M&S Bank to shut accounts and branches
Marks & Spencer is to close all M&S Bank branches and current accounts. The bank, a partnership with HSBC, has told customers that accounts will shut later this year. It is also closing its 29 in-store branches at the same time. It blamed the cuts on the shift to online banking that has been accelerated by the pandemic. M&S, which stopped offering new home loans last March, will focus more on credit cards and store rewards and still offer insurance, savings accounts and loans. It also will launch a cardless digital product through the M&S website. It noted that travel money desks in stores are not affected. The Telegraph says supermarket banks have struggled to compete with big lenders, noting that Sainsbury’s last year put its banking venture up for sale, with Co-op Bank launching a search for a buyer at around the same time and Tesco selling its mortgage book to Lloyds for £3.8bn in 2019. Sir Philip Hampton, a former chairman of both Sainsbury’s and NatWest, said banking is “much less attractive as a business” than it was, pointing to steeper capital requirements, tougher regulation and a collapse in margins through low interest rates.
NatWest boss warns over easier mortgages
Sir Howard Davies, the chairman of NatWest, has issued a warning about new mortgage deals that allow borrowers with just a 5% deposit to buy a home. The scheme, unveiled in Wednesday’s Budget, is aimed at helping people get on the housing ladder, though some have already warned it will "put fuel on the fire" of the UK's housing market. Sir Howard, a former deputy governor of the Bank of England, seemed unsure that the 95% loans are entirely a good idea. They will not be right for everyone, and there is a clear risk of borrowers ending up in negative equity, he suggested. "People should think hard about whether this is a sensible transaction for them," he told the BBC. The deals will launch in April, and will be open to all borrowers, not just first-time buyers. City analysts think they will boost bank profits, but Sir Howard notes that the UK mortgage market is highly competitive.
Lenders prevent nearly £1.6bn in fraudulent loan claims
New figures show that lenders have prevented nearly £1.6bn in fraudulent claims against the Government-backed bounce back loan schemes. The British Business Bank, which administers the scheme for the Treasury, said that 43,958 attempted loans had been blocked because they were suspected to be fraudulent claims.
Bank auditors lodged Greensill complaints in 2020
The Auditing Association of German Banks says it registered complaints about Greensill Bank with Germany's financial watchdog BaFin in early 2020, warning that the bank had not followed rules underpinning a deposit insurance scheme for the country's private banks.
Lufthansa profits grounded by COVID-19
Lufthansa has posted a record €6.7bn loss in the wake of the collapse in air travel caused by coronavirus. Europe’s largest airline group reported annual revenues of €13.6bn, down 63% on the previous year. Lufthansa is cutting a fifth of its staff, taking headcount down to 110,000, with a further 10,000 jobs or their equivalent in wages costs to go.
Construction activity bounces back in February
Construction activity in the UK bounced back in February as businesses gave the go ahead to projects that had been forced to be suspended due to the pandemic. The IHS Markit/Cips PMI index for construction scored 53.2 in February, with any score above the 50-mark indicating growth. IHS Markit said residential work remained the strongest area of growth in February, although the speed of recovery eased slightly since January.
Vistry to resume dividend payments
Vistry Group is following Taylor Wimpey in reinstating a final dividend, as the housebuilder reported profit of £143.5m for 2020, down about a quarter from 2019. Vistry completed 4,652 houses last year, down from 6,884 the year before. However, the firm said construction had bounced back in the second half and continue into the new year.
Cairn Homes posts profit slump
Cairn Homes has reported an operating profit decline of almost two thirds to €24.4m from €68m a year earlier, while revenue fell 40% to €262m from €435m in 2019.
Aviva profits remain stable
Aviva said operating profit remained stable even in the face of the pandemic amid a sale of its Italian and French division. The insurer reported operating profit of £3.16bn while its core business cash remittances rose marginally to £1.4bn. Aviva said it had delivered record sales in group protection as well as record sales of bulk purchase annuities. It also saw net flows in savings and retirement reach new highs. The insurer said it had completed the sale of its remaining Italian Life and General Insurance businesses for €873m, which values the businesses at €1.2bn. It is also in the process of putting its French division up for sale. Meanwhile, the firm has also announced a £800m debt tender offer as it looks to accelerate its debt reduction plans and lower debt by a total of £1.7bn in the first half of 2021.
Admiral employees to receive share windfall
Admiral has revealed that nearly 10,000 employees are set to land shares worth £3,600 as profits and sales boomed during the pandemic. The full dividend is also boosted by 12% to 156.5p, a payout worth £44m to founder Henry Englehardt and about £450m to other shareholders including staff. Profit for the year jumped 21% to £638m, partly due to lower claims as customers drove much less.
UK equity funds boosted by vaccine rollout
New figures show UK equity funds enjoyed their first inflows since last May with investors boosted by the success of the vaccine rollout. According to funds network Calastone, UK equity funds started the year with £179m in outflows which continued into February. But by the last week of the month, as the Government set out its roadmap for easing coronavirus restrictions, some £19m made its way into UK equity funds.
