Ministers plan overhaul of capital market rules to boost City
The Treasury is planning a wide-ranging review of UK financial markets rules to improve the City’s competitiveness. City minister John Glen told Bloomberg that the review would be “as broad and as inclusive as possible so that we really look at everything”. The overhaul in the immediate term is likely to focus on Mifid II rules, which critics say have had only marginal benefit and created layers of red tape. The FT reports that the Government wants to hand the Financial Conduct Authority powers to shape future rules, rather than continue to make changes by parliamentary legislation. Rules making it easier for banks to hold capital are also being considered, along with scrapping the share-trading obligation and the cap on the amount of trading that investors can execute on private marketplaces. A Treasury spokesperson said the Government wanted “to make the UK the most open and dynamic financial centre in the world [and] reduce burdens for firms whilst maintaining high standards of regulation”. Separately, entrepreneur Brent Hoberman writes in the FT that a shake-up of UK rules for listed companies is long overdue.
Government has ‘no plans’ to reduce Lifetime Isa withdrawal penalty
The Government has said that savers who need to raid their Lifetime Isa pot will soon be charged their own money to do so again to “discourage withdrawals” and “protect its status as a long-term savings product”. But Nathan Long, an analyst at Hargreaves Lansdown, said: “Given the nation seems to be steeling itself for anticipated job losses as furlough unwinds, the case for the reduced penalty must surely be as strong now as when they first signed off on it.”
Atom Bank valuation halves after latest fundraising round
The valuation of digital bank Atom is about to halve after concluding a fundraising at 60p-a-share, just under half the price at which it raised equity in 2019. The bank announced the £40m fundraising would help with profitability ahead of an IPO in the next few years. Atom said it had tripled its business lending in the last 12 months, partly because of its participation in the Coronavirus Business Interruption Loan Scheme.
Metro’s mortgages for buyers with poor credit scores
Metro Bank has launched a two-year and a five-year fixed-rate mortgage deal for borrowers with bad credit scores. The loans are open to applicants who've defaulted on previous credit payment and the bank may also consider lending to people who have had a County Court Judgement against their name, even if they haven't repaid it yet.
Citigroup offers London staff Covid tests
Citigroup’s London-based employees are being offered COVID-19 tests as part of the investment bank's plan to bring staff back to the office in the UK. As part of a pilot programme, the bank has started sending self-administer lateral flow tests to employees and contractors who have started to regularly visit the bank's Canary Wharf headquarters.
Barclays faces £33m legal bill for Amanda Staveley case
The High Court ruled on Thursday that Barclays would have to pay the £33.6m costs of successfully defending the suit brought by Amanda Staveley’s PCP, which itself incurred £19.5m of legal costs.
Blackstone expands its Manhattan HQ
Blackstone will lease an additional 80,000 square feet of office space at its Park Avenue, Manhattan headquarters, bringing its total property to about 720,000 square feet.
Lagarde ramps up eurozone bond purchases
The European Central Bank has announced a “significant increase” in the pace of its quantitative easing bond buying. However, the bank’s president Christine Lagarde said the overall size of the €1.85trn pandemic emergency purchase programme will not change. The move immediately sent Germany’s ten-year government bond yield down four basis points. Italy’s fell ten basis points. Ms Lagarde insisted that the ECB was “not doing yield curve control; we are preserving favourable financing conditions”.
BNP Paribas proposes buying up all of partner Exane
BNP Paribas is looking to buy the remaining 50% stake it does not already own in investment company Exane, in a move to solidify the bank as a dominant force in European investment banking.
Deutsche Bank nominates Witter to board
Deutsche Bank said yesterday it had nominated Volkswagen's outgoing finance chief Frank Witter to its supervisory board. Mr Witter replaces Alexander Schuetz, who came under fire for comments to the chief executive of collapsed payments company Wirecard.
Zurich bank pays $22m to end criminal tax evasion case
Switzerland’s oldest private bank Rahn+Bodmer Co will pay the US Department of Justice $22m to settle criminal charges it helped US taxpayers defraud the Internal Revenue Service by hiding hundreds of millions of dollars in offshore bank accounts.
Heathrow passenger numbers at lowest level since 60s
Heathrow Airport has revealed that passenger numbers have fallen to their lowest level since the 1960s. Just 461,000 people travelled through the west London airport in February – a 92% decline compared with February 2020 and the lowest monthly total since 1966. Heathrow also noted that its cargo volumes are 30% down on normal, while rival airports in Paris, Amsterdam and Frankfurt are moving “pre-COVID cargo tonnage levels”.
Rolls-Royce reports massive loss
Rolls-Royce has reported a tripling of annual losses to £2.9bn due to the pandemic. Revenues plunged almost 30% to £11.8bn. The company expects the downturn to last for several years and predicts that demand will rise to only 55% of pre-pandemic levels in 2021.
Credit Suisse executives ‘over-ruled’ risk managers on $160m loan to Greensill
Risk managers at Credit Suisse were over-ruled by senior executives who approved a $160m loan to Greensill Capital. Credit Suisse is thought to be exposed to Greensill to the tune of $1bn-$2bn. Meanwhile, the FT details how Greensill tried to raise $1bn after it had lost the insurance that was crucial to its business model. In the Telegraph, Ben Marlow says Greensill’s collapse should serve as a warning for fintech wannabes: “The lender claimed to be revolutionising small business financing with technology, but all it did was offer IOUs.”
