BANKING
Banks cut mortgage costs following rate freeze
NatWest and TSB have both reduced their mortgage rates on two-year and five-year fixed deals. NatWest said it will have five-year fixed-rate deals starting at 5.14%, while TSB has cut some of its deals by up to 0.25 percentage points, with rates starting from 5.09%. Nationwide will be home to the cheapest five-year fixed rate product priced at 4.94%. This comes as the Bank of England voted to hold interest rates at 5.25%. David Hollingworth, associate director at broker L&C Mortgages said: “Fixed rates should keep on getting cheaper. The very best rates have been slowly nudging down but positive inflation figures and the hold to base rate should add momentum to that trend. We could see further cuts feed through to the market quickly, which will be a boost for borrowers, giving them confidence that we are now at or very close to the peak.” Meanwhile, banks have improved saving rates, with Starling Bank increasing its one-year fixed account to 2.52% and Leeds Building Society offering a 4.8% online saving Isa and a 5.8% online savings account.
PRIVATE EQUITY
Venture firm GGV Capital to split off China business after US pressure
GGV Capital is splitting its Singapore-based operations from its current US headquarters amid political pressure on American tech investors to disengage from China. GGV has held stakes in some of China’s most prominent tech companies, including Alibaba, TikTok’s parent ByteDance. The strategy mirroring one recently pursued by Sequoia, which announced in June that it would separate its China and US arms.
INTERNATIONAL
Frasers tries to pull Morgan Stanley boss into margin call legal fight
British retailer Frasers Group has asked a New York court to compel Morgan Stanley chief executive James Gorman to provide evidence for the retailer’s UK court case against the bank, which it alleges acted in bad faith when it imposed a $1bn margin call covering trades in Hugo Boss. Frasers alleges that the move was an attempt by certain individuals at the bank to harm the company and claim the move forced the retailer to incur losses of about €50m as well as other costs from transferring the trades to other brokers.
UBS cuts 70% of Credit Suisse's Hong Kong staff
UBS has cut around 70% of the Hong Kong-based staff headcount at Credit Suisse's securities research unit as part of the integration process following UBS' takeover of Credit Suisse. Less than 10 researchers focusing on Hong Kong and China equities will join the UBS team. Credit Suisse has terminated the Asia Pacific equities strategy coverage as a result of the staff layoffs.
Swiss National Bank to expand liquidity provision to commercial banks
The Swiss National Bank (SNB) will now offer funds secured against mortgages to all commercial banks, expanding liquidity provision to the sector. Previously, this support was only available to systemically important banks. To access this support, lenders must be able to transfer the mortgages to the central bank. This comes as the SNB held its policy interest rate unchanged at 1.75% on Thursday.
AUTOMOTIVE
UK sticks with zero-emission vehicle mandate
Despite the Prime Minister moving to delay a ban on new petrol and diesel cars until 2035, ministers have insisted that quotas on electric vehicles still stand. Mark Harper, the Transport Secretary, is understood to have told members of industry group ChargeUK that the Government is pressing ahead with the so-called zero-emission vehicle (ZEV) mandate, which will require 22% of cars sold by manufacturers to be electric from January. By 2030, the quota will gradually rise to 80%. Dr Andy Palmer, a former top Nissan executive and chief executive of charging company PodPoint, told the Telegraph that few UK or European manufacturers support the target and the only manufacturers that would be able to meet it would be the Chinese.
AVIATION
Ryanair axes 17 routes from Dublin
Ryanair is scrapping 17 routes out of Dublin Airport after a row over soaring charges and a failure to incentivise the use of lower emission aircraft. In a statement, the DAA, the operator of Dublin Airport, said it "categorically denied false claims by Ryanair", with chief executive Kenny Jacobs saying he was "surprised and disappointed" by the airline’s announcement.
FINANCIAL SERVICES
Partners warned of money-laundering risk with cryptofirms
Social media companies and app stores risk committing money-laundering offences if they work with cryptofirms involved in illegal financial promotions, warns the Financial Conduct Authority (FCA). The FCA's new advertising rules, effective from October 8, include banning "refer a friend" bonuses, clear risk warnings, and a cooling-off period for first-time investors. The regulator also cautions that businesses supporting unregistered cryptoasset firms may be at risk of committing money laundering offences. The FCA expresses concerns about the unpreparedness of many cryptofirms for the changes and their refusal to engage with the regulator.
Edi Truell mothballs Pension SuperFund after watchdog inaction
Private equity veteran Edi Truell is winding down his Pension SuperFund five years after launch after failing to secure regulatory authorisation for his business model. Truell said his decision came after The Pensions Regulator failed to produce guidance on how profits generated by superfund investments could be distributed. Regulatory approval of superfund structures has been hampered by concerns that protections for pension-scheme members could be watered down.
