BANKING
Struggling homeowners get boost with sub-5% mortgage
Struggling homeowners have received a boost with the announcement of a five-year fixed-rate mortgage deal priced below 5%. This marks the first time such a deal has been available since June. The Mortgage Works, owned by Nationwide Building Society, unveiled the 4.99% fixed-rate deal for buy-to-let borrowers. The deal carries a 3% fee and is open to borrowers with a loan-to-value ratio of 55% or lower. This comes as lenders have engaged in a price war, with major lenders making rate reductions in recent days. The best five-year fixed-rate residential mortgage for buyers was 5.1% from Santander, while the best remortgaging five-year fix was 5.22% from Cumberland Building Society. Gary Bush of MortgageShop.com says lenders have shifted from "shut-up-shop mode to full-blown price war mode," suggesting a busy end to 2023 in the mortgage market. Halifax, Coventry Building Society, and Barclays have all announced rate cuts in response to the intensifying competition.
Covid loan bill hits £7.4bn
The Government has paid out £7.4bn to settle bad Covid-era loans, with £2.23bn more in arrears and £750m in default. With data showing that the Government paid out £1.2bn to settle pandemic emergency loans that had gone bad in Q2, Department of Business, Energy and Industrial Strategy figures suggest taxpayers could ending up paying £11.5bn to cover pandemic-related loans. Around £77bn was lent under three separate Covid-loan schemes. Of this, £46.6bn was through the Bounce Back Loan Scheme, which handed up to £50,000 to SMEs and saw a 100% guarantee from the Government. Almost 15% of these loans have been settled by the Government. While 11.5% of borrowers have fully repaid their bounce back loans, 64.8% are on schedule to do so. Amid concern over levels of possible fraud linked to some of the deals, it is noted that Starling Bank has been criticised for failing to perform adequate checks when it made the loans.
GMB calls for law to protect use of cash
The GMB trade union has called for the right to use cash to be protected by law in response to the closure of numerous high street banks. The union argues that cash payments should be safeguarded as many shops and venues now only accept card or digital payments, putting low-paid workers, older people, and small businesses at risk of financial crime. GMB general secretary Gary Smith highlighted the challenges faced by older individuals in learning digital payment technology and identifying scammers. The GMB is seeking legislation similar to that in US states such as New Jersey and Connecticut, which would guarantee the right to pay in cash and require banks and ATMs to provide free cash deposit and withdrawal services.
INTERNATIONAL
China's central bank cuts reserve requirement ratio
China's central bank, the People's Bank of China (PBOC), has announced a second cut to the reserve requirement ratio (RRR) for banks this year in an effort to boost liquidity and support the country's economic recovery. The RRR will be reduced by 25 basis points for all banks, except those that have already implemented a 5% reserve ratio. The PBOC aims to guide financial institutions to increase support for the real economy and boost market confidence.
Deutsche partners with Taurus for crypto custody services
Deutsche Bank has partnered with Swiss crypto firm Taurus to provide custody services for institutional clients' cryptocurrencies and tokenised assets. This allows Deutsche to hold a limited number of cryptocurrencies and tokenised versions of traditional financial assets for its clients. Various banks, including Standard Chartered, BNY Mellon, and Societe Generale, already offer crypto custody services.
Private funds prepare to spend billions on compliance after SEC rule
New US Securities and Exchange Commission rules on disclosure and expenses mean private equity, venture capital, and hedge fund groups face increasing regulatory scrutiny and more complex legal frameworks.
UBS CEO to stay through 2026 to integrate Credit Suisse
UBS chief executive Sergio Ermotti plans to stay at the helm through 2026 to integrate former rival Credit Suisse. UBS aims to cut $10bn in costs by the end of 2026 and lay off 3,000 people in Switzerland. Analysts estimate between 30,000 and 35,000 jobs could be cut globally.
