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Daily News Roundup: Friday, 22nd October 2021

Posted: 22nd October 2021

BANKING

Investment banking activity drives Barclays to record profits

Barclays posted profits of £6.9bn for the first nine months of the year - a record high and up 187.5% on the same period in 2020. Third quarter profits alone hit £2bn, 20% ahead of expectations. The performance was driven by the investment bank, which brought in fees of £971m in the third quarter, up from £610m in the same period last year. Danni Hewson, analyst at broker AJ Bell, said: “Unlike peers like Lloyds and NatWest, which retrenched in the wake of the financial crisis to become fairly straightforward lenders, Barclays still has a major investment banking arm. This allowed it to follow in the footsteps of US peers which earlier this month reported a major boost from the recent frenzy of dealmaking in financial markets and the wider corporate world.” However, investors have doubts about how long Barclays’ winning streak in investment banking will last. Meanwhile, Barclays warned that it may move to accelerate its transformation programme in the UK, leading to more branch closures.

ECB pushes banks to boost their post-Brexit operations

The European Central Bank is increasing pressure on banks to move more resources to the continent to run their European businesses, a move that could see some small operators close. Sources told the FT that the ECB was becoming "increasingly forceful" in its demands for lenders to beef up their EU hubs post-Brexit, with some banks told that they must relocate hundreds more staff than they had expected.

UK should legislate to prevent scam ads online

Regulators and lawmakers in the UK said on Thursday that new laws should be introduced to prevent scam adverts online. Mel Stride, head of the Treasury select committee, echoed a statement from the Financial Conduct Authority calling for paid-for advertising promoting scams to be included in the Government's planned Online Safety Bill. "The committee is deeply disappointed that some of these online platforms are just continuing to take advertising pounds from individuals and scammers without enough due diligence," Stride said.

PRIVATE EQUITY

Blackstone prepares for higher inflation as earnings hit record level

Blackstone is advising its private equity portfolio of about 100 companies around the world to prepare for higher inflation and continued supply chain disruptions. This comes as the asset manager announced is had more than doubled its earnings in the third quarter to an all-time high of $1.6bn, or $1.28 per share, up 112% on the same time last year.

UK scaleups attract record investment

New research shows a record high of over £6.5bn was invested by venture capital firms in UK scaleups over the summer, bringing the total amount to £20bn so far this year.

INTERNATIONAL

New Zealand forces finance companies to act on climate risks

Financial institutions in New Zealand will be forced to disclose and act on climate-related risks and opportunities, the government has said. “We have an opportunity to pave the way for other countries to make climate-related disclosures mandatory,” climate change minister James Shaw said. “New Zealand is a world-leader in this area and the first country in the world to introduce mandatory climate-related reporting for the financial sector.”

Global finance industry sinks $119bn into companies linked to deforestation

Global banks and asset managers have financed major agribusinesses linked to deforestation to the tune of $119bn in the five years since the Paris agreement was brought into force. HSBC was the largest British-based financer of destructive agribusiness making deals worth $6.85bn (£5.25bn).

BBVA debuts in Italy

Spain's BBVA has entered the Italian retail lending market by offering free online services to take advantage of a shift to digital banking in the country.

AUTOMOTIVE

Porsche IPO mooted

Goldman Sachs and law firm Freshfields are among the advisors working on a possible listing of Porsche AG, Volkswagen's luxury unit.

FINANCIAL SERVICES

Provident Financial considers bumper dividend

Provident Financial Group has said customer demand had picked up to pre-pandemic levels in the three months to the end of September. Consequently, the sub-prime lender is considering dishing out 30% of its profits as dividends if economic conditions continue to improve.

FCA wants to extend senior managers' rules

The Financial Conduct Authority on Thursday said that it was seeking to broaden the senior managers' regime to include payments firms and credit rating agencies. The proposals would mean companies including fintech firm Revolut and rating agency Moody's would become subject to the rules.

Mastercard takes bet on supply chain finance deal

Mastercard has joined forces with UK fintech Demica to offer supply chain finance to business clients, based on its platform that banks use to track invoices underpinning this form of financing.

