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Daily News Roundup: Friday, 18th March 2022

Posted: 18th March 2022


Bank branch numbers fall 34% in a decade

Britain has lost nearly 5,000 high street banks in a decade, with the fall from around 13,300 in 2012 to 8,810 last year marking a 34% decline. The analysis of figures on the House of Commons Library also shows a steep decline in branches since the late 1980s, with 20,583 banks in the UK in 1988. Meanwhile, separate analysis by consumer group Which? puts the total number of high street banks left in the UK at just 5,154, down from 9,807 in 2015, with this research focused on the most commonly used retail banks. According to the Financial Conduct Authority, the UK had an average of 2.3 branches per 10,000 inhabitants in 2012. Five years later, this had decreased to 1.47, a drop of 27%. HSBC is the latest bank to announce branch closures, confirming this week that it will close 69 sites, having already closed 82 branches last year as part of a transformation programme rolled out amid a switch towards online banking.

Banks increase mortgage rates after BoE move

Several banks yesterday moved to increase mortgage rates after the Bank of England increased interest rates to 0.75%. Lloyds Bank said customers on tracker mortgages would pay 0.25 percentage points more, adding that it is assessing what the Bank Rate increase will mean for customers on variable mortgage deals. Santander said its standard variable rate would rise in line with the Bank of England’s increase to 4.9% from May, while Barclays said its standard variable rate would increase by 0.25 percentage points, from 4.99% to 5.24%. Yorkshire Building Society also announced its mortgage rates will increase, saying that while it protected its mortgage customers from higher bills after the two previous interest rate increases, it has now been left with no choice but to pass on the cost. In regard to the impact of the interest rate increase on savings, Santander is raising interest rates on a number of its accounts from April, but only by 0.09 percentage points, while Yorkshire Building Society will pass on the full interest rate rise to its savers.


Carlyle inviting bids for Italian food ingredients maker

Carlyle has invited bids from investors for Irca in a deal valuing the Italian food ingredients maker at more than €1bn, according to reports. It is understood that the US private equity firm, which owns 97% of the group, has sent out initial teasers to investors and expects non-binding bids to come in the first half of April.


Russians have up to $213bn offshore in Swiss banks

The Swiss Bankers Association (SBA) has estimated that the country's banks hold between SFr150bn and SFr200bn of Russian client money in offshore accounts. However, the SBA stressed that this was small compared to overall assets held in Switzerland. "The share of assets held for Russian clients likely accounts for a share in the low single-digit percentage range of the total cross-border assets deposited with Swiss banks," it said in a statement.

Ping An profits tumble due to Covid and property woes

Ping An has recorded a decrease in group net profit to Rmb101bn, from Rmb143bn in 2020. The 29% fall was the insurer's steepest since 2008.


FCA 'asleep at the wheel' over British Steel pensions

The National Audit Office (NAO) says steelworkers were the victims of pension regulation failures that left some with losses of up to £489,000. The public spending watchdog said the “regulated financial advice market failed to protect” members of the British Steel pension scheme, prompting Dame Meg Hillier, chair of the Public Accounts Committee, to say the case “was a failure from top to bottom” and declare that the Financial Conduct Authority (FCA), “whose job it is to regulate these firms, was asleep at the wheel”. The NAO report relates to a 2017 scandal involving members of the British Steel pension scheme, many of whom were persuaded to transfer their retirement savings. The watchdog said some of those who transferred their money to a different provider “have suffered significant financial losses because they were provided with unsuitable advice,” adding that they have not been fully compensated. The average loss for British Steel pension scheme claims resolved by the Financial Services Compensation Scheme is £82,600, with individual losses going as high as £489,000. In a statement, the FCA said it welcomed the report, “which highlights the complex issues for government and regulators which arose from the exceptional circumstances around [this case] and the framework for pension freedoms.”

Abrdn will not replace private equity head

Abrdn’s global head of private equity, Mark Redman, has left the company after less than two years and will not be replaced. His departure has fuelled speculation that the asset manager is considering selling its private equity business. A spokeswoman for the company said it had “no desire” to sell the unit. The private equity business was spun out into a separate unit last year as Abrdn looked to profit from a boom in private equity deals. With Mr Redman exiting, the private equity leadership team will now report to Chris Demetriou, who oversees Abrdn’s investment teams across the UK, Europe and the Americas.

Regulator considers fund ‘side pockets’ for Russian assets

The Financial Conduct Authority (FCA) may authorise so-called ‘side pockets’ in retail funds to allow fund managers to separate hard-to-sell Russian and Belarussian assets from their core investments. The regulator is consulting with fund managers on the new structure, saying: “The side pocket proposals would be limited in scope to assets that are illiquid as a result of the Russia/Ukraine war. The precise scope would be determined as part of the consultation.” The proposed structure would allow existing investors in the funds to redeem the value of their investments while the Russian assets remain in the side pocket. It would allow new retail investors to enter the fund without exposing themselves to the Russian assets.

