BoE begins setting out crypto rulebook
The Bank of England’s financial policy committee has begun to set out its thinking on how the cryptocurrency sector should be supervised. The Bank has suggested that crypto activities that reflect conventional financial services would be governed by existing City rules and standards. While the Bank’s financial policy committee believes that “direct risks” to UK financial stability from cryptomarkets are “currently limited”, this will change “if the pace of growth seen in recent years continued”, it said. Meanwhile, Sam Woods, the head of the Bank’s Prudential Regulation Authority, wrote to bank bosses urging them to be mindful of the potential risks presented by cryptocurrencies. The Financial Conduct Authority also issued a notice to the firms it supervises to remind them to be vigilant about cryptomarkets.
Bank of England postpones City stress tests over Ukraine war
The Bank of England has postponed its annual stress tests of UK banks citing uncertainty around the fallout from the Ukraine war. The BoE announced plans in December to raise banks' capital requirements in the coming quarter but postponed a decision on this until May in light of the conflict. British lenders' capital and liquidity position remained strong, the BoE said in a quarterly report from its Financial Policy Committee, adding that it was confident that the major British institutions were well capitalised and “resilient” to a wide range of shocks related to conflict.
FCA to lead new open banking regulatory committee
The competition watchdog will today unveil a new committee of regulators to oversee the rollout of open banking technology, after sustained pressure from fintechs to speed up its decision making. In a joint regulatory statement today, the Competition and Markets Authority will announce that open banking regulation will now be overseen by a new Joint Regulatory Oversight Committee (JROC) chaired by the Financial Conduct Authority and the Payments Service Regulator, with the CMA and Treasury attending as members, according to four people close to the announcement.
Bridgepoint’s shares up on asset growth news
Shares in Bridgepoint rose almost 10% after the London-listed private equity firm reported higher-than-expected assets under management and fund investment returns. The buyout house said AUM rose 24% to £27.4bn in the year to the end of December while the firm’s investment returns exceeded expectations set in the previous year “by some measure”.
Apollo lines up banks for £6bn Boots bid
New York-based Apollo Global Management is in talks with banks including Bank of America and Credit Suisse to provide debt funding for a bid for high street chemist Boots. Bain and CVC abandoned their joint bid in February leaving Apollo and Asda as the only serious contenders.
Goldman Sachs poised to lead IPO of SoftBank's Arm
SoftBank is looking to hire Goldman Sachs as the lead underwriter on the Nasdaq IPO of Arm. The float could value the British chip designing company at as much as $60bn.
ECB to oversee wind-down of Russia-linked bank in Cyprus
The European Central Bank has appointed a temporary administrator to oversee the wind-down of Cypriot lender RCB Bank, a subsidiary of Russia’s state-owned VTB Bank. Some €2.8bn of customer deposits will be paid back or transferred to another bank. RCB Bank said it will cease operating as a bank and would become an asset management company.
G7 to crack down on Russia’s ability to sell its gold
G7 leaders have agreed to stymie Russia’s attempts to sell its gold reserves to support the rouble with one EU official describing the measure as part of “sharpening and shaping” the sanctions regime. The US separately announced new sanctions against more than 400 Russian individuals and companies, including Herman Gref, the chief executive of Sberbank. The UK also imposed 65 fresh measures including sanctions against six banks.
ECB to tighten banks’ access to cheap funding
The European Central Bank will phaseout most of the relaxed collateral requirements it introduced in 2020 by 2024, indicating a confidence that the eurozone can manage the economic fallout from Ukraine war.
UK car production falls for eighth consecutive month
Data from the Society of Motor Manufacturers and Traders (SMMT) show automotive output slumped again in February as chip shortages continue and global economic headwinds drive up costs. Production for the domestic market went down 35.8%, while overseas markets reported a 41.8% fall in units produced. SMMT's chief executive Mike Hawes said: “The sector entered 2022 hopeful for recovery, but that recovery has not yet begun, and urgent action is now needed to help mitigate spiralling energy costs and ensure the sector remains globally competitive to encourage the investment essential to growth, job security and the delivery of net zero ambitions.”
Renault shuts down Moscow factory
Renault has shut down its Moscow factory and is understood to be considering a sale of its majority stake in Avtovaz, which owns the Lada brand and is Russia’s largest carmaker. Separately, Geely has suspended its operations at a factory in Belarus and has launched a review into the reputational risk of continuing operations in Russia.
Lloyd’s of London predicts Ukraine war will represent ‘major claim’
Lloyd’s of London made £2.3bn in pre-tax profit last year, compared with a £900m loss in 2020 due to pandemic-related claims. Lloyd’s CEO John Neal warned, however, that the war in Ukraine will represent “major” but “manageable” claim this year with the cost to underwriters likely to be in the “low single-digit billions”.
MEDIA & ENTERTAINMENT
Michael Grade named Ofcom chairman
Veteran broadcast executive Lord Michael Grade has been appointed chair of UK media regulator Ofcom following a lengthy search. The role will require Lord Grade to scrutinise the work of the BBC, Channel 4 and ITV as well as police the conduct of online platforms such as Facebook and Google. Lord Grade has been critical of the BBC’s journalism and corporate governance in the past and is said to be sympathetic to the idea of privatising Channel 4.
Times Newspapers reports record profits
Strong growth in digital subscriptions and advertising revenue helped push pre-tax profit at Times Newspapers up 237% to £34m in the year to June 27, up from £10.4m the year before.
CMA: Morrisons takeover could lead to higher fuel prices
The Competition and Markets Authority has warned the £7bn private equity takeover of Morrisons could lead to higher petrol prices. The watchdog found 121 areas where both the supermarket and New York-based Clayton, Dubilier and Rice own forecourts. The regulator said this could lead to higher fuel prices as the firms would face little competition. CMA senior merger director Colin Raftery said: “Record high petrol prices make it even more important that we don’t allow a lack of competition at the pump to make the situation worse…. But if CD&R and Morrisons are able to address these concerns, then we won’t need to move on to an in-depth investigation of the merger.”
UK business activity better than expected in March
The latest S&P Global flash UK purchasing manager composite index fell to a two-month low of 59.7 in March from 59.9 in February. This was higher, however, that the 57.8 forecast by economists polled by Reuters. Growth was stronger than expected in the services sector, boosted by the removal of COVID-19 restrictions. But this was offset by a slowdown in manufacturing output, which fell to a five-month low as a result of supply shortages and rising inflationary pressures slowing demand. Chris Williamson, chief business economist at S&P Global, said the reopening of the British economy after pandemic restrictions had helped offset the drag from the conflict in Ukraine, Brexit and rising prices. However, he also warned of “potentially sharply slower growth in the coming months, accompanied by a further acceleration of inflation and a worsening cost of living crisis, which paints an unwelcome picture of ‘stagflation’ for the economy in the months ahead”.
BNP Paribas warns of riots in Britain
BNP Paribas said that there is a danger of "social unrest, protest and extremism" in Britain as its economy is one of the most fragile in Europe and its population seriously exposed to the cost of living crisis. The UK’s poor score on BNP’s sustainable economic barometer “indicates a reduced capacity to facilitate social mobility and is a strong indicator of future socio-economic protest and instability”, the report said.