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Daily News Roundup: Friday, 23rd July 2021

Posted: 23rd July 2021

BANKING

FCA questioned over bank account closures

The chairman of the Treasury select committee has written to the Financial Conduct Authority following reports that thousands of NatWest customers had their accounts shut without warning. Mel Stride said he was concerned the bank may have frozen vulnerable people’s accounts “for no apparent reason” during a crackdown on money laundering. The regulator had asked banks to shore up their anti-money laundering systems earlier in the year. Stride asked FCA chief Nikhil Rathi what service standards the regulator expects from banks and how the watchdog is ensuring that banks treat customers fairly in relation to bank account closures.

Net zero transition a risk for SMEs

A report from Bankers for Net Zero has warned that the UK's SMEs could be “forgotten or left behind” in the country's net zero transition. The initiative – supported by Barclays, Handelsbanken, Triodos, Ecology Building Society, ClearBank and Tide – argues that measures need to be implemented to avoid leaving SMEs unprepared to implement carbon reduction policies and regulations. Bankers for Net Zero are calling on banks and policymakers to ensure SMEs are supported. They represent 99% of British businesses, employ a quarter of the population and account for 52% of turnover. The measures outlined include financial incentives that facilitate investments in decarbonising operations and offer lower interest rates and taxes.

Starling on course for profit

Starling is on course to achieve its first full year of profitability. The digital bank's CEO Ann Boden said the bank was “pulling away” from its start-up peers as it eyed a potential IPO by early 2023. Starling reported a net loss of £23m for the 16 months ending March 31, compared with a £52m loss in the 12 months to November 2019. Revenues increased almost 600%, while administrative expenses rose 90%. Revenue continued to climb in the first quarter of the new financial year, rising almost threefold from a year earlier and contributing to a pre-tax profit of £7.3m.

Will banks exercise dividend restraint?

Banks will be watched closely next week when they start reporting interim results. While lenders may be cautiously optimistic the most turbulent period has passed, they will also be careful not to over-do payouts after the Bank of England removed limits on dividends. Danni Hewson, a financial analyst at AJ Bell, said: “Some protections are being kept in place to ensure banks still have extra capital put by just in case and, in order not to make regulators twitchy, the sector may be wary of going too far, too fast on capital returns. The guardrails may have been removed, but the Bank of England will be expecting companies to act responsibly.”

UK Government to sell part of its NatWest stake

The UK Treasury has revealed plans to cut its majority stake in NatWest, raising the possibility of share buybacks from the bank. The Government has appointed Morgan Stanley to cut its 55% stake in NatWest to 40% over the next 12 months. According to recent estimates from the Office for Budget Responsibility, the taxpayer is expected to make a loss of £38.8bn on its original stake.

Mortgages harder than ever for self-employed to secure

New research by Aldermore Bank shows two in three self-employed workers believe mortgage lenders treat them worse than those who are employed with a regular salary. Now some banks are refusing outright to accept applications from customers who have used the Government's self-employment income support scheme (SEISS), NatWest and Royal Bank of Scotland among them.

Mainstream websites hit by outage

Barclays, HSBC, TSB, Lloyds, Tesco Bank and Halifax were among the businesses hit by a massive outage yesterday. Internet infrastructure company Akami says it has implemented a fix for the issue. Other sites affected include British Airways, John Lewis, Argos, Barclaycard, Amazon Web Services, Sainsbury's Bank, Epic Games Store and Aldi.

PRIVATE EQUITY

Profits double at Blackstone

Blackstone Group said on Thursday its second-quarter distributable earnings nearly doubled year-on-year, driven by a surge in asset sales across its real estate, private equity and credit businesses. Blackstone's distributable earnings, which represents the cash used to pay dividends to shareholders, rose to $1.1bn from $548m a year earlier.

INTERNATIONAL

Commerzbank takes €200m hit from botched IT project

Commerzbank announced yesterday that it had pulled the plug on the planned outsourcing of its securities settlement business to HSBC, taking a hit of more than €200m in the process. The German lender said that it was immediately halting the outsourcing plan, launched in 2017, after identifying risks to its technical implementation.

Deutsche Bank market share shrinks

Deutsche Bank's investment banking arm lost market share across an array of key services in the second quarter, data from Dealogic shows. The group is in the process of shedding 18,000 staff globally as part of a push for sustainable profit.

AUTOMOTIVE

Hyundai warns chip shortage will hit third-quarter sales

A prolonged shortage of chips in the auto industry would continue to hit sales in the third quarter, Hyundai Motor warned, after posting its best quarterly profit in seven years.

FINANCIAL SERVICES

AJ Bell assets pass £70bn mark

Assets under administration at AJ Bell have topped the £70bn mark for the first time. In a trading update for the company’s third quarter ending 30 June, AJ Bell said total customer numbers had increased to 368,033, a 30% increase over 12 months and a 6% increase in the quarter. Total net inflows in the quarter stood at £1.8bn, a £600m increase on the £1.2bn it brought in in the same quarter in 2020. In addition, net inflows to its platforms have increased to £2.1bn over the past 12 months, a 40% increase on the £1.5bn logged over the same period last year. AJ Bell CEO Andy Bell said the introduction of simplified pension options was proving popular with advisers as it provided them with different price points and flexible investment options.

