Lloyds eyes private rental market move
Lloyds Banking Group is reportedly planning to snap up 50,000 homes for rent in a move that could see it become one of the UK’s largest landlords. In plans announced internally, the bank has launched the Citra Living brand as it looks to move into the private rental market. Sources say Lloyds has set a “strategic challenge” of reaching 10,000 properties by the end of 2025, with a further aim to hit 50,000 by 2030. Based on current property prices and rental estimates, this would create a portfolio worth £4bn, generating pre-tax profits of around £300m. If the bank hits a target to acquire the properties by 2030, it will pass Britain’s current largest landlord Grainger, which currently owns 9,100 properties worth around £2.1bn.
OSB reveals fraud and H1 profits
OSB Group has overhauled some of its internal processes after being hit by a suspected fraud on one of its funding lines. The specialist lender has set aside £20m to cover what it says is an isolated case. The bank confirmed the incident in its first-half results. OSB saw statutory pre-tax profits climb to £221.9m in H1 compared to £99.3m a year earlier – a period where it had taken a £42m impairment to account for possible loan losses from the pandemic. It also announced a 6% rise in its loan book to £20.4bn.
First Direct to grow headcount
First Direct has revealed it is planning to grow its headcount by a further 130 people by the end of the year as it targets doubling the size of the business. The bank wants to double its customer base, with a particular focus on attracting young people to open accounts. CEO Chris Pitt said the bank had already hired 111 people since January and that his main challenge would be swelling its volume of customers whilst maintaining its customer service.
Goldman Sachs to acquire NN Group's investment arm
Goldman Sachs is to acquire NNIP, the investment arm of Dutch insurer NN Group for €1.7bn. The deal is understood to be part of Goldman CEO David Solomon's strategy of making the bank's revenue stream less reliant on earnings from global markets and advising on deals. Additionally, the companies said they will enter a 10-year strategic partnership under which Goldman will provide the Dutch firm asset management services, the companies said in separate statements. NN said the sale will improve its Solvency II ratio by 17 percentage points.
Interactive Investor lines up banks for London flotation
Interactive Investor is lining up bankers to orchestrate a London flotation that could value it at up to £2bn. The online retail investment platform has invited investment banks to pitch for a role on an initial public offering that is likely to be among the City's most prominent in 2022. The platform, which has grown rapidly under the majority ownership of private equity firm JC Flowers, has more than 400,000 customers and £55bn of assets under administration.
Mastercard faces class-action lawsuit
A landmark £14bn case against Mastercard will see its fees come into question. The Competition Appeal Tribunal has ruled that former financial ombudsman Walter Merricks can represent 46m consumers in the UK's first class action claim of its kind. Mr Merricks claims Mastercard's interchange fees breached EU competition law by forcing consumers to pay higher prices to businesses that accept Mastercard between 1992 and 2008.
LEISURE & HOSPITALITY
'Pingdemic' hitting trading at pubs, bars and restaurants
New figures suggest that worker shortages triggered by the “pingdemic” are hitting pubs, bars and restaurants' trading. Output at food and drink businesses dropped in July as a result of these firms struggling to scale supply amid staff shortages and high rates of self-isolation, according to Lloyds Bank's UK recovery tracker. Output at food and drink businesses fell at the fastest pace in eight months, with Lloyd's recovery index for the category dropping to 45.6 in July from 60.5 in June. A reading above 50 indicates output is rising. Workers have been reluctant to return to leisure and hospitality jobs due to concerns that their roles may not be viable in the long term, while younger workers have entered education to strengthen their skill sets. This has shrunk the pool of labour food and drink businesses' can draw on. Firms are struggling to absorb higher costs as a result of strengthening incentives in a bid to attract talent, according to Lloyds' research.
