BANKING
Banks ordered to pull staff out of the City
The European Central Bank (ECB) has told eight unnamed banks to shift staff out of London, saying it has identified 56 groups of traders who should be doing their jobs from within the EU following an investigation into whether the institutions are seeking to dodge post-Brexit rules. The ECB reviewed 264 British-based trading desks and found about a fifth of them should not be located in the UK. In response it has warned of "targeted supervisory action" against the banks. It is noted that the number of professionals leaving the City post-Brexit has been much smaller than initially predicted. EY estimates that around 7,000 roles have moved abroad since 2016, far fewer than the 200,000 job losses that were forecast before the Brexit vote.
Ulster Bank to close nine branches
Ulster Bank has said it will close nine branches across Northern Ireland, with the closures to start in September through to mid-October. A spokesperson for Ulster Bank says more customers are moving to online and mobile banking, noting that all closing branches are within one mile of a free-to-use cash machine.
INTERNATIONAL
Investec profits climb 91%
South African-based lender Investec nearly doubled its annual profits last year, with earnings per share up 91% in the year to March. This was driven by increased customer deposits and loans. The bank's main South African business reported a 54% profit rise to £297.5m, while profits at its UK arm more than doubled to £299.9m. Chief executive Fani Titi said Investec is “well positioned to serve its carefully chosen client base and continues to navigate the uncertain outlook emanating from ongoing inflationary pressures and the economic effects of the invasion of Ukraine.”
Wells Fargo accused of faking interviews
Former Wells Fargo wealth management executive Joe Bruno has accused the US bank of scheduling fake interviews with black and female candidates for roles that were already filled in order to boost its diversity statistics. Mr Bruno claims he was fired after he blew the whistle to his bosses about the alleged fake interviews. He is one of seven current and former Wells Fargo employees that claim their bosses in the wealth management unit instructed them to interview diverse candidates for positions that had already been filled.
AVIATION
Boeing lands $6bn order from IAG
British Airways owner IAG has lodged a bumper order for aircraft from US manufacturer Boeing. It is buying 50 Boeing 737 Max aircraft worth $6.25bn at list prices, but said it had negotiated a “substantial discount”, which is typical for large orders.
FINANCIAL SERVICES
FCA to clamp down on firms using permissions to dupe consumers
The Financial Conduct Authority (FCA) is set to use new powers to allow it to revoke businesses’ permits to carry out regulated activity quicker, clamping down on firms using regulatory approvals to deceive consumers. The FCA is now able to cancel or change a firm’s permission if it has not taken appropriate action 28 days after receiving a warning. Previously it could take three months or longer to cancel a firm’s permission. The City watchdog is said to be concerned that companies are using permissions to convince consumers they are buying regulated products that are covered by the Financial Service Compensation Scheme when they are not. Mark Steward, executive director of enforcement and market oversight at the FCA, said: “These new powers will enable us to take quicker action to cancel permissions that are not used or needed.”
Watchdog urges BSPS members to act quickly and complain
The Financial Conduct Authority has written to those who transferred out of the British Steel Pension Scheme (BSPS), urging them to file their complaints as soon as possible. Noting that there is generally a six-year time limit to complain, the City watchdog told customers to check whether the advice was unsuitable using its advice checker and complain to the firm who gave the advice if there was any cause for concern. The FCA advised that if the individual is not satisfied with the response from the firm, it can complain to the Financial Ombudsman Service. The regulator plans to deliver £71.2m in compensation to former BSPS members who received unsuitable advice, with an estimated 1,400 steelworkers set to be involved. BSPS members were asked to make decisions about their pensions as part of a restructure of the scheme in 2017. About 8,000 members transferred out of the scheme, with transfers collectively worth about £2.8bn. However, concerns about the suitability of the transfers were soon raised, leading to an intervention from the FCA.
LEISURE & HOSPITALITY
Young's serves profit and revenue increase
Pub group Young's has reported a 251% rise in revenues for the year to March 28, with an operating profit of £52m, compared with the previous year's loss of £34.5m. Compared to pre-pandemic levels, revenues had risen by 17%. However, the group warned it was facing industry-wide inflationary pressures. CEO Patrick Dardis highlighted that utilities cost around £5m more than last year.
REAL ESTATE
Cheapest mortgage rates more than double since October
The cheapest fixed mortgage rates have more than doubled since October last year, according to analysis by mortgage broker L&C Mortgages. The typical new, £150,000 repayment mortgage now costs over £100 a month more than it did seven months ago, an increase of more than £1,200 per year. The cheapest average two-year and five-year fixed rates are now 2.36% and 2.46% respectively, having risen from the historic lows of 0.89% and 1.05% respectively last October. For someone repaying a £150,000 mortgage over 25 years, the cheapest typical two-year fix now costs £662 a month compared to £558 a month back in October, according to L&C.
House prices up 9.9% to £297k in March
Land Registry data shows that house prices in England were up 9.9% year-on-year in March, hitting an average of £297,524. While prices continue to climb, March’s increase marks a slowdown on the 11% growth recorded in February. Property experts say the market has been cooled by rising mortgage rates and the squeeze on incomes caused by the cost of living crisis. Andrew Montlake, managing director of mortgage broker Coreco, expects the rate of price growth to slow during 2022 and into 2023, saying: “9% inflation, rising interest rates and a potential recession ahead will impact demand while lenders are becoming ever more cautious, which will restrict what people can borrow.”
RETAIL
Dyson to join Currys as chair
Asos chair Ian Dyson is to join the board of electronics retailer Currys as chair in September, succeeding Ian Livingston. Mr Dyson will also step down as a non-executive director of Intercontinental Hotels Group in February 2023.
ECONOMY
Consumer confidence at an all-time low
Consumer confidence has dipped to a record low, with GFK's confidence index dropping two points to -40 in May, with this a point lower than the previous record of -39 set in July 2008. GfK director Joe Staton said: "This means consumer confidence is now weaker than in the darkest days of the global banking crisis, the impact of Brexit on the economy, or the Covid shutdown." He went on to warn: “The outlook for consumer confidence is gloomy, and nothing on the economic horizon shows a reason for optimism any time soon.”
IMF chief warns of multiple inflationary shocks
Kristalina Georgieva, managing director of the International Monetary Fund, has warned finance leaders to prepare for multiple inflationary shocks. Pointing to pressure on energy and food prices from Russia’s war in Ukraine, supply chain disruption and issues caused by China’s Covid policies, she said: “I think what we need to start getting more comfortable with is, that may not be the last shock.” Amid concern over a global economic downturn, Ms Georgieva said it is becoming harder for central banks to bring down inflation without causing recessions.
UK card spending slows
Office for National Statistics data shows consumer spending on credit and debit cards slowed last week, having rebounded the week before when the Bank Holiday boosted spending. Card spending in the week to May 12 fell to 104% the average recorded in pre-pandemic February 2020. This marked a 6 percentage point decline from the previous week. Adjusting for inflation, card spending last week was around 94% of its February 2020 average.
OTHER
Starting a business admirable but too stressful, poll suggests
A poll commissioned by AXA UK shows that while half of people admire the hard work of small business owners, many would not want the stress of being their own boss. On reasons that could deter them from starting a business, 31% pointed to the lack of security involved, while 11% did not want others relying on them. On the elements that appeal, four in 10 liked the idea of being able to work on something they were passionate about. The survey saw 23% of people say they would be wary of starting their own business, while 31% would give financial help to a friend or family member who was doing so. The poll also asked what qualities a start-up owner needed to be successful, with the key traits being: hard working (53%), motivated (48%), organised (46%), and willing to take risks (35%).