BANKING
Lloyds reintroduces 90% mortgages for first-timers
Lloyds is reintroducing 10% deposit mortgage deals, in a sign of increasing confidence in the property market. The mortgages will be available for first-time buyers from the group’s Lloyds Bank and Halifax brands directly, and via Halifax intermediaries, from 8 December. The maximum loan amount will be £500,000 and the maximum loan-to-income ratio will be capped at a multiple of 4.49. New-build properties will be excluded. Several other lenders have recently announced plans to re-enter the 10% deposit market, with Nationwide making 10% deposit loans available for house purchase and for existing mortgage customers looking to move home, while Yorkshire Building Society has also relaunched 10% deposit mortgages after withdrawing them in the summer.
INTERNATIONAL
EU urged to fix derivatives rules to lessen Brexit impact
The French securities regulator, the AMF, has said that the EU should fix its derivatives trading rules to avoid damage to its own financial sector once the UK leaves the bloc on January 1. AMF chair Robert Ophele warned that if rules were not amended it would penalise European banks trading in London. Under current rules, EU banks trading in London must use an EU-based or EU-approved system for trading. However, British rules oblige UK counterparties to trade on a UK approved platform, making cross-Channel deals impractical.
Cerberus pushed to install Colm Kelleher as Deutsche Bank chair
Shareholder Cerberus tried to install former Morgan Stanley president Colm Kelleher as Deutsche Bank chairman, a move the FT says highlights “discontent” over the incumbent, Paul Achleitner.
Stripe lines up banking move
Fintech start-up Stripe has partnered with Goldman Sachs and Citigroup, among others, to launch banking services. Its Stripe Treasury software embeds financial services using application programming interfaces onto its platform, allowing customers to send, receive and store funds.
AVIATION
Flybe owner applies for UK operating licence
Thyme Opco, the new owner of collapsed regional airline Flybe, has applied for a UK operating licence. The holding company, set up by hedge fund Cyrus Capital in October, has applied to the Civil Aviation Authority for the licence on Flybe’s behalf. Prior to the airline’s collapse in March, US-based Cyrus was the carrier’s biggest shareholder.
Norwegian Air seeking recapitalisation
Norwegian Air has said that it is looking to raise £340m in order to recapitalise the struggling budget airline. In a statement to Oslo’s bourse, it proposed a package of debt conversion, aircraft divestment and sale of new equity to get it through the coronavirus pandemic.
CONSTRUCTION
Countryside looking to offload private housebuilding arm
- Properties has said it is looking to offload its private housebuilding arm to focus on its social housing and private rental division. It also said chairman David Howell will step down next year. The announcements came just a day after US hedge fund Browning West, its third largest investor, called for Countryside to break up the company. Countryside fell to a £1.9m pre-tax loss in the year to the end of September, compared to a pre-tax profit of £203.6m the year before. It built around 4,000 homes this year - nearly 1,700 less than in 2019 - due to the disruption caused by the pandemic.
FINANCIAL SERVICES
FCA warns of advice price clustering
The Financial Conduct Authority has warned of "significant" price clustering in the advice market. Its review of the market over the past two years also warned that competition was not operating effectively in the sector, voicing concern over "little competitive pressure" amongst advice firms. This, it said, meant advisers are not encouraged to innovate and offer new and more affordable services. The City watchdog’s report also shows that 89% of firms had five or fewer advisers while firms with 50 or more advisers employed approximately 52% of all advisers but represented less than 1% of the firms in the market. Overall, the FCA said the financial advice market was "improving, albeit slowly" since the Retail Distribution Review and the Financial Advice Market Review.
FCA warns Sipp operators over liabilities
The Financial Conduct Authority has issued a Dear CEO letter warning self-invested personal pension operators (Sipp) over leaving "substantial" redress liabilities with the Financial Services Compensation Scheme. Sipp operators were reminded of their obligation to take potential financial liabilities into account when assessing their capital resources, with the watchdog saying insolvent operators with "substantial unpaid redress liabilities" had often placed a "significant and growing burden" on the industry-funded lifeboat.
AJ Bell sees revenues jump
Profits at AJ Bell have climbed by almost a third after the pandemic delivered a “wake-up call” that spurred savers to overhaul their finances. AJ Bell said its pre-tax profits in the 12 months to September 30 rose 29% to a better-than-expected £48.6m on revenues that were up 21% to £126.7m. The group attracted a record 63,239 customers, taking its total to 295,305. They brought with them £4.2bn of net inflows, which lifted the company’s total assets by 8% to £56.5bn.
