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Daily News Roundup: Friday, 23rd September 2022

Posted: 23rd September 2022


Jupiter to offload stake in Starling Bank

Jupiter is understood to be finalising the sale of a stake in Starling Bank. Sky News reports that Jupiter Fund Management is in advanced talks with several existing investors in the digital lender about offloading a shareholding of about 7%. The discussions have settled on a valuation for Starling Bank of about £1.5bn, according to reports. Jupiter is expected to generate just over £100m from the sale, which is likely to be concluded within weeks but which may not ultimately comprise the asset manager's entire shareholding.

FOS received most complaints about banking and credit concerns

The Financial Ombudsman Service (FOS) received the most complaints in the first half of this year regarding banking and credit concerns. In the first half of 2022, there were roughly 44,200 complaints regarding banking and credit, which was a small decrease from the 46,220 complaints in the second half of 2021. Credit cards and current accounts accounted for the majority of complaints in the most recent total. In the first half of this year, little over a third (37%) of banking and credit complaints were upheld in the consumers' favour. This is a decrease from the final half of 2021, when 44% of similar complaints were upheld. Overall, the FOS said it received 72,978 complaints in the first half of this year.


Silicon Valley Bank creates UK subsidiary in London

One of the world’s biggest commercial banks for tech has announced that it is turning its UK operations into a full-scale subsidiary. California-based Silicon Valley Bank, which has over £180bn in AUM, said the move reflects the strong growth of the UK’s tech sector and demonstrated the company’s commitment to the UK. The firm, which opened its first location outside the US in London in 2007, now employs over 650 people across EMEA and has committed funds to several top London-based firms including fintech business Wise and property directory Zoopla. Furthermore, technology entrepreneur Vin Murria and former TSB executive Darren Pope have joined the British arm of Silicon Valley Bank as part of the expansion drive.


HSBC to stop financing thermal coal

HSBC has announced it will stop financing the expansion of thermal coal from funds it manages actively with immediate effect. The bank said last December that it would cut exposure to thermal coal financing, across all its businesses including asset management, by at least 25% by 2025 and 50% by 2030, though non-EU or non-OECD-based clients could be funded until a global phase-out by 2040. In a new 10-point plan, HSBC Asset Management, said it would immediately stop investing in listings or primary debt issuance of any company engaged in thermal coal expansion. HSBC estimates that there are more than 300 companies globally with more than 10% of revenues tied to the fuel.

Credit Suisse to seek funding from investors

Credit Suisse is set to tap investors for fresh funding for the fourth time in seven years as it attempts a radical overhaul of its investment bank. It is understood that various scenarios are under discussion for the investment bank, including the most drastic option of largely exiting the US market. Reuters says it is unclear how keen investors are and interest may be dampened by the fact that the bank, which has struggled with a string of scandals, has gathered almost SFr12bn ($12.22bn) in capital since 2015 - almost equivalent to its current market value.

ECB: Banks face legal risks if they don't stick to climate goals

ECB supervisor Anneli Tuominen has warned that banks face the risk of being sued if they don't stick to their climate goals or try "greenwashing" their image. Major Wall Street banks have threatened to leave United Nations climate envoy Mark Carney's financial alliance because they fear its strict requirements could expose them to lawsuits. Tuominen did not make any reference to Carney's Glasgow Financial Alliance to Net Zero, but said banks faced risks if they don't keep climate pledges. "If banks do not meet the targets they have announced or follow the climate strategy they have communicated, they expose themselves to litigation and reputational risks," Tuominen said.

Average US long-term mortgage rates highest since 2007

As a result of the Federal Reserve's intensified effort to tamp down decades-high inflation and cool the economy, average long-term US mortgage rates jumped by more than a quarter-point this week to their highest level since 2007. Freddie Mac reported that the 30-year rate climbed to 6.29%, from 6.02% last week - the highest since August of 2007, a year before a crash in the housing market triggered the Great Recession.

Sabadell in talks with Worldline, Nexi and Fiserv for payments deal

Spanish bank Sabadell has received indicative bids from France's Worldline, Italy's Nexi and U.S. firm Fiserv for its payments arm, with a deal valued at up to €400m.


