HSBC installs CCP committee in Chinese investment bank
Britain’s biggest lender and Asia-focused HSBC has installed a Chinese Communist Party committee in its investment banking subsidiary in the country, becoming the first foreign lender to do so. The FT says the move reflects the political tension experienced by the bank as it tries to navigate between Beijing and the West. Under Chinese company law, a business must allow a CCP committee to be set up by employees. That said, one Wall Street banking executive said there had been a “longstanding understanding” with the China Securities and Regulatory Commission that most foreign securities or brokerage companies do not require CCP committees. Other foreign banks operating in China, such as Goldman Sachs, JPMorgan, Morgan Stanley, UBS and Deutsche Bank have so far resisted the formation of such a committee, but some fear the move by HSBC may well add pressure on them to follow suit. An HSBC spokesperson told City A.M.: “It is important to note that management has no role in establishing such groups, they do not influence the direction of the business, and have no formal role in the day to day activities of the business.”
Starling Bank reports first annual profit
Starling Bank has reported its first annual profit following its expansion into the mortgage market. The digital-only lender swung to a £32.1m pre-tax profit in the 12 months to the end of March from a loss of £13.7m a year ago. Starling bought buy-to-let specialist Fleet Mortgages a year ago and last month acquired a £500m mortgage book from Masthaven Bank. Founder and CEO Anne Boden said the results set the lender apart from rivals. “With our first full year of profitability, we've placed ourselves firmly in a category of one,” she said in a statement. “As an innovative digital bank with a sustainable business model and a strong balance sheet we are generating our own capital and we stand apart from both the old banks and other challengers.”
NS&I finally raises savings rates
National Savings & Investments has begun increasing its savings rates as it finally starts to catch up with high street banks. More than 1.3m people will see a boost to their savings after NS&I increased rates on 14 accounts. Rates on variable rate accounts rose by up to 0.7 percentage points while NS&I’s direct saver account will now pay 1.2%, up from 0.5%. Income bonds will pay the same amount and its direct individual savings account will pay 0.9%, up from 0.35%. At the start of this year the average for the five best easy-access savings accounts was 0.63%, according to Savings Champion. It rose to 1.54% on Thursday.
Blackstone reports surging inflows but warns of economic slowdown
Jonathan Gray, the president and COO of Blackstone Group, has warned that persistent inflation, particularly in labour and housing markets will weigh on economic activity and push the Federal Reserve to raise rates. His comments come as the world’s largest alternative asset manager reported record inflows in Q2 with a total of $88bn in new investor money going to the group, putting its assets under management at a record $941bn, a 38% increase from this time a year ago. Distributable earnings rose 86% to $2bn from the same time last year, equating to $1.49 a share and narrowly surpassing analyst forecasts.
HSBC agrees sale of Russian unit
HSBC has confirmed the sale of its Russian banking arm to Expobank as the lender becomes the latest global bank to exit the country following its invasion of Ukraine. Elsewhere, following the move by Russia’s Deputy Finance Minister Alexei Moiseev to block the sale of foreign banks' Russian businesses, the Russian divisions of foreign banks such as Citi and Raiffeisen Bank International have started trying to fill vacancies that opened up when staff left suddenly earlier in the year.
Nomura co-head of investment banking foresees huge rise in ESG dealmaking
Nomura’s Jeffrey McDermott says ESG dealmaking is set to accelerate rapidly amid the global push to decarbonise key economic sectors.
UK regulators warn airlines over ‘serious problems’ ahead of summer peak
The Civil Aviation Authority and Competition and Markets Authority have warned airlines that consumers could “experience significant harm” unless carriers handled the issue of flight disruption more effectively.
EU lawmaker calls for ban on ‘payment for order flow’
Danuta Hübner, a senior lawmaker in the European Parliament, is set to back calls for a formal ban on brokers selling customers’ share trades to market intermediaries - a practice known as payment for order flow.
