Recognise Bank sees £95m in deposits and lends £100m
Recognise Bank has seen £95m in deposits since receiving its full banking license six months ago. The SME-focused lender also handed out £100m to UK businesses in the period. Recognise Bank chief executive, Bryce Glover, hailed the figure as a “huge lending milestone,” adding: “Our next chapter is to continue helping UK SMEs, who are the lifeblood of the UK economy, but with an even greater focus on technology.” The challenger bank is part of the City of London Group, which in December reported a pre-tax loss of £5.8m for the six months ending September 30, up from a loss of £2.6m in the half year. The group said £5.6m of the latest loss stemmed from Recognise Bank, “in line with its business plan, as it develops its business.”
Shawbrook posts record profits
Private equity-controlled bank Shawbrook has reported a jump in profits as deposits rose by more than a fifth to £8.4bn and its loan book increased to £8.6bn from £7.1bn a year earlier. The bank saw pre-tax profits hit a record £197.2m in 2021, with this up from £73.5m in 2020. Shawbrook chief executive Marcelino Castrillo hailed an “exceptional performance” from the bank, which is owned by BC Partners and Pollen Street Capital – with the spike in profits coming amid speculation that its private equity owners are preparing for a sale of the group.
Account cap for Russians is illegal, warn bankers
The Telegraph says finance industry insiders have warned that a Government plan to ban Russian nationals from holding more than £50,000 in their bank accounts is "rushed" and illegal, saying the measure proposed amid a crackdown on dirty money would break equality laws that prevent discrimination on the basis of nationality. A source said: "What they are proposing is illegal, there's no question about it. This feels like a rushed announcement where the consequences haven't been thought through." Banking industry executives have reportedly asked for reassurances that they will not be sued if they enforce the measure.
Banking Protocol scheme stops £202m of fraud
Bank staff have worked with the police to stop £202.8m of fraud since 2016 thanks to the Banking Protocol scheme developed by UK Finance, National Trading Standards and local police forces. Last year £60.7m was stopped, 34% more than in 2020, with data showing that bank branch staff made 10,072 Banking Protocol calls to the police during 2021. The scheme led to the arrest of 162 suspected criminals last year.
BBVA gets regulatory backing for Garanti bid
Spain's BBVA says it has secured the regulatory approval needed to launch a voluntary takeover bid for the 50.15% stake it does not already own in its Turkish unit Garanti. BBVA had offered to buy the remaining stake in Garanti in November but since then a weaker Turkish lira has reduced the price of its deal in euros. The offer would now be worth €1.6bn, down from €2.25bn.
Barclays boosts wages of low-paid US employees
Barclays is raising wages for US workers by at least 21% to $20.50 an hour. The rise, which comes into effect this month, applies to more than 900 employees. The new rate will vary based on location and cost-of-living indexes.
Barclays raided by tax fraud investigators
German authorities looking into the long-running Cum-Ex tax evasion scandal have raided the offices of Barclays in Frankfurt. A Barclays spokesman said the Cologne prosecutor attended the Frankfurt office, adding: "This is related to an investigation into historic Cum-Ex trading activity and we are continuing to co-operate with the authorities in Germany.”
FCA outlines BSPS compensation scheme
The Financial Conduct Authority (FCA) has published plans for a £71.2m compensation scheme for British Steel workers who were wrongly advised to give up their guaranteed pensions. The City watchdog estimates that individual firms will pay £31.2m and the Financial Services Compensation Scheme will pay £20.6m. A further £19.4m will be paid by professional indemnity insurers. Noting that it has been reviewing the advice given to British Steel Pension Scheme (BSPS) members since 2017, the FCA says it has found that 46% of the advice it reviewed relating to BSPS was unsuitable, or should not have proceeded. Meanwhile, the City watchdog has written a Dear CEO letter to firms who gave pension transfer advice to BSPS members between May 2016 and March 2018, setting out the actions it expects firms to take with immediate effect. The FCA emphasised that firms are required to have adequate assets to pay any compensation due and urged them to not avoid their responsibilities. The regulator said firms who advised BSPS should not dispose of, withdraw, transfer, deal with or diminish the value of any of their assets and any funds that they hold, except in the ordinary course of business.
Crypto sector in regulation warning
The crypto industry has voiced concerns that the Financial Conduct Authority’s stringent regulatory standards are driving firms overseas. While the City watchdog has extended a deadline for crypto firms operating under its temporary register to secure approval, Ian Taylor, executive director of trade body CryptoUK, noted that 80% of UK firms that have sought approval from the regulator have been unsuccessful. He warned: “The impact for those companies is that they will have to operate off-shore,” adding: “Consumers will therefore have no recourse from the regulator, as the firm will operate outside the UK jurisdiction, which is bad for British consumer protection.”