Boeing settles charges over Max crashes

Boeing has agreed to pay $200m to settle charges that it made “materially misleading public statements” following two fatal crashes in Indonesia and Ethiopia of its 737 Max. The company agreed to pay the sum to settle charges that it misled investors. The former Boeing chief Dennis Muilenburg agreed to pay $1m.


Lord Vaizey joins ‘risky’ cryptocurrency business

Lord Vaizey has joined a cryptocurrency exchange described by the Financial Conduct Authority as posing a “significant risk” to British consumers. The former digital and culture minister has accepted a position on Binance’s new advisory board, an 11-strong body with members from around the world. Earlier this year, the FCA said Binance’s offer of “complex and high-risk financial products” posed a “significant risk to consumers” in the UK. Lord Vaizey said his advisory role “won’t involve me lobbying the FCA to regulate”.

FCA investigates Schroders value error

The Financial Conduct Authority is examining the circumstances behind a valuation blunder that left a Schroders-managed investment trust quoting an exaggerated net asset value number for more than four months. Officials from the FCA who supervise Schroders, the fund manager, and Link Fund Solutions, the fund administrator, are looking into the mistake, which was caused by the failure to adjust for a £21.8m slump in the value of one of the trust’s biggest investments. The inquiry into the reasons for the error could be the prelude to a formal enforcement investigation by the chief City regulator, although it has not yet reached that stage.

FTX was in talks with FCA about crypto licence before watchdog’s warning

The Financial Conduct Authority’s warning against FTX came as the cryptocurrency exchange was trying to secure a UK licence, setting up fresh tensions between the regulator and offshore crypto players.


DMGT CEO resigns

Daily Mail and General Trust (DMGT) CEO Paul Zwillenberg has resigned and is to be replaced by Lord Rothermere. Mr Zwillenberg, who has run DMGT since 2016 and led efforts to refocus the group on consumer media, is to step down from the DMGT board at the end of the month. He is to stay on as an adviser. The company's chair Jonathan Harmsworth will become chief executive.

Ofcom inquiry into cloud computing competition

Ofcom will launch an investigation into the dominance of Microsoft, Amazon Web Services and Google in UK cloud services. The study will examine the strength of competition in the sector.


JD Sports reports 'robust' results

JD Sports Fashion has reported an 18% drop in pre-tax profits to £298.3m for the six months to 30 July, while revenues grew to £4.4bn in the first half of the year, up from £3.9bn a year ago. JD said its sportswear shops in the UK and Ireland delivered profits before tax and exceptionals down by a "robust" 12.2% to £153m, while Europe and North America had delivered profits, despite supply chain challenges.


BoE raises interest rates to 14-year high

The Bank of England has raised interest rates from 1.75% to 2.25% and indicated that Britain’s economy is now in recession. A majority of the Bank’s nine-member monetary policy committee voted to increase the key base rate by 0.5 percentage points, judging that the risks of inflationary pressures becoming entrenched outweighed the short-term dangers to the economy. The central bank had previously expected the economy to grow between July and September but it now believes it will shrink by 0.1%. The Bank's seventh rate rise in a row takes borrowing costs to their highest level since 2008. FSB chairman Martin McTague said the "eye-watering" increase was a "clear illustration of the scale of the challenge facing small businesses".

Kwarteng says tax cuts will break 'cycle of stagnation'

Kwasi Kwarteng will today announce that Britain must break the “vicious cycle of stagnation”, as he outlines £50bn of tax cuts. In his mini-Budget this morning, the chancellor will present 30 measures intended to drive economic growth. These will include reversing the rise in National Insurance payments, freezing corporation tax and cutting stamp duty. The chancellor will tell the Commons that he wants to usher in a “new era focused on growth”, adding: “That is how we will deliver higher wages, greater opportunities and sufficient revenue to fund public services, now and into the future. That is how we will compete successfully with dynamic economies around the world. That is how we will turn the vicious cycle of stagnation into a virtuous cycle of growth.” Paul Johnson, the director of the Institute for Fiscal Studies, said the fiscal statement would be “the biggest tax-cutting fiscal event since Nigel Lawson's budget of 1988”. However, the Telegraph says that despite the tax cuts and heavy spending to hold down energy bills, the average person will still feel worse off this year than last year thanks to surging inflation eroding living standards.

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