BANKING
Market offers just two inflation-beating easy-access accounts
With the Office for National Statistics revealing that the Consumer Prices Index rose from 0.5% to 0.7% in October, analysis of the banking market shows that just two easy-access accounts now beat inflation. While inflation remains far below the Bank of England's 2% target, record low savings rates mean that only two basic savings accounts will not see savers lose money in real terms. The two accounts, from Saga and West Bromwich Building Society, are online offerings and come with time-limited bonuses which will eventually see the rates fall below the current rise in the cost of living. Figures from Moneyfacts show that the average easy-access account pays 0.22%. The report also highlights that the 0.75% market-leading deal from West Bromwich is almost half of the 1.46% best buy available a year ago. Moneyfacts says that across all forms, 220 accounts pay 0.7% or more – down from 444 last month. The firm’s Rachel Springall comments: “Inflation-beating rates are still available in the savings market for now, but if the rate of inflation rises as predicted next year, most savers will be losing money in real terms based on today's top rates.”
Starling hit landmark with first profit
Starling says it is the first digital challenger to see profit, with the online bank set to post operating profit of £0.8m for October, having made a made a loss every month since it launched in 2014. Founder Anne Boden said she is pleased that Starling has "become the first of the new breed of digital banks to become profitable". She also noted that operating costs have increased by 30% in the past year, while customer accounts almost doubled. This comes after the Bank of England’s supervisory arm said in the summer that many new banks had "underestimated the development required" to become successful, adding a need for challengers to focus on making a profit. The Telegraph notes that in 2019 losses at Revolut hit £106.5m, while Monzo's rose to £113.8m and Starling's doubled to £52m.
Close Brothers boosted by coronavirus loan demand
Merchant banking group Close Brothers saw its loan book rise by 5.6% to £8bn in the three months to the end of October, with its banking division boosted by demand for financing under the Coronavirus Business Interruption Loan Scheme. Total client assets at the fund management unit climbed to £13.8bn from £13.7bn at the end of July. CEO Adrian Sainsbury said: “Although the external environment remains highly uncertain, we continued to adapt well to these challenging and rapidly changing conditions.”
INTERNATIONAL
UBS pays out full dividend
UBS shareholders have approved payment of the second half of its 2019 dividend, with 99.49% backing the $0.365 per share payout. The decision makes UBS the first major European bank to pay a full dividend for the year. UBS and Credit Suisse both opted to postpone payment of part of the dividend in April, with authorities urging banks to pause payouts amid the coronavirus pandemic in order to conserve capital. While many regulators across Europe stopped banks paying dividends during the economic uncertainty brought about by the crisis, Swiss supervisor FINMA did not impose a ban.
AVIATION
Jet2 profits grounded by pandemic
Jet2 has posted a £68.7m pre-tax loss for the six months to September 30, down from a £278m profit for the same period last year. The airline flew just 990,000 passengers in the half-year, down from 10m a year earlier as plunging demand and restrictions amid the COVID-19 pandemic. Package holiday passengers slumped to 30,000, down from 2.7m. Jet2 warned over further losses in the traditionally quieter half of the financial year and cautioned it expects to cut its winter 2020/21 services by half year-on-year.
FINANCIAL SERVICES
CMA fines ComparetheMarket over insurance costs
The Competition and Markets Authority (CMA) has fined ComparetheMarket £17.9m for keeping home insurance costs artificially high. The CMA said that over a two-year period the firm's contracts stopped insurers advertising more cheaply elsewhere. The watchdog said clauses in contracts between December 2015 and December 2017 prohibited home insurers from offering lower prices on other comparison websites, and prevented other platforms from expanding. The price comparison site said it was disappointed with the CMA's decision and did not recognise its analysis of the market.
Investec reinstates dividend
Investec has reinstated its interim dividend despite a “difficult and volatile” year for markets which saw its profits plunge. The firm said total operating income was down 24% year-on-year at £729m, with profit before taxation plunging 57% to £112.9m. Adjusted earnings per share halved to 11.2 pence per share in the first half. Investec’s wealth and investment arm reported net inflows of £336m and a 14.9% rise in funds under management to £51.1bn.
Insurers could offer different policies for vaccine refusers
Phil Jeynes, director of corporate sales at Reassured, has warned that the existence of a coronavirus vaccine could mean insurance customers who have had the vaccine are offered different terms to those who have not, based upon the increased risk for those who have not been inoculated.
Traders grow anxious over market access ahead of Brexit deadline
Ahead of the Brexit deadline, the FT says traders are growing increasingly anxious over market access, which could see some derivatives trading move to the US unless an agreement is reached.
