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Daily News Roundup: Friday, 10th February 2023

Posted: 10th February 2023


Banks fail to pass on savings rates

The Express’ Sarah O’Grady looks at how banks are failing to pass on higher interest rates to savers. While the cost of mortgage borrowing has increased as the Bank of England has increased rates from a historic low of 0.1% to 4%, savings rates have not kept pace. Analysis shows that the typical rate paid on an easy access savings accounts is up by just 1.53%. Anna Bowes, co-founder of Savings Champion, said: “This shoddy behaviour of not passing on base rate hikes to their long-suffering customers is nothing new. The high street banks in particular are notorious for passing on as little of any base rate rises that they can get away with.” Ms O’Grady notes that the big four banks have “raked in” almost £20bn in profits in the first nine months of 2022. Barclays made £4.6bn, HSBC earned £8.9bn, Lloyds Banking Group recorded £3.9bn and NatWest Group pulled in £2.2bn. Cameron Parry, boss of savings app TallyMoney, accused banks of “double standards,” saying: “They’ve been painfully slow to pass on interest rate increases to savings customers.” Kevin Mountford, co-founder of savings platform Raisin UK, said: “In the current cost-of-living crisis, many customers are being left with less and less, with savers being disadvantaged.”

European banks urged to stop financing fossil fuels

Responsible investment group ShareAction has called on Europe’s biggest banks to stop lending to fossil fuel firms, co-ordinating letters from a group of investors with combined assets of more than £1.23trn. Barclays, BNP Paribas, Credit Agricole, Deutsche Bank and Societe Generale all received letters expressing concern that funding fossil fuel projects could jeopardise the global path to net zero. The letter to Barclays’ group chief CS Venkatakrishnan was signed by 27 investors, including Aegon Asset Management, Danske Bank and Brunel Asset Management. Jeanne Martin, head of the banking programme at ShareAction, said: “These investor-backed letters should be a wake-up call to banks that have made net-zero commitments."

Standard Chartered shares jump on reports of First Abu Dhabi deal

Shares in Standard Chartered jumped yesterday amid reports that First Abu Dhabi Bank, the largest bank in the United Arab Emirates, could be reconsidering a takeover offer worth £24.7bn to £28.8bn.


Toshiba receives $15bn buyout proposal from private equity group

A consortium led by Japanese private equity firm Japan Industrial Partners (JIP) has made a $15bn buyout proposal for Toshiba. JIP has teamed up with financial services group Orix and other Japanese companies.


Credit Suisse axes top bosses’ bonuses

Credit Suisse has scrapped its annual bonus for top executives having reported its worst full-year loss since the 2008 banking crisis. The lender, which revealed a £6.6bn net loss for 2022, said none of its executives, including the new chief executive, Ulrich Körner, would receive bonuses after the poor performance. Meanwhile, the total 2022 bonus pool for Credit Suisse bankers has been reduced by 50%, with senior managers taking a bigger cut to their annual payouts than their junior colleagues. Credit Suisse saw a sharp acceleration in clients pulling out funds, with outflows hitting £100bn in the fourth quarter alone. Its wealth management division accounted for the bulk of the funds that were pulled out, with £83bn withdrawn in Q4.

Crypto exchange ends staking program in SEC Settlement

Crypto exchange Kraken has agreed to shut down its cryptocurrency staking service and pay $30m in penalties to settle US Securities and Exchange Commission (SEC) charges that it failed to register the crypto asset programme. The SEC alleged that Kraken’s staking service was an illegal sale of securities. Kraken said the firm will end its staking services for US clients, noting that these customers will be “unstaked” and customers outside of the US will receive staking services from a separate Kraken subsidiary.


AstraZeneca snubs Britain due to ‘discouraging’ taxes

AstraZeneca chief executive Pascal Soriot says the firm overlooked Britain for a new $400m drug factory because of its “discouraging” tax regime. Mr Soriot said AstraZeneca had wanted to open a new state-of-the-art plant near its existing manufacturing sites in the North West of England, but instead switched to Ireland “because the tax rate was discouraging.” He added: “You need an environment that gives you good returns and incentive to invest.”


Pub firm sues insurers over business interruption claim

Pub firm Fuller’s has filed a lawsuit against insurance firms Aviva and Liberty Mutual in the UK’s commercial court, with the dispute centred on a business interruption claim. Insurers reluctant to pay out amid a surge in business interruption claims in relation to business closures during the pandemic saw the Supreme Court rule in favour of policyholders in January 2021. Financial Conduct Authority data shows that insurers have since paid out more than £1bn to companies that closed during lockdowns.