Schroders enjoys record AUM
Assets under management reached a record high for Schroders despite net inflows dipping across the year. AUM jumped 15% to £574.4bn after strong demand in its private assets and solutions divisions pushed net inflows to £42.5bn. Profit before tax and exceptional items increased marginally to £702.3m beating a consensus of £649.2m. Schroders declared an unchanged dividend of 114p per share, matching last year’s final payout of 79p per share.
Rathbones increases dividends after “challenging” 2020
Rathbones said it finished a “challenging” 2020 with £54.7bn funds under management after enjoying growth of 8.5% last year. The investment firm’s underlying profit before tax increased by 4.3% to £92.5m, while its funds business soared 32.4% to £9.8bn. The board has recommended a final dividend of 47p for 2020, up 2p from the year before, making a total of 72p for the year and hitting a total increase of 2.9%.
Accounting start-up secures Series A funding
Countingup, a business account that claims to simplify bookkeeping, has secured a £9.1m Series A funding round. The funding round was led by Framework Venture Partners and included investment from Gresham House Ventures, Sage and existing investors.
LEISURE AND HOSPITALITY
Mixed bag for bookmakers
William Hill, currently in the process of being acquired by Caesars Entertainment, posted a steep fall in profit last year, with adjusted pre-tax profit falling 91% to £9.1m in 2020. The bookmaker saw net revenue fall by 16% as the pandemic disrupted live sporting events and shut its betting shops. However, the firm compensated slightly for the closures by delivering a 9% net revenue growth in its online platforms. Meanwhile, Ladbrokes owner Entain posted a profit of £113.8m in 2020, compared with a loss of £131.2m the year before. Revenue and gross profit were both flat at £3.5bn and £2.3bn respectively, while earnings rose 10% to £862.1m.
Deliveroo picks London for IPO after listings review
Deliveroo has chosen London over New York and Amsterdam for its upcoming IPO, in part due to an overhaul of listing rules to allow founders to retain more control after going public. This means Deliveroo will not initially be eligible for a “premium” listing that would allow it to join the major FTSE indices, although it will move to a single structure after three years.
JD Wetherspoon to open hundreds of outdoor spaces
JD Wetherspoon will open outdoor spaces in 394 pubs next month, with these offering a reduced menu and shorter hours. The pub group’s decision is in line with coronavirus restrictions easing on April 12 to allow hospitality to open up outdoor space for customer use.
Melrose selling air-conditioning division
Melrose Industries has begun processing the sale of its Nortek air-conditioning division. The company, which owns jet and car parts supplier GKN, has reported that adjusted operating profit came in at £340m in 2020, compared with £1.1bn a year earlier. Adjusted revenue hit £9.3bn for the year, a steep decline from the £11.6bn figure posted in 2019.
MEDIA AND ENTERTAINMENT
CMA probing Apple over treatment of app developers
The Competition and Markets Authority (CMA) is investigating Apple over the way it treats app developers. The CMA said it will investigate whether the tech giant imposes unfair or anti-competitive terms on developers, resulting in users having less choice or paying higher prices for apps and add-ons.
LBTT relief will not be extended
Scotland’s Finance Secretary Kate Forbes says the extension of the stamp duty holiday announced in Wednesday’s Budget will not be replicated north of the Border, with a temporary reduction to Land and Buildings Transaction Tax to finish as planned at the end of this month. Scotland opted to increase the level at which buyers start to pay the stamp duty equivalent from £145,000 to £250,000 last July, with the move meaning around 80% of sales did not trigger payments. Ms Forbes ruled out an extension, saying the policy has “achieved its purpose” and will end on March 31.
Online retail sales hit new record
Figures show that online sales hit a new record high in February. With the latest round of restrictions meaning large parts of the high street remained closed, online sales were up 167.3% in February. However, this did not offset a decline across in-store sales, with combined like-for-like sales across in-store and online falling 3.1%.
Government paying £2bn a month to service national debt
The Government is paying £2bn a month to service the nation’s debt pile, with Budget documents showing that the interest bill will hit £24.8bn in 2021/22 before rising to £33.7bn in 2025/26. There are concerns that the cost of servicing the debt could increase significantly on the back of a rise in interest rates. The Chancellor addressed the matter in his Budget speech, saying: “While our borrowing costs are affordable right now, interest rates and inflation may not stay low for ever.” Calculations show that a one percentage point rise in interest rates would add £20.8bn to debt interest payments for 2025/26. That would take the total to £54.5bn, almost double what is forecast.
Firms show more optimism
A Bank of England poll shows that while more than two thirds of bosses reported high or very high uncertainty in the economic outlook in January, this fell to 57% in February. Firms anticipate investment remaining weak, saying it is set to be a fifth below the level it would have been without the pandemic in Q1, with that slipping to 11% by Q3.