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Weekly review: BA lands record fine and Deutsche Bank downsizes

Ben Weiss, Monday, 15 July 2019

BA July Price

It’s been a poor weak to say the least for equities. Fines, downsizings and drastic falls in share prices have all sent a reminder to traders that this industry is not all just about riding the profit waves on the way to a mid-40s retirement. Things can go take a sudden turn for the worst, meaning positions go from profitable to losing heavily in a matter of minutes. Here’s the highlights from the week just gone.

 

BA fined

Most of us have been there. We return back to our car after a nice day out, only to have it cruelly ruined as our eyes lay sight on something bright, yellow and unmistakable on the dashboard. Our hearts sink and a brief wave of anger pulses through our bodies as we realise we have been on the receiving end of the only tool in a traffic warden’s arsenal; a parking ticket.

BA’s fine is admittedly a little different, but I’m sure the execs had that same sinking feeling when they found out the bad news. For allowing customer data to be breached, BA was fined a record £183 million under the new GDPR regulations. According to the new laws, a firm can be fined up to either £20 million or 4% of its annual turnover. With BA recording a £13 billion turnover in 2018, the fine is around 35% of what the total amount it could have been – but it’s still takes the crown for largest fine so far.

The UK airline is part of the International Airlines Group, whose price fell slightly after the news. It may affect the group’s revenue for this quarter, but in perspective it’s no more than an inconvenience for the company that owns several other airlines.  

 

Deutsche Bank downsizing

Deutsche Bank, a financial firm that operates on a worldwide scale, has announced several cuts to its workforce. Over 18,000 jobs are going to be lost, many of which coming from the London headquarters.

Analysts say the firm has still not fully recovered from the global recession back in 2008. The fact that its share price has fallen from over €100 12 years ago to less than €7 seems to confirm those fears.

Deutsche Bank’s job cutting is part of a reorganisation scheme to cut its worldwide workforce to 74,000. It has plans to remain an international bank but is just scaling down the part of the operation that buys and sells shares on behalf of clients.

Deutsche is planning for long-term sustainability. Investing in it short term is seemingly not going to be ideal, as further losses could be on the way. But investors should still take positive in the fact that a clear plan to get the bank back on track has been outlined and is beginning to be executed.

Trade Deutsche Bank here.

Deutsche Bank


Thomas Cooked?

Thomas Cook have experienced troublesome times for a while now, but there had been hope among investors that the company, or more specifically the share price, would bounce back up. However, this week it emerged that the holiday firm had struck a ‘rescue deal’ with its majority shareholder, Fosun.

The deal means that Fosun would become a majority shareholder, something that CEO said was ‘not the outcome that any of us wanted.’ But there was little other choice.

Its share price opened nearly 25% down on Friday, before falling a further 50%. It now sits at just above 5.00. Some fear that this could be the end of the travel company – is it cooked or is there a road back to redemption?

Trade Thomas Cook here.

Thomas Cook price July

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