As London banks prepare to move operations before Brexit, lobby group Frankfurt Main Finance has revealed that the UK could lose up to €800 billion (£700 billion) in assets to Frankfurt. Whilst a number of banks are moving operations to cities including Paris and Dublin, Frankfurt Main Finance confirmed that the German city would be the new home to the headquarters of 30 banks and financial firms. The managing director, Hubertus Vaeth, said in a statement that most relocations will occur in the first quarter of 2019 with many to follow. “All in all, we expect a transfer of €750 billion to €800 billion in assets from London to Frankfurt, the majority of which will be transferred in the first quarter of 2019,” he said. “Banks are faced with the choice of either relocating only what is absolutely necessary or preparing for the relocation of the entire business.” “In any case, it is clear that considerable second-round effects will follow,” he added The managing director as said that an estimated 10,000 over 10 years will be created in Frankfurt due to Brexit. This is a contrast to the City of London, which is expected to lose 5,000 jobs before the UK leaves the EU in March. Among the banks moving to Germany are Standard Chartered (LON: STAN), Credit Suisse (NASDAQ: TVIX), Citigroup (NYSE: C) and Lloyds (LON: LLOY). In other Brexit-related news, this morning the latest Bank of England analysis warned that a no-deal scenario could lead to a recession worse than the 2008 financial crisis. The news came after Philip Hammond’s Brexit analysis, where the Chancellor admitted that the UK would be worse off in all Brexit scenarios  

The Competition and Markets Authority could launch an investigation into the UK funeral market. Following a study starting six months ago, the watchdog said that it has “serious concerns” with the sector over the high price hikes. Over the past ten years, prices have increased by as much as 66% and “problems with the market that have led to above-inflation price rises for well over a decade”. The CMA said: “The scale of these price rises does not currently appear to be justified by cost increases or quality improvements.” Whilst customers are able to save a significant amount of money if they shop around, the CMA was aware that “people organising a funeral are usually distressed and often not in a position to do this – making it easier for some funeral directors to charge higher prices. Prices are also often not available online, making it difficult to compare options.” Ian Strang, the founder of funeral comparison site Beyond, has said that the investigation cannot come soon as funeral prices have allowed to go unchecked. The cost of organising a funeral has increased to between £3,000 – £5,000.

Andrea Coscelli, chief executive of the CMA, said:” People mourning the loss of a loved one are extremely vulnerable and at risk of being exploited.”

“We need to make sure that they are protected at such an emotional time, and we’re very concerned about the substantial increases in funeral prices over the past decade.”

“We now feel that the full powers of a market investigation are required to address the issues we have found. We also want to hear from people who have experienced poor practices in the sector, so that we can take any action needed to fix these problems.”

The biggest providers in the market are currently Dignity (LON: DTY) and Co-op funerals.

Shares in Dignity have tumbled 15.74% on news of the CMA investigation (0943GMT).

Dignity chief executive, Mike McCollum, said: “We look forward to our continued work with the CMA and other industry bodies to ensure we take the necessary steps to protect consumers and improve quality and standards across the industry.”

Unilever has announced the departure of CEO Paul Polman. He will be replaced by Alan Jope, leader of the company’s Beauty & Personal Care division. Paul Polman has been with the company for over 10 years, working in the consumer goods industry for almost four decades. Whilst in the position of CEO, the company was able to deliver consistent top and bottom line growth ahead of its markets. Moreover, the company was able to give strong returns for its shareholders. Indeed, over the period, there was a Total Shareholder Return of 290%.

Unilever is one of the biggest firms on the FTSE 100.

