BANKING
Establishment banker looks to revolutionise finance industry
Bloomberg profiles 10x Banking Technology, the fintech founded by former Barclays CEO Antony Jenkins. 10X provides modern banking technology to lenders that need to upgrade their legacy systems and is backed by JPMorgan Chase, Blackrock, and Ping An Insurance Group, among others. At its most recent funding about a year ago, 10X was valued at about £600m, with Jenkins’ own stake worth £200m. He says IT upgrades that have traditionally cost hundreds of millions of dollars but can now be done for low single-digit millions, and in a fraction of the time. Last year, 10X changed its model - from being paid to develop systems for clients to one based on recurring revenues from subscribers to its platform.
Klarna boss criticises Barclays for ‘irresponsible’ BNPL research
Klarna UK boss Alex Marsh has criticised Barclays for publishing “mind-boggling” and “irresponsible” research exploring mounting buy-now pay-later debt levels in the UK. Barclays Partner Finance issued research alongside debt charity StepChange warning that 876,000 Brits could be plunged into unmanageable debt this year as a result of BNPL products. Marsh criticised the research as an attempt by Barclays to push its own “high-cost” instalment product. He said: “The conclusions in this report from Barclays are hugely patronising to UK retailers who already choose their credit providers based on responsible lending practices and quality of service.” Marsh added that it was “unsurprising that UK Retailers, like their customers, are ditching the old banks.”
FCA fines Ghana International Bank for poor controls
The Financial Conduct Authority (FCA) has fined Ghana International Bank (GIB) £5.8m for failing to adequately perform the additional anti-money laundering checks required when providing correspondent banking services to other lenders. "No evidence of actual money laundering was detected, though the risk of money laundering as a result of these deficient systems was significant," the FCA statement said, adding that the bank has not disputed the findings and has agreed to settle early.
INTERNATIONAL
Major U.S. banks pass Fed’s stress test
The U.S. Federal Reserve said on Thursday that the nation’s largest banks would remain well capitalized in the event of a severe economic shock. The 34 lenders with more than $100bn in assets that the Fed oversees would suffer a combined $612bn in losses under a severe downturn, the central bank said. But that would still leave them with roughly twice the amount of capital required under its rules. The results from the annual health check pave the way for banks including JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs to use their excess capital to issue dividends and buybacks to shareholders.
Deutsche Bank’s top team forgo €75k for ‘cultural shortcoming’
Christian Sewing, Deutsche Bank’s CEO, and his top team are waiving €75,000 each in pay in an effort to show contrition for the use of unapproved messaging applications at Germany’s largest bank. The lender is among several financial firms under investigation by U.S. authorities over the use of personal messaging applications, including WhatsApp. Deutsche Bank recently introduced a new app that allows the retrieval of messages on company phones.
AIB fined record €96.7m over tracker mortgage scandal
Ireland’s second-largest lender, AIB, has been fined €96.7m for denying customers access to cheaper mortgages that tracked base rates. The country’s central bank said the decision had inflicted “devastating consequences” on almost 13,000 households. The fine is 2½ times the regulator’s previous highest financial sanction, imposed on Ulster Bank in March last year for its involvement in the same practice.
AUTOMOTIVE
Toyota recalls EV fleet as challenge to Tesla dominance suffers setback
Toyota is recalling its fleet of 2,700 electric vehicles less than two months after launch warning that wheels could potentially fall off because of issues with bolts that connect them to the vehicle.
AVIATION
BAE Systems wins £500m jet order
BAE Systems has won a £500m slice of a £1.5bn contract for 20 Eurofighter Typhoon jets put in by Spain. The pan-European Eurofighter consortium is made up of BAE, Airbus and Leonardo of Italy, and the UK company will make the jet’s fuselage and tails at its factory in Samlesbury, Lancashire. Meanwhile, Britain’s former top civil servant, Lord Mark Sedwill, is joining BAE Systems as a non-executive director.
CONSTRUCTION
UK construction groups accused of ‘bid rigging’ in £150m contracts
The Competition and Markets Authority has found that several construction businesses colluded over contract tenders for demolition and asbestos removal projects worth £150m in order to cheat clients. Michael Grenfell, the CMA’s executive director for enforcement, said: “The construction sector is hugely important to Britain’s economic well-being. Bid rigging can result in worse deals, which can leave businesses – and sometimes taxpayers – out of pocket. This is unacceptable, and the CMA won’t hesitate to come down hard on these activities and impose appropriate fines.”
FINANCIAL SERVICES
Rise of women to top of UK finance is 'stagnating'
A review of women in finance found the average level of female representation in senior management remained flat at 33% in 2021 compared with 2020. The review by the New Financial think tank found that 78% of firms that had signed up to the voluntary Women in Finance Charter are meeting or are on track to meet their targets, up 5% on last year. "I am concerned to see progress stagnating," Women in Finance Champion Amanda Blanc said. "Frankly, up to now there has been too much tinkering at the edges and not enough fundamental change," said Blanc, who is also chief executive of insurer Aviva. "I welcome this year’s progress, but settings targets is just one part of the process – I am today calling on firms to double-down on their to commitments and continue to deliver greater gender-equality in the workplace," Britain's financial services minister John Glen said in a statement.