Phoenix increases FY cash generation
Phoenix Group has posted a full-year cash generation of £1.7bn, exceeding the top end of its target range and more than doubling from last year. The life insurer’s reported cash generation compares with £707m it reported in 2019 and a target range of £1.5-£1.6bn.
Bad debts jump for Paragon
Buy-to-let lender Paragon set aside £48m for the year to September to deal with bad debts and saw profit plummet by £43m to £118m. Paragon, which also does SME and car loans, has seen profit margins fall due to low interest rates.
MEDIA AND ENTERTAINMENT
Offer deadline extended by TalkTalk
The deadline for major shareholder Toscafund to make a solid offer for TalkTalk has been extended for the second time. The private equity firm will now have until December 17 to table a firm bid for the troubled telecoms firm. Last month it made a 97p per share approach for TalkTalk, with the original deadline set for November 5. The current offer values TalkTalk at around £1.1bn.
REAL ESTATE
Number of affordable homes built creeps up
England’s provision of affordable housing rose just 1% last year and fell almost 90,000 homes short of the estimated number required to solve the housing crisis. The figures, from the Ministry of Housing, Communities and Local Government, show there were 57,644 affordable homes delivered in England in 2019/20. The National Housing Federation has estimated that 145,000 new affordable homes are needed each year.
Derwent London signs up Transferwise on new five-year lease
Derwent London has announced that finance start-up Transferwise has signed up to a new five-year lease on Shoreditch's Tea Building, and is expanding its space in the building by 54% - meaning the firm will occupy nearly 50,000 square feet.
RETAIL
Supermarkets to pay back rates relief
Asda, Sainsbury's and Aldi have announced they will repay business rates relief received during the coronavirus pandemic, with Tesco and Morrisons having already committed to the move. The announcements mean the supermarket chains will collectively return more than £1.7bn. Asda yesterday said it will pay back its £340m relief in full, while Sainsbury's will hand back £440m of rates relief and Aldi has pledged to repay £100m. They follow Tesco and Morrisons, who promised to repay £850m between them. Meanwhile, John Lewis, which owns Waitrose, said it has no plans to repay rates relief, insisting the support measure “remains crucial to help us navigate the crisis.”
Sales up in November
Analysis shows that combined in-store and online retail sales rose 3.3% year-on-year in November amid heavy discounting on – and in many cases ahead of - Black Friday. The increase delivered the best November performance since 2017. While like-for-like lifestyle sales were up 17.6 %, fashion sales slid by 5.7%.
ECONOMY
Economy shrinks, with services sector hit by lockdown
While the economy shrank in November due to the England-wide lockdown, the downturn was not as severe as analysts had feared. The IHS Markit/CIPS composite purchasing managers’ index (PMI) fell from 52.1 to 49 last month on an index where a figure above 50 points to growth. While this marks the first shrinking of the economy since June, it outperformed the fall to 47.4 economists had forecast. With the lockdown seeing the closure of many shops, restaurants and pubs, the service sector was the hardest hit, with the services sector PMI falling from 51.4 to 47.6 in November. An increase in Brexit-related stockpiling offered a boost the manufacturing sector, however, with the manufacturing PMI up from 53.7 to 55.6, its highest reading since December 2017. Economists note that the PMI captures whether business activity is rising or falling but not by how much. Samuel Tombs, an economist at Pantheon Macroeconomics, suggests the economy most likely shrank by 5% last month and will rebound by about 4% in December.
OTHER
Noteworthy cash pile unaccounted for
MPs on the Public Accounts Committee have called on the Bank of England (BoE) to identify where £50bn of missing banknotes are. Figures show that the number of notes in circulation reached a record high of 4.4bn in July, with these carrying a face value of £76.5bn. Of that, the Bank estimates up to 24% is used for cash transactions and another 5% is held as savings. The committee’s report said the unaccounted for remainder “may be being used overseas or held in the UK as unreported household savings or for use in the shadow economy.” It adds that the BoE “does not have any real understanding of what these notes are being used for.”
Bank of mum and dad give £500m in property cash
Parents handed out more than £500m of property wealth this year, the Mail reports. A survey found that helping younger relatives on to the property ladder was the chief reason behind equity release, with £230m put towards house deposits and a further £134m given in early inheritances.