BANKING
Square Mile outperforms New York and Paris
A new report by the City of London Corporation reveals that London has retained its crown as the world’s top destination for financial and professional services. The Square Mile outperformed other major financial hubs, including New York, Singapore and Paris, with “unmatched international financial reach”. The City excelled as a hub for tech and innovation remained Europe’s leading destination for investment in financial services. It was also the world’s leading foreign exchange trading centre. However, London trailed Singapore, Hong Kong and Japan in terms of skills and lost out to rival hubs in terms of attracting companies to float on its stock market. Catherine McGuinness of the City of London Corporation said: "To remain globally competitive, we must future-proof the sector by improving digital skills and infrastructure. Our tax rates must remain globally competitive and, crucially, we need to remain open - and be seen to be open - to the very best talent from across the globe.”
TSB returns to profit on record mortgage demand
A strong UK mortgage market and improving economic outlook helped TSB back to profit last year. The Sabadell-owned bank swung from a loss of £204.6m in 2020 to a pre-tax profit of £157.5m last year. However, bosses are keeping a close eye on the impact of possible rate rises on borrowing. CFO Declan Hourican said: “Both inflation and the Monetary Policy Committee's response to that which is likely to be interest rate rises – and we're expecting gradual rises over the course of 2022 – will put pressure on household finances.”Parent company Banco Sabadell announced a net profit of €161m in the fourth quarter, up from a loss of €201m in the same period a year ago, thanks to TSB's solid performance.
Regulators holding back innovation
UK banks think the Financial Conduct Authority reacts too slowly to change, hampering innovation in the sector. A survey by London-based agency Yobota found two-thirds of all UK banks and financial institutions think the City regulator is not responding quickly enough to new trends. One of the key roadblocks banks face is not being allowed to trial new technologies due to a lack of formal guidance from UK regulators.
PRIVATE EQUITY
Blackstone to use record war chest to capitalise on tech sell-off
Asset management giant Blackstone attracted $154bn in new assets during the fourth quarter and intends to take advantage of price falls in sectors such as ecommerce, cloud computing and cyber security. Its fourth-quarter distributable earnings rose by 55% to a record $2.3bn from $1.7bn a year earlier.
CVC plans overhaul to keep lucrative profit stream private after IPO
CVC Capital Partners is planning to restructure so it can float an entity through which the public can invest in its management fee income. Performance fees from successful buyouts would be kept separate.
Founder of failed private equity firm Abraaj fined for misleading investors
Arif Naqvi, the founder of failed private equity firm Abraaj, has been fined $135.6m by Dubai’s financial regulator for misleading investors about the use of their funds.
INTERNATIONAL
Deutsche Bank quadruples profits to €2.5bn
Deutsche Bank quadrupled its full-year profit in 2021 to €2.5bn, its highest profit in 10 years, with the better-than-expected result driven by its investment arm which generated almost two-fifths of the group’s revenue for the full year. Deutsche Bank's investment bank division saw quarterly revenues climb to €1.9bn, up 1% year-on-year, as a 14% fall in fixed income and currency trading was offset by 29% growth in origination and advisory revenues. The bank also announced it would resume dividend payments worth €400m this year. It will also buy back €300m of shares.
Ex-Deutsche Bank traders have Libor-rigging convictions overturned
The convictions of two former Deutsche Bank traders for Libor-rigging have been overturned by a US federal appeals court. Matthew Connolly, who was the director of Deutsche Bank’s pool trading desk in New York, and Gavin Black, director of Deutsche Bank’s money markets and derivatives desk in London, were accused of conspiring with other traders and inducing co-workers to submit false rates to the British Bankers’ Association, which administered Libor at the time, in order to either profit from moving the rate or reduce losses on derivatives contracts. But a three-judge panel sitting at the US Court of Appeals in Manhattan held that “the government failed to show that any of the trader-influenced submissions were false, fraudulent, or misleading”.
AUTOMOTIVE
Renault, Nissan, Mitsubishi to triple investment in EVs
Renault SA, Nissan Motor Co and Mitsubishi Motors Corp plan to triple their investment to jointly develop electric vehicles (EVs). The three announced a plan on Thursday to invest more than €20bn ($23bn) over the next five years on EV development. By 2030, the alliance is expected to produce more than 30 new battery EVs underpinned by five common platforms.
AVIATION
EasyJet expects strong summer as curbs ease
EasyJet on Thursday reported a “sustained step change improvement” in bookings from the UK following the relaxation of travel rules this month and said it would return to near 2019 levels of flight capacity by the summer. The low-cost airline’s capacity will fall to 50 per cent of normal levels this month, but it forecast that this would increase as the quarter continues.
FINANCIAL SERVICES
Hancock pushes for crypto-friendly regulation
Speaking in the House of Commons, former Health Secretary Matt Hancock urged the Government to develop policy that fosters the fintech industry, particularly in areas such as cryptocurrency and blockchain. “These innovations have the potential to disrupt finance, just as social media has disrupted communications or online shopping has changed retail,” said Hancock. He went on to say that “post-Brexit, the UK has the chance to be the home of fintech which can not only be an economic driver but also help to cut fraud and financial crime because of the transparency that it brings.” New legislation should ensure that emerging industries are “fit for the future, so Britain can be home of this revolution,” Hancock concluded. Writing in the FT, Ian Taylor, director of CryptoUK, welcomes moves to bring the promotion of crypto assets under the umbrella of financial services regulation, adding that “crypto could help democratise finance, wealth creation and the ability to raise capital.”
Sunak working hard to make the City more competitive
The next Queen’s Speech will feature an overhaul of financial services regulation, sources told City AM, while a consultation on the Treasury’s Future Regulatory Framework (FRF) Review is set to be wound up in early February. The package of measures will include an easing of capital requirements for the insurance industry and changes to share-listing rules. A Treasury source said Sunak’s push for a regulatory overhaul shows he is “capturing the mood and that he’s on top of these things…at a time when there needs to be potential Brexit dividends”.
New collective pension schemes face strict rules in UK
The Pension Regulator is to impose new requirements on the managers of collective pension schemes to explain to members how their retirement income could fall as well as rise.
Investors bet billions on crypto custody providers
Digital asset custodians are becoming increasingly attractive to investors who predict a surge in demand on the back of an influx of Wall Street players into digital markets.
Stubben Edge raises £10m
UK-based "insurtech" Stubben Edge has raised £10m after doubling business since its first funding round in December 2020.
MEDIA & ENTERTAINMENT
CMA launches probe into music streaming market
The Competition and Markets Authority's (CMA) has launched an investigation into the music streaming market. As part of its assessment of how well the market is working for audiences, the CMA will consider whether innovation is being stifled and if any firms hold excessive power.
REAL ESTATE
UK seeks to unwind £7.6bn housing deal with Guy Hands’ Annington Homes
The Ministry of Defence will attempt to wrest control of Annington Homes back from Terra Firma as the cost of leasing the properties hits £183m a year and the losses from asset appreciation come close to £6bn.
RETAIL
CMA launches first phase of Morrisons takeover probe
The Competition and Markets Authority (CMA) has launched the first phase of its probe into the takeover of Morrisons by US private equity giant Clayton, Dubilier & Rice Holdings. The inquiry will look into whether the deal “has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom”.