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HSBC Advance £175 switch offer closes midnight 2 December

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Those after money in return for switching bank accounts have less than 12 hours to get their hands on the best deal out there, with HSBC’s bumper cash carrot closing at midnight.

The bank is currently offering £175 to those who switch to either its HSBC Advance or HSBC Premier bank accounts and also offers £75 for those who switch to its basic bank account.

It has had the offer open since 16 September, but will close its doors to new switchers today. 

This time last month, there were four accounts offering three-figure sums for switching – after tonight, there will be zero.

Crunch time: HSBC will stop its £175 carrot for opening a current account from midnight

Crunch time: HSBC will stop its £175 carrot for opening a current account from midnight

Crunch time: HSBC will stop its £175 carrot for opening a current account from midnight

In order to be eligible for the £175 switch bonus for its Advance account, you cannot have held a HSBC current account since 1 January 2016, and you must set up two direct debits within 30 days of opening the account.

You must also pay in £1,750 a month or £10,500 over six months in order to open the account and get the bonus. 

As well as the market-leading switch offer, the account also comes with a 2.75 per cent regular saver which lets you save between £25 and £250 each month, though this rate used to be a lot more generous. 

The banking giant cut it from 5 per cent in October 2019. 

HSBC’s chunky current account cash bribes have helped persuade nearly 74,000 current account customers to switch to it since January 2019, making it a big winner of the bank account battle along with NatWest, which has pursued a similar strategy. 

However, the bank still languished in fourteenth place in a ranking of current account providers by consumer group Which? published last week, while rankings published by the Competition and Markets Authority in August put it at number six.

HSBC-owned First Direct, which is included in the switching figures for HSBC and has also offered cash carrots, came top in both sets of rankings.

Deadline: HSBC's market-leading current account switching offer closes 2 December

Deadline: HSBC's market-leading current account switching offer closes 2 December

Deadline: HSBC’s market-leading current account switching offer closes 2 December

What else is out there?

The disappearance of the £175 bribe means the current account market is currently set for a fallow period when it comes to switching bonuses.

This time last month there were four three-figure sums on offer for those looking to switch.

As well as HSBC, both NatWest and RBS offered £150 bonuses, while Lloyds Bank had released its own switching offer for the first time, £125 for those looking to move to its Club Lloyds account.

Those savvy enough to game the system could potentially have made as much as £450 in just three months by taking advantage of three of the four offers – as you could not use NatWest and RBS at the same time.

In order to make the same amount of money in interest through the highest-rate easy-access account, Goldman Sachs’s Marcus which pays 1.45 per cent, you would need £28,041 in savings.

However, Lloyds, NatWest and RBS have since all pulled their offers, and HSBC’s deal will now close today.

It means the best cash bribe terms is now offered by First Direct and that is a far stingier £50. 

Meanwhile M&S Bank, also part of HSBC, offers £180 in gift vouchers if you switch and then stay for 12 months, but they are only useful if you shop at M&S.

Even digital-only bank Monzo scrapped its £10 referral bonus.

Other options include Nationwide’s FlexDirect account, which offers five per cent interest for 12 months – it has been the big current account switching winner. 

However, that interest is only paid on balances up to £2,500, which would return you £127.90 after a year – a little way off the easy £175 in free cash.

THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS

HSBC’s Advance Account will pay £175 when you switch and transfer over two or more direct debits within 30 days. It also offers a year’s free British Cycling Fan membership. You need to deposit £1,750 per month.

Santander

First Direct’s First Account offers a £50 switching incentive to new customers and £100 if you switch away after six months (T&Cs apply). It comes with a £250 free overdraft and requires a £1,000 monthly deposit to avoid a £10 monthly fee.

First Direct

M&S Bank’s Current Account offers £180 in gift cards to switch and stay or £220 to existing M&S credit card holders. You earn 1 M&S point for every £1 spent on the card. You need four active direct debits, to pay in £1,250 per month and register for online banking and statements.

Santander

RBS’s Reward Account offers 2 per cent in rewards on seven types of household bills paid by direct debit, plus the bank is currently handing out £150 in cash to switch. It comes with a £2 monthly fee and requires a £1,500 minimum monthly deposit, you must also log in to mobile or online banking.

