FCA to monitor for savings rate profiteering
The Financial Conduct Authority (FCA) told MPs on Thursday that it would be monitoring the results of UK banks to see whether they are profiting from interest rate rises and whether loyal savings customers are being unfairly squeezed. Nikhil Rathi, FCA chief executive, said: “It is, and has been, standard practice for firms to offer more attractive rates to new savers, while leaving existing savers earning less competitive rates… Firms should not be seeking to exploit customer inertia.” The Consumer Duty “represents a step change in how we can ensure firms are focused on delivering good outcomes”, he told the Treasury committee. Rathi added that the regulator was open to making interventions if it saw "loyalty penalties" being applied to savers. His assurances come as Coventry Building Society reveals that £256bn of household savings are earning no interest at all.
Twins told not to use ‘Face ID’ on banking apps
NatWest has warned customers that identical twins should not use facial recognition on their banking apps. A message from the bank read: "We're offering Face ID as an alternative way to access your accounts that's both fast and secure. To disable it at any time, simply go to Face ID in your app settings menu." The message went on: "If you have an identical twin we recommend you log into the app using your passcode instead of Face ID." Cyber security expert Oliver Pinson-Roxburgh advises people to use fingerprints for security as they are more secure than PIN codes or voice authentication.
US banks prepare to shift more assets to EU
US investment banks are finalising details of the staff, asset and risk transfers they must make to the EU following pressure from the European Central Bank. Following Brexit, the ECB has demanded greater oversight of financial risks for the EU that are embedded in the balance sheets of global banks, but investment banks have been reluctant to shift away from London given its deep liquidity and talent pools. The ECB initiated a desk-mapping review in 2020 and it is expected to deliver feedback to banks on their plans imminently.
HSBC boss defends SVB UK acquisition
HSBC CEO Ian Stuart told an audience at TheCityUK’s International Conference on Thursday that buying Silicon Valley Bank UK for just £1 back in March was a “brave” decision and that he hoped it was the right thing to do. “I hope that little bit of bravery pays off,” he said, adding that the one person the deal definitely helped was “the UK taxpayer”.
European Parliament backs new rules for crypto
Lawmakers in the European Parliament have backed new regulations for the crypto industry. The new measures are designed to ensure that crypto assets can be traced, preventing money laundering, terrorist financing and other crimes. Major crypto providers will also have to disclose their energy consumption. The regulations will be introduced next year and will require companies that issue and trade crypto assets to be licensed by a national regulator. "This regulation brings a competitive advantage for the EU," said Stefan Berger, the German MEP who steered the rules through parliament. "The European crypto-asset industry has regulatory clarity that does not exist in countries like the US.”
US regional banks’ stability comes at a price after SVB’s collapse
Midsized US banks have largely recovered since the SVB crisis, but heightened competition for deposits is forcing them to raise savings rates, cutting into their profits.
GKN automotive business falls 20% on first day of London trading
Shares in GKN’s automotive arm, Dowlais, which is owned turnround specialist Melrose Industries, fell by 20% on Thursday following its debut on the London Stock Exchange.
Neil Woodford victims in line for £235m compensation payout
The Financial Conduct Authority has confirmed more than 300,000 investors who had money in Neil Woodford’s flagship Equity Income Fund are to be offered redress payments worth £235m. Link Fund Solutions, the administrator of the collapsed Woodford Investment Management vehicle, was found to have mismanaged the liquidity of the fund and will be sold by parent company Link Group, with the proceeds, plus cash, capital and insurance cover, paying for the redress payments. However, the £235m payout falls short of the £298m the FCA estimates is owed to investors and the proposed settlement would see them receive only 77p for every pound lost. Investors and creditors will need to vote on the proposed payout.
FCA to clamp down on high insurance costs for leasehold flats
The Financial Conduct Authority (FCA) is planning to introduce new rules to protect leaseholders from paying excessive insurance costs. Leaseholders will be defined as customers of buildings insurance under the proposed changes, with insurance firms required to act in the best interests of leaseholders and will ban them from recommending policies based on commission fees. Additionally, brokers found to be taking too much from leaseholders could face enforcement action leading to fines and bans. An investigation by the watchdog found brokers had hiked fees by around 40% between 2019 and 2022 and were handing landlords millions in commission.
