Startups are crushing the big banks by using freebies and loyalty points | ||
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Britain's challenger banks are successfully "eroding" away the country's biggest banks' market share by offering "freebies and loyalty points." That's according to Warren Mead, the head of challenger banking and alternative finance at KPMG. In an interview with BBC's Today programme, Mead said that upstart lenders from retailers such as Sainsbury's and Marks and Spencer, as well as small to medium enterprises (SME) focused firms like Shawbrook and Aldermore, have increased their lending by 16% in the last year. Meanwhile, Britain's biggest banks, such as Barclays, Lloyds Banking Group and the Royal Bank of Scotland, have reduced their lending by 5%. "Although these banks only make up 5% of the overall banking market, and bank account switching is still low, when people do switch to these smaller banks, what they're really looking for is freebies and loyalty points," said Mead, to the BBC. "If you're a small business, challenger banks work better for you, as you have better access to credit products like invoice, financing and small business loans. In particular, the peer-to-peer market is really interesting. It's much less regulated than the banking sector and growing by about 200% a year." Supermarket Sainsbury's offers customers discounts on food shopping and loyalty points in exchange for a customer signing up to its banking services or by taking out one of its loans or home insurance. Elsewhere, SME focused upstart lenders such as Aldermore and Shawbrook have become so popular that they both launched an IPO earlier this year. Aldermore unveiled a 4% rise in total customer deposits to £4.7 billion ($7.4 billion) in the first quarter this year, compared to the whole of 2014. Deposits from small to medium enterprises (SME) also rocketed by by 10% to £1.1 billion ($1.7 billion). Shawbrook currently lends to just over 60,000 SMEs and consumers in the UK. Shawbrook increased customer loans by 70% to £2.3 billion ($3.6 billion) in the year to December 31, 2014, and reported a 191% surge in underlying profit before tax for that year. Join the conversation about this story » NOW WATCH: Here's what 'Game of Thrones' stars look like in real life  | ||
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Merkel says still 'a lot to do' for Greek debt deal | ||
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Riga (AFP) - German Chancellor Angela Merkel said Friday there was still a lot of work needed to reach agreement with Greece on its debt bailout, as tortuous talks drag on amid fears Athens could run out of money. The government of Greek leftist Prime Minister Alexis Tsipras is locked in talks to obtain fresh funding with international creditors who are demanding more tough austerity measures in return. Tsipras met Merkel and French President Francois Hollande late Thursday on the sidelines of the EU-Eastern Partnership summit in the Latvian capital Riga but their discussions produced no breakthrough. "It was a very friendly and constructive exchange," Merkel said as she went into the summit Friday. "But it is clear, the work with the three institutions has to go on. There is still a lot to do," she said, referring to the European Union, European Central Bank and the International Monetary Fund who have bailed out Greece twice to the tune of 240 billion euros. Merkel said she and Hollande had offered Tsipras their good offices if he needed help during the talks but it was up to Athens to reach an accord with the three creditors. "The conclusion has to be found with the three institutions and it has to be worked very, very intensively," she added. Tsipras said he was "very optimistic" as he went into the summit Friday and declined further comment. An aide to Hollande said earlier that the talks late Thursday had been "friendly and constructive (and had) ... focused on the desire to reach an agreement on the current programme." A Greek government source said separately that Merkel and Hollande "understood the need for a long-term deal." The immediate focus is what reforms the radical left Tsipras can accept in return for the release of a final 7.2 billion euros ($8.2 billion) in bailout funds Athens needs to avoid defaulting on its debt and possibly crashing out of the eurozone. The delay in reaching an agreement has led to concerns Athens is running critically short of cash and may soon end up defaulting, which could set off a messy exit from the euro. Join the conversation about this story »  | ||
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10 things you need to know in markets today | ||
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German GDP grew 0.3% in the first quarter. The second estimate of GDP growth came in exactly as the first did, following the 0.7% jump recorded in Q4 of 2014. Draghi says growth is still too low across Europe. European Central Bank head Mario Draghi said that "growth is too low everywhere" in Europe despite a modest recovery. Draghi made the blunt remark as he opened a conference on the unemployment problem plaguing the 19 members of the European Union that share the euro currency. Greek Prime Minister Alexis Tsipras spoke to Angela Merkel and Francois Hollande in Riga. Greek Prime Minister Alexis Tsipras held "friendly and constructive" debt talks with the leaders of France and Germany Thursday, but gave no sign of a breakthrough ahead of a crucial June deadline. The Bank of Japan held off on stimulus. The Bank of Japan on Friday held fire on launching more stimulus, days after official data showed the world's number three economy grew more than expected in the first quarter. Italian industrial orders and retail sales are coming. Industrial data is out at 9 a.m. London time and retail sales are at 10 a.m. (4 a.m. and 5 a.m. ET respectively). Analysts expect a small bump in month-on-month retail sales. HP is offloading a large Chinese data business. Hewlett-Packard will sell a controlling 51 percent stake in its China-based data-networking business to China's Tsinghua Unigroup for at least $2.3 billion (£1.47 billion), forming a partnership designed to create a Chinese technology powerhouse. Charter is in talks to buy Time Warner Cable with a higher bid than Comcast made. Charter is in talks with Time Warner Cable about a bid that is likely to be well above $170 (£108.50) per share expected by some analysts, the Wall Street Journal reported, citing people familiar with the matter. Italy passed a new law to tackle corruption. The latest anti-corruption bill was approved by the lower house in a watered-down version more than two years after it was presented by Senate speaker Piero Grasso, a former anti-mafia prosecutor. The legislation increases prison sentences for corruption by an average of two years up to a maximum of around 10 years for the most common varieties, involving bribery or offering or demanding favours to obtain public contracts. Yellen is coming. The Fed is likely to stick with plans to raise interest rates later this year, with progress toward its employment and inflation goals helping allay concerns over the economy's recent weakness, current and former Fed officials say. Fed Chair Janet Yellen, who on Friday will talk about the economy's prospects, is expected to acknowledge the recent sluggishness, including near stagnant performance in the first few months of the year. Asian markets are up. Japan's Nikkei is 0.15% higher than Thursday's close, with more rapid climbs in Chinese stocks: The Shanghai Composite Index is up 1.89% and the Hang Seng in Hong Kong is up 1.89%. Join the conversation about this story »  | ||
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Good morning! Here are the major stories you should read about in markets today.