Banks are failing to comply with anti-corruption rules and sanctions
Banks and other financial firms around the world are failing to comply with international anti-corruption rules, according to research by the University of Cambridge and the University of Texas at Austin. The researchers contacted 5,000 banks and 7,000 other financial intermediaries in 273 countries and financial jurisdictions in 2020/21, testing compliance with rules meant to combat money laundering and legislation that allows sanctions to be imposed against specified Russian government officials. The study found one in 30 banks did not comply with international regulations. This increased to one in 10 when discounting those that did not respond to the researchers. The results for the sanctions test found one in 20 companies did not comply, rising to one in-six if discounting non-responses. The researchers set up 12 shell companies in countries recognised as a low risk for corruption and others deemed a high risk. They then posed as representatives of those companies and sought to open bank accounts for them. The researchers said some of the individual responses indicated a willingness to conspire with high-risk customers to break the rules.
Barclays fined after shops lose out on card fees
Barclays has been fined £8.4m by the Payments Systems Regulator, with the bank failing to be transparent with retailers about the fees they were charged to use its card services. The payments industry watchdog said the bank had breached interchange fee rules between the end of 2015 and 2018, noting that during this time, Barclays processed a third of all card payment transactions in the UK, “meaning thousands of retailers and transactions were affected.” It added: “Barclays’ failure meant retailers weren’t fully aware of the fees they were paying so could not effectively compare prices of card services, shop around to find cheaper deals, or negotiate the best deal with Barclays.” The bank said it had “fully co-operated” with the investigation.
HSBC chief has ‘moved on’ from idea of splitting bank
HSBC chief executive Noel Quinn says that while the bank gave serious consideration to calls to break itself up, it has moved on from the idea. The bank has faced calls to split from Ping An, a Chinese insurer that holds a stake of more than 8% in the bank. Ping An believes that separating HSBC’s Asian business into a separate Hong Kong listed company will unlock value for shareholders. Mr Quinn said that while HSBC agreed with many of the sentiments made by Ping An, the break-up idea was a “point of difference.” “In terms of the proposal of splitting the bank in two, we’ve given it serious consideration, very serious,” he said, before confirming: “We have now moved on.” Meanwhile, sources claim that HSBC is cutting as many as 15% of its 2,000 senior operations managers worldwide, with this coming as it looks to streamline its management ranks and reduce costs. Mr Quinn says HSBC has identified $1.7bn of extra cost cuts it will make next year as it looks to meet an overall goal of costs rising by no more than 2% despite inflationary pressures.
NatWest hands staff a pay boost
NatWest has offered the majority of its 41,500 staff in Britain a pay rise and one-off cash sum in an effort to support workers amid the cost-of-living crisis. The bank has offered 39,000 staff on lower pay bands a minimum £2,000 salary increase and a one-off sum of £1,000 to be paid in January, according to sources. The pay offer follows talks with the Unite union and the Financial Services Union. NatWest chief executive Alison Rose said the lender is “committed to paying our colleagues fairly and providing further support during a difficult time.” NatWest had already given staff earning less than £32,000 a year an unscheduled 4% pay increase in September. The bank has also increased its minimum salary to £22,000, with this up from £19,000 in April.
Lloyds pension plan sold billions of assets during gilts crisis
Lloyds Banking Group’s pension scheme sold billions of pounds of assets to meet collateral calls during September’s market crisis.
Monzo boss expects turnround by next year
Chief executive T.S. Anil says Monzo will be profitable in 2023. He added that while expansion into the US is an ambition, the digital bank’s focus is maintaining its UK market position.
Blackstone blocks withdrawals from property fund
Blackstone has limited withdrawals from its $69bn real estate income trust after receiving too many redemption requests. The world's largest private equity fund said it would curb withdrawals after it received redemption requests greater than 2% of its monthly net asset value and 5% of its quarterly net asset value. A Blackstone spokesperson said: “Our business is built on performance, not fund flows, and performance is rock solid.”
Morgan Stanley making 'modest' job cuts
Morgan Stanley is making modest job cuts across its global workforce, CEO James Gorman has confirmed. He said: “Some people are going to be let go," adding: "We're making some modest cuts all over the globe. In most businesses, that's what you do after many years of growth."
Pancretan in talks to merge with Central Macedonia Bank
Greek lender Pancretan Bank has signed a memorandum of understanding over the possibility of a merger with the Bank of Central Macedonia. Pancretan said: “The two parties will come to a negotiation and exert every effort to reach a binding agreement by January 31, 2023.”
