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Daily News Roundup: Friday, 23rd June 2023

Posted: 23rd June 2023


UK banks join forces to tackle dirty money flows

British banks are set to launch two landmark pilot programmes to share intelligence on major financial crimes such as money laundering and terrorism financing. More than half a dozen banks are in advanced talks with British law enforcement and government agencies to systematically share data. The first pilot involves around six banks and Britain's National Crime Agency, and would allow companies to share data if they identify multiple flags about potential serious financial crime. The second pilot would involve launching a broader database for suspected economic crime and involves around eight banks, the Home Office and bank lobby group UK Finance. The trials could be formally launched by October when Britain's economic crime and corporate transparency bill is expected to become law. 

Credit fears send bank shares down

UK bank shares fell in morning trading on Thursday amid concern that borrowers would find it harder to repay their debts after the Bank of England again raised interest rates. The Bank’s Monetary Policy Committee voted 7-2 in favour of a 0.5% hike to 5%. Barclays, Standard Chartered, HSBC, NatWest and Lloyds were all down by between 1 and 2%. The FT points out that, so far this year, NatWest has seen its shares fall 14.5% with a 9% drop over the past 5 days. Shares in Barclays declined 9.5% in the year to date - including almost 4% in the past five days and Lloyds dropped 8% in the year to date and 4% in the past 5 days. Richard Buxton, UK equity fund manager at Jupiter, said the share price moves reflected “a view that higher rates from here will see squeezed mortgage margins and greater competition for deposits, offsetting the benefits of higher rates”.

Banks urged to help struggling borrowers

The Chancellor Jeremy Hunt will meet with bank and building society bosses today to urge them help struggling homeowners with rising borrowing costs. They will discuss possible strategies including extending the term of a mortgage or allowing temporary reductions in payments. Mr Hunt will also confront the banks over the growing gap between the rate they pay to savers and the rate they charge to borrowers. When asked his view, City minister Andrew Griffith said banks "can and should" step in with extra help to avoid an increase in homes being repossessed. But he urged calm, pointing out that the current level of people in mortgage arrears is less than 1%, compared with 3.3% in 2009.

Rise in borrowing costs will wipe out savings for millions

The millions of households that have to remortgage this year face a 50% increase in their repayments, according to the National Institute of Economic and Social Research. Max Mosley from NIESR said: “The rise in interest rates to 5% will push millions of households with mortgages towards the brink of insolvency.” This will push the total number of families with no savings to 7.8m, equivalent to 28% of all households. He added that the rate shock awaiting households would be greater than lenders would have accounted for in stress tests.


US mid-tier banks set to face tighter capital requirements

US banking regulators are considering expanding Basel III capital rules to include banks with over $100bn in assets. On Thursday, Federal Reserve Chairman Jerome Powell echoed comments from Federal Deposit Insurance Corporation Chairman Martin Gruenberg that some rules in an upcoming proposal to implement international banking standards could apply to mid-sized lenders. But Powell added that he expected the bulk of the new requirements would be reserved for the largest global banks. Gruenberg also suggested that if the rules had been in place earlier, the loss of confidence in Silicon Valley Bank might have been averted. The Financial Services Forum criticised the idea of imposing the rules, asserting that the largest banks are already more than amply capitalized.

Swiss central bank calls for overhaul of banking regulations after Credit Suisse rescue

The collapse of Credit Suisse has prompted the Swiss National Bank (SNB) to call for a review of banking regulations, warning that current global rules on capital and liquidity do not safeguard systemically important lenders from failure. The crisis at Credit Suisse, which was rescued by UBS in March in a government-engineered deal, was not the result of macroeconomic shocks, the SNB said; it was caused by "repeated incidents at the bank itself, primarily triggered by breaches of legal and supervisory obligations and shortcomings in risk management."

JPMorgan to pay $4m fine for deleting records

JPMorgan Chase will pay a $4m fine to settle Securities and Exchange Commission allegations that the bank deleted millions of electronic records, leaving communications unavailable to regulators conducting investigations. The SEC alleged that JPMorgan Securities permanently deleted 47m records, hampering eight SEC investigations and four other regulatory probes. The regulator said a third-party vendor was responsible for failing to preserve the data. 


US to lend $9.2bn for Ford battery plants in clean energy push

The US Department of Energy plans to lend a record $9.2bn for three EV battery factories being built by a joint venture between Ford and South Korea’s SK On. The conditional loan is the biggest ever award from the US Government's Advanced Technology Vehicles Manufacturing loan program, which is looking to encourage companies to build their supply chains in the US.


Almost 770,000 Calpers members hit by cyber attack

US pension fund Calpers has revealed that it was hit by the MOVEit cyber-attack, with about 770,000 of its members affected. The data breach occurred at a third-party vendor contracted by the pension manager, PBI Research Services/Berwyn Group, which said it had resolved the vulnerability and put additional security measures in place.


Premier Inn sales surge as tourists flock to budget hotels

Sales at budget hotel chain Premier Inn rose by 18% in the UK as people sought out "value-led" places to stay, the company reported on Thursday. The chain’s owner, Whitbread, said the coronation of King Charles and strong demand for budget stays in the capital has provided a boost for the company. Whitbread said like-for-like sales growth in the UK was up 14% year-on-year, with total like-for-like sales growth 15% above year-ago levels.


3M agrees to pay more than $10bn to settle ‘forever chemicals’ lawsuits

Minnesota-based 3M has agreed to pay up to $12.5bn to settle thousands of lawsuits that claimed so-called forever chemicals manufactured by the company contaminated drinking water supplies across the US.


TikTok operating chief Pappas to step down after five years

Vanessa Pappas, the chief operating officer at TikTok, has stepped down after five years in what the FT says is a “blow to the social media platform as it faces mounting regulatory scrutiny.”


Swedish landlord SBB hit with accounting probe

The Swedish Financial Supervisory Authority has opened an investigation into whether accounting rules were broken in SBB’s 2021 annual report. The potential violations relate to the way properties were valued. Scandinavia’s property sector is under pressure as companies that loaded up on cheap debt now face rising borrowing costs. SBB was criticised last year by Viceroy Research, which said the firm was a “debt-fuelled roll-up of rent-controlled assets” and it is currently seeking advice from distressed debt specialists as some creditors begin to get twitchy.


Morrisons profits hit by inflation and price cuts

Morrisons has reported a 10.7% fall in underlying earnings to £394m in the six months to the end of April, which it blamed on continued "significant inflationary headwinds" and its £700m investment programme to lower prices for hard-pressed shoppers. Group revenue fell 0.9% to £4.5bn in the three months to April 30, reflecting lower fuel sales year-on-year. However, total sales excluding fuel increased 3.1% at £3.7bn.

Amazon eyes bid for Ocado

Shares in Ocado Group jumped by around 40% on Thursday following rumours that Amazon could be lining up a potential bid for the owner of the online grocery store.


Interest rates hiked to 5%

The Bank of England raised interest rates to 5% on Thursday, the highest level for 15 years. The increase was 0.25% more than most analysts expected. The Bank’s Governor Andrew Bailey said the 0.5% rise was needed to bring inflation down to target, denying the Bank was attempting to precipitate a recession. “We’re not expecting, we’re not desiring a recession, but we will do what is necessary to bring inflation down to target,” he said. "Many people with mortgages or loans will be understandably worried about what this means for them... but inflation is still too high and we've got to deal with it," he added. Prime Minister Rishi Sunak admitted that the job of halving inflation – something he promised to do by the end of the year – had become harder but insisted he was fully committed to achieving that goal.

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