Visa snaps up Currencycloud

Visa has agreed to buy a British financial technology group Currencycloud, which offers services designed to make it easier to move money around the world. “Currencycloud was founded with a vision to re-imagine the way money flows globally for businesses,” CEO Mike Laven said. “Moving money across borders shouldn’t be hard and yet many companies and small businesses still feel the pain of slow, expensive and opaque payments and foreign exchange.” Joining Visa would allow Currencycloud “to deliver greater customer value to the businesses moving money across borders,” he added.

Hiscox chief Bronek Masojada to depart

Hiscox chief executive Bronek Masojada is leaving the Lloyd’s of London insurer after it had to settle multiple claims over business interruption losses during the pandemic. Masojada, who has run Hiscox for 21 years, will retire at the end of the year, to be replaced by CFO Aki Hussain. Hiscox was one of several insurers that refused to pay out on many policies on the ground that they did not cover losses suffered during a pandemic. The company was one of the largest providers of business interruption policies, making it the focus of anger from businesses and politicians about the issue.

HEALTHCARE

GSK appoints consumer head as CEO of new spin-off

GSK’s consumer healthcare head, Brian McNamara, will take over as the chief executive officer of the unit once it is spun off into a new company next year. The announcement came despite a demand from activist investor Elliott Management for GSK to launch a six-month review of who should lead the division – as well as another review into who should lead the remaining pharmaceuticals and vaccine company, meaning GSK boss Emma Walmsley would effectively have to apply for her own job.

MANUFACTURING

UK factories enjoy post-lockdown output surge

British manufacturers’ expectations for output growth over the next three months are the strongest on record as the economy bounces back from its coronavirus pandemic lockdowns, the Confederation of British Industry said on Thursday. The CBI’s quarterly survey showed surging levels of employment and investment in factories but also acute inflation pressures. Average cost growth in the three months to July hit its fastest pace since 1980. “UK industry is reawakening following the economic ravages of the pandemic,” CBI chief economist Rain Newton-Smith said before going on to warn that: “Acute staff shortages evident across the economy are biting deeply within manufacturing, with skills in short supply and the number of people isolating climbing steeply.”

PROFESSIONAL SERVICES

Professional and financial services lead capital’s jobs boom

Professional services firms are leading the recruitment charge in the capital, with hiring in London now topping pre-pandemic levels, according to data from jobs site Indeed. The firm said the most commonly advertised roles included internal auditor, risk manager, SAP consultant, transformation manager, senior VP and assistant VP. Indeed found jobs in banking and finance were up 161% year-on-year, insurance jobs rose 108%, and software and development roles are up by 102%. Legal roles were up 92%. The stats come as figures from the Office for National Statistics show pay was rising at 7.3% in the quarter to May, higher than economists expected.

REAL ESTATE

Workspace records office demand running at pre-Covid levels

Office demand is running at pre-Covid levels, according to Workspace, with the office landlord confident that it has come through the worst of the pandemic. The FTSE 250 firm which offers flexible leases has seen improved demand at a time when numerous employers are looking at space for hybrid working plans. The company recorded an average 947 enquiries per month in the quarter to June, up from 506 a year earlier when working from home was in full swing during the crisis. Some 125 lettings per month were agreed upon, compared with 43. "Our first-quarter performance reinforces our confidence that we have come through the worst of the pandemic and are now on a clear positive trajectory,” said Graham Clemett, chief executive of Workspace.

RETAIL

Morrisons deal to cost over £300m in fees

Financial advisers working on the £6.3bn takeover of Morrisons will command £312.5m in fees, documents have revealed. Fortress, the American investment firm owned by SoftBank, of Japan, which is leading a consortium to buy the supermarket chain, has published its circular to shareholders before the vote to agree the deal on August 16.

SPORT

English football requires independent regulator, says MP’s report

A review into English football led by the former sports minister Tracey Crouch has found the sport needs an independent regulator to address financial regulation, corporate governance and ownership. The review was launched after leading clubs attempted to form a breakaway competition. An independent body would also address requirements such as cost controls, “real time” financial monitoring and independent non-executive directors on club boards. Fans should also be given a “golden share” in their clubs that would allow them to veto any major changes.

ECONOMY

Broadbent: Inflation spike temporary

Bank of England deputy governor Ben Broadbent has said the rise in inflation is mainly due to temporary rises in goods prices and should not trigger a reduction in support for the economy. The Bank expects inflation to hit more than 3% but believes this is mostly down to oil price rises and is likely to "fall away" in the early part of 2022. His comments come as members of the Bank's Monetary Policy Committee appear split over whether to begin a tightening of monetary policy or continue with economic stimulus.

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