Nationwide

Nationwide’s FlexDirect come with 5% interest on up to £2,500 – the highest interest rate on any current account – plus a fee-free overdraft. Both perks last for a year.

Barclays

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Shakti Pumps hits 52-week low as CARE downgrades bank facilities

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The outlook for the long-term rating of the company has been revised from ‘Stable’ to ‘Negative’.

SI Reporter  |  Mumbai 

Shares of (SPIL) hit a 52-week low of Rs 202, down 2 per cent on Monday, having declined 5 per cent in the past two trading days, on the BSE after Care Ratings downgraded the long-term rating of the bank facilities of the company with a negative outlook. The stock has fallen below its previous low of Rs 203 touched on November 18, 2019.

“The long-term rating outlook of SPIL has been revised from ‘Stable’ to ‘Negative’ on expectation that SPIL’s scale of operations and profitability are likely to be lower than that envisaged earlier on account of delay in implementation of centrally sponsored schemes for installation of solar pumps for agricultural uses,” Care Ratings said in a press release.

This, along with sustained debt levels, is also expected to translate into weaker than anticipated debt coverage indicators. The outlook could be revised back to ‘Stable’ if there is a sustainable increase in SPIL’s scale of operations and better-than-expected profitability, or there is meaningful reduction in its debt levels aided by better collections or reduced inventory holding, it added.

In the past three months, the stock of SPIL tanked 36 per cent due to weak September quarter (Q2FY20) earnings, as compared to a 9 per cent rise in the S&P BSE Sensex.

SPIL had reported a consolidated net loss of Rs 1.7 crore in Q2FY20, as against a net profit of Rs 9.27 crore in a year ago quarter. Operational revenue declined 34 per cent to Rs 91 crore from Rs 138 crore in the corresponding quarter of previous fiscal.

The rating agency said the ratings are tempered by decline in SPIL’s scale of operations and moderation in its profitability during H1FY20 on account of the increased competitive intensity in the solar pumps market and lower demand from its customers due to delay in implementation of centrally sponsored schemes resulting in moderation in its debt coverage indicators.

First Published: Mon, December 09 2019. 14:23 IST

Source: Business Standard

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Chilango burrito bond investors could be left with worthless investments

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Almost 800 people who together poured £3.7million into Mexican chain Chilango’s ‘burrito bond’ fundraise could be left with virtually worthless investments under plans being proposed to the company’s shareholders.

This is Money understands Chilango’s shareholders received emails Friday night asking them to vote by 20 December in favour of transferring the company’s mini-bond liabilities into a new form of equity, in a bid to ease its £7.2million debt burden.

The proposal means bondholders would be promised returns sometime in the future provided the company improves its financial situation, rather than the 8 per cent interest they’re currently owed.

Chilango co-founders Eric Partaker and Dan Houghton. The two emailed shareholders Friday night asking them to approve a package of restructuring measures

Chilango co-founders Eric Partaker and Dan Houghton. The two emailed shareholders Friday night asking them to approve a package of restructuring measures

Chilango co-founders Eric Partaker and Dan Houghton. The two emailed shareholders Friday night asking them to approve a package of restructuring measures

Being holders of the new ‘debt like’ share class – known as preferred equity – would mean the nearly 800 former bondholders would be first in line for any dividends paid out by Chilango.

However, there is no guarantee of this, especially as balance sheet figures seen by This is Money suggested it was on course to make a £1.695million pre-tax loss in the 12 months to the end of this March.

Currently, those who invested in its ‘burrito bonds 2’ fundraise between last October and this April are due 8 per cent interest payments twice a year and are owed their initial investments back at the end of a four-year term.

The new share class does not change how much burrito bond investors are owed, but will supposedly give Chilango greater flexibility when it comes to making repayments. Failing to make dividend payments to preferred shareholders does not mean a company is in default, unlike if it misses bond payments.

Rebecca O’Keefe, head of investment at DIY investment platform Interactive Investor, previously told This is Money that ‘unlike debt sold to institutional investors, holders of retail bonds are at the back of the queue of creditors if the company goes under, and investments could easily be wiped out in a restructuring.’