RBC agrees £1.6bn takeover of Brewin Dolphin
Royal Bank of Canada has agreed to make an all-cash purchase of Brewin Dolphin in a deal valuing the latter at about £1.6bn. The move is one of the largest M&A deals in the UK wealth space over recent years. Sky News’ Ian King notes that big international banks and asset managers have been looking to step up their presence in the UK wealth management market, but are “up against some very big and well-entrenched players,” such as St James's Place.
House price growth at 17-year high
Data from Nationwide shows that the pace of house price growth hit a 17-year high in March. Annual growth in house prices hit 14.3%, with this the steepest increase since November 2004. The jump in prices has taken the price of the average UK home up £33,000 in a year to a record high of £265,312. Wales led the way, with the average price up 15.3% in a year, while London has the highest average price at £518,333 despite prices climbing at the far slower rate of 7.4%. The report notes that house prices are now more than a fifth higher than when the coronavirus pandemic hit in early 2020. Nationwide said robust demand, limited supply and a strong jobs market are pushing up prices, with the market experiencing “a surprising amount of momentum given the mounting pressure on household budgets and the steady rise in borrowing costs". Nationwide expects house price growth to slow in the year ahead, with high inflation rates and interest rate increases set to have an impact. Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said that while the housing market was going from "strength to strength,” March "probably marks the peak for house price growth".
Homeowners face hit as cheap mortgages expire
Almost 600,000 people who remortgaged in 2018 ahead of an expected interest rate rise risk paying an extra £1,700 a year on their mortgages as the cheap fixed-rate deals expire. The Telegraph warns that those remortgaging will face a jump in monthly repayments as the market braces for the Bank of England to raise rates, with a hike to more than 2% on the cards as officials look to curb soaring inflation. If the Bank rate hits 2% by 2023 and lenders pass on the increases, the rate on a typical five-year fix would hit 4%, according to Moneyfacts. Those who took a cheap five-year fixed rate mortgage on a £200,000 loan in 2018 would find their monthly repayments rising by £140 a month on a new five-year deal, with this meaning £1,680 a year more in mortgage bills. Andrew Wishart, economist at Capital Economics, said: “I expect mortgage rates to rise sharply over the next few months. The steep rise in market interest rates has yet to be priced into mortgage rates so lenders have historically low margins right now.” Capital Economics expects the average rate on new mortgages to double from a low of 1.5% in November 2021 to almost 3% in 2023.
Boots reports surge in sales ahead of potential takeover
Rising footfall and strong online demand resulted in a 15.3% year-on-year rise in total UK sales at Boots over the last quarter. The sales boost comes despite "trading headwinds" caused by the Omicron variant. This was offset, however, by a 75% rise in pharmacy services revenue in the three months to the end of February amid robust demand for Covid testing and flu vaccinations. In addition, there was a 52% year-on-year rise in footfall at Boots stores, while digital sales also rose - now accounting for more than 15% of the chain's total retail sales in the UK, compared to 9% before the pandemic.
ONS: Economy grew by 1.3% in Q4
The Office for National Statistics (ONS) has revised up its UK economic growth estimate for the October to December 2021 period, saying the economy grew at a rate of 1.3% in Q4, rather than the 1% previously estimated. This means GDP was now 0.1% below the pre-pandemic period of Q4 2019, compared with the ONS’ previous estimate of 0.4% below. Revisions to GDP figures for the past two years show the economy increased by 7.4% in 2021, with this lower than an initial 7.5% estimate. The ONS figures also show that people opted to dip into their savings in Q4, with the household savings ratio dropping to 6.8% - down from 7.5% in Q3 2021. The data also revealed that high inflation eroded real incomes 0.1% over the closing quarter of 2021. Pointing to a potential decline in confidence, Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “No one should rule out a decline in households’ real expenditure this year that could drag the overall economy into a recession.”
Expert warns of the economic impact of long Covid
Dr Nathalie MacDermott, a specialist in paediatric infectious disease at King’s College London, has warned of the economic impact of officials failing to consider long Covid when lifting restrictions. Flagging concern that long Covid is not being given enough consideration when public health measures are adjusted, she warned: “Economically, that is going to be to our downfall in the coming years.” Dr MacDermott said that the condition will have a substantial impact on people’s ability to work, their earning potential, and costs to government and businesses, adding: “That’s going to be a significant hit to our economy, not just to people’s lives.” The Office for National Statistics estimates that 1.5m people in UK households are living with long Covid.