Ministers look to protect cash access
The Government has proposed legislation that will see consumers and businesses granted the legal right to withdraw and deposit cash within "a reasonable distance" of their home or premises. Analysis suggests that cash remains a necessity for at least 8m people, and while UK Finance data shows that the number of payments made with cash dropped by 35% last year, it still accounted for 17% of all payments, making it the second most-popular way to pay behind debit cards. The Treasury proposals say: “The government proposes that these geographic requirements would be set on the basis of cash access facilities being available within maximum distances of a minimum percentage of the population”. Initially, the Treasury suggests that people should not have to travel more than 1km, with this distance potentially extended over time if the use of notes and coins declines. The Financial Conduct Authority would oversee the system. Consultation on the proposals ends on September 23.
HSBC launches new credit card service
HSBC has launched credit card instalment options to help customers with their repayments. The new feature, ‘instalment plans’, is available through the bank’s mobile app and enables eligible credit card customers to convert recent spend into bespoke instalment plans that will divide spending of at least £250 into three, six or twelve equal monthly payments. Purchases of at least £100 can be amalgamated to meet the £250 minimum, and customers can have up to six plans at one time. Andrew Rankin, HSBC UK’s head of unsecured products, said: “With clearly defined repayment terms, monthly and total costs, the instalment plan will help customers with their budget and give them more control of their finances.” Rachel Springall, finance expert at Moneyfacts, welcomed the initiative, saying it will "put borrowers in more control of their spending”.
M&S closes banks
All 29 branches of M&S Bank are set to close today, with services moving to online, mobile and telephone channels. All current accounts with the bank, including premium accounts and Monthly Saver accounts, will shut in August, with the bank saying that only a "very small proportion" of its 3m customers are current account customers who will be affected.
Business committee chair raises concerns over private equity takeovers
MP Darren Jones, chairman of the Commons Business, Energy and Industrial Strategy Committee, has asked regulators what measures are available to investigate private equity takeovers, writing to the Competition and Markets Authority and the Financial Reporting Council, to ask about the “scope of your regulatory powers”. Mr Jones wrote: “Given previous highly leveraged purchases of high street brands, which have ultimately resulted in administration, job losses and pension fund shortfalls, there is concern that regulatory bodies have insufficient oversight or powers to intervene when new owners act irresponsibly”. This comes with Refinitiv analysis showing that private equity firms have made a record 345 bids for British companies since the start of the year. The most recent high-profile case has seen Clayton Dubilier & Rice make an approach for supermarket chain Morrisons, with it still pursuing a deal despite an initial offer being deemed too low.
ECB to lift cap on eurozone banks’ dividends and share buybacks
Andrea Enria, the European Central Bank’s head of supervision, says it will ease its remaining pandemic-related restrictions, lifting a cap on dividends and share buybacks at eurozone banks in Q3.
UBP to acquire Danske Bank wealth management business
Swiss private bank Union Bancaire Privée is acquiring Danske Bank's Luxembourg-based wealth management business in a move that takes UBP's managed assets in Luxembourg to around $35.63bn.
UniCredit to continue remote working
Italian bank UniCredit will allow its non-branch staff globally to work from home for up to two days a week on average, post-pandemic. It marks the latest shift to a hybrid model across the sector, with UBS this week saying it will let most staff adopt hybrid working patterns.
Caixabank to cut 6,450 jobs
Caixabank is to lay off 6,452 employees in what will be the biggest ever staff overhaul in Spanish banking. The job losses come after talks with banking unions and the move, which will see the lender reduce its workforce in Spain by around 14.5%, will see 1,800 fewer job cuts than the bank had initially planned.
Nissan announces £1bn battery gigafactory
Nissan has confirmed plans to build a gigafactory that will make batteries for electric cars and a new electric car. The move comes as part of a £1bn expansion of its Sunderland factory and will create 6,200 jobs at the facility and its supply chains. Chinese firm Envision AESC, Nissan’s battery supplier, will invest an initial £450m to build the new battery plant and could invest an additional £1.8bn to expand the plant’s capacity. Business Secretary Kwasi Kwarteng told BBC Radio 4 that the Government has “committed some measure of support” but that Nissan’s £1bn investment was “far in excess of the amount of support that we provided”.
Sunak: Talks on City’s EU access have stalled
Rishi Sunak has told financiers that talks to secure City of London access to the EU have stalled, saying that while he had not “given up” on the European Commission granting equivalence, it may not happen. In his first Mansion House speech as Chancellor, Mr Sunak said that with a comprehensive post-Brexit financial services settlement with the EU not having happened, “we are moving forward, continuing to cooperate on questions of global finance, but each as a sovereign jurisdiction with our own priorities”. Saying Britain would diverge from Brussels’ rules on financial services, Mr Sunak said Britain now had the “freedom to do things differently and better”, adding that officials “intend to use it fully”. Mr Sunak also tempered concerns among investors that the EU could block UK firms’ access to its markets due to a weaker regulatory system. He said: “The EU will never have cause to deny the UK access because of poor regulatory standards. Take firms like clearing houses, which are fundamental to the open, free markets that we advocate. The UK already has one of the world’s most robust regulatory regimes for central counterparties.” The Chancellor also set out a roadmap for financial sector reforms designed to boost Britain’s competitiveness after Brexit, including moves to encourage more firms to list on London's stock market, the removal of some regulatory requirements for trading inherited from the EU and a new visa stream for people with a job offer from a recognised start-up.
