Skip to Content
Skip to Main Menu

Daily News Roundup: Friday, 26th January 2024

Posted: 26th January 2024

BANKING

Record number of customers switch banks in Q4

A record number of people switched their current account provider in the last quarter of 2023, according to the Current Account Switch Service (Cass). Between October and December 2023, Cass oversaw 433,701 switches, the highest quarterly total since the service started over a decade ago. In November 2023 alone, a record 162,637 personal, small business, and charity accounts were switched. Data shows that from July to September 2023, NatWest had the highest net switching gains from those using Cass to switch, at 59,158. This was followed by HSBC UK (25,037), TSB (15,754) and RBS (6,382). Cass believes that customers are drawn by switching incentives, promotional offers, and services that better meet their needs. Andrew Hagger from Moneycomms said: "The latest Cass figures once again confirm that offering a cash incentive drives new business." Alastair Douglas from TotallyMoney noted: "The number of switching offers has tailed off in 2024 ... whether this is just a lull or maybe the beginning of the end for cash incentives, time will tell, but without the incentives it's highly likely that switching numbers will fade."

Lloyds to cut 1,600 jobs

Lloyds Banking Group is to cut 1,600 jobs across its branch network, with this coming as part of its shift towards digital services. The bank noted that the “most junior” positions would not be affected by the job cuts, adding that some employees would be offered voluntary redundancy. Lloyds, which owns Halifax and Bank of Scotland, will also create 830 new roles in a “relationship growth” team that will interact with customers both in branches and virtually. It is understood that the latest round of cuts are unrelated to a previously announced review of 2,500 mainly back-office jobs. The job losses at Lloyds mark the latest in a series of layoffs within the sector, with Barclays having cut around 5,000 jobs in 2023 as it looked to reduce costs and Metro Bank planning to let go of 20% of its workforce as part of a restructuring.

PRIVATE EQUITY

Takeover bid for Elementis rejected

US private equity firm KPS Capital Partners has had its takeover offer for UK-listed chemical company Elementis rejected. Elementis, which is currently trading at 139p per share, rejected the 160p per share offer, with the board reportedly seeking around 180p. Shareholders have been pressuring Elementis to pursue a takeover bid, with Franklin Mutual Advisers, which controls 9.8% of the company, calling for the board to engage with buyers.

INTERNATIONAL

Wells Fargo CEO compensation rises to $29m

Wells Fargo has increased CEO Charles Scharf's total compensation for 2023 to $29m, consisting of a base salary of $2.5m and a total variable compensation of $26.5m. This includes $6.6m in cash and $19.9m in long-term equity. Mr Scharf's compensation for 2022 was $24.5m.

Stock awards for majority of BoA employees

Bank of America will give stock awards to employees who earn $500,000 or less, or about 97% of its workforce. Some staff will also receive cash awards based on compensation and local requirements.

FINANCIAL SERVICES

Sustainable funds see net redemptions

Data from Morningstar shows that sustainable funds saw their first net redemptions ever in the closing three months of 2023, with ESG-focused funds seeing $2.5bn of outflows in Q4. While US investors pulled a record $5bn from sustainable funds, European investors pumped $3.3bn of new money into them. Japanese investors and Canadian investors pulled $1.2bn and $200m from sustainable funds respectively. While Q4 saw net redemptions, across the whole of 2023 sustainable funds gathered $63bn in inflows, with $76bn from Europe compared to $13bn of outflows from the US. Globally, sustainable funds saw their assets rise 8% over the last quarter, hitting almost $3trn. Hortense Bioy, global director of sustainability research at Morningstar, said that although the picture for global ESG fund flow for Q4 “may look bleak,” ESG funds in Europe “continued to hold up better than the rest of the fund universe.” She added: “Global ESG fund assets kept rising too.”

Auto lenders face £16bn compensation payments

UK auto lenders could be hit by up to £16bn in compensation payments after the Financial Conduct Authority (FCA) confirmed its probe into historic commission arrangements. The City watchdog will review cases dating back to 2007, focusing on discretionary commissions that allowed brokers and dealers to raise customers' interest rates. Analysts at RBC estimate that the industry could be forced to pay out £16bn, with this up from a previous estimate of £8bn. Jefferies said the industry could be on the hook for up to £13bn, raising its estimate from around £4bn. RBC analysis suggests Lloyds will bear the brunt of the fallout, with payouts predicted to hit £2bn. Analysts expect Barclays to face a bill of up to £250m, while merchant banking group Close Brothers could be in line to pay £200m and Santander UK could face a £850m bill. The FCA's probe has drawn comparisons to the PPI scandal, although experts have flagged that banks did not benefit from discretionary commissions in the same way.

