is impressive, but there are too many factors moving against its markets
Tempus – NCC Group (NCC): Avoid. Scale of the recovery programme makes it too unpredictable