Pfizer and Flynn fined £70m for overcharging NHS for epilepsy drug
Pfizer and Flynn Pharma have been fined £70m by the Competition and Markets Authority for overcharging the NHS for a life-saving epilepsy drug. The UK’s competition watchdog fined New York-based Pfizer £63m and imposed a £6.7m penalty on Flynn, a smaller UK pharmaceutical firm following of an in-depth investigation which found the two companies charged “unfairly high prices” for phenytoin sodium capsules for more than four years.
LEISURE & HOSPITALITY
Whitbread boss Alison Brittain to chair Dunelm
The outgoing boss of Whitbread has lined up a non-executive directorship at Dunelm for early September after which she will be installed as chairman of the homewares retailer ahead of the departure of Andy Harrison, who was also her predecessor as chief executive of Whitbread.
Tata threatens to shut Port Talbot steel works
Tata Group has threatened to shut its Port Talbot steel works unless it is given £1.5bn of subsidies to help it reduce carbon emissions. Charlotte Childs from the GMB union said: “This is deeply worrying news. UK steel is a critical part of the nation’s industrial infrastructure and central to our national security . . . It’s essential the Government act quickly and show they are serious about this vital industry.”
MEDIA & ENTERTAINMENT
Rising costs blamed for S4 Capital’s lower profits forecast
Shares in S4 Capital almost halved on Thursday after Sir Martin Sorrell’s digital advertising group cut profit guidance for this year to around £120m, down on the £154m-£165m expected by analysts.
OECD proposes housing tax reforms
A review of property taxes across its 38 member countries by the Organisation of Economic Cooperation and Development (OECD) found surging house prices should be tamped down with more punishing property taxes. The OECD said countries that sought to spur economic growth by cutting taxes on property transactions were propping up sky-high prices and favouring already wealthy sections of society. Although owner-occupied housing represents on average 60% of middle-class wealth, high-income, high-wealth and older households hold a disproportionate share of overall housing wealth, the OECD said. The OCED proposes a six-point plan for property tax reform which could be used to raise funds to pay for income taxes cuts.
Reduced customer spend and higher costs increase losses at Ocado
The online grocer Ocado fell to a loss of more than £200m in the first half of this year amid falling consumer spending and rising fuel costs for its fleet of delivery vans. Group revenue was down 4% to £1.26bn in the six months to the end of June, compared with £1.32bn last time around, pushing the company to a deeper pre-tax loss of £211.3m, up from £27.9m last year.
Marks and Spencer CFO to join Primark owner ABF
Marks and Spencer finance director Eoin Tonge is to leave the retailer later this year to take up a new role at Associated British Foods. Tonge was one of three senior executives being manoeuvred into position to replace Steve Rowe, who retired as chief executive in May.
UK debt interest payments jump to all-time high
UK interest payments on government debt jumped to the highest level on record in June hitting £19.4bn - £10.3bn more than in the same month last year. The surge in debt servicing costs pushed borrowing up to £22.9bn in June, the highest figure for the month outside of the pandemic. However, tax receipts jumped by £5.1bn to £51.4bn as the Exchequer benefited from the hike in National Insurance and the frozen tax thresholds pulling more earners into higher bands.
Consumer confidence ‘severely depressed’ amid soaring prices
The latest survey of consumer confidence by GfK reveals optimism remains “severely depressed” as households grapple with soaring food and fuel prices. Joe Staton, client strategy director at GfK, said: “Consumer confidence remains severely depressed this month as the impact of soaring food and fuel prices and rising interest rates continues to darken the financial mood of the nation.”
ECB raises rates for first time in more than a decade
The European Central Bank has raised interest rates by half a percentage point, the first rate rise for more than a decade and twice the size of the increase mooted by the bank only last month. The move brings an end to the era of negative interest rates with the 50 basis point rise bringing the rate to 0%. The euro climbed as much as 0.8% against the dollar following the surprise rates decision before retreating.