FOS head steps down amid complaint backlog
Financial Ombudsman Service (FOS) head Caroline Wayman has stepped down amid an increasing number of unanswered complaints to the consumer watchdog. In front of Parliament in November 2020, the FOS revealed that 37,689 cases were more than eight weeks old but had yet to be allocated to a case handler. About 56,000 cases had been open for more than six months and 23,000 open for over two years.
Gresham House grows AUM
Gresham House has reported a 42% rise in AUM to £4bn over the year with organic growth of £1bn across housing, forestry and sustainable infrastructure. It was largely driven by £437m of positive performance in forestry, which saw value increase 29% over the year. Strategic public equity rose 15% while the remaining asset classes remained stable. The asset manager’s net core income increased 29% to £40.8m while it reported adjusted operating profit of £12.1m, a 17% increase.
IG revenues soar on unprecedented spike in new clients
IG saw revenues increase 65% in the last quarter to £230m, while active client numbers were up 60% to 230,100. CEO June Felix said there has been “an unprecedented spike in new client demand, largely in response to heightened news flow relating to certain listed US stocks”.
AstraZeneca shares down after Denmark suspends vaccine
AstraZeneca shares fell 2.2% in early trading yesterday after the Danish Health Authority said that it would stop using the company’s COVID-19 jab while it investigates reports of several cases of blood clots among vaccinated people. Denmark joins Norway, Austria and Iceland in halting injections of the vaccine.
LEISURE & HOSPITALITY
M&B confirms emergency fundraising
Mitchells & Butlers has confirmed it has raised £350m in emergency funding after shareholders took control of the pub chain. M&B, which owns Toby Carvery and All Bar One, raised £350.5m through an open offer that will see it issue 167m new shares. The pub group launched the cash raise last month after its liquidity “deteriorated significantly” as a result of lockdown measures during the pandemic. Separately, Marston’s CEO Ralph Findlay is to step down after two decades at the helm of the pub chain. Mr Findlay will leave on 30 September, at the end of the current financial year, and Marston’s has launched a search for his replacement.
Playtech suffers loss as COVID shuts casinos
Playtech swung to a €73m (£62.5m) loss last year as COVID lockdowns shuttered casinos. The gambling software group’s loss compared to a €55.9m profit in the previous year. Revenue dropped by a quarter to just over €1bn. The figures were driven by a 40% decline in earnings from the firm’s business-to-business gambling division as the pandemic prompted retail closures.
MEDIA & ENTERTAINMENT
WPP to resume share buyback programme, restore dividend
WPP has announced it is to resume its £620m share buyback programme and restore its dividend as it eyes a return to growth this year. It said up to £300m will be raised over the next three months and proposed a final dividend of 14p per share. WPP said like-for-like revenue less pass-through costs dropped 8.2% to £9.8bn. WPP posted a pre-tax loss of £2.8bn for the year, compared to a profit of £1.2bn in 2019. This was impacted by previously-announced impairments of £3.1bn related to previous acquisitions.
Dip in rental income for Derwent
Derwent London recorded a dip in net rental income for the year, as the vacancy rate for the London office market doubled during the pandemic. Gross rental income for the property group hiked 5.8% last year to £202.9m, up from £191.7m in the same period last year. However, the impact of COVID-related costs and impairments saw net rental income for the firm fall to £174.3m, down 2.1% from last year. The landlord swung to an IFRS loss of £83m, down from profit of £280.6m last year. EPRA earnings were £111.0m or 99.2p per share, down 3.8% from 103.1p in 2019.
Morrisons expects recovery after profits halve
Morrisons has said it expects profitability to recover this year after profits for the 12 months to January 2021 halved due to the costs of the COVID-19 pandemic. Like-for-like sales rose 8.6%, but pre-tax profit before exceptional charges halved to £201m, down from £408m the previous year and in line with analysts’ forecasts, because of £290m of costs relating to the pandemic, including covering for worker absence and paying store staff a bonus.
John Lewis to close stores
John Lewis has posted an annual loss of £517m due to soaring COVID-related costs. The partnership’s chair Sharon White said it does not expect to reopen all of its John Lewis shops at the end of lockdown, as she revealed that coronavirus costs reached £648m last year. Profit before exceptional items was £131m, but the department store chain would have posted a loss if not for the COVID crisis-related support from the Government.
CVC agrees Six Nations deal
The Six Nations has agreed to sell a 14.5% share of its commercial rights in a five-year deal with CVC. The £365m investment will be divided among the six unions on a sliding scale, with England and France receiving the biggest slice because of their audience share, with the Rugby Football Union netting £95m over the next five years, compared to £48m to the Irish Rugby Football Union.
Sunak worries about risk of rising interest rates
The Chancellor told MPs on Thursday that a reversal of low-cost borrowing would have a “significant impact” on the public finances over the next few years. Explaining his Budget decisions to lawmakers, Rishi Sunak acknowledged the risk of rising bond yields and that the Bank of England’s QE programme amplified these. Ben Wright in the Telegraph explains that the UK’s margin for error when it comes to rates is “vanishingly small” and cites BlackRock’s Vivek Paul who says the country has the least sustainable deficit of any developed nation. “If and when investor sentiment begins to turn, it is likely to hit the UK faster and harder than any other major economy.”