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Daily News Roundup: Friday, 17th March 2023

Posted: 17th March 2023


Wall Street banks shore up First Republic

A group of Wall Street’s biggest banks have propped up troubled lender First Republic. Eleven major US lenders have agreed to deposit a combined $30bn into the bank after the US Government convened talks following a collapse in First Republic’s share price. First Republic has been caught up in the fallout from the collapse of Silicon Valley Bank, with concern over deposit outflows driving a near-70% fall in its share value. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo are each making a $5bn deposit into First Republic, while Goldman Sachs and Morgan Stanley are each making deposits of $2.5bn, and BNY Mellon, PNC Bank, State Street, Truist and US Bank depositing $1bn each. Meanwhile, US Treasury Secretary Janet Yellen has assured Congress that the US banking system is “sound,” saying Americans “can feel confident that their deposits will be there when they need them.”

Credit Suisse shares boosted by central bank support

Credit Suisse has confirmed that it will move to shore up its finances by borrowing up to 50bn Swiss francs from the Swiss National Bank. The Zurich-based lender said it was taking “decisive action to pre-emptively strengthen liquidity.” The bank said that exercising an option to borrow up to 50bn Swiss francs from the Swiss National Bank “would support Credit Suisse's core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.” The bank had seen its stock plunge after its largest shareholder announced it would no longer put more money into the bank. However, news of the central bank support delivered a rebound, with shares up more than 30% in European markets.

UK Infrastructure Bank on course to deliver fraction of pre-Brexit support

The Office for Budget Responsibility says Britain’s new Infrastructure Bank will miss an annual target of providing £1.5bn in loans, equity financing and guarantees, falling 37% short of an initial estimate.

Atom Bank chair to step down

Atom Bank has hired headhunters to find a new chair as it prepares for an initial public offering. Bridget Rosewell has chaired the app-based lender since 2018.


Swiss banks oppose idea of forced merger

Sources say UBS and Credit Suisse are opposed to a forced merger, with UBS focused on its own strategy and reluctant to take on risks related to Credit Suisse. Amid uncertainty caused by a slump in shares that has seen investor confidence take a hit, JPMorgan has suggested a takeover by another lender, probably UBS, was the most likely scenario for Credit Suisse.

Santander's Mexico arm to launch digital bank

The Mexican arm of Spain's Banco Santander plans to launch digital lender Openbank by the end of March 2024, according to Santander's Mexico country head Felipe Garcia.


FCA: Payment firms lack controls and pose unacceptable risk

The Financial Conduct Authority (FCA) has warned payments companies that they will be shut down unless they address issues that pose an “unacceptable” risk to consumers. In a Dear CEO letter to 291 chief executives, Matthew Long, the FCA’s director of payments and digital assets, criticised payments companies over inadequate safeguards for client funds, failing to conduct anti-money laundering checks and for governance failures. He said that while the City watchdog welcomes the competition and innovation it has seen in the payments sector – “and the improved choice, convenience and value this can provide for customers” - it remains concerned that some firms “present an unacceptable risk of harm to their customers and to financial system integrity.”

Bankman-Fried secretly transferred $2.2bn from FTX

FTX co-founder Sam Bankman-Fried received more than $2bn from entities linked to the collapsed cryptocurrency exchange into his personal accounts, according to court filings. Mr Bankman-Fried and five members of his inner circle transferred a total of $3.2bn to their personal accounts in the form of “payments and loans.” The money primarily came from Alameda Research, a crypto trading hedge fund affiliated with FTX. Mr Bankman-Fried faces 12 federal charges and is awaiting trial after pleading not guilty to a fraud.

More than half of advisers behind on consumer duty

A poll by Copia Capital Management shows that just 27% of firms believe they are on track with the work required to comply with the consumer duty regulations, with 65% lagging behind and 8% yet to start.


Hospitality leaders warn of rail dispute impact

UKHospitality says pub and restaurant businesses are expected to lose as much as £600m due to transport strikes. Kate Nicholls, chief executive of the industry body, said: “Our pubs, bars, coffee shops, hotels and restaurants, to name a few, continue to suffer as collateral damage, with total lost sales since the start of the dispute last year now expected to reach more than £3bn.” Kris Hamer, director of insight at the British Retail Consortium, said that strikes will “slow the progress” retailers have made to encourage people back to the high street following on from the pandemic.


Rise in homeowners withdrawing properties

New data from TwentyCi shows that 35% of sellers took their properties off the market without selling them last month, up from 24% during the same time last year.


John Lewis axes staff bonus and could cut jobs

The John Lewis Partnership says a £234m pre-tax loss means it is unable to issue bonuses to its staff for just the second time since 1953. Partnership chair Dame Sharon White also suggested the firm may have to reduce its headcount, saying: “As we need to become more efficient and productive, that will have an impact on our number of partners.” She added: “That’s a massive regret to me.” Sales across the John Lewis Partnership fell 2% to £12.25bn in the 12 months to January 28.

Deliveroo reports £300m loss

Deliveroo has reported a loss for the year of £294.1m, although it remains adamant that it is making “excellent progress" on its path to profitability. The company said customers placed 299.2m orders for takeaways and groceries on Deliveroo’s platform last year, a rise of 5% compared with 2021. The total amount customers spent via Deliveroo increased by 9% to £6.85bn, generating the company revenue of £1.97bn. That was 14% higher than the £1.74bn it turned over in 2021.

Amazon fights EU tax call

Amazon has argued that the EU decision ordering the firm to pay about €250m in back taxes is without merit. In 2017, the European Commission said a Luxembourg tax arrangement allowing Amazon to channel profits to a holding company tax-free meant it paid no taxes on almost three-quarters of its profits from EU operations. It added that this, in essence, amounted to illegal state aid. The online retailer challenged the EU tax order in 2021, convincing a tribunal to scrap the back tax ruling. The commission has since appealed to Europe's highest court, the Court of Justice of the European Union.


ECB hikes interest rates to highest level since 2008

The European Central Bank (ECB) has hiked interest rates to the highest level since during the financial crisis in 2008. The 0.5 percentage point rise pushes the bank’s main rate up to 3.5%, while the rate paid on eurozone bank deposits left at the ECB increases to 3%. Christine Lagarde, the president of the ECB, said “there were three or four dissenters” on the ECB’s governing board who had argued for a pause in rate rises, but otherwise it “moved quickly” to a decision in favour of a 0.5% rise. Meanwhile, ECB officials have insisted that the “euro area banking sector is resilient, with strong capital and liquidity positions,” with this coming amid market concerns about Credit Suisse and other European lenders after share prices slumped.


Wages up by a quarter in a decade

With wages failing to keep up with the rising cost of living for many people, BBC News has analysed salary figures from the Office for National Statistics to see how wages in different professions compare to the overall average and whether any have kept pace with inflation. The reports shows that over the last 10 years, the wage of an average full-time employee in the UK has risen by about a quarter, to £33,000 in April 2022. This is almost in line with inflation, falling just £230 short of matching price rises.

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