FCA chief says UK will not target EU equivalence deal at any cost
The head of the Financial Conduct Authority said in a speech delivered to the Association of Foreign Banks yesterday that the UK will not strive for an EU equivalence deal for the City of London “at any cost”. Nikhil Rathi added that Brexit provided the regulator with more flexibility and this would be used to “regulate for the benefit of UK financial markets and consumers.” However, he admitted that a lack of deal harmed consumer choice in both markets while the EU’s resistance to an equivalence deal has also cost EU banks market share in the trading of interest rate swaps and certain credit derivatives, for example. In his speech on Thursday, Mr Rathi also said the regulator would get tougher on misconduct, saying there will be a "rigorous review of all firms seeking to enter the UK authorisation gateway"
HSBC has strongest mortgage completion month ever in March
HSBC said March was its strongest month for mortgage completions ever as the Government’s stamp duty holiday continues to boost the housing market. “We completed more mortgages in March than any month in the 40-plus years we have offered home loans, including those for over 3,000 first-time buyers. It has been an incredibly busy time for us,” explained Michelle Andrews, HSBC UK's head of buying a home. Meanwhile, TSB said this week that between March 2020 and March 2021, it provided 12,000 mortgages for first-time buyers – a 60% increase on the previous 12-month period.
FCA fines London boutique investment bank
The Financial Conduct Authority has fined Sapien Capital £178,000 after it failed to carry out proper due diligence on a client likely participating in financial crime. The regulator said that between 10 February and 10 November 2015, Sapien Capital failed to have in place proper systems to find and mitigate the risk of being used to facilitate fraudulent trading and money laundering in relation to business introduced by the Solo Group.
UniCredit boosted by trading gains and fees
UniCredit said revenue increased between January and March, driven by trading gains and fees, which more than offset ongoing weakness in the lending business. Italy's second-biggest bank said net profit in the three months through March was €887m, more than twice a company-provided average analyst estimate of €396m. UniCredit said it expected its 2021 full-year underlying net profit, which strips out one-off items, to be "broadly in line" with its previous forecast of more than €3bn. It expected 2021 revenue to be line with a consensus estimate of €17.2bn, down from €17.7bn previously.
ING posts better-than-expected Q1 profit
ING has posted better-than-expected first quarter net profit of €1.01bn on strong fee income and fewer bad loan provisions than a year earlier. However, CEO Steven van Rijswijk said that with much of Europe only now emerging from lockdowns, the COVID-19 pandemic was still the main threat to customers' prospects. The Dutch bank said net core lending increased by €17.8bn in the quarter, with its wholesale banking arm accounting for €15.1bn in loans, and the rest mostly retail mortgage loans. ING’s net interest margin shrank to 1.41% from 1.51% a year ago, reflecting a relatively higher cost of customer deposits and worse lending terms.
SocGen posts best performance in 6 years
Société Générale has posted its best performance in six years in the first quarter. Revenue from share trading soared to €851m from just €9m a year ago, helping SocGen post a better than expected net profit of €814m after a loss of €326m in the first quarter of 2020. In its French retail business, SocGen reported a 1.8% drop in revenue in the first quarter as lockdowns weighed on business but it said activity was gradually improving. Revenue is expected to be between -1% and +1% this year, the head of retail networks Sebastien Proto said.
JP Morgan moves money to Frankfurt
JP Morgan is further expanding its balance sheet in Frankfurt as it adapts to a post-Brexit Europe. The US bank expects to add a similar amount to its European hub in 2021 as it did last year. The unit increased by about €180bn to €244bn last year. In its annual report, JP Morgan said: "We plan to complete the Brexit program by the end of 2021. Together with the expansion of our existing business activities, we expect that the size of our balance sheet this year could increase similarly to the previous year."
Commerzbank job cut deal expected
Commerzbank is set to agree a deal with labour representatives allowing the bank to cut 10,000 jobs globally, a move central to CEO Manfred Knof's plans to streamline Germany’s second-biggest listed lender and return it to profitability.
DBX attracts buyers to Aston Martin
Aston Martin sold 1,353 cars in the first three months of 2021, more than double the 578 sales it made a year earlier. Around half of the cars sold were its DBX model, an SUV which costs at least £158,000. Revenue was up 153% to £224m and pre-tax losses more than halved to £42m. Sales in China jumped by 900%, executive chairman Lawrence Stroll noted.
Prices for holiday flights soar
Demand for flights has soared ahead of the lifting of the ban on foreign travel, sending prices up significantly. The Transport Secretary is expected to announce which countries will be on the UK’s “green list” of destinations this afternoon. After it was suggested Portugal could be on the list, the cost of flights has more than doubled. Separately, the UK’s biggest tour operator, Tui, said it would more than halve the price of PCR tests to £20 to encourage summer bookings.
Barratt prepares to repay £3.5m in rates relief
Barratt Developments will repay £3.5m of business rates relief after benefiting from a surge of activity in the housing market. Barratt now has orders of £3.6bn on its books, higher than both last year and in 2019. The FTSE 100 company has already repaid £26m that it took from the furlough scheme.
John Laing shares surge as KKR talks are confirmed
British infrastructure company John Laing has confirmed on Thursday that it was in talks with US buyout firm KKR over a possible takeover, sending its shares up 14%.
