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Daily News Roundup: Friday, 5th November 2021

Posted: 5th November 2021

BANKING

Carlyle approaches Metro in takeover bid

Metro Bank has confirmed that it has received a takeover approach from US private equity firm Carlyle. Metro Bank would not reveal how much the mooted deal is worth and under UK takeover rules, Carlyle has until December 2 to announce whether it intends to table a bid or walk away. News of the potential takeover saw Metro’s share price climb by almost 50%, with its market value at around £228m at the end of trading yesterday. Metro said in a statement: "Metro Bank has engaged with Carlyle in relation to its possible offer and a further announcement will be made as and when appropriate. In the meantime, shareholders are advised to take no action.” Metro, which made a £110m loss in the first half of the year, has 2m customers and £16.4bn in deposits.

Virgin Money hails strong FY performance

Virgin Money expects its statutory profit before tax for the year to come in at £417m, with this coming after a loss of £168m last year. In a trading update yesterday the bank said business lending has dipped 5% to £8.5bn but personal lending is up 4%. CEO David Duffy said: “We performed very strongly in FY21, with an expected return to statutory profit before tax underpinned by significant underlying profit growth.” Virgin has reinstated its dividend at 1p a share for the year and set a gross cost savings target of £175m over the next three years, with this set to involve cutting its number of branches and offices.

INTERNATIONAL

Credit Suisse Q3 net profit falls 21%

Credit Suisse chairman Antonio Horta-Osorio has announced sweeping changes at the bank, saying it will shut most of its prime brokerage business and make the investment bank smaller. CFO David Mathers said the move was a “straightforward reallocation from an economic loss-maker to an economic profit-maker.” This came as the bank posted a 21% fall in third-quarter net profit to SFr434m, with a SFr214m charge to settle allegations of corruption surrounding loans to Mozambique having an impact. Credit Suisse expects a loss in the final quarter of 2021 as it writes off some SFr1.6bn in goodwill payments.

Commerzbank posts Q3 profit

Germany's Commerzbank has reported a better-than-expected third-quarter net profit of €403m, with this in contrast to a €60m loss a year ago. Chief executive Manfred Knof said: “Despite restructuring expenses, we are anticipating a positive net result for the full year.”

SocGen net income climbs

French bank Societe Generale saw Q3 net income jump to €1.6bn from €862m a year ago. The bank, France’s third-largest listed lender after BNP Paribas and Credit Agricole, is launching a share buyback programme of around €470m.

BBVA plans to decarbonise

Spanish bank BBVA has set targets to decarbonise its portfolio as part of its sustainability policy. The bank said between 2020 and 2030 it would reduce carbon intensity in its loan portfolio and also pledged to achieve net zero emissions by 2050.

UBS executives hit by Hamers

UBS CEO Ralph Hamers has announced plans to streamline the Swiss bank's management, saying it will do away with all ranks above managing director. An internal memo titled Simplicity starts at the top said: “To help streamline decision-making and reduce hierarchy, we are simplifying our corporate rank structure.”

AUTOMOTIVE

Nikola set aside $125m after SEC investigation

Electric-truck start-up Nikola has set aside $125m to settle a regulatory investigation by the Securities and Exchange Commission that looked into allegedly misleading statements made by Trevor Milton, its founder and former executive chairman. CEO Mark Russell said Nikola had “been engaged in discussions and co-operation with the SEC for some time regarding their investigation.”

FINANCIAL SERVICES

Axa announces up to €1.7bn share buyback

Insurance giant Axa, which has seen revenues climb 7% year-on-year in the first three-quarters, has announced an immediate share buyback of up to €1.7bn.

MANUFACTURING

Staff shortages mean pay pressure for factories

More than half of small British manufacturers feel under pressure to pay employees more because of staff shortages brought about by the pandemic and Brexit. The report from consultancies South West Manufacturing Advisory Services and the Manufacturing Growth Programme show most SME manufacturers lost skilled staff during the pandemic. With many struggling to fill the gaps, 60% say they have - or will have to - increase pay to attract staff. The poll saw 40% of respondents point to a shortage of EU staff post-Brexit as an issue.

REAL ESTATE

1 in 3 mortgage applicants rejected

Research by bridging finance lender KSEYE shows that 32% of UK borrowers have been rejected by a lender on at least one mortgage application in the past five years. The analysis shows that 44% of those who had been rejected said having irregular income was an issue, while 30% of those rejected were self-employed. It was also found that 46% of those who were turned down received an agreement in principle but the lender later reversed their decision, while 36% were never told why their application had been unsuccessful. Of the 752 mortgage customers polled by KSEYE, 59% said lenders should do more to take an individual’s full financial circumstances into account.

RETAIL

CMA: JD-Footasylum tie-up could hamper competition

The Competition and Markets Authority (CMA) has ordered JD Sports to sell Footasylum after a review which found the tie-up could “lead to a substantial reduction in competition and a worse deal” for customers who could see “higher prices, fewer discounts and less choice of products”. JD Sports’ executive chairman Peter Cowgill questioned the CMA ruling, describing it as “inexplicable” and “deeply troubling”.

ECONOMY

Bank of England holds interest rates at 0.1%

The Bank of England has opted to hold interest rates at their record low level of 0.1%, with the Bank’s Monetary Policy Committee (MPC), which voted 7-2 in favour of keeping the rate at its current level, saying there was "value" in waiting to see how the jobs market coped with the end of the furlough scheme. Governor Andrew Bailey said the decision to hold rates was a “very close call” and advised that they are likely to rise over the coming months. In an interview with the BBC, Mr Bailey said: “We think there will be some need to increase interest rates to bring inflation sustainably back to target. And we will be ready to do that." The MPC said it expected inflation as measured by the Consumer Prices Index to climb over the next several months, peaking at 5% in April before falling back “materially” from the second half of 2022. The Bank’s quarterly monetary policy report said supply chain issues and weaker consumer spending mean it has halved its growth forecast, with the economy expected to expand 1.5% in Q3 and 1% in Q4.

OTHER

Over £5.5bn of pandemic support lost to fraud or error

HMRC data shows that more than £5.5bn of taxpayer money from the Government’s coronavirus support schemes was acquired fraudulently or given out incorrectly, including £5.2bn under the Coronavirus Job Retention Scheme. HMRC’s annual report reveals that about 8.7% of the £60bn it paid out under the furlough scheme in the 2020/21 tax year was awarded erroneously or ended up in the hands of organised crime gangs and fraudsters. A further £490m was lost to fraudulent or incorrect claims under the Self-Employment Income Support Scheme, while the “eat out to help out” scheme accounted for £70m. An HMRC spokesperson said the Taxpayer Protection Taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, adding that work is already under way, with 23,000 ongoing investigations. HMRC says it has so far stopped or recovered £840m of over-claimed grants in 2020/21.

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