FCA: Banking competition is growing
The Financial Conduct Authority (FCA) says competition in retail banking is growing, with a shift from large banks to small businesses. In an update to its 2018 strategic review of retail banking, the FCA says the increase in competition is providing more choice and lower prices for consumers. The analysis shows that the share of personal and micro-business current accounts held by digital challengers rose between 2020 and 2021, while the gap in profitability between large banks and smaller challengers has reduced in recent years, with this driven by competition in mortgage prices, innovations in banking services and banks' reduced ability to lower costs. Digital challengers including Starling Bank and Monzo have increased their share of the personal current account market from 1% in 2018 to 8% in 2021. The share of personal accounts run by the Big Four of Barclays, HSBC, Lloyds and NatWest fell from 68% to 64%, while their share of small business accounts fell from 74% to 67%. The analysis shows that scale challengers, including the likes of Santander, Nationwide and Virgin Money, saw market share in personal accounts slip 26% to 24%, with their business account share falling from 18% to 16%. The FCA report suggests innovation has loosened the biggest banks’ grip on the market, saying: “There are signs that some of the historic advantages of large banks may be starting to weaken through innovation and digitisation and changing consumer behaviour.” Kate Collyer, chief economist at the FCA, said: “Competitive pressures and innovation are starting to deliver for retail banking customers, with greater choice, lower prices and more convenient ways to bank.” UK Finance said the review shows that customers are benefitting from a competitive retail market that gives them a greater incentive to shop around.
Workers set to return to desks
A number of firms have announced plans to return to the office after the Government scrapped its work-from-home guidance, although most have said flexible working arrangements will remain in place. HSBC says staff started returning to the office yesterday, while Standard Chartered has asked employees to return to their desks from Monday. Citigroup and Goldman Sachs also plan to resume office working, while other lenders including Barclays, NatWest and JPMorgan said they have yet to decide on their new policies. Insurance firm Zurich said it was "excited" to welcome staff back to offices but most would continue on a hybrid basis.
Banks' payment ban for state pensions and UC
Half of lenders are refusing to give a mortgage to people on Universal Credit and State Pension, reports the Express. Banks look at mortgage applicants’ sources of income to see if they can afford the loan; this includes salary, but also benefits and pension payments. Some lenders do not allow money from state pension pots or benefits to be used. David Hollingworth, from L&C Mortgages, said :"I think people can be under the misapprehension that lenders will take their whole income into account . . . But each type of income can be treated differently, and it can be treated differently by each lender.”
CVC mulls London listing
CVC Capital Partners is considering a London listing that would value the company at over £14.6bn. CVC has tapped Goldman Sachs, JPMorgan and Morgan Stanley for the flotation, which could take place in the second half of the year.
Top Wall Street banks paid out $142bn in pay and benefits last year
JPMorgan, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America have handed out $142bn in pay and benefits in 2021, up from $124bn in 2020, as they look to retain talent.
China cuts key mortgage rate
The People's Bank of China (PBOC) has cut its five-year loan prime rate, the reference rate used for mortgages, from 4.65% to 4.6%. It was the first such cut since April 2020. The PBOC also cut its benchmark lending rates for corporate and household loans for the second month in a row.
Ibercaja announces IPO plan
Spanish bank Ibercaja is to launch an initial public offering (IPO) to comply with legal requirements under the terms of a bailout after the 2012 financial crisis. Former savings banks such as Ibercaja have been given until the end of next year to go public or raise money to cut stakes held by foundations. The lender said JPMorgan had been given an an option to purchase up to 10% of the offering.
Credit Suisse vice-chair undecided on board future
Credit Suisse vice-chair Severin Schwan says he is undecided whether he will stand for re-election at the bank's shareholder meeting in April. "In eight years on the Credit Suisse board of directors, I had two phases in particular that were very intense, once around the departure of Tidjane Thiam and now with the resignation of António Horta-Osório," he said.
Crest Nicholson to cover fire safety costs with £28.8m set aside
Housebuilder Crest Nicholson has allocated £28.8m to cover potential fire safety work on existing developments, after Housing and Levelling Up Secretary Michael Gove indicated recently that firms could be compelled to pay for such improvements.
Consumers rack up £3.3bn buy-now-pay-later debt
New data reveals that consumers racked up £3.3bn of debt using buy-now-pay-later (BNPL) products over the Christmas period. Research from money platform Credit Karma found BNPL spending increased by £1bn over Christmas, but 40% of consumers are yet to pay the debt back. Credit Karma warned of a growing debt bubble amongst BNPL customers, as 11% of users admit that they have missed repayments, and a similar number expect to fall behind this year.
AJ Bell enjoys 21% rise in net inflows
Total assets under administration at AJ Bell rose 21% to end the year at £75.6bn. The firm recorded its “second-best quarter ever” for customer acquisition on its advised platform, with 4,690 net new advised customers joining in the three months to December 31, 2021. AJ Bell Investcentre now has 131,610 advised customers, up 17% in the last year. As a result, the platform welcomed £1.6bn of inflows, but it also experienced £1bn of outflows, including a £241m ‘exceptional bulk annuity purchase’, which it flagged back in its October trading update.
Cushon closes £35m funding round
Cushon has closed a £35m fundraising round and doubled its assets under management to £1.7bn with a new acquisition. The workplace savings fintech has snapped up Creative Pension Trust, a workplace pension scheme, which now makes it the fifth largest master trust pension provider in the UK..
Blackstone’s new property pitch: rent now, buy later
An analysis by the FT raises questions about the business model of rent-to-buy landlord Home Partners. Blackstone bought Home Partners in July for $6bn.
LEISURE & HOSPITALITY
Pub boss says office return a 'boost' for hospitality
Clive Watson, chief executive of City Pub Group, has said the return of office workers "will be a much-needed boost" to the hospitality sector, as he also warned that cost increases will lead to higher prices for customers. Mr Watson said it has been "coming through the worst of it" in recent weeks after December trade was hit hard by the spread of Omicron. He added that strong sales in October and November offset the impact of the weaker performance last month.
European real estate pulls in record €359bn
Investors piled a record €359bn into European property last year, targeting homes and warehouses as they pulled back from
offices and shops which have been hit hard during the pandemic.
Primark sales climb
Primark, which is owned by Associated British Foods, has reported that sales for the 16 weeks to January 8, including in its 207 overseas stores, increased 36% year-on-year to £2.7bn and operating margins were ahead of expectations. Despite this, like-for-like sales in the UK were 10% lower than equivalent pre-Covid levels.
Sales at Wickes dip
Wickes has reported that total like-for-like sales fell 5% over the fourth quarter compared with the same period in 2020, but were still 14% of pre-pandemic levels.
Rising costs hit every sector of the economy
Research from Lloyds shows that every sector of the economy is suffering from soaring costs. The report warns that higher wages coupled with rising energy and raw material prices are hitting firms' margins, with it noted that a 1.25% increase in National Insurance coming into effect in April will add to firms’ expenses. City A.M. says the Lloyds report points to inflation climbing further in the coming months, adding that it reinforces Office for National Statistics figures showing British businesses’ input costs have jumped 13.5% in the last year.