NatWest urged to block Rose payout
Ministers have called on NatWest officials to block a seven-figure payout for former boss Dame Alison Rose over her role in the debanking scandal. Dame Alison last month stepped down as CEO amid the scandal involving the closure of former UKIP leader Nigel Farage's account with Coutts, a bank run by NatWest. Dame Alison could be handed close to £10m in variable payments but it is believed that ministers have discussed with NatWest board members the possibility of stopping Dame Alison receiving the full exit package. Meanwhile, Mr Farage has suggested that Dame Alison should be stripped of her Damehood rather than receiving a £2.4m payout he describes as a "leaving present." NatWest's board will meet to discuss Dame Alison's payout after considering the findings of the investigation, which is due to conclude by October.
Blackstone revives retail buyout fund launch after redemption turmoil
Blackstone Group plans to launch a private equity fund for wealthy individuals, resuming its expansion beyond institutional clients. Sources say the private capital group will begin taking subscriptions for the Blackstone Private Equity Strategies Fund later this year.
Royal Bank of Canada reports rise in third-quarter profit
Royal Bank of Canada has reported a rise in third-quarter profit, with net income coming in at C$3.81bn. The bank's profit was boosted by a high-interest rate environment, as the Bank of Canada hiked its overnight rate to a 22-year high in June and again in July. RBC's personal and commercial banking unit saw a 5% increase in net income during the quarter. The sharp rise in interest rates has raised the risks of loan defaults, prompting RBC set aside C$616m as provision for credit losses.
Swiss banks fail money laundering risk analysis
Switzerland's financial markets authority, FINMA, has conducted an in-depth review of over 30 banks and found that "a large number" failed to meet basic requirements for analysing the risk of money laundering. FINMA suggested that many of the banks should do more to fight money laundering and provided guidelines for them to follow.
Itau Unibanco to sell Argentine business to Banco Macro
Brazilian bank Itau Unibanco has signed a binding agreement to sell its business in Argentina to Banco Macro for about $51.47m. Itau's loan book in Argentina totals $9.1bn, just over 4% of its international book. After the transaction is completed, Itau will continue serving corporate clients and individuals in Argentina through its foreign subsidiaries.
CBA to pay $3m in settlement with union
The Commonwealth Bank of Australia has agreed to pay A$3m to over 3,000 branch staff in a settlement with the Financial Services Union over a court case regarding unpaid breaks. Under the settlement, affected branch staff will receive one-off payments of up to $750 each, depending on their length of employment. Part-time workers will receive up to $487 each, while casual workers will receive up to $187.
BoA adds EV charging rewards to credit card
Bank of America is adding benefits for electric car owners to its rewards initiative. The bank's customised cash rewards credit card now offers 3% cash back at EV charging stations. This move comes after Bank of America saw a 44% jump in EV charging transactions on its cards in the first half of this year.
BNPL debt hits £2.7bn
Bank of England analysis shows that around 3.1m UK households owe £2.7bn in buy now, pay later (BNPL) borrowing. Research by Bank economists Gerry Gunner and James Waddell looked at a survey from March 2023 and found that 11% of UK households reported owing money on BNPL. The average balance was £866, meaning a total of £2.7bn is owed. The study shows that 68% of BNPL users are concerned about their borrowing, compared with 45% of other borrowers. They are also more likely fall behind on repayments by two months or more. Rocio Concha, director of policy and advocacy at consumer group Which?, believes regulation is needed to protect BNPL borrowers, saying: “With several providers not offering clear information of the risks attached to using BNPL … some consumers are entering into agreements without the full picture.”
Financial crime fines fall 88%
Data from compliance firm Fenergo shows that the value of fines handed to banks and financial services firms over financial crime violations fell in the first half of this year. Regulators issued 97 financial crime-related fines in first six months of the year, with the total value of fines coming in at $189m. This marked an 88% decline, year-on-year, with regulators worldwide pulling in over $1.5bn in fines in H1 2022. While the majority of the fines were issued by US regulators, UK agencies issued $14.2m in fines in the first half of 2023. Globally, Wells Fargo saw the largest fine, with a penalty worth $97.8m issued for failures on sanctions oversight. US institutions paid out 83% of the total fines, despite making up just 10% of enforcement action. The data also shows that crypto fines made up a third of the global total.