FCA tells spread betting firms to crack down on insider dealing
The Financial Conduct Authority (FCA) has warned that spread betting firms are not doing enough to identify and report suspected insider dealers. Announcing a wider crackdown on the industry, the City watchdog said it was concerned at the level of suspicious activity by potential insider dealers who use firms offering spread bets and similar products. The FCA has written to chief executives of contracts for difference (CFDs) providers, saying that firms face fines or bans if failings continue and they do not improve their systems and controls. The regulator flagged that a minority of providers caused “significant consumer harm”, voicing concern over “opting up” – where inexperienced investors are offered incentives to upgrade to elective professional status, enabling them to take bigger and riskier bets. The FCA said: “Poor systems and controls often result in firms being used as conduits of financial crime, primarily insider dealing,” warning that it is “concerned at the level of suspicious transaction activity in the CFD sector.” It also highlighted issues around high-pressure sales tactics, excessive fees and firms refusing to process requests for withdrawals. The watchdog also noted that the use of affiliate marketers or introducers was a concern, with oversight deemed inadequate.
Morrissey steps down
Baroness Morrissey says she is stepping down as chairwoman of AJ Bell with “great regret” after a dispute with the Financial Conduct Authority (FCA) over the investment platform’s abandoned succession plans. The FCA raised governance concerns about the proposed role of AJ Bell’s co-founder, Andy Bell, who intended to become non-executive deputy chairman after stepping down as chief executive. The City watchdog’s concerns prompted AJ Bell to scrap the plan and led to Baroness Morrissey tendering her resignation less than a year after taking charge of the board.
City minister insists Brexit will benefit financial services
City of London Minister Andrew Griffith says Brexit is delivering benefits for the financial services sector, saying an overhaul of insurance industry regulation could see £100bn invested in the economy.
Britain’s factories already in recession
Britain’s factories are already in recession, despite the S&P/CIPS manufacturing PMI survey showing a slight increase in November. While the index rose to 46.5 last month from 46.2 in October, the survey remained far below the 50 point threshold that separates growth and contraction. This marked the fourth consecutive month where British manufacturing activity fell. The PMI suggests that businesses are cutting spending on manufactured goods as they brace for a slowdown in consumer demand. Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, comments: “Demand for industrial goods likely will be hit again early next year as real incomes are squeezed by the watering down of government support for energy bills and higher unemployment, as businesses are forced to consolidate costs.” The PMI also indicates that factories are pulling back on hiring plans and may even be considering reducing the size of their workforces. Manufacturers cut jobs for a second month in a row - and at the fastest pace since November 2020. The report also shows that export orders fell at the fastest pace since May 2020.
House prices fell 1.4% in November
House prices saw the biggest monthly fall for more than two years in November, according to data from Nationwide. The 1.4% decline recorded last month is the largest month-on-month fall since June 2020 and marks the third consecutive month where values have declined. There was also a slowdown in year-on-year price growth, which came in at 4.4% in November compared to 7.2% in October. The average property price fell to £263,788 last month from £268,282 the month before, the report shows. Pointing to the impact of September’s mini-Budget, which drove up borrowing costs, Nationwide’s chief economist Robert Gardner said: “While financial market conditions have stabilised, interest rates for new mortgages remain elevated and the market has lost a significant degree of momentum.” He added that the market “looks set to remain subdued in the coming quarter,” noting that inflation “is set to remain high for some time” and interest rates are likely to rise further.
Next rescues fashion chain Joules
Clothing chain Joules has been rescued from administration by retailer Next and founder Tom Joule in a £34m deal. Next will take a 74% stake in the business, with Mr Joule owning the rest. Next has bought the majority of Joules’ assets, including paying £7m for the retailer’s head office, and says the chain would retain "management autonomy and creative independence." While Next intends to keep about 100 Joules stores open and save 1,450 jobs, administrators will close 19 stores with immediate effect with the loss of 133 jobs. Joules collapsed into administration last month after failing to secure emergency investment.
LSE: Brexit added £210 to household food bills
Brexit added £210 to the average household food bill in the two years to the end of 2021, research from the London School of Economics (LSE) suggests. Academics say the cost of food brought in from Europe went up because of extra red tape and checks, with changes to import rules pushing food prices up by 6%, or £5.84bn overall. Researchers at the LSE's Centre for Economic Performance looked at data tracking the flow of trade and prices of food products between the UK and the EU, with the analysis looking to isolate the effects of Brexit from other supply chain issues that caused disruption during the pandemic. The research found the increase in food prices was due to a rise in "non-tariff barriers" to trade between the UK and the EU. Nikhil Datta, a co-author of the report, said non-tariff barriers should be a "first-order concern" for politicians and policymakers. The report also shows that between 50% and 88% of price rises seen by EU exporters and UK importers were being passed on to customers.