Bank of England warns Truss and Sunak over City regulation plans
Andrew Bailey, the governor of the Bank of England, has warned the UK’s next prime minister not to interfere politically in the regulation of the City of London, arguing that it would harm the UK’s competitiveness. His comments were made in a letter to parliament's Treasury Select Committee and referred to the Financial Services and Markets Bill, which Liz Truss said she would amend to give ministers the power to reverse any decisions made by City regulators if they are seen to be holding back post-Brexit reforms. She has also pledged to review Threadneedle Street's mandate to keep inflation at 2% if she becomes prime minister and questioned the Bank's use of quantitative easing. Bailey said he welcomed the bill as initially proposed, but added: “Regulatory independence is important, not least because our international standing, and therefore the competitiveness of the UK financial sector which the reforms are aimed at enhancing, depends on it. Anything that would weaken the independence of regulators would undermine the aims of the reforms.” Rishi Sunak has backed the BoE, stating that scrapping its independence would be a mistake that would scare off international investors.
Ping An repeats call for HSBC Asia spin-off
HSBC’s largest shareholder has repeated claims a break up of the bank would realise greater profits for investors. Ping An believes spinning off HSBC’s Asian business into a separate company listed in Hong Kong would unlock as much as $35bn in value. The Chinese insurer also believes more than $8bn in capital would be released across the two companies as a result of a split. The comments from Ping An come after HSBC CEO Noel Quinn last week rejected calls for a break up arguing it “would have a material negative impact on value”.
Average mortgage hits 30 years for UK’s first-time buyers
More first-time home buyers in the UK are taking out mortgages that will take longer than ever to pay off. The average term of a home loan taken out by a first-time buyer in June hit a record 30 years, according to data compiled by UK Finance. That compares with 25.5 years in 2005 when the industry lobby group began compiling the data.
Aldermore offers 3.25% interest on savings
Aldermore Bank is offering savers 3.25% interest on deposits up to £1m. However, they will need to have £1,000 to open the account and they won't be able to access their savings for three years. Aldermore is the latest challenger bank to hike savings rates as competition with high street lenders heats up.
BlackRock pushes into crypto market with bitcoin private trust
BlackRock is launching a private trust that gives U.S.-based institutional clients based exposure to spot Bitcoin. The move comes days after the investment firm announced a partnership with crypto exchange Coinbase, which will now be able to connect clients using BlackRock's Aladdin investment technology platform with Coinbase Prime. “Despite the steep downturn in the digital asset market, we are still seeing substantial interest from some institutional clients in how to efficiently and cost-effectively access these assets using our technology and product capabilities,” BlackRock said in a statement.
Arix looks to Nasdaq to rebuild portfolio
London-listed venture fund Arix Bioscience is looking to the Nasdaq to bolster its portfolio after suffering a £25m loss in value so far this year. CEO Robert Lyne said: “At the moment we still find that Nasdaq is the preeminent market for listing individual biotechs…There is greater depth of analyst coverage on the Nasdaq and greater support for these types of businesses.”
Credit Suisse steps up legal claim against SoftBank in $440m dispute
Credit Suisse has applied to the English High Court to initiate formal legal proceedings against SoftBank as it looks to recoup losses linked to the collapse of supply chain finance firm Greensill Capital. The Swiss lender is looking to recover $440m that Greensill had lent to a now-defunct finance firm Katerra, which was backed by SoftBank.
Rabobank's profit falls following withdrawal from Russia
Rabobank reported that its net profit fell by more than a quarter in the first half of 2022, driven by its withdrawal from Russia and rising costs of anti-money laundering operations. The Dutch cooperative posted a net profit of €1.57bn ($1.61bn) over the first six months of the year, down from €2.16bn a year before.
Michael O’Leary blames Brexit for airport chaos
Ryanair boss Michael O’Leary has warned that the era of ultra-low airfares is over and claimed Brexit was to blame for a shortage of airport workers that has created chaos over the summer. “I don’t think there are going to be €10 flights anymore because oil prices are significantly higher as a result of the Russian invasion of Ukraine,” O’Leary told BBC Radio 4’s Today programme. He went on to blame Eurosceptics for the staff shortages, stating: “If there was much more honesty, or any honesty, from Boris Johnson’s government, they would come out and admit that Brexit has been a disaster for the free movement of labour and one of the real challenges being faced by the UK economy.”
Zurich posts highest first-half profits since 2008
Swiss insurer Zurich posted its highest first-half profits since the financial crash of 2008 on Thursday, and its second highest profits ever. The company said its business operating profits increased 25% compared to last year to $3.4bn as commercial insurance prices continued to outpace cost inflation. Mario Greco, chief executive, said that Zurich’s ability to exceed its three-year financial goals despite the pandemic and the war in Ukraine “gives us great confidence that we can handle unexpected, unprecedented things and still deliver”. The rise in profits and an imminent disposal paved the way for a SFr1.8bn ($1.9bn) share buyback, Zurich said.