Paul Polman will be replaced by Jope, who led the company’s largest division since 2014. Moreover, he has been on the company’s Leadership Executive since 2011. Chairman Marijn Dekkers, commented: “Paul is an exceptional business leader who has transformed Unilever, making it one of the best-performing companies in its sector, and one of the most admired businesses in the world. His role in helping to define a new era of responsible capitalism, embodied in the Unilever Sustainable Living Plan, marks him out as one of the most far-sighted business leaders of his generation.” “Paul’s vision, drive and performance focus, combined with his commitment to serving the best long-term interests of the company, have materially strengthened Unilever. He leaves a more agile and resilient company, well placed to win in this fast-changing, dynamic industry. I’d like to thank him personally, and on behalf of the Board, for his contribution to Unilever.” “After a rigorous and wide-ranging selection process, the Board is delighted to appoint Alan to the role. Having worked for Unilever in a variety of senior management roles, Alan has a deep understanding and experience of our business, the industry, and the markets in which we operate. He is a strong, dynamic and values-driven leader with an impressive track record of delivering consistent high-quality performance. The Board warmly welcomes Alan to the role and wishes him every success.” In October, we reported that Unilever had scrapped plans for a Rotterdam HQ. This was as a result of shareholder backlash over the announcement of a potential HQ move. The revolt of its influential investors put the jobs of Unilever’s bosses at risk. At 08:59 GMT today, shares in Unilever (LON:ULVR) were trading at +0.68%.

Rio Tinto announced on Thursday that it will develop its most technologically advanced mine yet. Indeed, the company has approved a $2.6 billion investment in the Koodaideri mine in Western Australia. Construction is set to begin next year, with first production expected in 2021. Once complete, the iron ore mine will have an annual capacity of 43 million tonnes.

The mine is expected to underpin Rio Tinto’s production of the Pilbara Blend, its primary iron ore product.

The new production hub will incorporate a processing plant and infrastructure including a 166-kilometer rail line connecting the mine to the rest of the network. Rio Tinto’s chief executive J-S Jacques commented on the announcement: “Koodaideri is a game-changer for Rio Tinto. It will be the most technologically advanced mine we have ever built and sets a new benchmark for the industry in terms of the adoption of automation and the use of data to enhance safety and productivity.” “As we pursue our value over volume approach, targeted high quality investments such as Koodaideri will ensure we continue to deliver value for our shareholders and Australians.” “This further investment in our iron ore business is also a multi-billion dollar vote of confidence in Western Australia. The project will also deliver significant opportunities for local companies and we expect more than A$3 billion will be spent with Australian-based businesses, with opportunities for about A$2.5 billion of spending for Western Australian-based businesses during its development.” The new iron ore mine is expected to deliver an internal rate of return of 20% and capital intensity of roughly $60 per tonne of annual capacity. In addition to the new mine infrastructure, Rio Tinto has announced the construction of an airport, mine support facilities and employee accommodation. This is to accommodate the employees working onsite of the construction and once the mine is operational. The company expected to employ over 2,000 people with 600 permanent roles created once the mine begins to operate. At the end of September, Rio Tinto announced a new share buy-back programme. Equally, earlier in July, we reported that the company was ahead of targets for iron ore exports. At 08:41 GMT today, shares in Rio Tinto plc (LON:RIO) were trading at +1.44%.

The Bank of England has warned that leaving the EU in a no-deal scenario could lead to a recession worse than the 2008 financial crisis. In the bank’s Brexit analysis, it has found that a disorderly departure from the EU would send the pound plunging by a quarter and immediately shrink the economy by 8%. The latest figures are not what the Bank of England necessarily expects but is the worst-case scenario if the UK crashes out without a deal. The news comes after Philip Hammond’s Brexit analysis, where the Chancellor admitted that the UK would be worse off in all Brexit scenarios, however, Theresa May’s option is the best bet. Following a no-deal Brexit, house prices are expected to crash 30%, inflation could rise to 6.5% and unemployment in the UK could increase from 4.1% to about 7.5%. The bank has come under fire for creating hysteria but Carney insists that there is a difference between a forecast and scenario. Bank of England governor Mark Carney said: “These are scenarios not forecasts. They illustrate what could happen not necessarily what is most likely to happen.” “Taken together the scenarios highlight that the impact of Brexit will depend on the direction, magnitude and speed of the effect of reduced openness of the UK economy.” The latest analysis has also been seen as a final attempt to scare MPs voting in support of the prime minister’s Brexit deal. May will no doubt welcome Carney’s worst-case scenario to garner support for her deal. Andrew Sentance, who is a former BoE interest rate setter, challenged the bank over the analysis. “Does anyone really believe any of this as a real-world scenario? The Bank of England is undermining its credibility and independence by giving such prominence to these extreme scenarios and forecasts,” he said. As well as a disorderly departure from the EU, the bank also considered a “close” relationship between the UK and EU, and scenario of a “less close” relationship. UK Banks The Bank of England also conducted stress tests on 7 major UK lending institutions. The banks were put through a series of scenarios that were 2.5 times worse than the BoE’s most negative Brexit outcome. All banks passed including RBS, Barclays (LON: BARC) and HSBC (LON: HSBA). Marc Kimsey, Equity Trader at Frederick & Oliver, said on the latest Brexit analysis: “The takeaway is somewhat bitter-sweet. The banking sector’s efforts to get Brexit-fit are admirable but the thought of it being tested so rigorously 10 years on from the last disaster draws a wince.”

