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Daily News Roundup: Friday, 17th September 2021

Posted: 17th September 2021

BANKING

JPMorgan unveils UK digital bank

JPMorgan Chase will look to become one of the biggest lenders in Britain, with the largest bank in America set to launch a new digital bank in the UK next week. The bank, Chase, will initially offer current accounts initially before expanding into savings, loans and other products – with it suggested that if it proves popular enough it could also move into fast-growing areas, including payments. If successful in the UK, the digital bank will expand into the Continent and then worldwide. Sanoke Viswanathan, chief executive of the bank, said JPMorgan selected the UK for the venture due to a combination of consumers embracing online financial services and an innovative regulatory framework. He said the venture will see JPMorgan “spend hundreds of millions before we get to break-even”, noting that the project marks a “very big strategic commitment”. Mr Viswanathan added that he is aware that the lender faces competition, saying: "We know we have our work cut out to get customers to understand what Chase is all about. Arguably we have last-mover advantage." Chase will be competing against fintech rivals such as Revolut, Monzo and Starling, as well as the UK's more traditional banks. US rival Goldman Sachs has already entered the UK market, launching Marcus, a savings-driven digital bank.

Monzo to launch BNPL product

Monzo is to launch a buy now, pay later product called Flex that will let customers borrow up to £3,000 and spread the cost of purchases over three, six or 12 months. The digital bank said those who repay over three months will be charged no interest, while those spreading costs over six or 12 months will be charged 19% annual interest. Flex can be use on any transaction over £30 and can be retroactively applied up to two weeks after a purchase is made. Monzo will not issue charge late fees for customers who miss a repayment, unlike some rivals. The bank noted that customers will be subject to affordability assessments and credit checks.

PRIVATE EQUITY

CVC acquires veterinary clinic chain

CVC Capital Partners is to acquire veterinary clinic chain Medivet from Inflexion Private Equity in a deal worth over £1bn. Medivet, which operates around 300 branches and more than 20 round-the-clock clinics across the UK, has been part-owned by Inflexion Private Equity since 2016. Investment bankers at HSBC ran the Medivet auction process.

INTERNATIONAL

UAE central bank looking to replace interbank rates

The UAE central bank is reportedly looking at ways to replace the local interbank rate, as it tries to catch up with global regulators who have called time on such benchmarks after banks' attempts to rig them. It is understood that the UAE is looking at potential replacements for EIBOR - the Emirates Interbank Offered Rate which is used to price financial instruments in the Gulf's top financial centre - and has started consultations with commercial banks in recent weeks. 

Credit Suisse replaces Asia Pacific M&A chief

Credit Suisse has appointed a new head of mergers and acquisitions for Asia Pacific, with Christian Deiss replacing Joe Gallagher. Mr Gallagher will remain vice chairman of investment banking and capital markets for Asia Pacific.

CONSTRUCTION

Galliford Try returns to profit

Builder Galliford Try has posted pre-tax profits of £11.4m for the year to June 30, compared with underlying losses of £59.7m in the year earlier period. The company stated: “Our disciplined approach to bidding and active engagement with our supply chain have proved particularly important during the recent period of materials shortages and inflation.”

FINANCIAL SERVICES

TPR and FCA propose DC scheme benchmarks

The Pensions Regulator (TPR) and the Financial Conduct Authority (FCA) have launched a joint discussion paper on developing the framework for measuring value for money in defined contribution (DC) pension schemes. They have proposed a framework for disclosing information on the key elements that deliver value for money: investment performance; scheme oversight, including data quality and communications; and costs and charges. The regulators have proposed building on definitions that currently underpin the disclosures required by some DC workplace schemes: administration charges and transaction costs. The FCA and TPR have said disclosures alone would not address the “difficult issues” surrounding value for money in pensions, saying that improving data disclosures is a “starting point”. The consultation runs until December 10, with a feedback statement setting out the regulators’ next steps to be published in 2022.

ECONOMY

UK tops G20 economic growth rankings

The UK economy grew at the fastest rate among the G20 nations in Q2, according to figures from the Organisation for Economic Co-operation and Development (OECD). The British economy expanded 4.8% between April and June, with this almost double the 2.7% recorded by Italy, which ranked second, and outpacing the 1.6% growth seen in the US and China’s 1.3% increase. However, the OECD report also shows that Britain’s output has been one of the weaker performers among the G20 across the whole pandemic, with GDP down 4.4% at the end of Q2 compared to Q4 2019, the last pre-pandemic quarter. GDP across the entire G20 is 0.7% above pre-pandemic levels, with China and Turkey driving the recovery with GDP up 8.2% and 8.8% respectively.

CBI: Budget can boost business

The Confederation of British Industry (CBI) has urged Rishi Sunak to use the autumn Budget to deliver policies designed to tempt private companies to invest in the UK, telling the Chancellor now is not the time for a “play-it-safe Budget”. The business organisation has called on the Government to reform taxes to reward firms that invest in research, innovation and green technologies. The CBI also believes the business rates system needs to be reformed. CBI chief economist Rain Newton-Smith said that while the UK is one of the best places in the world to do business, “we do not have the same investment levels as international peers”. She said the autumn Budget presents a “once-in-a-generation opportunity” to address this.

OTHER

Tax gap climbs with £35bn lost

HMRC data shows that the amount of tax lost in Britain through non-payment, avoidance and fraud has increased to £35bn. The tax gap - the difference between the Revenue’s expected income and actual receipts – is estimated to have increased by £2bn in the 2019/20 financial year compared to the 12 months before. HMRC says the figure represented a 5.3% shortfall of theoretical tax liabilities due, up from 5% in 2018/19. HMRC data for 2019/20 shows that it collected 95% of the tax it expected to receive, pulling in around £633.4bn. While failure to “take reasonable care” accounted for £6.7bn of the tax gap, avoidance accounted for £1.5bn – with error (£3.7bn) and the “hidden economy” (£3bn) also contributing to the shortfall.

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