Virgin Money announces closure of 31 branches
Virgin Money is to close 31 branches with the loss of 112 jobs, with the firm also planning to scale back office space used by its employees. The bank said the cuts, which will reduce the lender's number of branches to 131, saw sites selected based on location, usage, proximity to alternative branches and lease arrangements. It said the closures will take place in early 2022 and come as part of an "acceleration of its digital strategy". Fergus Murphy, group customer experience director at Virgin Money, said: "As our customers change the way they want to bank with us and conduct fewer transactions in-store, we must continue to evolve the role of our stores into places where we showcase our products and bring our digital services to life." Since its 2018 tie-up with Clydesdale and Yorkshire Banking Group, Virgin has cut its number of branches from 245. Union Unite said that the latest reduction was “shameful” and would leave rural and remote areas without adequate banking services. Virgin is not the only bank looking to trim its branch network. HSBC is shutting 82 branches under a programme that has been running since April, while Lloyds Banking Group, TSB and the Co-operative Bank have all shut branches since the start of the pandemic. MPs on the Treasury Select Committee last month revealed that closures in recent years have left more than 200 “last in town” branches across the UK.
Bankers warn over central bank digital currencies
The Bank for International Settlements (BIS) and seven central banks - including those in the US, Britain and the European Central Bank (ECB) - have warned that central banks could trigger runs on banks if they launch their own digital currencies. The report said an official digital currency would be likely to cut the cost of transactions and increase security in payments, but also risks undermining parts of the existing financial system if money rushes out of banks. Its report, written by analysts led by the Bank of England's deputy governor Sir Jon Cunliffe, said: “Central bank digital currencies and certain new forms of digital money could increase the latent risk of systemic bank runs”. The study says the tech involved in delivering digital cash should be useable with existing domestic payments systems, adding that the existing financial system must be given time to adjust to the introduction of CBDC. ECB president Christine Lagarde said: “Central banks have a responsibility to ensure that citizens have access to the safest form of money — central bank money — in the digital age”.
NatWest’s Davies ‘very hostile’ to crypto
Sir Howard Davies, chair of NatWest Group and a former deputy governor of the Bank of England and former chairman of the Financial Services Authority, has expressed support for a ban on cryptocurrency trading, saying he is “very hostile” to crypto and revealing that it is regarded as the biggest worry within NatWest. Sir Howard, who stressed he was not talking of central bank digital currencies, said: “It’s gambling as far as I can see, with a sort of libertarian veneer on top of it.” He has praised China for officials' “instinct” in banning “the damned stuff” and said it is “quite a worry” that more Britons own crypto assets than shares.
Investment banks' fees soar to $100bn in M&A boom
Surging activity in M&A and equity capital markets has seen investment banks score record fees of $60.6bn so far in 2021, while underwriting loan and debt offerings has pulled in $52bn.
3i appoints Hutchison as chairman
Investment group 3i has looked to its own board to select a new chairman, promoting David Hutchison. Mr Hutchison is currently 3i’s senior independent director and heads its valuations committee. He will become non-executive chairman in November. It is noted that 3i has £11.6bn of private equity assets under management, alongside £4.9bn of infrastructure assets.
Wells Fargo must face shareholder lawsuit
A federal judge has rejected Wells Fargo’s bid to dismiss a lawsuit claiming it defrauded shareholders about its ability to rebound from scandals over its treatment of customers. The bank has operated under consent orders from the Federal Reserve and two other US financial regulators to improve governance and oversight since 2018. Shareholders say bank officials falsely claimed in interviews, analyst calls and congressional testimony that the bank was mending its ways, when regulators actually viewed its progress as "deficient" and "unacceptable."
Credit Suisse names interim heads of internal audit
Credit Suisse has appointed company veterans Nitesh Patel and Roger Senteler as interim co-heads of group internal audit, Richard Meddings, chair of Credit Suisse's risk and audit committees, has told employees in an internal memo.
BBVA plans cash dividend payout
Spain's BBVA will pay a cash interim dividend of €0.08 per share against 2021 results following the lifting of restrictions on remuneration policy by the European Central Bank. The bank said it will resume a "predictable" and "sustainable" dividend policy, with a 100% pay-out in cash, equivalent to 35% and 40% of its profit, to be distributed in two annual instalments.
FCA warns wealth managers on failure planning
The Financial Conduct Authority (FCA) has warned wealth managers they must have a plan for what to do if their firm fails, saying they must have a good understanding of their regulatory capital and reporting requirements. This comes after the City watchdog found an increase in the number of loss-making firms during the pandemic. In a Dear CEO letter, the FCA said that while many firms had weathered revenue fluctuations driven by pandemic-induced market volatility, many were still failing. The FCA said it expects firms to have a “credible” wind down plan, saying it is “concerned that in the event of disorderly firm failure, there is a risk of harm to consumers.” The watchdog reminded CEOs that they are responsible for ensuring that their firm meets FCA requirements, adding that it will “use the Senior Managers and Certification Regime to engage directly with accountable individuals on areas of concern.”
