HSBC profits rise as it prepares for UK ringfence

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HSBC has reported a rise in its first half profits and announced a share buyback as it prepares to ring-fence its UK retail arm by 2019.

Europe’s biggest bank reported a 5% rise in pre-tax profit of $10.2bn (£7.8bn) for the first six months of 2017, up by about $500m.

As widely expected, the bank has also announced a share buyback of up to $2bn which it expects to complete by the end of 2017.

HSBC shares rose 3% on the news.

The bank’s shares fell back later but its share price has rallied over the past year, helped by the weak pound which makes profits earned abroad more valuable when repatriated to the UK.

Since the 2008 financial crisis, HSBC has been cutting jobs and selling assets to make the group more profitable, while still making dividend payments to shareholders.

“In the past 12 months, we have paid more in dividends than any other European or American bank and returned $3.5bn to shareholders through share buybacks,” HSBC’s chief executive Stuart Gulliver said.

The bank has used share buybacks to offset the impact of shares being paid out as dividends.

The announcement takes the total of HSBC share buybacks since the second half of 2016 to $5.5bn.


Brexit: Race to host EU agencies relocated from London

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EU countries have until midnight to enter a race to bid to provide a new home for two agencies that will be relocated from the UK after Brexit.

The European Banking Authority and the European Medicines Agency, based in Canary Wharf in London, employ just over 1,000 staff between them.

The banking and medicines agencies are seen as the first spoils of Brexit by the 27 remaining members of the EU.

About 20 countries are expected to enter the bidding process.

Glossy brochures

There will be fierce competition to attract the agencies’ highly skilled employees, their families and the business that comes with them.

This includes 40,000 hotel stays for visitors each year.

Countries have printed glossy brochures, posted promotional videos online and hired lobbying firms.

The contest has pitched larger countries against smaller ones from across the EU.

The European Commission will assess the entries based on the quality of office space, job opportunities for spouses and transport links.

European ministers will use a complicated voting system to choose the winners in November.


Vauxhall takeover by PSA given go-ahead

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The European Commission has given the go-ahead to the takeover of Vauxhall and Opel brands by France’s PSA Group, maker of Peugeot and Citroen cars.

European Commission said it had “unconditionally approved” Peugeot’s move to buy the European division of General Motors (GM).

It said it had concluded that “the transaction would raise no competition concerns in the relevant markets”.

Vauxhall employs 4,500 people in the UK at plants in Ellesmere Port and Luton.

Elsewhere in Europe, Opel employs about 33,500 staff in Germany, Poland, Hungary, Austria, Spain and Italy.

GM agreed the sale of its European division, on which it has not made a profit since 1999, to Peugeot in March.

In 2016 it lost $257m (£206m), making it the 16th consecutive loss-making year for GM in Europe, bringing its cumulated losses on the continent since 2000 to more than $15bn.

‘Strong competition’

The deal will mean that Peugeot becomes Europe’s second-biggest carmaker, after Volkswagen.

It will enable the firm to boost its presence in the UK and to re-enter the US market, which Citroen left in 1974 and Peugeot exited in 1991.

In its statement, the European Commission said that in terms of the manufacture and sale of motor vehicles, the two firms had a combined market share of more than 40% in only two national markets, Estonia and Portugal, for small commercial vehicles.

“In the other affected markets, the market shares remain small,” it added.

“The Commission investigation also showed that the merged entity will still face strong competition from manufacturers such as Renault, Volkswagen, Daimler, Ford, Fiat and various Asian competitors.”


Carmakers call for transitional EU deal

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The government must secure a transitional Brexit deal to protect the future of the UK car industry, a trade group has said.

The Society of Motor Manufacturers and Traders (SMMT) said Britain was highly unlikely to reach a final agreement with the EU by the March 2019 deadline.

That meant carmakers could face a “cliff edge”, whereby tariff-free trade was sharply pulled away.

It warned the industry would suffer without a back-up plan in place.

The EU is by far the UK’s biggest automotive export market, buying more than half of its finished vehicles – four times as many as the next biggest market.

UK car plants also depend heavily on the free movement of components to and from the continent.

The SMMT said any new relationship with the EU would need to address tariff and non-tariff barriers, regulatory and labour issues, “all of which will take time to negotiate”.

“We accept that we are leaving the European Union,” said chief executive Mike Hawes.

“But our biggest fear is that, in two years’ time, we fall off a cliff edge – no deal, outside the single market and customs union and trading on inferior World Trade Organization terms.

“This would undermine our competitiveness and our ability to attract the investment that is critical to future growth.”

He called on the government to seek an interim arrangement, whereby the UK stayed in the single market and customs union until a new relationship was brokered.

UK car manufacturing generated £77.5bn of turnover last year and accounted for 12% of all goods exports, according to the trade group.

It added that almost a million people were employed across the wider automotive industry.


Brexit negotiations begin: David Davis targets ‘historic’ deal

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Brexit Secretary David Davis will call for “a deal like no other in history” as he heads into talks with the EU.

Subjects for the negotiations, which officially start in Brussels later, include the status of expats, the UK’s “divorce bill” and the Northern Ireland border.

Mr Davis said there was a “long road ahead” but predicted a “deep and special partnership”.

The UK is set to leave the EU by the end of March 2019.

Day one of the negotiations will start at about 11:00 BST at European Commission buildings in Brussels.

Mr Davis and the EU’s chief negotiator Michel Barnier, a former French foreign minister and EU commissioner, will give a joint press conference at the end of the day.

The UK minister, who will be accompanied by a team of British officials, is expected to say: “Today marks the start of negotiations that will shape the future of the European Union and the United Kingdom, and the lives of our citizens.

“We want both sides to emerge strong and prosperous, capable of projecting our shared European values, leading in the world, and demonstrating our resolve to protect the security of our citizens.

“I want to reiterate at the outset of these talks that the UK will remain a committed partner and ally of our friends across the continent.

“And while there is a long road ahead, our destination is clear – a deep and special partnership between the UK and the EU. A deal like no other in history.”

The BBC has been told by European Union sources that the talks will follow the EU’s preferred pattern of exit negotiations first, with the future relations between the two sides – including the free trade deal the UK is seeking – at a later date.

Five major UK business bodies have come together to call for continued access to the European single market until a final Brexit deal is made with the EU.

In a letter to Business Secretary Greg Clark, they urged the government to “put the economy first”.

The letter is from the British Chambers of Commerce, Confederation of British Industry, EEF, Federation of Small Businesses and Institute of Directors.

On the eve of talks, Chancellor Philip Hammond issued a strong warning about the implications of the UK leaving the EU without a deal in place.

Mr Hammond told the BBC’s Andrew Marr Show that having no deal would be “a very, very bad outcome for Britain” but added that one that aimed to “suck the lifeblood out of our economy over a period of time” would be even worse.

He called for a transition deal to be in place to avoid businesses being affected by a “cliff edge” scenario as the UK leaves.

Mr Hammond has said the UK should “prioritise protecting jobs, protecting economic growth and protecting prosperity”.

 


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