M&G boosted by return of retail investors
London-listed investment manager M&G reported a slump in pre-tax profits on Thursday after the company was hit by “adverse market movements” and soaring inflation. Pre-tax profits fell to £182m at the end of June, down from £327m in the same period last year, as total assets under management fell by £21.1bn to £348.9bn. However, profit beat analysts' expectations of £144m. Moreover, M&G has started to win net new business from retail investors for the first time in four years, producing net inflows for the division of £800m, a turnaround from £3.4bn of net outflows last time. Shares were up 1.9% in morning trading.
Prudential profits hit by Hong Kong Covid restrictions
Sales at Prudential have been hurt by quarantine restrictions in Hong Kong with new business profits in the territory down 31% to $211m in the six months to June. But the London-listed insurer still reported an 8% increase in first-half adjusted operating profit to $1.66bn. On a market-to-market basis, Prudential’s profits collapsed from $1.07bn to $106m because of a slump in the market value of the bonds held on its balance sheet.
TP ICAP beats profit estimates as market volatility persists
TP ICAP has seen its half-yearly revenue increase to £1.08bn, compared with £936m a year ago. It also reported adjusted profit before tax of £116m for the six months ended June 30, compared with £88m a year ago. The company benefited from higher trading activity and volumes, driven primarily by monetary policy tightening to combat record inflation, war in Ukraine and recessionary risks in many countries.
Mark Carney to become chair of Brookfield’s asset management spin-off
Former Bank of England Mark Carney is to become the chair of Brookfield Asset Management, which his set to be spun off from the Canadian conglomerate Brookfield by the end of this year.
Zantac lawsuits rattle GSK and Haleon investors
Shares in GSK, formerly GlaxoSmithKline, and its newly demerged consumer healthcare business Haleon, have slumped amid concern over a potential billion-dollar liability related to a former GSK blockbuster drug called Zantac. GSK, Pfizer and Sanofi are facing lawsuits over the heartburn drug which authorities revealed in 2019 contains a cancer-causing substance called N-Nitroso-dimethylamine (NDMA). GSK was down 6.3% yesterday, Haleon fall by more than 10% and Sanofi was down 9%. Analysts at Credit Suisse said it believed “Haleon’s involvement in Zantac litigation is limited”, adding: “The connection to Haleon likely relates to GSK and Pfizer’s ownership, but both companies sold on the rights and liabilities.”
LEISURE & HOSPITALITY
Entain gambles on Croatia’s biggest betting operator
Entain has taken a 75% stake in Croatia’s biggest gambling operator in a deal worth €920m. The purchase of SuperSport by the FTSE 100 company behind Ladbrokes and Sportingbet is one of five transactions announced this year as the firm pushes into new markets. The SuperSport deal will see Czech investment group Emma Capital, previously part of the former owner of SuperSport, retain a 25% stake with an option for Entain to buy in three years.
Superdry boss: VAT change means shoppers will choose EU over Britain
Julian Dunkerton, the co-founder of Superdry, has warned that the UK’s decision to withdraw the scheme allowing non-EU visitors to recover the VAT on High Street purchases will mean high-spending international tourists will stop coming to spend money in Britain. "They're going to go to France instead of to us to do all that luxury shopping," he said. "The other aspect that people haven't realised is that we as Brits can go to France and if we're buying any high-ticket item, get a tax-free deal on that product. So what we're going to see, as we saw in I think it was the 80s when people used to do booze cruises, it will be worth getting on a plane, getting on a boat and going to France or going to mainland Europe and doing their shopping."
Ministers and energy firms fail to resolve cost pressures
Boris Johnson joined a meeting of government ministers and energy company bosses yesterday in an attempt to thrash out a plan to reduce the cost of energy for the public. The Chancellor Nadhim Zahawi met the providers along with the PM and the Business Secretary, Kwasi Kwarteng, but no new measures were agreed to ease pressures on household bills. One industry source briefed on the talks told the Guardian it was “clear the windfall tax is not a preferred option for anyone – ministers or electricity companies”. But Johnson, Zahawi and Kwarteng did urge the companies to use their profits to invest more in energy production, with a Treasury spokesperson adding that energy bosses were told that “extraordinarily high bills will ultimately damage energy companies”. Meanwhile, the Government has opened a consultation on how to support the development of biomass powered carbon capture projects in the UK over the next decade. This comes as experts predict annual energy bills could soar to more than £5,000 next year.