Nestle (SWX: NESN) has warned that the consequences of a no-deal Brexit will be “very severe”. The owner of brands including Nescafe revealed that whilst it was stockpiling ingredients in the event of a no-deal scenario, warehouses for frozen and chilled food are almost full. According to Ian Wright, the chief executive of the Food and Drink Federation, warehouses for storing ingredients were “for all practical purposes booked out at the moment”. “We don’t know if there are products in those places or people have booked the space to be careful or for production,” he said to theBusiness, Energy and Industrial Strategy Committee on Wednesday. “Some innovative providers are doing the Airbnb of warehousing which is very interesting, but for big and medium-sized businesses, that just won’t work.” The news comes as new analysis has revealed that the UK will be worse off in every Brexit-related scenario. The worst outcome, however, will be a no-deal. It is for this reason that Wright is in favour of Theresa May’s agreement, which has been declared by Philip Hammond as the best option. “The political declaration is excellent, but it is a list of new year’s resolutions. We don’t know if what we see now will remain intact.” “We like what we have now. No deal is infinitely worse than anything we could imagine, therefore the deal on the table is better than no deal, but is not as good as the status quo,” he added. “If you look at this purely from an economic point of view, yes there will be a cost to leaving the European Union because there will be impediments to our trade,” said Hammond on Wednesday. The deal that will be put to the vote in December will “absolutely minimise those costs,” he added. To persuade MPs and the public to support the Brexit deal, May has travelled to Scotland.  

Next week will see the final reshuffle of the FTSE for 2018, where all eyes will be on which big names leave or join the blue-chip index.

FTSE 100

For the FTSE 100, the most likely to drop off the list is the Royal Mail (LON: RMG). The postal group has struggled this past quarter after a shock profit warning in October and drop in market value. Expected profit dropped from £694 million to £500-550 million. Whilst the share price has slightly recovered, it will need to increase another 12% in the next week in order to avoid being dropped from the FTSE 100. Connor Campbell from Spreadex told UK Investor Magazine: “It’s been quite the year for Royal Mail. Having struck its highest levels since the start of 2014 back in May, it is now looking like it is going to crash out of the FTSE 100, the British institution’s out-dated letters division seeing its struggles only increase in a post-GDPR world.” “Just from a common-sense perspective, it makes sense; regardless of the online-shopping led growth in parcel volumes, the letters side of things is only going to exponentially shrink in the next decade or so.” Dubbed to replace the Royal Mail is insurance company Hiscox (LON: HSX), whose share price has more than doubled in the past five years.

FTSE 250

Funding Circle (LON: FCIF) and Aston Martin (LON: AML) are likely to join the FTSE 250 index following a disappointing debut onto the stock market. Despite Aston Martin shares falling below IPO price, the group remains positive for the future. “We’ve taken 105 years to get to an IPO [initial public offering]. I don’t think we’ll worry about what the shares are doing initially. We’ll always look over the longer term,” said the group’s chief executive. Groups that face getting bumped from the FTSE 250 include Thomas Cook, On the Beach, Premier Oil, Spire Healthcare, Civitas Social Housing and Keller Group. Thomas Cook (LON: TCG) issued a second profit warning in two months this week, sending shares down 30%. “Our final result is expected to be around £30 million lower than previously guided, due to a number of legacy and non-recurring charges to underlying EBIT. Within this, profit in our tour operating business fell £88 million as the sustained heatwave restricted our ability to achieve the planned margins in the last quarter,” said the group’s chief executive, Peter Fankhauser.