The new shares will also not come with any voting rights.

Those who poured £3.7m into Chilango's 'burrito bond 2' fundraise between October 2018 and April this year were promised 8% interest. However this is now in doubt

Those who poured £3.7m into Chilango's 'burrito bond 2' fundraise between October 2018 and April this year were promised 8% interest. However this is now in doubt

Those who poured £3.7m into Chilango’s ‘burrito bond 2’ fundraise between October 2018 and April this year were promised 8% interest. However this is now in doubt

The move, which will be subject to shareholder approval, is one of a number of steps the 12-restaurant chain is taking to try and get a grip on its finances.

Last month Chilango brought in restructuring firm RSM, and it is also due to launch a proposal for a company voluntary arrangement on Monday, a controversial debt solution which allows firms to cut rents and close restaurants.

According to the email sent to shareholders, an approved CVA will allow Chilango to exit leases it holds on unopened sites. Its bond prospectus estimated it would spend £597,000 on those in the 12 months to the end of March 2019.

Any CVA will require majority approval from the firm’s creditors, which include the almost 800 bondholders who invested in its ‘burrito bonds 2’ fundraise between last October and this April, after being promised 8 per cent returns.

One of the measures put to shareholders as part of the proposed company voluntary arrangement is exiting from non-restaurant leases. It forecast it'd pay nearly £600,000 on these in the March 2019 financial year

One of the measures put to shareholders as part of the proposed company voluntary arrangement is exiting from non-restaurant leases. It forecast it'd pay nearly £600,000 on these in the March 2019 financial year

One of the measures put to shareholders as part of the proposed company voluntary arrangement is exiting from non-restaurant leases. It forecast it’d pay nearly £600,000 on these in the March 2019 financial year

If the new equity was agreed by shareholders, it would serve to ease Chilango’s debt burden, as the £3.7million burrito bond debt and that of other unsecured creditors would disappear from its balance sheet. That raise is currently due to cost the chain £236,000 a year in interest.

This is Money previously reported how the company owed £7.2million to ‘other creditors’ and in long-term loans in March this year, which related both to two burrito bond fundraises and on loans to shareholders, which the company was paying between 8 and 15 per cent interest on.

That debt pile meant the company had negative equity of £1.3million at the end of this March.

Chilango’s AGM is due to take place on 19 December, having previously been postponed from 29 November due to the restaurant chain’s talks with RSM.

This is Money has contacted the chain for comment.

What you need to know before buying into bonds

* Any investor buying individual shares or bonds would be wise to learn the basics of reading a balance sheet. Read a guide here.

* When looking at bonds, research all recent reports and accounts from the issuer thoroughly. You can find official stock market announcements including company results on This is Money here.

* Check the cash flow is healthy and consistent. Also look at the interest cover – the ratio which shows how easily a firm will be able to meet interest repayments on its debt. This is calculated by dividing earnings before interest and taxes (known as EBIT) by what it spends on paying interest. A guide to doing investment sums like this is here.

* It is very important to find out what the bond debt is secured against, and where you would stand in the queue of creditors if the issuer went bust. This should be included in the details of the bond offer but contact the issuer direct if it is unclear.

* Consider whether to spread your risk by buying a bond fund, rather than tying up your money with just one company or organisation.

* Inexperienced investors who are unsure about how retail or mini-bonds bonds work or their potential tax liabilities should seek independent financial advice. Find an adviser here.

* If the interest rate is what attracts you to the bond, weigh up whether it is truly worth the risk involved. Generally speaking, the higher the rate on offer, the higher the risk.

* If the issuer is a listed company, before you decide whether to buy it is worth checking the dividend yield on the shares to see how it compares with the return on the bond. Share prices, charts and dividend yields can be found on This Is Money here.

* Investors should bear in mind that it can be harder to judge the risk involved in investing in some bonds than in others – it is easier to assess the likelihood of Tesco going bust than smaller and more specialist businesses.