HEALTHCARE
Oxford Biomedica reveals strategic shift
Oxford Biomedica boss Frank Mathias has outlined a new strategy for the cell and gene therapy specialist, announcing that the business would concentrate on contract drugs manufacturing and would spin off its residual product development business. Oxford Biomedica manufactured COVID-19 vaccines for AstraZeneca, but its stock is at a six-year low following a drop in revenues from Covid jabs as the pandemic fades. Mathias also said costs would be cut, with 170 job losses in Oxford, and it would acquire ABL Europe from Institut Mérieux for €15m to help it expand in the EU.
MEDIA & ENTERTAINMENT
Cisco agrees $28bn deal for cyber security group Splunk
The US tech group Cisco has agreed its biggest acquisition ever with a $28bn deal to buy US software maker Splunk. The deal will help Cisco bolster its software business, which relies heavily on AI and provides a variety of cyber security services. San Francisco-based Splunk is known for data observability services, which allow companies to monitor internal systems for network health, cybersecurity risks and other insights. Cisco offered $157 in cash for each share of Splunk, representing a 31% premium to the company's last closing price.
Rupert Murdoch steps down as chair of Fox and News Corp
Rupert Murdoch has announced that he is stepping down as chair of Fox and News Corp. His eldest son Lachlan will take over as chair of News Corp and continue as executive chair and chief executive of Fox Corporation. Shares of Fox ended the day 3.2% higher after the news broke. News Corp shares gained 1.3%.
ITV’s Carolyn McCall blames ‘stagnant’ UK economy for advertising downturn
ITV would see depressed advertising revenues during the rest of the year, the company’s boss Dame Carolyn McCall has warned, blaming a stagnant economy and a lack of government policies to help boost sentiment.
REAL ESTATE
Residential rental costs rise
Private rents rose 5.5% year on year in August, up slightly from 5.3% in July, and the largest annual percentage increase since January 2016. Data from the Office for National Statistics shows rents in August rose at the fastest rate in Wales at 6.5%, followed by Scotland at 6%, while in England the average was 5.4%. The data also shows London's annual rental price growth, at 5.9%, was the highest of all English regions and at its highest annual rate since the data series began in January 2006. Emma Humphreys, partner at law firm Charles Russell Speechlys, said: "There are tenants struggling to pay their rent, and many landlords are being squeezed just as tightly, with rising mortgage payments and changes to tax reliefs forcing many to let go of their properties."
RETAIL
Next raises profit outlook again
Next has raised its annual profit expectations for the third time in four months after the retailer recorded a 5.4% lift in total group sales during the six months to the end of July. Profit before tax was up 4.8% to £420m. As a result, it now expected £875m for the 12 months, up from the £845m it had only recently predicted. Next shares - up by more than 20% in the year to date - rose by a further 1.5% in early trading on Thursday.
ECONOMY
BoE leaves rates on hold after inflation drops lower
The Bank of England held interest rates at 5.25% on Thursday after figures on Wednesday showed an unexpected fall in inflation last month. Bank governor Andrew Bailey said inflation had been falling over recent months and he expected it to continue to do so, adding that there were increasing signs that higher rates were starting to hurt the UK economy. The decision brings an end to almost two years of rising borrowing costs. The BoE did not rule out further rises should wage growth remain high and services inflation remain sticky; oil prices would also be factored in. But economists doubt the data will warrant a further rise and believe the current cycle has reached its peak. Despite this, analysts expect monetary policy to remain restrictive for well into next year.
Higher tax income and fall in inflation drive down public borrowing
Figures from the Office for National Statistics (ONS) in August showed that monthly public sector borrowing came in at £11.6bn, below the £13bn forecast by the Office for Budget Responsibility and just above the £11.1bn expected by economists. It means that total borrowing in the financial year starting in April is now £11.4bn lower than the OBR forecasted in March at £69.6bn. A rise in VAT and income tax receipts - up nearly £3bn on the same month last year – helped to bring up total monthly tax receipts to £57.6bn while falling inflation has reduced the Treasury’s debt servicing bill.
Treasury faces £3bn bill for bond losses
Alongside the decision on interest rates, the Bank of England’s Monetary Policy Committee also voted to step up the speed of bond sales on Thursday, from £80bn a year to £100bn over the next 12 months. While the sales will reduce the near £760bn of gilts on the Bank's balance sheet, they are expected to precipitate a loss of about 14% on the purchase price of the bonds.
OTHER
Rising number of Britons worried about personal finances
A recent survey conducted by Nationwide Building Society reveals that a growing number of Britons are worried about their personal finances and their ability to cover basic expenses. The survey found that 32% of respondents have £100 or less in their bank account at the end of each month, while 9% have no money left at all. The percentage of people concerned about paying for essentials has risen to 69%, up from 57% in July and 62% in August. Separately, the latest consumer confidence survey by GfK four points this month to a net minus 21. Confidence in future personal finances over the next year rose one point to minus 2.