TransferGo raises $50m
International payments business TransferGo has raised $50m as it looks to push ahead with expansion plans. The Series C funding round was led by Russia-focused private equity giant Elbrus Capital and US-based VC Black River Ventures, taking the fintech to a total of $77m raised to date. Founder and CEO Daumantas Dvilinskas said: “We have ambitious goals over the next five years to take this company public … The number one priority is to grow our customer base three of five times in that period... and to introduce new payment and financial options."
Wise boss at risk of FCA action after tax breach
Lawyers say Kristo Kaarmann, CEO of money transfer group Wise, could face Financial Conduct Authority sanctions after HMRC penalised him over tax issues and identified him as a "deliberate tax defaulter".
LEISURE & HOSPITALITY
VAT support shift could hit hospitality
City A.M. reports that there is concern that the upcoming 7.5% VAT rise will slow down the post-pandemic recovery for the hospitality sector. In a bid to support the sector through the pandemic, the VAT rate for hospitality was reduced from 20% to 5%. As of today, the rate climbs to 12.5% until March 31, 2022. Kate Nicholls, chief executive of UK Hospitality, has suggested VAT should be permanently lowered for hospitality and tourism businesses. She has also called for a reform of business rates.
Cinema giants lose court battle over unpaid rent
London's Trocadero Centre in Piccadilly Circus has won a High Court battle against cinema chains Cineworld and Picturehouse Cinemas over unpaid rent. The cinemas argued they were not liable to pay for the time when the premises could not legally be used as a cinema due to Covid-19 restrictions. But Judge Robin Vos found the cinemas had “no realistic prospect of defending the claims” about the rent and service charges.
House price growth slows
Data from Nationwide shows that UK house price growth slowed in September, with the average price up by just 0.1% over the month, with this far lower than the growth of 2% recorded in August. The month-on-month increase means the average price hit £248,742 last month. The report also shows that annual house price growth in September came in at 10%, down from 11% in August. Reflecting on the data, Robert Gardner, Nationwide’s chief economist, noted the impact of the tapering stamp duty holiday, adding that “activity is likely to soften” now the tax break has been withdrawn, with the threshold back to £125,000 as of today. Pantheon Macroeconomics economist Gabriella Dickens said September’s figures point to the “start of a period of relatively restrained growth in house prices” as the boost from of the stamp duty holiday fades. Looking ahead, Andrew Wishart, an economist at Capital Economics, believes house price growth “will cool gradually rather than collapse”.
Chancellor urged to cut rates to boost high street stores
Rishi Sunak has been urged to deliver steep cuts to business rates in his autumn Budget, with campaigners arguing that high street shops should face lower bills and the cost should be covered by steeper taxes for large online retailers. MP Scott Benton said: "We are urging the Chancellor to urgently reduce the level of business rates, or, what we should really call it - a shops tax - to give those businesses with a physical presence the chance to compete against the likes of Amazon.” Andrew Goodacre, of the British Independent Retailers Association, says there is an argument for a return of the 50% retail discount relief that allowed stores whose premises had a rateable value of £51,000 or less to cut their business rates in half. Meanwhile, MP Kevin Hollinrake, who chairs the Property Research Group of MPs, said: "Making the business rates system fair has to be a priority.”
Economy recovers faster than expected
Figures from the Office for National Statistics (ONS) show that the UK economy recovered faster than expected in Q2. GDP increased by 5.5% between April and June, with the figure revised up from an initial estimation of 4.8%. Despite the revised figure, the economy was still 3.3% smaller than in Q4 2019, the last quarter before the pandemic hit. The analysis shows household spending was the biggest contributor to the economic boost, with this driven up as lockdown restrictions eased in April. Jonathan Athow, deputy national statistician at the ONS, said: “Household saving fell particularly strongly in the latest quarter from the record highs seen during the pandemic”. The ONS also revised its Q1 figure, estimating the economy shrunk by 1.4% rather than 1.6%, while also reporting that the economy contracted by a record 9.7% in 2020, down from the previously estimated 9.8% dip. The ONS said the revisions came as it acquired more complete data and made "numerous improvements” to data sources and methods.
Business leaders' confidence plummets
Optimism among business leaders has been hit by soaring costs, staff shortages and looming tax increases. The Institute of Directors (IoD) says confidence in the economy has fallen from 22% to -1% in the last two months. With climbing costs hitting supply chains and firms having to increase pay in a bid to attract workers, three in four businesses think their costs will be higher over the next year. Kitty Ussher, chief economist at the IoD, said that alongside higher costs, the Government’s decision to raise employers’ National Insurance contributions is set to have an impact, suggesting it “acts as a disincentive to hire just when the furlough scheme is ending.”