BANKING
Banks should pass on higher rates, or lose BoE interest
Analysis by Hargreaves Lansdown indicates that British households are missing out on £23bn a year because high street banks are not passing higher interest rates to savers. The base rate has risen from a record low of 0.1% in December 2021 to 4% today, but the average easy-access savings rate has risen from 0.2% to just 1.88%. Britain's four largest banks all recently admitted widening their net interest margins, with NatWest’s growing the most – by 24%, resulting in massive profits. These banks hold billions in accounts with the Bank of England, earning 4% on these reserves. Frederic Malherbe, professor of economics and finance at University College London, said these interest payments should be conditional on banks passing the higher rates to their saving customers.
Griffin secures UK banking licence
Digital challenger bank Griffin has secured a UK banking licence, with restrictions, from the Prudential Regulation Authority (PRA). The PRA and Financial Conduct Authority still need to approve Griffin's full banking licence before the company can handle unlimited transactions but for now it will be able to offer businesses a comprehensive Banking as a Service (BaaS) platform. Co-founder and CEO of Griffin, David Jarvis, said the “huge milestone” meant Griffin could allow businesses to seamlessly integrate banking into their operations without relying on big banks' systems “built around a mainframe from the 1960s.”
Scottish SME lender Alba granted banking licence
Glasgow-headquartered challenger bank Alba has been granted a banking licence. The lender, established five years ago by Clyde Blowers chairman and chief executive Jim McColl, is being billed as Scotland's first bank solely dedicated to lending to SMEs. Chief executive Rod Ashley said: “This is unquestionably a landmark moment in our journey so far. I am incredibly proud of the team who have steadfastly believed in our mission of launching a new SME-focused bank and have worked tirelessly to build a comprehensive business plan.”
FCA tells banks to support struggling borrowers
The Financial Conduct Authority has issued new guidance to lenders on how they can support customers who have missed payments or are worried they may fall behind, including by extending the term of their mortgage to lower the monthly amount due or temporarily slashing payments. It came as the FCA released new estimates showing that 356,000 borrowers could face a struggle to make their mortgage payments by June 2024. However, that is down from the 570,000 it had estimated were struggling in September.
INTERNATIONAL
Credit Suisse delays annual report after SEC inquiries
Credit Suisse was forced to delay publication of its annual report on Thursday after receiving a call from the US Securities and Exchange Commission on Wednesday evening. The regulator reportedly had technical queries about revisions Credit Suisse made to cash-flow statements related to the financial years 2019 and 2020, as well as related controls. The bank said its financial statements for 2022, as previously released on February 9, 2023, were unaffected. Separately, the Swiss bank has cut most of its investment banking division headcount in Japan of more than 20 staff.
Silvergate announces liquidation amid sector turmoil
The cryptocurrency-focused US lender Silvergate is to wind down its operations after it was hit by customer withdrawals following the collapse of crypto exchange FTX. The California-based bank had warned last week it was “less than well capitalised” after depositors demanding their money back, adding that it was evaluating its ability to operate as a going concern. Silvergate said a voluntary liquidation of the bank was “the best path forward” in light of “recent industry and regulatory developments”.
Mikhail Fridman and Petr Aven set to offload Alfa-Bank stake in $2.3bn deal
The Russian billionaires Mikhail Fridman and Petr Aven are poised to sell their stakes in Alfa-Bank in a $2.3bn disposal of Russia’s largest private lender.
FINANCIAL SERVICES
Schroders first to open long-term assets fund
Schroders has become the first company to launch a UK long-term asset fund (LTAF) after winning permission from the Financial Conduct Authority (FCA) to establish this type of vehicle, which is designed to allow investors to back long-term illiquid assets. The regulator set out the rules for LTAFs in 2021. Last week Peter Harrison, chief executive of Schroders, criticised the UK for failing to support risk-taking, perhaps prompting City Minister Andrew Griffith to insist on Thursday that he would make sure a risk-taking environment was supported. Following the announcement of Schroders’ LTAF, Mr Harrison said: "We feel strongly that a wider range of UK savers must be able to take advantage of the robust returns and diversification benefits that investing in private assets can bring." Mr Griffith added: "This new vehicle can provide a significant boost to investment in productive areas of the economy, including much-needed infrastructure and decarbonisation products."