Deliveroo cuts 350 jobs

Deliveroo has announced 350 job cuts, with chief executive Will Shu blaming high inflation, recession fears and a decision to over hire employees. He said the food delivery app increased its headcount “very quickly” due to the pandemic. Deliveroo last year slashed its sales forecasts, predicting that the rising cost of living would lead to a slowdown in consumer spending.


Ofcom to investigate price hikes

The communications regulator is investigating mobile phone and broadband operators over mid-contract prices. Ofcom is looking at whether the scale of price variation is made clear enough to customers when they sign up to a new deal, saying it will assess whether contracts give customers “sufficient certainty and clarity” over their bills. Cristina Luna-Esteban, Ofcom’s director of telecoms consumer protection, warned that contracts can be “unclear and unpredictable.” The watchdog will publish a report later this year and make a decision on whether it will intervene to make sure that customers know exactly what they could be paying when they sign up.

Disney activist ends proxy fight

Activist investor Nelson Peltz, who runs Trian Fund Management, has declared that his proxy fight with Disney is over, saying the entertainment company “plans to do everything we wanted them to do.” This comes with Disney announcing plans to cut 7,000 jobs as it looks to reduce costs by around $5.5bn, while CEO Bob Iger has announced that he will step down in two years. Mr Iger told CNBC his plan is “to stay here for two years, that’s what my contract says, that was my agreement with the board, and that is my preference.” Trian recently launched a proxy fight with Disney, pushing for Mr Peltz to gain a seat on the company's board of directors.


Property demand and prices fall

Data from the Royal Institution of Chartered Surveyors shows that UK property sales and house prices continued to fall in January, with buyer demand and fresh listings also down. A net balance of -47% for new buyer inquiries was reported, down from -40% in December, with this the weakest monthly reading since April 2009 in a survey measuring the difference between the number of estate agents and property surveyors reporting increases and those experiencing decreases. A net balance of -14% respondents reported a decline in new instructions during January, while data on house prices shows the net balance weakened further to -47% compared with a reading of -42% in December.

First-time buyer numbers fall

Coventry Building Society analysis of HMRC data shows that fewer than one-in-five homes bought in the first nine months of last year were bought by first-time buyers. The study calculates that the number of people getting on to the property ladder in 2022 is likely to have fallen to a five-year low. Between January and September last year, 142,600 people claimed first-time buyer relief on their house purchases, making up 18% of transactions. By comparison, 217,700 people bought their first home in 2018, while 223,400 did so in 2019.


Bailey ‘very uncertain’ about inflation

Bank of England governor Andrew Bailey says he is “very uncertain” about whether inflation will decline, telling MPs on the Commons Treasury Select Committee he wants to see “more evidence” of the rate of price increases falling this year before easing measures to tackle inflation. He said: “I’m very uncertain, particularly about pricing and wages, and we have the largest upside force we’ve ever had on inflation,” adding: “We do put weight on the persistent risks, but there are also very powerful downside forces this year.” Huw Pill, the Bank’s chief economist, said a series of shocks that have hit the UK economy – the pandemic, supply chain issues and Russia’s invasion of Ukraine – mean rate setters “will fall short” of hitting their inflation target, adding that he is cautious of “over steering” the economy into a downturn via higher interest rates. Meanwhile, Silvana Tenreyo, an external member of the Bank’s Monetary Policy Committee, said a fall in inflation “is pretty much guaranteed” this year, barring “another big development that we do not or cannot know about, such as a new energy shock.” The Bank is forecasting that the Consumer Price Index will fall to around 4% by the end of the year, from its current level of 10.5%, with this based on a lack of additional shocks for the UK and wider global economy.


FTSE 100 hits record high

The FTSE has closed at a record high for the second time this year, having climbed 0.3% to 7,911.15. The index of Britain’s biggest companies is up more than 6% so far in 2023, with investors increasingly optimistic amid hopes that the economy may be heading for a shallower recession than had been initially feared and that inflation may have peaked. Richard Stone, chief executive of trade body the Association of Investment Companies, said: “Markets are forward-looking. We may still be heading into a recession, but markets believe inflation has peaked and are looking ahead to when rates may start falling.”

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