HEALTHCARE

Care homes 'face collapse' as staff move to hospitality

A new report into health and social care by the Care Quality Commission has warned that the care system could be hit by a "tsunami of unmet care needs" this winter, with staff abandoning the sector for better-paying jobs in fields like tourism and hospitality.

LEISURE & HOSPITALITY

Hospitality industry warns against restrictions

Leading hospitality figures have warned ministers that pubs, bars, restaurants and hotels could not survive a second Christmas lost to COVID-19 restrictions, as the Government faces increasing pressure to impose "plan B" measures to curb the rise in coronavirus cases. Kate Nicholls, the chief executive of UK Hospitality, which represents 730 companies operating 85,000 venues, said: “A lot of businesses are still fragile. Any knock at this point in time could have an impact on viability. People will just go to the wall."

MANUFACTURING

Manufacturers raise prices by most since 1980

Figures from the Confederation of British Industry show UK manufacturers raised prices by the most since 1980 over the past three months as they sought to pass on rapidly rising costs for raw materials and manage acute labour shortages. Expectations for price growth in the coming quarter also rose to their highest in more than 40 years. "From higher material costs to labour shortages, manufacturers continue to face a number of serious global supply challenges hampering their ability to meet strong demand," CBI deputy chief economist Anna Leach said.

MEDIA & ENTERTAINMENT

Trump takes aim at Big Tech

Former US president Donald Trump plans to return to social media with a new entertainment and news company called Trump Media and Technology Group. His new company has been created through a merger with blank check company Digital World Acquisition Corporation (DWAC). Shares of DWAC soared nearly 400% on the news, giving the Miami-based SPAC a valuation of approximately $2bn. The company said it planned a trial version of its social media app next month and a full roll-out in the first quarter of 2022.

Financial Times slumps to heavy loss

The publisher of the Financial Times has reported a pre-tax loss of £34.5m for 2020, compared with a loss of £4.6m in the previous year. Its print edition now sells fewer than 6,000 copies on weekdays. The number of digital subscribers has risen to 960,000, with income growing 16% from this cohort as average charges increased.

REAL ESTATE

House sales surge in September

House sales rose by more than two-thirds in September as buyers rushed to make stamp duty savings. Across the UK, an estimated 160,950 homes changed hands, which was 67.5% higher than in August, said HMRC. The September total was also 68.4% higher than in September 2020.

RETAIL

UK retailers call for human rights checks on global supply chains

Major UK retailers are among large businesses calling for new legislation requiring companies to carry out human rights and environmental checks on their global supply chains. Tesco, John Lewis, Primark, Asos, Unilever and the Co-op are among those asserting that such "failure to prevent" legislation could potentially fend off future Boohoo-style supply chain scandals. In a letter to the Government, the organisations said changing the law would establish the UK as “a leader in setting standards for renewed and sustainable prosperity worldwide”.

ECONOMY

BoE chief economist warns UK inflation likely to hit 5%

The Bank of England's new chief economist has warned that inflation could top 5% early next year. Huw Pill told the FT the Bank would have a “live” decision on whether to raise interest rates at its November meeting. He said: “I would not be shocked - let’s put it that way - if we see an inflation print close to or above 5% [in the months ahead]. And that’s a very uncomfortable place for a central bank with an inflation target of 2% to be.”

UK public borrowing falls by more than expected

Government borrowing fell to £21.8bn in September, down by £7bn compared with a year earlier, as the economy continued to recover from coronavirus lockdowns. While that was the second highest September borrowing total since records began in 1993, it was lower than economists had expected. Receipts rose to around £62.3bn, an increase of £6.2bn than a year ago - as tax revenues were lifted by the recovery.

OTHER

Fed officials barred from holding individual stocks

The US Federal Reserve has banned officials from trading individual stocks after conflicts of interest scandals brought down two of the body’s regional chairs. Senior officials will now only be able to purchase “diversified investment vehicles, like mutual funds,” the Fed said in a statement on Thursday.

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