Police demand tech firms are made responsible for scam ads
In a joint letter to Priti Patel, the City of London Police, which runs Action Fraud, and 17 other organisations, including Which? and Age UK, demanded that the Government protect internet users from "an avalanche" of scams by making Google and other online giants responsible for scam adverts on their websites. Online scams have surged over the past year, with at least £1.7bn lost to fraudsters. Anabel Hoult, of Which?, said: "The time for self-regulation is over as clearly it has not worked." The Guardian's Nils Pratley suggests tech companies have been lobbying against legislation because it would hurt revenue streams. Pratley notes that Charles Randell, the chair of the Financial Conduct Authority, last year said it was "frankly absurd" that the regulator was paying "hundreds of thousands of pounds to Google to warn consumers against investment advertisements from which Google is already receiving millions in revenue."
Goldman Sachs offers investors bitcoin derivatives
Goldman Sachs is to allow investors to trade with a derivative tied to bitcoin prices, Bloomberg reports. The bank will protect itself from the cryptocurrency's volatility by buying and selling Bitcoin futures in block trades on CME Group using Cumberland DRW as its trading partner,.
Aviva sells stake in Turkish joint venture
Aviva has completed the sale of its 40% stake in Turkish life insurance and pensions joint venture as the company continues with its strategy to pull back from international markets.
Biden backs vaccine IP waiver prompting pharma backlash
The pharmaceutical industry has reacted with anger at the Biden administration’s decision to support a temporary waiver of intellectual property rights to help developing nations produce COVID-19 vaccines. The move sent shares in vaccine makers down while Nathalie Moll, director-general of the European Federation of Pharmaceutical Industries and Associations, warned a waiver risked diverting raw materials and supplies away from “well-established, effective supply chains to less efficient manufacturing sites where productivity and quality may be an issue”. Clive Dix, who stepped down as head of the UK Government’s vaccine task force last week said, it was a “vote-winning” move from Biden but would not “fix the problem”. “The industry is pushing back as they see it as the thin end of the wedge and rightly so. Without IP innovation dies,” he said.
JCVI attempts to remove fear of side effects with shift from Oxford jab
The Joint Committee on Vaccination and Immunisation has suggested people under 40 should be offered an alternative to the AstraZeneca/Oxford vaccine in an attempt to improve uptake among those least at risk of COVID-19. The move comes amid concerns over the risk of blood clots from the Oxford jab.
LEISURE & HOSPITALITY
Future of Virgin Active hangs in the balance
Sky News reports that Virgin Active is on the brink of administration as the gym chain awaits a court ruling, which could be made this week, on its restructuring plan. Many landlords are opposing the plans which would see property owners forced to write off millions of pounds in rent arrears and agree to future reductions if the restructuring is approved. Sources said that if the so-called Part 26A proposal is blocked, Virgin Active could fall into administration within days.
Hong Kong buyers target prime property in London
Sales of London homes to Hongkongers have risen by 144% since Boris Johnson’s offer of a new immigration route to British national overseas (BNO) passport holders. The properties include 270 in prime central areas and 1,932 across London, according to the estate agency Benham and Reeves.
Next raises full-year guidance as sales pick up
Next has upgraded its full-year profit forecast for the second time in two months, with first quarter revenue surging after shops were allowed to reopen when coronavirus-induced restrictions were eased in the UK. In the last three weeks, when non-essential retailers were allowed to reopen, Next recorded a 19% surge in sales – but warned the post lockdown surge would be short-lived. The company said it now expects pre-tax profit for the 2021-2022 fiscal year to come in at £720m, up from the £700m it guided for in April.
BoE: Economy set to grow at fastest rate in more than 70 years
The Bank of England has forecast the economy will enjoy its strongest growth in more than 70 years in 2021 as COVID-19 restrictions are lifted. The economy is expected to expand by 7.25% this year, with extra government cash for workers and businesses helping to limit job losses. However, the BoE’s quarterly set of forecasts showed it downgraded its growth outlook for 2022, to 5.75% from 7.25%. The view for the economy this year came as the Bank’s MPC voted unanimously to hold interest rates at 0.1%. The BoE kept its QE programme on hold at £895bn, although one member of the MPC voted to reduce it by £50bn given the brighter recovery prospects. The Bank said the third lockdown is set to see GDP fall by around 1.5% between January and March – far better than the 4.25% drop first feared. It also sharply cut its forecasts for unemployment over the year, now predicting that the jobless rate will peak at 5.5% down from 7.75%.
Recruitment activity recovers at record rate
A monthly report from the Recruitment and Employment Confederation shows job hiring bounced back at the fastest rate since records began in 1997 in April. Private sector employers led the increase in activity, with computing seeing the steepest increase in permanent vacancies, followed by accounting, finance and engineering. Retail was the only sector to register lower demand for permanent staff. However, those looking for work or to move jobs fell in April at the sharpest rate since January 2020, partly due to furlough but also because of concerns about job security and a reduction in foreign workers after Brexit.
Services sector expanded at its fastest pace since 2013 in April
IHS Markit’s purchasing managers’ index for the services sector rose from 56.3 to 61 in April - the fastest acceleration since October 2013 and above an earlier flash estimate of 60.1. Tim Moore, economics director at IHS Markit, said: “A surge of pent-up demand has started to flow through the UK economy following the loosening of pandemic restrictions.” IHS Markit noted that inflationary pressure was starting to build in the services sector, but Samuel Tombs, economist at Pantheon Macroeconomics, said he thought large price rises will not become the norm.