AUTOMOTIVE
France to block UK request for electric car trade deal extension
France will block a British request to extend a trade deal on exporting electric cars to Europe amid concerns about Chinese parts. The British Government, supported by car makers from across Europe, wants to delay Brexit trade tariffs on electric vehicles shipped between the UK and the EU until 2027. However, a senior French source stated that Brussels does not want Britain to be a back door for China to flood the bloc with cheap electric vehicles. Under the 'rules of origin' requirement, electric vehicles shipped from Britain to the bloc must have a certain percentage of their battery and parts sourced from the EU or UK. Failure to meet this criteria will result in a 10% trade levy.
CONSTRUCTION
Kier to resume dividends
Kier Group has announced that it will resume dividend payments after a "significantly improved financial performance" over the past year. The company reported a 7.5% increase in revenues to £3.4bn, driving pre-tax profits up to £51.9m. With a strong order book of £10.1bn, Kier plans to restart dividend payments, with the first to be declared in March.
FINANCIAL SERVICES
FCA uncovers poor advice and misleading promotions in later life mortgage review
The Financial Conduct Authority (FCA) has forced lenders offering lifetime mortgages to withdraw or change over 400 misleading promotions. A review by the City watchdog found that sales of these mortgages often did not meet expected standards. The review identified a number of bad practices, including companies promoting the benefits of their products without mentioning the risks. The FCA has required the firms which fell short to improve the quality of their advice. Sheldon Mills, executive director of consumers and competition at the regulator, said: “Our review led to the largest later life mortgage firms making improvements to their sales and advice practices, and almost 400 promotions have been removed or amended where firms have identified issues with them.” He added: “We expect all firms to assure themselves they comply with existing rules and guidance and higher standards under the Consumer Duty.”
Lazard CEO targets spike in revenue
Peter Orszag, the incoming CEO of Lazard, has set an ambitious goal to double the investment bank's revenue by 2030. In a memo to employees, he outlined his plans, including personnel changes and a focus on boosting revenue in asset management through better distribution, improved investment performance, and potentially an acquisition. Mr Orszag believes that the advisory business has room to double in size in the US, Europe, and the Middle East and Africa region.
HEALTHCARE
Bayer CEO plans to cut management jobs
Bill Anderson, who became chief executive of industrial group Bayer in June, plans to cut management jobs as part of an overhaul. With the firm facing investor pressure to break up, Mr Anderson is keen to deliver speedy improvements. Investor Artisan Partners says Bayer needs to separate its three main businesses - agriculture, prescription drugs and consumer health products, while activist Bluebell Capital Partners has also called for a breakup.
RETAIL
Lidl UK reports loss after aggressive expansion strategy
Lidl UK has reported a loss of £75.9m in the year to February, compared to a profit of £41.1m the previous year. Lidl UK's sales rose nearly 19% to £9.3bn, with a 1.4m increase in shoppers and a market share rise to 7.1%.
ECONOMY
Eurozone interest rates hit all-time high
The European Central Bank (ECB) has increased interest rates across the eurozone to a record high of 4%, warning that inflation is "expected to remain too high for too long." Signalling that the increase – the tenth consecutive hike – may be the last for the moment, ECB officials said key interest rates “have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the target.” While inflation across the bloc is expected to average 5.6% over 2023, the ECB said it expects inflation to fall to around 2.9% next year and 2.2% in 2025.
OTHER
Only a third of public investment replaced since Brexit
The UK has only been able to replace a third of public investment since leaving the EU, according to the think-tank UK in a Changing Europe, which also flagged that just an eighth of infrastructure investment has been replaced. EU funding pumped £146bn into crucial infrastructure schemes over a 46-year period. However, in opting to exit the bloc, the UK lost access to the European Investment Bank (EIB) and created four new domestic development banks - the UK Infrastructure Bank, the Scottish National Investment Bank, the Development Bank of Wales and the British Business Bank. While the EIB invested an average of £6.4bn a year in real terms in the UK from 2009 to 2016, the domestic development banks invested £2.4bn in 2022. Between them, the development banks invested only 17% as much in infrastructure projects in 2022 as the EIB did in the years leading to the Brexit vote. Stephen Hunsaker, who co-authored the report, said: "It is not clear that the UK’s domestic development banks will be able to fill the hole left by the EIB by the end of the decade. They lack staff and expertise, inhibiting them from scaling up operations quickly."