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What to Watch: Ryanair revolt, Kier, wealth firm tie-up, Bank of England

Edmund Heaphy
Finance and news reporter
Shareholders revolted against the renumeration package of Ryanair CEO Michael O'Leary. Photo: Tolga Akmen/AFP/Getty Images

Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:

Ryanair shareholders revolt against pay packages

Almost half of Ryanair (RYA.L) shareholders voted against the low-cost airline’s renumeration report, after it emerged that CEO Michael O’Leary had been granted share options that could end up being worth €99m (£88m).

Only 50.5% of shareholders voted in favour of the report, which detailed the pay and bonuses that O’Leary will receive as part of his new five-year employment contract.

The value of O’Leary’s share option was questioned by a representative of the UK’s Railways Pension Scheme, which is a shareholder in Ryanair.

Ryanair board member Howard Millar defended the package, noting that O’Leary’s pay was “significantly lower” than that of other CEOs in the airline industry and his counterparts on the FTSE 100 index, which tracks the UK’s top 100 listed companies.

“Retaining Michael’s services for a period of five years was very, very important for the board and, we believe, for the company, to deliver the very ambitious plans that we have,” Millar said.

Tilney acquires Smith & Williamson

Two major London-based wealth management firms are set to merge.

Tilney, which was founded in 1836, has acquired Smith & Williamson, which was founded only 45 years later, for £625m.

The combined group, which will be called Tilney Smith & Williamson, will mange about £45bn in wealth and will be valued at about £1.8bn, making it one of the largest private client investment managers in the UK.

The firm will have annual revenues of about £500m and before-tax profits of around £150m.

Tilney CEO Chris Woodhouse will become group CEO of the merged company, while the co-CEOs of Smith & Williamson will join the group’s board.

“This is a transformational deal, which will create a truly unique business, able to support clients from across the wealth spectrum with a comprehensive range of services for both their personal wealth management and business needs,” said Woodhouse in a statement.

Smith & Williamson shareholders will receive a combination of cash and shares in the new group as part of the £625m deal.

The deal is expected to complete in early 2020.

Bank of England set to hold rates steady

The Bank of England is expected to leave interest rates unchanged on Thursday as Brexit uncertainty continues to hang over the UK economy.

Central banks around the world have cut interest rates in recent weeks, amid signs of slowing growth and warnings of a possible impending recession in the US.

Despite this, economists expect the Bank of England’s Monetary Policy Committee to leave the headline interest rate unchanged at 0.75% when it publishes its latest decision at 12pm UK time.

“We expect rates to remain on hold for the foreseeable future,” James Smith, a developed markets economist at ING, said in a note to clients on Wednesday.

“Despite recent moves by the Fed and the ECB, we think it’s too early to be pencilling in UK rate cuts and we suspect the Bank of England will retain its notional tightening bias tomorrow.”

Flagging construction group Kier loses £245m

Kier (KIE.L), a construction group with contracts for the High Speed 2 railway line and the Highways Agency, said on Thursday that it lost £245m in its most recent financial year.

The group is currently pursuing a costly restructuring process, and investors have raised concerns about the overall financial health of the company. The company made a profit of £106m last year.

The company’s accounts noted charges of £341m, which were mostly related to the restructuring process.

Revenue at the company fell to £4.12bn in the 12 months to the end of June from £4.24bn in its previous year, with the company noting that it experienced a “difficult year.”

Kier said that it has set up a Brexit taskforce, but it warned that related uncertainty could postpone client decisions, saying that “the business does not expect its revenue to increase in 2020.”

Brexit could have a significant effect on operations, from materials, to people, to its supply chain, Kier said.

Only 1,000 banking jobs have been lost since Brexit

Just 1,000 jobs have left the City of London since Britain voted to leave the EU, new data suggests.

Consultancy EY’s latest quarterly Financial Services Brexit Tracker, published on Thursday, said that 1,000 roles have been moved to the continent amongst big UK investment banks. The tracker monitors the statements of 222 large finance firms in the UK.

The job moves are far below earlier estimates made of the damage Brexit would do to the UK finance sector.

In 2016, consultancy Oliver Wyman estimated that around 3,500 jobs would be lost even if the UK retained close links to Europe and as many as 75,000 finance jobs could be lost in a hard Brexit. Former London Stock Exchange CEO Xavier Rolet said over 200,000 City of London jobs could go.

European stocks climb

European stocks were up on Thursday, with the FTSE 100 (^FTSE) up 0.33%, Germany’s DAX (^GDAXI) up 0.28%, and France’s CAC 40 (^FCHI) up by 0.62%.

The pound climbed 0.06% against the dollar (GBPUSD=X) on Thursday, pushing it close to $1.25. The pound was down 0.18% against the euro (GBPEUR=X), to around €1.128.

What to expect in the US

Futures are pointing to a lower open for US stocks.

S&P 500 futures (ES=F) are down by 0.19% and Dow Jones Industrial Average futures (YM=F) are down by 0.18%. Nasdaq futures (NQ=F) are down by 0.31%.