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How Cambridge Analytica profiled voters and what it means for India

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A recent Federal Trade Commission (FTC) order holding US based guilty of “deceptive practices to harvest personal information from tens of millions of users for voter profiling and targeting” has shed new light on the business of psychological profiling aimed at predicting voter behaviour. The Commission’s order spells in great detail the technicalities, business and potential impact of voter profiling on election results.

How did the model work?

The now bankrupt firm’s chief Alexander Nix primarily relied on new research that was done in University of Cambridge that used profile information to predict an individual’s personality according to the OCEAN scale. The OCEAN scale also known as the five big personality traits measures an individual’s personality on five counts – openness, conscientiousness, extraversion, agreeableness, and neuroticism. Researchers had developed an algorithm that used an individual’s likes to predict their personality traits – the more the likes a person had, the more accurate the algorithm’s prediction would be. A researcher at the university named Aleksandr Kogan had developed an application that could collect personal data from not just those Facebook users who had installed this application but also data about their friends who were not using the application. The charge against Facebook in this data collection exercise was that it allowed collection of data from users friends even though they had no information about their data being collected. Among the pieces of critical personal data that was harvested from millions of users in the US and across the world included their name, gender, age, location and likes of all public Facebook pages.

As US investigators put it; this data when analysed by the algorithm could produce a psychological profile of users and predict an individual’s personality better than their friends, family and co-workers. In the US for instance, anyone liking a page related to George Bush, rap, hip-hop and certain other pages could be accurately linked to a conservative and conventional personality. The FTC noted, “ was interested in this research because it intended to offer voter-profiling, micro-targeting, and other marketing services to US political campaigns and other US-based clients.” The company also procured voter records in various US states.

Then, a series of paid surveys were carried out in which Facebook users were asked various questions including those pertaining to national security in the US. The algorithm was then trained to analyse these responses along with the harvested Facebook information to classify personalities on a range of issues like “political enthusiasm, political orientation, frequency in voting, consistency in voting for the same political party, and views on particular controversial issues.” It is estimated that data of upto 65 million people; majority of them in the US were harvested in this fashion to build psycho-political profiles. Most of these users had never consented to share their data nor had they consented for their psychological profiling. These profiles were then matched with voter registration records and the trial proved to be a great success. In effect Cambridge Analytica now had a database of Facebook users whose political affiliations and voting behaviour had been predicted using harvested personal data determined by an algorithm. Cambridge Analytica would use this to “identify and build target voter lists and apply psychological profiles to target group of voters.” These profiles could then be sold to political parties or other clients who could then target these users with advertisements and influence their voting behaviour. In effect, these profiles that also revealed consumption tastes and other personal traits could also be sold to corporations who would use it to send targeted advertisemnts for their products. The FTC noted, “The project would have had little value to Cambridge Analytica if the personality scores could not be matched with actual US voters.”

What can it mean for India?

The FTC’s findings and ruling in the Cambridge Analytica case have deep repercussions in a country like India where data privacy is still in its infancy and a large part of the population is unaware about what bits of their personal data are being harvested and for what purposes. The FTC found Cambridge Analytica guilty of deceiving Facebook users – not telling them that their and their friends’ identifiable information was being collected and analysed for political purposes. The Personal Data Protection Bill that was recently cleared by the union cabinet does take many steps in this regard. It explicitly states that the data fiduciary – in this case Facebook – would have to explicitly tell users the kind of personal data it is collecting, the purpose for its collection, source of such collection, the entities with which data will be shared among other things. It provides equal safeguards to users when it comes to processing of their personal data. But the recent FTC judgment in the Cambridge Analytica case shows that users are oblivious of the fine print of the consent that they are often asked to provide. Often the language of these terms and conditions are highly technical and voluminous with users generally preferring to click on the ‘I Accept’ button instead of bothering to read the fine print. In many ways, this was at the crux of the ‘deception’ that Cambridge Analytica was found guilty of. It also remains to be seen if India’s Personal Data Protection Bill can address the issue of comprehensibility and simplicity when it comes to devising terms and conditions for getting citizens consent for collecting, processing and sharing their critical personal data.

First Published: Mon, December 09 2019. 14:15 IST

Source: Business Standard

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