Banks fight to keep earnings rising faster than costs
British banks face a tougher battle for mortgage customers and business borrowers this year, with experts saying rising costs and deposit rates paid to savers threaten to outpace flatlining profit margins. Despite reporting robust profits, shares in the largest banks have broadly stumbled amid forecasts of pressure on margins, with escalating competition for customers' deposits and mortgage business on the cards. Britain's current account switching service saw 376,107 moves in the fourth quarter of 2022, the highest level on record. Analysis shows Lloyds, NatWest and Barclays saw their combined deposits fall by £34.7bn in Q4. Leading banks have faced criticism for not raising savings rates as swiftly as they have rates on loans, while some campaigners have called for a windfall tax on their profits. John Cronin, banking analyst at Goodbody, said: “I think the banks are worried they could face political intervention.”
SEC ‘not the right regulator for stablecoins’
Jeremy Allaire, chief executive and founder of Circle Internet Financial, says the US Securities and Exchange Commission (SEC) is not the right regulator for stablecoins. Mr Allaire, whose firm is the issuer of USD Coin - the second-largest stablecoin, said: “There is a reason why everywhere in the world, including the US, the government is specifically saying payment stablecoins are a payment system and banking regulator activity.” Mr Allaire says he is generally in favour of a recent SEC proposal that includes virtual currencies in the assets that are subject to ‘qualified custodian’ requirements, saying: “We think having qualified custodians that can provide the appropriate control structures and bankruptcy protections and the other things is a very important market structure and very valuable.”
SEC and NY regulator oppose Voyager deal
The US Securities and Exchange Commission (SEC) and the New York Department of Financial Services have opposed Binance.US's deal to buy defunct crypto lender Voyager. The SEC said the proposed deal may violate laws on the unregistered offer and sale of securities, while New York's top financial regulator said Voyager "illegally operated a virtual currency business … without a license."
Electric car production jumps in January
Figures from the Society of Motor Manufacturers and Traders (SMMT) show that the number of electric or hybrid vehicles produced in January was up by almost 50% on a year ago. A total of 28,329 electric or hybrid vehicles were produced, representing more than four in every ten cars made in January. SMMT data shows that overall car production was "stable" last month, with output down by 0.3% to 68,575. Production for the UK increased by 5.6% year-on-year, while exports fell by 1.5%. Mike Hawes, chief executive of the SMMT, said: "Automotive manufacturing can drive long-term growth for the low-carbon economy but the sector needs competitive conditions to attract investment.”
FCA did not consider consumer cost of mis-sold funds
The Treasury Committee's Financial Services Regulations Sub-Committee has heard that the Financial Conduct Authority (FCA) has not analysed the possible costs to consumers of mis-sold sustainable funds. Committee chair Harriett Baldwin asked Sacha Sadan, the FCA's director of ESG, and Mark Manning, technical specialist for sustainable finance and stewardship at the FCA, if they had calculated the potential costs to consumers of switching out of funds that fall short on sustainable credentials. Mr Manning said: “We have not got a figure for that... It is quite a theoretical exercise at this stage," going on to acknowledge that such costs were "not going to be zero." Mr Sadan said: "We are raising the bar to make sure [investors] get what they need.” In response, Ms Baldwin argued: "But they are not getting it … and there is going to be a cost, but you have not worked out what the costs are estimated to be, or even tried to estimate what the cost is going to be." She went on to express her “shock” that the FCA “had not thought about the cost, either for the industry or for the consumer.”
New charges for FTX founder
Sam Bankman-Fried, the former chief executive of collapsed crypto exchange FTX has been hit with four new criminal charges. Mr Bankman-Fried, who has already pleaded not guilty to defrauding customers and investors, is also accused of conspiring to make illegal political donations, commit bank fraud and operate an unlicensed money transfer business. Mr Bankman-Fried now faces a total of 12 criminal charges.
BTG Banner - Wc 20.02.23 - PLACED IN MIDDLE OF SUMMARY
Steel industry concerned over support timetable
The steel industry says more jobs could be cut before the Government delivers support for energy bills, with Gareth Stace, director general of industry body UK Steel, saying British Steel's decision to axe 260 jobs could be the start of a trend in the sector. Ministers have proposed changes that would bring costs faced by the UK's energy-intensive industries in line with those charged in other major economies, with a consultation on the plans set for the spring. Around 300 firms employing 400,000 workers stand to benefit from the changes, which would see them exempt from certain costs and taxes. Mr Stace said the Government’s proposals would go a "long way to bridging the gap" between what UK steelmakers pay compared to competitors in the EU but warned that the time taken to implement them was "particularly concerning."
Value range shoppers bear the brunt of food price inflation
New research from Which? has found that shoppers relying on the cheapest supermarket ranges are bearing the brunt of grocery inflation with price rises on value items far outstripping those of branded and premium products. The price of value items was up 21.6% in January on a year before, well in excess of overall grocery inflation of 15.9%. In comparison, branded goods rose by 13.2% over the year, own-label premium ranges were up 13.4% and standard own-brand items increased 18.9%.
Rate-setter: High inflation could persist into 2024
Bank of England rate-setter Catherine Mann has warned that without further increases to interest rates, inflation could remain high into 2024. Ms Mann, a member of the Monetary Policy Committee, told an event hosted by the Resolution Foundation think-tank that she does not think the current level of rates are “in a restrictive stance,” adding: “I believe that more tightening is needed, and caution that a pivot is not imminent.” She added: “We have an inflation remit, and we will achieve it one way or another. Failing to do enough now risks the worst of both worlds... as monetary policy will have to stay tighter for longer to ensure that inflation returns sustainably back to the 2% target.”
Consumer confidence rebounds from historic low
A survey by data company GfK shows that consumer confidence has unexpectedly bounced back from historic lows to hit the highest level since April 2022. GfK’s consumer confidence index has risen by seven points in February, although the headline score remains at a “severely depressed” -38. While confidence in the general economic situation over the next 12 months is up by 11 points to -43, confidence in personal finances increased by nine points to -18. The overall uptick follows the index falling three points to a near-historic low of -45 in January. Joe Staton, client strategy director at GfK, said: “While it’s too early to talk about ‘green shoots of recovery’, the uptick across all measures should be welcomed.”