Aviva returns another £300m to investors and lifts dividend
Shares in Aviva rose 3% on Thursday after the group posted full-year operating profits of £2.2bn, ahead of analyst expectations, driven by a good performance by its UK life business and changes in longevity assumptions. Aviva also said it would pay out an additional £300m to shareholders and lifted its dividend guidance. The activist shareholder Cevian had been pushing Aviva to return more capital to investors and the latest payout takes the total since 2021 to more than £5bn – the number originally targeted by Cevian. Analysts at JP Morgan told clients: “Aviva now offers one of the strongest levels of total capital return in the sector.” Meanwhile, Aviva hiked insurance premiums for new customers by 20% on average for motor cover and 13% for home insurance last year, as the cost of claims rose by between 9 and 11%. Amanda Blanc, Aviva’s CEO, said the group had already increased prices by 5% in the first quarter of 2023, with further hikes expected.
Railsr agrees rescue deal to avoid collapse
London-based fintech Railsr is set to be rescued after it agreed a sale to investors. A group including D Squared Capital, Moneta VC and Ventura Capital will make an investment that will allow it to continue trading under a new entity, with the existing one being put into administration. Railsr said the change of control has been agreed with the Financial Conduct Authority.
Fund managers call for pensions rule change to revive UK stock market
A 20-year-old rule requiring companies to hold pension deficits on their balance sheets needs to be removed to revive investor interest in London-listed shares, UK equity fund managers have said.
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MEDIA & ENTERTAINMENT
GB News loses over £30m in first year
Accounts for broadcaster GB News Limited show that for the year to May the company made a £30.7m loss on revenues of £3.6m. The majority of its revenue came from £3m in advertising, followed by digital and sponsorship income. However, wages and other staff costs were £12.7m.
PROFESSIONAL SERVICES
PageGroup reaps record profits in hot jobs market
PageGroup on Thursday posted a more than 16% upturn in operating profit to £196.1m for the year ending 31 December, slightly ahead of forecasts. The London-listed recruitment group, which operates in 40 countries, said it expects candidate shortages and high levels of vacancies to persist, despite a challenging macroeconomic climate. Page's rivals Hays and Robert Walters have flagged challenging market conditions, while Amsterdam-based Randstad warned that recruiting had slowed as companies brace for a looming recession. Last month Hays posted a lower interim profit due to tougher trading conditions in China and the US.
REAL ESTATE
Hammerson's shares tumble as value of its property empire falls
Shares in Hammerson have tumbled after a fall in the value of its property empire. The shopping centre group said its estate was worth £5.1bn at the end of 2022, down from £5.4bn 12 months earlier. Hammerson said it had completed £195m of disposals last year and pledged a further £300m of sell-offs by December 2023. Market confidence was also knocked by a decline in rental income from £250.4m in 2021 to £215.2m. Rita-Rose Gagné, chief executive of Hammerson, said: “Looking forward, we have strong momentum and are well placed to deliver another year of robust adjusted earnings and cashflow in 2023 and anticipate a return to cash dividends.” The shares were down 11.5%, closing at 25.94p.
Blackstone sells London waterfront complex to Singaporean group for £395m
St Katharine Docks, the waterfront office complex near the Tower of London, has been sold by Blackstone for £395m to Singapore-based property group City Developments Ltd.
RETAIL
Tesco begins hunt for new chair
Tesco is reportedly working with headhunters to find a replacement for chairman John Allan, who is set to leave the grocer in 2024. Mr Allan has served for nearly a decade at Tesco meaning he will no longer be deemed independent under UK corporate governance rules.
ECONOMY
UK jumps up rankings for highly skilled overseas workers
According to the Organisation for Economic Co-operation and Development (OECD), the UK has shot up the rankings of countries most attractive to highly qualified workers, due to changes to the migration regime introduced after Brexit. The OECD said the rankings reflected the UK's decision to abolish its quota for highly skilled workers as well as the success enjoyed by many overseas workers in the country. The UK enjoyed the largest improvement in "talent attractiveness" in 2023, moving up nine places to 7th since 2019 and climbing above the US and Canada for the first time.