Manufacturers turning away work
A new survey suggests that manufacturers are having to turn away work because of the soaring price of raw materials and shortages of staff and components. Almost half of those surveyed by the South West Manufacturing Advisory Service said that they were already trading more strongly before the pandemic but 94% were struggling to source raw materials to fulfil orders and 96% were being buffeted by price rises, making it difficult to maintain profit margins. Disruption to supply chains were forcing some to leave production lines idle while they waited for components to be restocked and nearly half the 260 SME manufacturers surveyed said they were struggling to recruit. The findings echo the CBI’s quarterley SME trends survey, released earlier this month, which showed that in the three months to July manufacturing output was growing at the fastest pace since its records began in 1988.
CMA to investigate Ultra takeover in national security probe
The Competition and Markets Authority (CMA) is to investigate the potential takeover of UK defence business Ultra Electronics by US-owned rival Cobham, with Business Secretary Kwasi Kwarteng ordering an inquiry to identify and assess any national security concerns around the £2.6bn acquisition. The CMA report will be sent to the Business, Energy and Industrial Strategy Department by January 18, 2022.
Morrisons accepts £7bn private equity takeover
Morrisons’ board has switched its recommendation and backed a £7bn takeover by Clayton Dubilier & Rice. The private equity firm outdid a rival bid from Fortress and made pledges to support the supermarket chain’s business model. The bid by CD&R values Morrisons at £9.7bn including debt and has been funded by equity from the firm’s latest fund and other alternative investors Ares and West Street Strategic Solutions, in addition to debt provided by Goldman Sachs, BNP Paribas, Bank of America and Mizuho Bank. CD&R has pledged to safeguard employment and pension rights of all Morrisons staff, adding that it does not anticipate “any material change to Morrisons headcount”. The retailer’s board will unanimously recommend the CD&R bid at a meeting scheduled for the start of October.
Former Debenhams workers launch legal fight
A group of former Debenhams workers are taking legal action after losing their jobs with just a few days' notice, with lawyers arguing that there was a “complete failure” to follow the statutory process and that the workers' employment rights were breached. The staff were not given the 45-day minimum consultation period for redundancy.
Consumer confidence slips but stays above pre-pandemic levels
Data from research company GfK shows that British consumer confidence surpassed pre-pandemic levels for the second month in a row in August. While the consumer confidence index fell by one point to -8 in August, levels of optimism remain close to record highs. The major purchase sub-index fell by five points to -3, while the savings index rose by five points to 25 and the sub-index for the general economic situation over the coming year slipped by one point to -6. The sub-index for personal financial situations over the coming year was flat at 11. Joe Staton, client strategy director at GfK, said: “With the economy continuing to open up and GDP bouncing back, the overall picture for the economic health of the nation is looking good for the remainder of 2021. There are compelling reasons here to be cheerful as we begin to put the hardest pandemic months behind us.”
Entrepreneurs and freelancers contribute £125bn to the economy
A survey commissioned by business banking app Mettle has looked at the economic contribution of entrepreneurs, the self-employed and those with a side hustle business. It found that the total economic contribution from this sector is estimated at more than £125bn, a figure that represents about 15% of the total UK economy at the end of 2020. The survey found the average estimated turnover of small business owners was £52,620.
Card spending slips
Bank of England data shows that spending on credit and debit cards fell 5% in the week to August 12 compared to the week before. The rate of payments made by card is currently at 94% of that seen before the pandemic, the report shows.
Overseas investment not hit by Brexit
Analysis suggests the flow of foreign money into high-growth UK companies has not been affected by Brexit, with overseas investors piling £19bn into such businesses in the past three years. The Trading Places report produced by Barclays and data firm Beauhurst shows that US investors have led the way, pumping £4.5bn into high-growth UK companies in 2020 alone. The study also shows that the annual value of their investment has risen by more than 620% since 2011. Deals involving EU investors hit £1.9bn in 2020, marking a slight dip on the record £2.4bn seen in 2019. Over the last ten years, software firms have been the most popular among international investors, followed by internet platform, mobile app, and analytics companies.