Mortgage costs rise £800 in just six months
Two increases in the Bank of England base rate have spurred a rise in the cost of home loans. The average two-year fixed rate being sold by the country's largest lenders has climbed from 0.89% to 1.89% since October last year, when banks began increasing prices. This is despite the Bank Rate only going from 0.1% to 0.5% since December. This will cost Britons £840 per year more if repaying a £150,000 mortgage over a 25-year term. David Hollingworth, of L&C Mortgages, said: "Rates have been shifting rapidly as lenders adapt to higher borrowing costs from the central bank. The sheer pace of change is taking borrowers by surprise." Borrowers who have lapsed onto their lender's standard variable rate are paying on average 4.14% in interest, equal to an additional £2,107 each year on a £150,000 mortgage.
Blackstone takes more space in Mayfair
Private equity giant Blackstone is in talks to lease more office space in Mayfair’s Berkeley Square after increasing its London-based workforce during the pandemic. It is noted that the firm, which has been luring talent from investment banks, paid a record $1.6bn in performance-related pay to its dealmakers and executives in 2021.
Goldman Sachs and JPMorgan withdraw from Russia
Goldman Sachs became the first Wall Street bank to announce the imminent closure of its Russia business on Thursday, followed swiftly by JPMorgan Chase. Both said they were winding down their business in Russia in compliance with regulatory and licensing requirements. Western Union has also said it will be suspending its operations in Russia in light of the conflict in Ukraine. New York-listed Marsh McLennan, the world's biggest insurance broker, also announced it would exit Russia, stating that ownership of its Russian businesses will be transferred to local management that will be independently operated.
Deutsche Bank has €2.9bn in Russian credit risk
Deutsche Bank has disclosed €2.9bn in credit risk to Russia and said that it had reduced its exposure further over the past two weeks. Meanwhile, the German lender said that it aimed to lift its post-tax return on equity above 10% over the coming three years. It is aiming to increase revenue by almost a fifth, to €30bn, while further cutting its costs. Elsewhere, Credit Suisse outlined its Russian risk on Thursday, detailing a gross credit exposure of SFr1.6bn ($1.7bn) at the end of 2021. The lender said this included derivatives and financing exposures in its investment bank, trade finance exposures in its domestic Swiss bank and loans in its wealth business. Meanwhile, executive pay at the bank was slashed by 64% after a year which saw Credit Suisse hammered by the collapse of hedge fund Archegos and finance firm Greensill.
ECB to end QE by third quarter
The president of the European Central Bank, Christine Lagarde, has said the eurozone’s €3.3trn quantitative easing programme would wind down by the third quarter of the year if inflation falls back to the ECB’s 2% target next year. Lagarde went on to say that interest rates would follow “shortly after” the end of bond buying, raising the prospect of higher rates before the end of the year.
Bank for central banks suspends Russia
The Bank for International Settlements has suspended Russia’s access to its “services, meetings and other BIS activities” in response to western sanctions on Moscow. The Times notes that the institution does not provide monetary or financial plumbing to execute payments or manage the financial system, making Russia’s suspension largely symbolic.
European banks could be branchless by 2025
A new survey by the Economist Intelligence Unit (EIU) and Temenos has found that 70% of European banks expect physical branches will be phased out by 2025. The study also found more than a third of European banks are looking to snap up fintech firms over the next three years to build up their online offering.
BMW shares fall despite largest profit in company’s history
BMW’s net profits hit an all-time high of €12.5bn in 2021, a 150% increase on 2019, but shares fell 6% amid concern over rising inflation and the economic impact of the conflict in Ukraine. Elsewhere, Volkswagen CEO Herbert Diess has warned that a prolonged war in Ukraine risks being “very much worse” for Europe’s economy than the coronavirus pandemic.
Russia could refuse to return leased jets
Russia has said it will enact laws to prevent aircraft leased to its airlines from being returned. The move could mean a $10bn hit for western aircraft finance companies.
L&G sees profits rise
Legal & General’s pre-tax profits rose 28% in the year to December 31. In its full year results, the firm posted profits of £2bn, compared with £1.6bn in 2020. Operating profit rose 11% to £2.3bn, and the group will pay a full year dividend of 18.45p. The revenues were driven by significant improvements in operating profit at Legal & General Insurance and Legal & General Capital. L&G also said individual annuity sales were up 5% to £957m compared to £910m in 2020. It expects the annuity market to recover from its “slight dip” during the pandemic when people deferred retirement.
Prudential enjoys bump in new business profit
Prudential saw new business profit rise 15% to $2.5bn in the year to 31 December, up from $2.2bn in 2020. The company’s gross premiums for 2021 inched slightly higher than in 2020, up from $23.4bn to $24.2bn. However, Prudential swallowed a loss of $2.8bn for the full-year, plunging from its 2020 profit of $2.1bn. Prudential also signalled it is not planning to close its office in London despite moves by the Asia-focused insurance giant to shift its centre of gravity towards Hong Kong.