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Daily News Roundup: Friday, 9th April 2021

Posted: 9th April 2021


Revolut will let staff work from abroad

British challenger bank Revolut has said once travel restrictions are lifted, employees who "wish to work outside their country of employment for personal and non-business related reasons will be able to do so for a period of up to 60 calendar days over a rolling 12 months.” Some 56% of employees polled by the bank said they would prefer to work from home between two to four times a week, while 36% wanted an entirely remote role. Only 2% said they would prefer to work from one of the company's offices every day.

Co-op to repay furlough assistance but keep hold of rates relief

The Co-operative Group has announced that around £15m of furlough scheme assistance will be repaid to the UK Government while £65m of business rates relief will be retained. The Telegraph’s Ben Marlow says the Co-op’s refusal to hand the cash back contradicts the mutual’s claims to have an ethical approach to business, considering it remained open during the pandemic and profited from the grocery shopping boom - annual sales at its supermarkets were £7.8bn, a 3.5% increase on 2019.

Homeworking hinders fraud prevention for banks

A report from analytics company FICO reveals that working from home over the pandemic has negatively impacted fraud protection, with 79% of banking executives saying there was a high or major impact. “Just as the pandemic put huge stresses on the health care system, it put huge stresses on fraud and financial crime management teams,” explained Toby Carlin, senior director for fraud consulting at FICO. “Banks are feeling the pain of having fragmented software for managing fraud and financial crime.”

Duke urges banks to invest more in reforestation and cleaner oceans

The Duke of Cambridge told a joint International Monetary Fund and World Bank event on the climate emergency that global development banks should set an example to commercial banks and invest more in nature, “through reforestation, sustainable agriculture and supporting healthy oceans.” Prince William explained that doing this would be “one of the most cost-effective and impactful ways of tackling climate change.”

Oxbury launches an account that will plant trees

Oxbury Bank, which lends money solely to British farmers, has launched a new best buy one-year fixed-rate bond. Interest will be paid in the form of trees which the bank will plant on behalf of savers.


Small businesses supported by venture capital fundraising

Ian Sayers, chief executive of the Association of Investment Companies has spoken out on how the coronavirus crisis has affected fundraising for smaller companies, noting that “It’s really positive that during the pandemic 11% more was raised to support the UK’s most innovative and fast-growing businesses than the year before.” With venture capital trusts raising £685m last year to support such firms, he remarked: “This investment will support healthcare, science and technology businesses which have helped in the battle against coronavirus and supported us to adapt to life in lockdown. It demonstrates that demand for VCTs and the benefits they bring investors remains high at an extremely difficult time.”

Phoenix launches first venture capital fund

UK insurer Phoenix Group has launched its first dedicated venture capital fund, administered with Aberdeen Standard Investment. With an initial allocation of over £100m it will mostly invest in "disruptive and transformative" early stage UK-based fintech, green energy and healthcare start-ups and businesses.

BlackRock secures largest-ever ETF launch as green investing wave builds

Institutional investors have ploughed $1.25bn into Blackrock’s new Carbon Transition Readiness fund, making it the largest exchange traded fund launch ever and underscoring the surging demand for ESG products.

Santander set to launch new fund

Santander’s asset management arm is close to launching a new fund that will allow clients to invest in trade finance receivables. The fund will primarily buy assets created by the banking group's trade finance business in transactions with its large corporate clients.


US Senate banking chair queries Credit Suisse and other banks on Archegos

The chair of the U.S. Senate Banking Committee has written to Credit Suisse and Nomura requesting information on their relationship with Archegos Capital Management after the fund imploded last month. In addition to Credit Suisse and Nomura, which lost $4.7bn and $2bn, respectively, letters were sent to Goldman Sachs and Morgan Stanley which did not lose money on the trade. “I am troubled, but not surprised, by the news reports that Archegos entered into risky derivatives transactions facilitated by major investment banks, resulting in panicked selling of stocks worth tens of billions of dollars and those banks collectively losing nearly $10bn,” senator Sherrod Brown said in his letter.

Central banks discuss common rules on CBDCs

The Bank of Japan is holding discussions with six other major central banks, including the U.S. Federal Reserve and the European Central Bank, with the view to creating common rules and platforms for central bank digital currencies (CBDC). “For advanced economies, the best approach would be to heighten the function of payment and settlement systems in several stages, and design them in a way so new technology can be incorporated flexibly,” said Kazushige Kamiyama, head of the BOJ's department overseeing development of a CBDC.

Action taken on Westpac consumer credit insurance claims

The Australian Securities and Investments Commission has begun proceedings against Westpac for allegedly selling junk consumer credit insurance, with ASIC deputy chair Karen Chester stating: “ASIC's deep dive investigations in late 2018 and into 2019 found lenders had disappointingly not changed policies and conduct to stem harms from the design and sale of CCI.” She went on: “As a result, we've commenced civil proceedings against Westpac.”