FCA extends Sipp asset probe deadline

The Financial Conduct Authority has given self-invested personal pension providers more time to fill out its information request regarding assets held in these wrappers. The request asks providers for information about assets under administration for both standard and non-standard assets, as well as the total number of members it has in its schemes. The information request was originally sent to providers with a deadline of April 6, but the regulator has since extended this by four weeks to May 4. The City watchdog said: “The revised deadline means firms will have had a total of 11 weeks to complete this request. No further extensions will be offered.”

Assetz nets £1bn fund to aid small housebuilders

Assetz Capital has received an injection of £1bn to fund lending to small businesses, including housebuilders, over the next three years. Aros Kapital will contribute at least £750m to lending, in addition to around £350m already pledged. Extra funding will allow the lender to offer loans ranging from £150k to £20m at record low rates for SMEs. This would place the business in direct competition with challenger banks.


GSK halts new clinical trial in Russia

GlaxoSmithKline has joined other pharmaceutical companies in halting new clinical trials in Russia while still providing essential medicines to the country. Like others in the sector, it will push on with existing trials.


P&O Ferries criticised over job losses

P&O Ferries has sacked 800 staff with plans to replace them with cheaper agency workers, with employees told yesterday was their "final day of employment" via a video call. The RMT union is threatening legal action against P&O, while TUC General Secretary Frances O'Grady said P&O's "secret plan" to sack staff with no notice was "reprehensible". Ann Francke, chief executive of The Chartered Management Institute, said P&O had "got it very wrong", adding: "It's shocking and appalling. It's like management behaviour from another era." A spokesman for Prime Minister Boris Johnson condemned P&O's actions, saying they were "completely unacceptable."

Cineworld reports loss

Cineworld has reported a $708m loss for 2021 as Covid closures continued to affect the world's second-biggest cinema chain. However, revenues rose from $852m to $1.8bn year-on-year thanks to the easing of Covid restrictions. Admission numbers jumped 75% from 54m in 2020 to 95.3m in 2021.


Digital publishing revenues jump in Q4

Digital publishing revenues rose 13.4% to £174m in Q4 2021 compared to the same period in 2020, according to the latest Digital Publishers’ Revenue Index from the Association of Online Publishers.


Property investment firm secures £85m funding injection

Property investment firm Edmond de Rothschild Real Estate Investment Management (REIM) has secured an additional £85m in funding for one of its investment funds to develop rented accommodation around the UK. REIM, which specialises in affordable properties in the private rented sector, has now increased its total investment capacity to £535m after the new backing for its Residential Investment Fund UK.


Bank raises interest rates and expects inflation increase

The Bank of England (BoE) has raised interest rates from 0.5% to 0.75% as it looks to tackle soaring inflation, which has hit a three decade high of 5.5% and is set to climb higher still. The rate increase – the third in four months – takes rates to the highest level since March 2020. The Bank has warned that inflation is likely to reach 8% in April and possibly higher in the coming months, saying that Russia’s invasion of Ukraine has led to large increases in energy and other commodity prices and is “likely to exacerbate global supply chain disruptions.” It added that this has “increased the uncertainty around the economic outlook significantly.” The BoE’s Monetary Policy Committee (MPC), which voted by eight to one in favour of the increase, said more interest rate rises "might be appropriate in coming months, but there were risks on both sides of that judgement depending on how medium-term prospects evolved." Frances Haque, Santander's UK chief economist, said the Bank’s decision to increase rates “was not a surprise to markets and forecasters alike”, saying concerns over supply constraints, the energy crisis, the situation in Ukraine, and the labour market remaining tight “trumped apprehension around the effect on economic growth of raising the Bank Rate again.” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said analysts are “more confident … that the rate hiking cycle will stall after the Committee increases Bank rate to 1%, most likely at the next meeting in May." 

Ukraine crisis could hit global growth, says OECD

The Organisation for Economic Development (OECD) has warned that the war in Ukraine could cut global economic growth by more than one percentage point in the next year. The report also warned that the conflict could push up prices globally by about 2.5%. Outside Russia and Ukraine, the OECD suggests that Europe will be hardest hit, with up to 1.4% knocked off the economy. Those countries "that have a common border with either Russia or Ukraine" would feel the impact most, the OECD said. The report says governments could soften the blow for household budgets with a "targeted fiscal response,” saying: “Well-designed and carefully targeted fiscal support could reduce the negative impact on growth with only a minor extra impetus to inflation."

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