Recovery ushers in higher LTV mortgages
Banks are planning to offer more high loan-to-value products as they are prepared to take on more risk amid growing house prices and a strong economic recovery. The latest Bank of England credit conditions survey has revealed that lenders expect demand for mortgages to reach the highest level on record in the next three months as the stamp duty holiday, household savings and increased home working create incentives to move. Lenders said that mortgage availability had risen in the first quarter and was expected to improve further in the present quarter thanks to a reduction in mortgage rates, an increase in high loan-to-value mortgages and an easing in credit criteria. Homebuyer demand is at its strongest relative to supply since 2004, according to a survey by the Royal Institution of Chartered Surveyors. Hinckley & Rugby Building Society is planning to launch a two-year variable mortgage at a rate of 0.99% in the next two weeks, with more firms expected to follow suit. The lowest discounted variable-rate currently available for two years is at 1.08% with Cumberland Building Society, according to data from Moneyfacts.
Mortgage loyalty costs £1,000 a year
Analysis shows that 42% of people whose fixed-term mortgages have ended since the first coronavirus lockdown began last year have not switched. Citizens Advice fears they could be paying a penalty for sticking with their existing provider. The charity found one in five customers who did not switch said the process was too time-consuming. “It's more important than ever that customers aren't penalised for not switching," said Alistair Cromwell, acting chief executive. The Financial Conduct Authority estimates not switching can cost borrowers £1,000 a year extra.
Bank of Ireland offers hybrid working model
Bank of Ireland has announced plans to implement a hybrid working model and launch four UK working hubs that will allow staff to use desks and attend meetings. The bank carried out staff surveys in May and December 2020 and found that more than three quarters of employees expressed a preference for working from home between 25% and 75% of the working week. Chief People Officer Matt Elliott said: “Ultimately, it offers much more flexibility and choice, blending home and office working with less commuting time and cost and a greater work-life balance.”
Hart lands Takeover Panel role
Ian Hart, a senior banker at UBS, will be the next director-general of the Takeover Panel, replacing Citigroup's Simon Lindsay in July. He will be on a two-year secondment from UBS, where he is joint-chairman of UK investment banking.
Peel Hunt considering £350m float
Independent investment bank Peel Hunt is considering a return to the public markets, Sky News reports. People close to the bank say that an IPO is not certain to proceed but is “being actively explored”.
Citigroup axes retail arm in some countries
Citigroup has announced that it is scaling back consumer banking in some countries, with the US lender to close its retail operations in 13 markets, including Australia, India, and China. It plans to focus on four "wealth centres": London, UAE, Hong Kong and Singapore. The bank also announced Q1 profits of $7.9bn, an increase on the $2.5bn recorded a year earlier. A 46% rise in investment banking revenue, which hit $1.97bn, was offset by a hit its consumer bank took from low interest rates. Overall revenue dropped 7% to $19.33bn.
Bank of America profits soar
Bank of America has beaten first-quarter forecasts and announced a $25bn share buyback. Its total revenues were flat at $22.8bn, with a 12% decline in consumer banking revenue coming on the back of lower interest rates. Overall net income rose by 102% to $8.1bn in Q1. Bank of America’s investment banking division reported a 62% jump in fees to $2.2bn, while revenue from sales and trading climbed 17% to $5.1bn. The bank released $2.7bn of reserves set aside to cover loan losses during the pandemic.
New UniCredit CEO’s pay packet approved
Shareholders at UniCredit have approved Andrea Orcel’s appointment as CEO, as well as his proposed pay packet. This came despite proxy adviser Glass Lewis having questioned why his pay was higher than that of his predecessor.
Credit Agricole bid for Creval raised by €140m
Credit Agricole Italia’s bid for Italy's third-tier lender Creval has been increased by €140m to €737m, or €12.20 per Creval share, which would further increase to €12.50 if shares corresponding to over 90% of the bank's capital were tendered. Creval is being advised by Bank of America and Mediobanca during the process.
Wizz Air expects sluggish travel recovery in late summer
Low-cost carrier Wizz Air expects a slow recovery in the late summer, with chief executive József Váradi noting that the firm is “well placed for a return to normal operations.”
Finance firms call in climate scientists
The Mail says that tough regulations forcing firms to decarbonise portfolios and loan books have prompted banks, asset managers and private equity firms to hire environmental scientists and those with “the right green expertise”. The number of job ads for "sustainability" roles nearly doubled to more than 1,000 during the year to February compared to the previous 12 months, according to finance recruitment specialist eFinancialCareers, while green recruitment specialist Acre said its hires in finance had increased by more than a quarter year-on-year every year since 2017.
Elliott builds GSK stake
American activist hedge fund Elliott Management has built a stake in GlaxoSmithKline, with sources suggesting the investment is a "significant" multibillion-pound position.
OECD recommends stamp duty cut
Stamp duty should be permanently axed as part of a radical overhaul to boost investment in the wake of the pandemic, the Organisation for Economic Co-operation and Development (OECD) has said. The think-tank believes the tax cut should be combined with reforms to boost construction and additional infrastructure spending to help boost the UK economy. The OECD’s Going for Growth 2021 report said stamp duty should be permanently reduced, arguing that the coronavirus crisis has “emphasised the need to retrain and up-skill the population, secure access to affordable housing by reducing bottlenecks to supply and to revive investment.”
Pandemic boosts property investment
Economic uncertainty caused by the coronavirus has led to more people investing in property. Data from Hamptons shows that property investors bought twice as many homes in the first quarter of 2021 as they did during the same period last year. Investor purchases increased by 111% year on year, and there were 63% more homes sold in the UK during the first three months of 2021. Investors accounted for 13% of all buyers in Q1 of 2021, the highest share in five years.
THG posts loss but 2021 starts well
Online retailer The Hut Group has recorded a hefty loss for 2020 after taking a £332m non-cash charge for share-based payments to staff, but the group said trading in the first quarter had been ahead of expectations and revealed an intention to spend more on acquisitions than previously planned. In its maiden annual results as a listed company, it reported group revenues up 41.5% to £1.6bn, and underlying profit up 354.2% to £151m. The group reiterated its previous guidance of revenue growth for 2021 of 30%-35% on the year.
Growth upgrades ‘pour in’ as recovery accelerates
The Daily Telegraph’s Ambrose Evans-Pritchard says that while Britain’s “accelerating” recovery may not be an economic miracle, it does mark a “breath-taking turn of fortunes for the much denigrated Brexit economy.” He highlights that output may return to pre-pandemic levels before year-end, while noting that upgrades to growth forecasts “are pouring in”. UBS has raised its UK forecast from 3.8% to 5.5%, Bank of America and Barclays have both raised theirs to 5.9%, while a “very optimistic” Goldman Sachs has said growth of 7.1% may be on the cards. Philip Shaw of Investec – which expects eurozone growth of 4.4% - forecasts 7.3% growth for the UK this year but says an 8% increase is possible. David Owen from Jefferies says a “coiled spring” recovery could see the UK outperform the US in 2022 with growth of 7.6%. On post-Brexit trade, Mr Evans-Pritchard reflects that while exports to the EU slipped 12% year-on-year in February, over two-thirds of this was offset by a rise in exports to the rest of the world. Overall, he argues, the British economy “is doing just fine”.