BoA offers extra incentives to young staff

Bank of America is to boost the pay of its junior investment bankers next month in a move the bank says reflects the heightened workload caused by a flurry of dealmaking during the pandemic. As scrutiny grows over working conditions at major banks, BoA is also launching a new scheme dubbed “Junior Banker Candid Conversations”, which it said will enable staff to give feedback on issues such as workload and work/life balance. Separately, Bank of America said it will deploy $1trn for its environmental business initiative to push for green finance by 2030, expanding on the $300bn it had announced for the same project in 2019.

JPMorgan forms new green team

JPMorgan Chase & Co has formed a new team in its commercial banking unit to support companies that focus on environmental conservation. Led by Brian Lehman, the team will initially target on four sectors - renewable energy, efficiency technology, sustainable finance, and agriculture and food technology.

US regulator turns spotlight on rosy Spac projections

The Securities and Exchange Commission is considering treating Spac deals more like traditional IPOs requiring companies going public via the vehicles to publish more honest valuations ahead of going to market.

Greco joins Morgan Stanley

Emilio Greco has been hired by Morgan Stanley to head financial services M&A in Italy. Greco spent almost nine years at UBS covering major financial services transactions in Italy and payments deals across Europe.


Lookers enjoys sales boom

Car dealer Lookers said it would smash profit forecasts following a lockdown sales boom. Mark Raban, chief executive of Lookers, said: “The events of the last year have highlighted the inherent strength of our franchised dealership model and the importance of an integrated customer experience which fully embraces both digital and physical channels.”

Car industry prepares for take off

BMW, Mercedes-Benz and Volvo have all registered soaring demand. China is driving the increases as it bounces back strongly from coronavirus.


Construction activity up in March

IHS Markit’s construction Purchasing Managers Index for March registered 61.7, as construction output increased at the fastest rate in six and a half years. Duncan Brock, group director at the Chartered Institute of Procurement & Supply, commented: “Construction was full of the joys of spring in March with a sudden leap into solid growth fuelled by across the board rises in workloads in all sectors. The commercial pipeline was particularly spectacular giving its best performance since late-2014.”


AJ Bell adds Aquis Stock Exchange to platform

AJ Bell has added Aquis Stock Exchange (AQSE) to its online trading platform, offering customers access to approximately 90 listed growth companies. The investments are available directly to retail investors via AJ Bell Youinvest and to investors that use a financial adviser via AJ Bell Investcentre.

Elo picks banks for IPO

Brazilian payments firm Elo has picked Morgan Stanley, Goldman Sachs and JPMorgan & Co as the main underwriters of its planned Nasdaq IPO. Sources said Elo is pursuing a valuation of around $7bn through the flotation.


Steel exports slump

British steel exports to the EU have plunged by a third in a fresh blow to the industry. UK Steel said that shipments from the UK to the bloc dipped to just under 420,000 tonnes in the first three months of the year, down from 630,000 tons in the same period a year ago. A separate analysis of exported steel products – excluding tubes, wire and cold finished bars – showed a 38% drop in the first three months of 2021 compared with the 2015-2017 average.


Axa IM places €800m bet on return to the office in Europe

A unit of French fund house Axa Investment Managers has raised almost €1bn to develop offices in the UK, Germany and France, with investors evidently willing to bet that modern, high-end offices will remain attractive.


Asos reports 253% increase in profits

Online fashion retailer Asos has reported pre-tax profit in the six months to the end of February of £106m, an increase from £30.5m in the year earlier period. The firm stated: “In the coming months we expect a portion of consumer demand will move back to stores as restrictions are eased throughout our markets, but we expect online penetration to remain structurally higher than pre COVID-19 levels,” continuing: “As a result, our expectations for the full year have increased in line with our outperformance in the first half, and our outlook for the second half is unchanged.”


An end to ECB bond buying poses risk to weaker eurozone economies

Experts warn that heavily indebted eurozone countries such as Italy and Greece face mounting debt costs after the pandemic – a situation that could unnerve investors and drive up interest rates. M&G fund manager Eric Lonergan said: “Europe is ironically vulnerable to recovery because it seems you only get temporary elimination of credit risk in European sovereigns when you are in an emergency, in which case the ECB underwrites your bond market. The problem is that when you come out of an emergency, you are back to market forces in the bond market, and some of these numbers look really, really bad.” Italy was particularly exposed, Mr Lonergan added, because the interest rate on its debt was higher than its rate of GDP growth.

FTSE rebounds to new post-pandemic high

Growing optimism as the economy reopens pushed the FTSE 100 to its highest level since the beginning of the pandemic on Thursday, rising 56.9 points to 6,942.22. The FTSE 250 rose to another all-time high following a top performance on Wednesday. Michael Hewson, chief market analyst at CMC Markets commented: “While other major indices have led the way in posting record highs in recent weeks, UK stocks appear to be finally finding favour with investors as an economic reopening beckons.”

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