Good morning! Here’s what you need to know in markets on Wednesday.
1. Shares in Provident Financial, a UK-based door-to-door lender, lost more than 74% of their value on Tuesday after the company cut its dividend, issued a profit warning, announced the resignation of its CEO, and announced the regulator is investigating part of its business. The subprime lender warned investors it expects to make a loss of between £80 million and £120 million.
2. The Bank of England should shut down its £115 billion cheap funding scheme for high-street lenders because it has served its purpose and is now undermining policy, a top economist has said according to a Times report. Simon Ward, chief economist at Janus Henderson, said that the term funding scheme (TFS) should be closed because it makes the Bank look as though it “is pursuing contradictory policies.”
3. Airports have pressed the government to urgently strike a post-Brexit deal on flights between the UK and the EU, warning that the current uncertainty alone would be enough to see bookings drop by up to 41%, reports the Guardian. A report submitted to ministers by the owners of Manchester, Stansted, Heathrow, Gatwick and London City airports concludes that even if flights are not interrupted in March 2019 when Britain leaves the EU passenger numbers are likely to be hit hard without early assurances.
4. The government ran the first July budget surplus in more than a decade last month, as Britain’s public finances recorded an unexpected leap back into the black with help from an increase in self-assessed tax payments, reports the Guardian. Public sector net borrowing last month, excluding the nationalised banks, was in surplus by £184m, the first surplus in that month since 2002, the Office for National Statistics (ONS) said on Tuesday: City economists had expected the government to record a £1bn deficit.
5. Dominic Chappell, the serial bankrupt who bought BHS for £1, is being prosecuted by the pensions watchdog. The Pensions Regulator said on Tuesday that Chappell had failed to hand over crucial documents regarding his purchase of BHS.
6. Lidl has overtaken Waitrose to become the UK’s seventh biggest supermarket, according to a new consumer survey. Data from Kantar Worldpanel shows German discounter Lidl grew its market share by 0.7 percentage points to a record high of 5.2% in the 12 weeks to August 13%. The figure is up from 4.5% a year ago.
7. BHP Billiton, the world’s biggest mining company by stock market value, has said it has decided to offload its US shale oil operations and is “actively” looking at exit options, Sky News reports. The announcement represents a victory for Elliott Advisors, the hard-driving activist fund that for months has been campaigning for a shake-up at BHP Billiton, recently raising its stake in the company known as ‘The Big Australian’ to 5%.
8. A British company is selling lead fuel additives — banned because of their “catastrophic” effects on human health — to the last remaining country in the world where they are still legal, the Independent reports. The Cheshire-based firm Innospec Ltd is believed to be the last place on the planet that still makes tetraethyl lead, or TEL, which has been linked to an array of severe health problems, including premature death and brain damage.
9. Vodafone is in talks with BT’s network subsidiary Openreach about a groundbreaking joint investment in new ultrafast fibre-optic broadband for British cities, the Telegraph reports. The two companies are in what are described by industry sources as “early but serious” discussions about combining their financial strength to build large-scale new infrastructure to replace ageing copper telephone lines.
10. Peer-to-peer lender Zopa saw revenues leap 60% higher last year as losses narrowed. The online lender’s revenue rose from £20.6 million in 2015 to £33.2 million last year, accounts filed with Companies House this week show. At the same time, losses narrowed from £8.8 million to £5.8 million.