FCA: Adviser fees increase to £82m
The Financial Conduct Authority (FCA) has announced that advisers will pay more than £82m towards the regulator's fees for the coming year, with a policy statement revealing that advisers would pay 1.5% more than they did in 2020/21. The adviser contribution to the annual funding requirement (AFR) for 2021/22 comes to £82.3m, up from £81.1m the year before. While a consultation paper in April proposed a new periodic flat fee of £250 for each appointed representative, the FCA has responded to feedback and reduced its introducer appointed representative fee to £75. The £250 fee will apply to full appointed representatives. The move reduces the amount of funding it expects to raise from ARs from £10m to £7.2m. The City watchdog has revised its overall budget from the £616.5m proposed in April, to £613.7m. Even with the revision, the budget is up 4% on last year’s. The FCA also confirmed it will continue to extend the time small and medium firms have for paying fees from two months to 90 days.
Hedge fund calls for GSK shake-up
Activist US hedge fund Elliott Management has outlined its position on GlaxoSmithKline, calling for a shake-up in a critical open letter to Sir Jonathan Symonds, the pharmaceutical firm’s chairman. The letter warns that GSK is “facing a significant inflection point”, questioning the “credibility” of GSK’s leadership and calling on the board to name new directors and determine whether CEO Emma Walmsley is the right candidate to lead GSK after the spin-off of its consumer division.
Manufacturers see growth continue in June
The manufacturing sector saw continued growth in June, with the IHS Markit/CIPS UK manufacturing purchasing managers’ index (PMI) coming in at 63.9. While this was down from an all-time high of 65.6 recorded in May, it far exceeds the 50 mark that separates growth from contraction. While output, new orders and employment grew at a near record pace - with businesses seeing demand climb following the easing of lockdown restrictions - manufacturers were hit with rising costs as supply chain problems hindered production. Rob Dobson, director at IHS Markit, said: “UK manufacturing maintained a near survey-record pace of expansion at the end of the second quarter”, adding: “Solid business confidence and rising backlogs of work also suggest that the current upturn has further to run.” However, Gabriella Dickens, senior economist at Pantheon Macroeconomics, said Markit’s survey is “understating the fallout from component shortages and delivery delays”. She also warned that Brexit is still “weighing on external demand”.
Stamp duty holiday drives up prices
The stamp duty holiday has driven property prices up, with buyers snapping up homes as they took advantage of the tax holiday. According to Nationwide's latest figures, house prices have experienced the highest rate of annual growth since November 2004, while figures from Halifax suggest the average property price has jumped by £22,000 in the last year. Rightmove analysis shows that prices have jumped £16,000 and that the tax break has benefited 1.3m buyers so far. The measure, which was rolled out to support the market through the coronavirus crisis, removed stamp duty for homes valued up to £500,000 but started to taper as of July 1 and now only applies to homes worth less than £250,000. As of October 1, the stamp duty holiday will come to a stop and the threshold will lower to its pre-pandemic level of £125,000.
Bailey: Increasing inflation should be temporary
Andrew Bailey, governor of the Bank of England (BoE), has said that an accelerating inflation rate was expected to be a "temporary feature" of the economic recovery from the pandemic. In his annual Mansion House speech, he said that while a near term increase in inflation was likely, levels should retreat in the medium term as the economy “rebalances” itself. Mr Bailey said that the economy is “bouncing back rapidly” and this has delivered increasing inflation but said reasons to believe the climb will not last are “well-founded” and not a “vain hope or a matter of whistling in the wind”. He also suggested the Bank could raise interest rates if there are signs the increase is not temporary, saying it is “prepared to respond with the tools of monetary policy”. Mr Bailey said it is “important not to over-react to temporarily strong growth and inflation”, warning against undermining the economic recovery with a “premature tightening in monetary conditions."
Global M&A hits record in Q2
Global mergers and acquisitions activity has broken records for a second consecutive quarter, with data from Refinitiv showing that deals worth $1.5trn were announced in the three months to June 30. This marks a 13% increase on the record set in Q1. Alison Harding-Jones of Citigroup said: “This is an environment we haven't seen before because we have very supportive financing markets combined with the pressure to come out of Covid-19 and reorganise entire businesses”. With some firms in the US looking to complete deals before President Joe Biden's proposed tax hikes, Anu Aiyengar at JPMorgan Chase said: “Many transactions are happening because people want to announce and close before the end of the year.” Tariq Hussain at Jefferies commented: “We expect a lot of sell-side activity in the second half of the year as many corporates are thinking about carve-outs right now.”
130 countries agree minimum rate of corporation tax
An agreement between 130 countries accounting for nine tenths of global GDP will see a global minimum corporation tax rate of 15%. The move, which aims to bring an end to tax avoidance by multinational companies, will look to ensure large businesses pay at least that level of tax on their profits, regardless of whether or not they base them in a tax haven. The Organisation for Economic Cooperation and Development (OECD) led the negotiations and said the agreement will end the “race to the bottom” and deliver $150bn more in tax for governments each year.