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31.10.19 15 FOREIGN NEWS PSA Group, the French owner of Peu- geot, is exploring a merger with its US-Italian rival Fiat Chrysler, it has confirmed. A deal between the two carmakers would create a business with a com- bined market value of nearly $50bn (£39.9bn). is is Fiat Chrysler's second attempt at a merger this year after it pulled out of an agreement with Renault in June. Fiat Chrysler shares jumped more than 9% in trading on Wednesday. e potential merger would face sig- nificant political and financial hurdles. Discussions remain in the early stag- es and there is no guarantee of a final deal. However, if the two companies do combine, PSA chief executive Carlos Tavares is expected to lead the en- larged group. John Elkann, Fiat Chrysler's chairman and the head of Italy's Agnelli industri- al dynasty, which controls the business, would retain the same position at the new company. e talks come months after a pro- posed tie-up between Fiat Chrysler and French carmaker Renault col- lapsed with Renault in June. Elkann broke off talks after French government officials intervened and pushed for Renault first to resolve ten- sions with its Japanese partner Nissan. After ditching the proposed merger Elkann confirmed the group's bid to pursue an alternative deal. Car makers face huge investments for electrification, emission reduction and autonomous driving technolo- gies, which gives them an incentive to merge. A merger of the two groups would cre- ate one of the world biggest car makers, and bring a number of brands under one roof including Alfa Romeo, Citro- en, Jeep, Opel, Peugeot and Vauxhall. Morningstar senior equity analyst Richard Hilgert said that the total sales of Fiat Chrysler and Peugeot, including China joint venture partners, were 8.7 million vehicles last year. is would rank the eventual com- bined group fourth behind Volkswa- gen, Toyota and the Renault-Nissan Alliance, each at more than 10 million units. "We view the combination of these two companies as reasonable given global competition, high capital in- tensity, and industry disruption from electrified powertrain as well as auton- omous technologies, Hilgert said. Fiat Chrysler had described its bid for Renault as a "transformative" proposal that would create a global automotive leader. Fiat Chrysler and Peugeot owner in merger talks THE UK business of Santander took a major hit from the PPI (payment pro- tection insurance) mis-selling scandal as profits dipped in the first nine months of the year. Pre-tax profits at Santander UK fell 43% to £785 million, as the bank took a £169 million charge from PPI. Meanwhile, economic uncertainty as Brexit and a trade war continue to weigh on the global economy also hit its bot- tom line. "Our profitability for the first nine months of 2019 has been impacted by ongoing competitive income pressure, additional PPI costs as well as transfor- mation programme investment," said chief executive Nathan Bostock. A £127 million transformation charge helped the bank to reorganise its branch network, which is starting to result in improved efficiency. e impact will be- come clear in 2020, Santander said. e Spanish bank is not the only one to face a major challenge from PPI mis-sell- ing. Last week, Barclays said it had taken a £1.4 billion hit from the scandal, as the deadline passed at the end of August. e bank posted a £292 million net loss, down from a £1 billion net profit in the same period last year. Santander saw its best mortgage growth since the years immediately after the financial crash, with net mortgages up £3.6 billion, while deposits grew by £4.2 billion. Meanwhile, the bank said it had built up enough liquid assets to weather Brex- it uncertainty. However its outlook for the year, which is largely unchanged, relies on Britain leaving in an "orderly" way. "e uncertain economic environment looks set to continue for some time, re- inforcing our longstanding prudent ap- proach to risk. We are delivering excel- lent customer experience while taking decisive steps to improve our efficiency and competitiveness," Mr Bostock said. "We delivered our strongest quarterly net mortgage growth in almost 10 years, driven by a focus on customer service and retention. "We have also increased customer de- posits across the business, with further improvement in customer loyalty." Santander profits plummet as PPI claims takes £169m bite

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