AmEx hit by rise in expenses
Shares in American Express fell 7% yesterday after it revealed it had set aside more money to cover potential bad debt and expenses had surged 22%, cutting into its first quarter profits. Profit fell 13% to $1.8bn, or $2.40 per share, for the three months ended March 31, despite increased credit card use driving revenue up 22% to $14.3bn.
Activist investor ramps up pressure on incoming Bayer boss
Bluebell Capital Partners is pushing for Bayer to separate its crop science and pharmaceutical divisions and ensure several members of its supervisory board coming to the end of their terms are not re-elected.
MEDIA & ENTERTAINMENT
Buzzfeed News to close, Insider axes staff
Shares in Buzzfeed slumped 26% on Thursday after CEO Jonah Peretti announced it would reduce its workforce by 15% and close down its Buzzfeed News brand after losing $10m a year. Some staff will be offered roles at The Huffington Post, a website Peretti co-founded in 2005, and which Buzzfeed acquired in November 2020. Meanwhile, rival online news site Insider has said it is to lay off 10% of its staff in the US, with both editorial and commercial roles affected. Insider president Barbara Peng said in an email to staff: “Unfortunately, to keep our company healthy and competitive, we need to reduce the size of our team.”
Meta plans to cut 10% of UK workforce, scrap Insta’s London hub
Meta plans to axe more than 10% of its UK workforce and ditch Instagram’s new hub in London as part of a major restructuring. Meta announced it would cut 10,000 jobs in March, after previously cutting 11,000 roles last year, including 600 in the UK. Instagram is relocating most of its staff, including boss Adam Mosseri, from London to New York.
Alphabet merges DeepMind and Google Brain AI research units
Alphabet is combining its DeepMind and Google Brain AI research units as the group attempts to make up lost ground in generative AI against Microsoft and OpenAI. Google said the new unit, Google DeepMind, will be led by Demis Hassabis, the co-founder and CEO of DeepMind, which Google purchased for about $500m in 2014.
Gove leverages investors in fight with cladding companies
The Housing Secretary Michael Gove has urged investors including Blackrock, Vanguard and Fidelity to convince cladding manufacturers to come forward to discuss a settlement deal with the Government to fix unsafe buildings. “Today we ask responsible investors to use their influence to encourage these companies to come forward immediately with a comprehensive financial package for remediation work”, Gove said in a letter to the investors. “To those cladding companies who fail to do the right thing: you will face severe consequences and I will use all commercial and legal tools available to me to ensure you take responsibility”, Gove added.
Mulberry boss slams plan to scrap tax-free shopping
Mulberry chief Thierry Andretta has warned that Britain’s decision to scrap tax-free shopping for overseas visitors is damaging the country while benefiting Europe. He said businesses in the UK are suffering as wealthy American and Middle Eastern tourists flock to the Continent to shop. Announcing an upbeat set of results for the luxury brand yesterday, Andretta said: “British brands, British luxury, British retail and British hospitality are all suffering as a result of the UK’s lack of tax-free shopping for tourists, to the benefit of our European counterparts.”
Hammerson in talks about development stake sale
The shopping centre owner Hammerson is close to agreeing a deal with Unibail-Rodamco-Westfield to sell its holding in a joint venture between the two groups to redevelop Croydon's Whitgift shopping centre. Hammerson has undertaken a series of asset sales this year as it comes under pressure from Lighthouse, its biggest shareholder, to resume dividend payments and reduce its exposure to development projects.
UK consumer confidence rises to highest level since Ukraine invasion
Consumer confidence recovered further in April, rising to its highest level since February 2022. Confidence rose by six points to -30, with an improvement in all areas measured in the index by market intelligence company GfK. “There’s a sudden flowering of optimism with big improvements across the board,” said Joe Staton, client strategy director at GfK., who explained that consumers may have built price rises into their expectations and now felt “more stoic and less desperate because maybe things aren’t as bad as they could be”.
Rates expected to rise one more time in May
Former Bank of England rate-setter Michael Saunders expects interest rates to rise one more time in May, to 4.5%, before inflation falls “sharply” over the rest of the year. “I think we get this further, probably final, hike in May, and then probably a long period in which interest rates are fairly stable. The big tightening cycle – interest rates going up meeting after meeting - I think that's largely over and what you'll see over the rest of this year is inflation crawling lower, interest rates stable.”