Bank of England: Ensuring privacy a ‘core design feature’ of Britcoin

The Bank of England and the Treasury say privacy would be a “core design feature” of the digital pound, saying: “Just as with other forms of money, ensuring trust in a digital pound issued by the central bank would be essential.” Over 50,000 people responded to a consultation on the introduction of Britcoin, with widespread concerns about privacy. A response paper from the Bank said legislation introduced by the Government for a digital pound would guarantee users’ privacy, with officials committed to exploring “technological options” that would make it impossible for the Bank to access personal data through its core infrastructure. Bim Afolami, Economic Secretary to the Treasury, said: “We will always ensure people’s privacy is paramount in any design.”

FCA criticises standards at payment companies

The Financial Conduct Authority (FCA) says a failure to properly safeguard customer cash is a "constant theme" at payment companies. Matthew Long, the FCA's director of payments and digital assets, said 85% of payments and digital money licensing cases were rejected, withdrawn or refused in the last year, while some firms left the governance section of their applications blank. Noting that the City watchdog will be consulting on a “strengthened regime,” Mr Long said: “It's critical we focus on the areas where we can raise standards.”

Liontrust looking for new chair

Asset manager Liontrust has begun to search for a new chairman, with Alastair Barbour, who has been on the board for 13 years and been chair since September 2019, set to be replaced. This comes following the firm’s failure to purchase Swiss asset manager GAM. Liontrust launched a £96m bid to buy GAM last year but just 33.5% of GAM’s shareholders voted in favour of the takeover.

MEDIA & ENTERTAINMENT

Microsoft announces game division job losses

Almost 2,000 workers in Microsoft's gaming division are to set to lose their jobs, with a memo from Xbox boss Phil Spencer telling workers that the company plans to shed 1,900 of its 22,000 staff. Mr Spencer wrote that losing staff was a "painful decision." Most of the job losses are set to be at game publisher Activision Blizzard, which Microsoft acquired in a $69bn deal in October. Meanwhile, Activision Blizzard president Mike Ybarra has announced that he is leaving the company.

REAL ESTATE

Average monthly rent outside London reaches record high

The average monthly rent outside of London has reached a record high of £1,280, according to property website Rightmove. The website also revealed that agents are receiving an average of 11 inquiries per available rental property. However, it is expected that the pace of rental growth will slow down in 2024. Advertised rents in the final quarter of 2023 were 9.2% higher than the previous year, but this was the lowest annual growth since 2021. Rightmove predicts that rents will be 5% higher outside London and 3% higher in London by the end of 2024.

RETAIL

Retail sales see sharpest slowdown in three years

Retail sales in Britain have fallen at the sharpest pace in three years. The Confederation of British Industry's (CBI) monthly retail sales balance has fallen to -50 in January from -32 in December, the lowest reading since January 2021. Martin Sartorius, principal economist at the CBI, expects a similar rate of contraction next month due to higher interest rates and forthcoming rise in business rates. Official figures show that British retailers experienced a record drop in sales volume last month, with a decline of 3.2%.

ECONOMY

ECB keeps rates on hold

The European Central Bank (ECB) has opted to keep interest rates unchanged at 4%. ECB President Christine Lagarde said policymakers needed to be more confident that inflationary pressures have definitely subsided before moving towards cutting rates. Madison Faller, a global investment strategist at JPMorgan, said it is "not a surprise” that the ECB held rates steady, “especially as speakers have been fairly clear that they need to see more confirmation that inflation is moving sustainably back to its target," while Colin Finlayson, fixed income investment manager at Aegon Asset Management, said that although Ms Lagarde “attempted to push back on the current market expectations of rate-cuts in the coming month, she did have to concede that both underlying inflation and inflation expectations have continued to fall.” Seema Shah, a strategist at Principal Asset Management, commented: “The ECB is clearly data dependent, but the data they focus on are pointing to a rate cut within the next few months, potentially April."

US economy sees faster than expected growth

The US economy grew faster than expected in Q4 2023, with data from the Commerce Department showing that the world's largest economy expanded at an annual rate of 3.3% over the three months to December. While this was down from 4.9% growth seen in Q3, it exceeded the 2% increase many analysts had forecast. The data shows that the US economy grew at an annual rate of 2.5% last year, up from 1.9% in 2022.

OTHER

Consumer confidence hits two-year high

Consumer confidence has hit the highest point in two years, with an index published by GfK increasing to -19 points in January from -22 in December. Improved optimism in household finances over the next 12 months drove the increase in the overall index, while the personal finance expectations index was flat in January, marking the first time in two years that it has not been negative. Joe Staton, client strategy director at GfK, said that “consumer confidence has started the year well”, adding that “despite the cost-of-living crisis still affecting many households across the UK, consumers appear to be encouraged by the positive news about falling inflation.”

Close Menu