Elliott Management staff paid £1.3m on average
US hedge fund and activist investor Elliott Management paid its 124 UK staff a combined £160m last year - meaning an average payout of £1.3m. The total exceeds the £137m shared by employees the previous year. The increase comes after its UK operation, Elliott Advisors UK, reported a 10% climb in pre-tax profits. Despite the rise in total pay, the average pay for employees in the London office remained the same as last year, with the firm having boosted its headcount.
Lazard chair in Sweden charged with aggravated bribery
Gustaf Slettengren, the head of Lazard in Sweden, has been charged with aggravated bribery linked to a corporate takeover. Prosecutors have called for Lazard to be fined SKr1.5m over the matter.
LEISURE & HOSPITALITY
Subway sold in $9bn deal
Sandwich chain Subway is to be sold to private equity firm Roark Capital, the owner of Dunkin Donuts, Arby’s and Baskin Robbins, in a deal believed to be worth more than $9bn. John Chidsey, CEO of Subway, said the deal “reflects Subway’s long-term growth potential, and the substantial value of our brand and our franchisees.”
Majority of owners could not afford their house now
Analysis by data science company Outra shows that the majority of homeowners could not afford their house under today’s mortgage rates. The research looked at more than 30m households and found that just 0.9% of homeowners of working age could afford to buy their own home again now or expand into a larger property. It was also shown that in June 2023, just 5.9% could afford their home but only with more favourable mortgage terms – or with help from a shared ownership scheme. This compares to 22.3% in December 2022. Of those who could not afford to buy their home in the current market, 24% were aged 20-30, while 22% were between 50 and 60.
Searches for interest-only mortgages spike
Research from Legal & General Ignite shows there was an 11% increase in searches for interest-only mortgages from June to July, with a 53% spike from May to June. L&G suggests this jump coincided with the Chancellor announcing the mortgage charter on June 26. Under the mortgage charter, borrowers can contact their lender to discuss alternative options without it affecting their credit score. Financial Conduct Authority analysis shows that the total number of interest-only mortgages halved between 2015 and the end of 2022, hitting just under 1m. The number of interest-only mortgages still outstanding was 749,524, with 244,179 for partly-interest-only deals.
Retail sales fall at fastest pace for two years
The latest CBI distributive trades survey reveals a significant drop in retail sales, with the net balance falling to minus 44%, down from minus 25% last month and the biggest drop in sales since March 2021. The CBI data indicated that employment in the sector fell for the fourth straight quarter, although at a slower pace than the previous three months - at minus 20% compared with minus 48% in May.
Interest rates to peak at 5.5%, experts predict
Economists predict that interest rates will peak at 5.5% in September. Despite inflation falling to 6.8% in July from 7.9% in June, all but one of the 62 economists polled expect the base rate to rise by 0.25 percentage points – from 5.25% to 5.5% when the Bank of England’s Monetary Policy Committee meets on 21 September. The remaining analyst preferred a half-point increase to 5.75%. While the economists polled expect inflation to average 6.8% this quarter before falling to 4.7% in Q4, they do not expect price rises to fall below the Bank’s 2% target until at least 2025.
Consumer confidence climbs in August
GfK's Consumer Confidence Index improved five points in August, although it remains in negative territory at minus 25. Confidence in the general economic situation for the next 12 months increased by three points to minus 30. The major purchase index rose eight points to minus 24, while the personal finance 12-month forward index rose four points to minus three. Joe Staton, client strategy director at GfK, said: “Although the headline figure remains strongly negative at minus 25, hopes for our personal financial situation for the coming year are heading back towards positive territory."
Turkey leads London and Milan in 2023 IPO race
Istanbul has outperformed London, Frankfurt or Milan in attracting initial public offerings this year, with thirty IPOs raising $1.9bn collectively. Dealogic data shows that IPOs in London have raised just $967m.