MANUFACTURING
Manufacturers hit by tightened COVID-19 restrictions
The CBI’s monthly measure of UK manufacturing order books fell to a score of -40 in November, as governments tightened coronavirus restrictions. It had picked up sharply to -34 in October, although that was still well below the long-run average of -14. The business group said the overall measure of output improved in November. Output expectations dropped sharply. Anna Leach, CBI Deputy Chief Economist, said: “Order books have softened again as global demand has been hit by intensified lockdowns, and manufacturers have trimmed their expectations. Key to stabilising trading conditions for manufacturing firms will be getting the pandemic under control through further investment in mass testing.”
Thyssenkrupp cut further jobs
Thyssenkrupp is set to cut a further 5,000 jobs after posting a €1.6bn loss in the last financial year. The latest round of job cuts by the German industrial firm comes on top of 6,000 redundancies announced last year, meaning the conglomerate is axing a tenth of its 104,000-strong workforce in total.
MEDIA AND ENTERTAINMENT
CMA probing O2 Virgin Media merger
The Competition and Markets Authority has launched an investigation into the planned £31bn merger between O2 and Virgin Media after the deal was referred from the EU. The watchdog last month requested to take over the case, arguing the potential impact on competition would primarily affect the UK market. The CMA has now launched a phase one investigation into the tie-up between parent companies Telefonica and Liberty Global after the European Commission granted the referral.
REAL ESTATE
Grainger looks to double housing portfolio
Grainger intends to more than double its rental portfolio, the firm has said, after showing that it has collected 97% of rent due in the last year. Average occupancy has remained high at 95%, although it slipped to 91% two months ago. The company said that it was able to outperform its peers because it does not outsource its rent collection operations and has strong customer relationships. The company has expanded its pipeline with more than £400m in new investment. It will add 1,475 new homes to the portfolio, and is planning to build 8,950, doubling the 8,941 it already has. It added that net rental income grew by 16% over the last year.
Londonmetric benefits from surge in demand for storage
Londonmetric has reported a rise in rental income and property valuations thanks to demand for storage space during the pandemic. The warehouse investor said that its portfolio valuation grew by 4.3% or £99.8m, to £2.45bn in the six months to the end of September. The landlord has collected 96.5% of rent owed from its tenants during the period. Only 0.8% has been forgiven or remains outstanding.
RETAIL
Peacocks and Jaeger collapse
Retailers Peacocks and Jaeger have fallen into administration, with owner Edinburgh Woollen Mill Group (EWM) failing to find a buyer for the fashion chains. While no redundancies have been announced and no stores have closed, the collapse puts more than 4,700 jobs and almost 500 shops at risk. Administrators are said to be in discussions with potential buyers.
Ashley snaps up larger stake in Mulberry
Mike Ashley’s Frasers Group, which runs Sports Direct and House of Fraser, has increased its stake in Mulberry. Frasers said it had bought 4.3m shares at 150p each from Icelandic bank Kaupthing to increase its ownership of the brand to 36.8%.
SPORT
Private equity firms score Serie A deal
Italy’s 20 top flight football clubs have accepted a €1.7bn offer from a consortium of private equity funds that will see them work with Serie A on the sale and promotion of the league’s TV rights. The consortium featuring CVC Capital Partners, Advent International and FSI will control 10% of the league´s new media company.
ECONOMY
Treasury’s Scholar: Debt could reach 105% of GDP
The Treasury's senior civil servant, Sir Tom Scholar, says Government spending rolled out amid the coronavirus crisis could see national debt climb to 105% of GDP. Permanent Secretary Sir Tom told the Commons Public Accounts Committee that while official forecasts from the Office for Budget Responsibility have yet to be released, the economy is likely to see the worst annual contraction in three centuries. Noting that the Bank of England last week said it expects the economy to have contracted by 11% year-on-year in 2020, he said: “It is extremely serious.”
UK economy sees biggest contraction among G7
Data from the Organisation for Economic Co-operation and Development (OECD) shows that the UK economy contracted more than that of any other G7 nation in the first nine months of the year, with GDP down 9.7% in Q3 compared to end of 2019. With many economies hit by the coronavirus pandemic, the next largest decline across G7 nations was in Canada, which saw a 4.7% contraction, with the US seeing the smallest contraction at 3.5%. Across the 36 OECD nations, GDP fell by 4.3%.
OTHER
One in seven businesses in fear of collapse
Around one in seven UK companies say they were at risk of collapse, according to a new report from the Office for National Statistics. The study saw 14% of UK companies say they have “low or no confidence” that they will survive the next three months. While 40% had moderate confidence that their business would survive the next three months, another 40% had high confidence of making it through the period. Pessimism was most apparent among hotels and restaurants where 34% of businesses said they would struggle to make it through the next 12 weeks. It was also found that across all industries, 7% of businesses expect to temporarily or permanently close a site in the next fortnight.