LME appoints consultancy to review nickel crisis
The London Metals Exchange has hired American management consultancy Oliver Wyman to conduct a review into the nickel crisis that shut the LME down in March. The LME reversed trades after the price of nickel spiked by more than 50% to hit $100,000 a ton, with short-sellers looking to get badly burnt. The move led to the LME being accused of bias for undoing the trades and lawsuits are in progress. The Financial Conduct Authority and the Bank of England are conducting separate investigations into the episode. The announcement comes as the price of zinc surged amid an acute supply crunch. The gap in price between immediate delivery zinc and future contracts widened to the broadest levels since 1997, suggesting another crisis could be looming at Britain's oldest trading ring.
Sunak to unveil plan to slash EU financial services rules
According to City AM, the Chancellor will unveil his plan to slash EU financial services regulations in a speech at Mansion House next month. The package of measures, which Rishi Sunak has said could start a second “big bang” for the City, aims to maintain the UK’s global competitiveness as it diverts from the EU financial services rulebook post-Brexit. The bill will outline plans to ease the EU’s Solvency II regulation, which forces insurance firms to set aside a certain amount of capital in order to withstand economic shocks, and is expected to include a new clause that will force financial services regulators to promote competitiveness and economic growth.
Data analytics helps FCA crack down on fraud
The Financial Conduct Authority (FCA) is using state-of-the-art analytics to scan 100,000 websites a day in a crackdown on scams and fraud. Although the watchdog cannot remove fraudulent sites, it has added almost 2,000 possible scams to its consumer warning list since May 2021- up a third more than during the same time the previous year. “Better use of data means we can be more proactive and find and stop harm faster”, said Jessica Rusu, chief data, information and intelligence officer, at the FCA. “We are continuing to improve our data, technology and capabilities to act decisively in consumers interests, while making it easier for firms to report to us.”
SumUp struggles to €8bn valuation as tech sell-off hits UK fintech
The London-based payments start-up SumUp has been given a valuation less than half that expected just a few months ago, becoming the latest European fintech to be hit by a global sell-off in technology companies. The company said on Thursday it had raised €590m split evenly between debt and equity at an enterprise value of €8bn. However, in January, SumUp was said to be targeting a value as high as €20bn, which would have made it the UK's third-most valuable fintech behind Checkout.com and Revolut.
Citadel ditches Chicago for Miami following crime complaints
Ken Griffin is moving his Citadel hedge fund to Miami from Chicago making it the third major company to move out of Illinois due to spiralling crime rates in less than two months. In recent months, Caterpillar said it was moving its office from Illinois to Texas, and Boeing has said it is moving from Illinois to Virginia. “The firms are having difficulty recruiting top talent from across the world to Chicago given the rising and senseless violence in the city,” said Zia Ahmed, a Citadel spokesman. “Talent wants to live in cities where they feel safe.”
MANUFACTURING
Age of cheap Chinese manufacturing is over, says Volex boss
Nat Rothschild, the executive chairman of British manufacturer Volex, has said the era of businesses sourcing parts from China is over as companies seek out suppliers closer to home. "The world perfected a kind of meticulous, just in time production system across multiple industries that all got turned on its head," he said. Volex yesterday set a target to nearly double its annual sales to $1.2bn (£980m) by 2027, saying the global shift to localised sourcing would provide a fair wind at its back.
REAL ESTATE
Cost of the average home up £50k since start of the pandemic
UK property prices have risen by £50,000 since the start of the coronavirus pandemic, according to official figures. In a report that cast doubt on expectations of a sharp slowdown in the property market, the Office for National Statistics (ONS) said that the value of a typical home hit £281,000 in April. That was £50,000 higher than in February 2020 as the coronavirus crisis struck, and £31,000 higher than in April last year. Analysts said the property market was being driven by buyers looking to lock in cheap mortgage deals ahead of further expected rate hikes by the Bank of England. Mark Harris, of SPF Private Clients, a mortgage broker, commented: “Borrowers are moving quickly to secure the best fixed rates.”
ECONOMY
Business sentiment falls as recession signals grow
The sharp rise in the consumer price index, which in May reached a 30-year high of 9.1%, led business sentiment to fall to the lowest level seen in two years, according to figures from the S&P Global/CIPS UK purchasing managers’ survey. The PMI's preliminary composite index held at 53.1 in June, which was unchanged from May. But the PMI's measure of new orders effectively stagnated as it fell to 50.8, marking the lowest level in over a year. Factory orders dipped below the 50 growth threshold to 49.6. Chris Williamson, chief business economist at S&P Global Market Intelligence, said that private sector sentiment had dropped to levels that signalled an “imminent recession” adding: “The economy is starting to look like it is running on empty.”
UK consumer confidence falls to lowest level since records began
Confidence among British households in the economy has fallen to the lowest level on record as surging inflation hits households’ finances and the wider economy. The monthly consumer confidence survey by GfK dropped one point to -41 in June, as households reported falls in their personal financial situation and level of savings. “The consumer mood is currently darker than in the early stages of the Covid pandemic, the result of the 2016 Brexit referendum, and even the shock of the 2008 global financial crisis, and now there’s talk of a looming recession,” Joe Staton, client strategy director at GfK, said.
UK debt interest costs hit May record
Soaring inflation led interest payments on Government debt to hit the highest amount for May on record, figures from the Office for National Statistics reveal. Interest payments paid by the Government for last month hit £7.6bn, up £3.1bn from a year earlier. Borrowing was £14bn, down £4bn from a year earlier but still the third-highest May borrowing on record and £3.7bn more than the Office for Budget Responsibility (OBR) had forecast. The OBR estimates that debt interest payments will cost the Government £87.2bn over the financial year ending in March 2023.