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Daily News Roundup: Friday, 9th June 2023

Posted: 9th June 2023

BTG Advisory

European airlines prepare for a surge in summer demand

BTG Advisory’s Mark Fry details how European air passenger capacity has returned to pre-pandemic levels, despite inflationary pressures reducing consumer purchasing power. Meeting the demand will prove tricky, however, due to labour shortages, capacity constraints, and the ongoing threat of industrial action.


HSBC withdraws mortgages amid scramble to secure deals

HSBC on Thursday withdrew all residential, buy-to-let and business mortgage deals after being overwhelmed by a rush of customers seeking to lock-in deals before rates rise. The lender, which accounts for almost a quarter of the home loans market, said it would relaunch its products on Monday. Recent rises in yields on government debt have prompted mortgage lenders to rapidly reprice their deals and withdraw some products altogether. HSBC has increased rates on all deals available to existing customers while Nationwide and Lloyds were among other lenders to hike their mortgage rates on Thursday. The Bank rate currently stands at 4.5% but economists now expected it to peak at 5.5%. Andrew Wishart at Capital Economics said: “There is a growing risk that the pressure on household budgets from inflation and the large increase in payments for those coming to the end of a two-year fix will cause financial distress to occur earlier than in the past.”

UK banks must pass on interest rate rises to savers, say MPs

The House of Commons Treasury select committee has called on banks to do better in passing on the benefits of higher UK interest rates to customers. Loyal bank customers, particularly older and more vulnerable ones, are being offered "measly" rates of interest on their savings, MPs claimed, with banks accused of prioritising higher profit margins over customer savings. The big four High Street banks are offering instant access savings rates of between 0.7% and 1.35%, compared with a Bank of England base rate of 4.5%.

Standard Chartered to lay off around 100 workers

Standard Chartered is set to lay off employees across Singapore, Hong Kong, and London as part of its cost-cutting measures. The bank could cut over 100 employees, although the final number is yet to be determined. The redundancies come as the lender aims to reduce costs by more than $1bn by 2024. Roles have been cut in middle-office functions, such as human resources and digital transformation, in Asia, while a few managing directors have been cut in London. 


Blackrock acquires Kreos Capital

Blackrock has acquired London-based venture debt specialist Kreos Capital, extending its reach into the credit asset management market. The deal will see Blackrock acquire full control of Kreos, with its clients gaining access to the venture debt space. Kreos specialises in growth and venture debt financing for tech and healthcare companies, complementing Blackrock's Global Credit business. Since its founding in 1998, Kreos has committed more than €5.2bn across more than 750 deals in 19 countries. Stephan Caron, Blackrock's EMEA head of private debt, said that "growth and venture lending will figure prominently in the expansion of the global direct lending opportunity" for Blackrock.


SocGen announces deals to sell Africa subsidiaries

Société Générale has signed agreements with African banking groups Vista and Coris to sell its activities in Congo Brazzaville, Equatorial Guinea, Mauritania and Chad. The bank has also launched a strategic review of its 52.34% stake in Union Internationale de Banques in Tunisia.


Wizz Air expects return to profit

Wizz Air, the low-cost European carrier, expects to return to profit this year as a rebound in travel builds steam. Cost efficiencies and having fuel and currency hedges in place will also boost the firm.


Housing approvals fall to 14-year low following rule changes

Planning permissions have fallen to a 14-year low following new green rules introduced last year Levelling Up Secretary Michael Gove and DEFRA. Under so-called “nutrient neutrality” rules developers must prove that their buildings will not impact river pollution in any way, leading to construction delays. Mr Gove also proposed reforms reducing the number of homes councils had to plan for. Simon Coop, senior director of planning consultancy Lichfields, said: “The scrapping of house building targets is a massive issue.”

Crest Nicholson warns about impact of inflation on sector

Crest Nicholson has reported a 60% drop in half-year profits to £20.9m after revenues fell by more than a fifth to £282.7m. CEO Peter Truscott said the September mini-Budget prompted a downturn in business at the start of the financial year in November as mortgage rates spiked. Although confidence returned, the increase in mortgage rates in recent weeks has dampened demand. “In terms of the market going forward, a lot will depend on the next couple of inflation prints and the reaction to that,” Truscott added.

CRH shareholders approve listing switch from London to New York

Shareholders have backed a plan by the world’s largest building materials group, CRH, to move its primary listing from London to New York.


Odey Asset Management probed over assault claims

The Financial Conduct Authority (FCA) has widened a probe into Odey Asset Management following allegations of sexual assault. The UK’s top financial regulator opened an investigation into potential “non-financial misconduct” at the hedge fund two years ago and this inquiry later shifted to examine corporate governance issues after founder Crispin Odey fired his executive committee in 2021. An investigation by the FT reveals that 13 women alleged they had been sexually harassed or assaulted by Odey over the past 25 years, with the most recent allegation relating to an incident which took place in December 2021. News of the allegations has led Morgan Stanley to consider cutting ties with the firm while JPMorgan and Goldman Sachs are also reviewing their relationship. A law firm representing Mr Odey said he “strenuously disputed” the allegations.

Fintech firm CAB Payments to float on London Stock Exchange

A specialist cross-border payments and foreign exchange firm, CAB Payments, has announced plans to float on the main market of the London Stock Exchange. The move is seen as a boost for the Square Mile after a difficult few months for the IPO market. CAB Payments chief Bhairav Trivedi said the plans to list in London were a “sign of confidence in the UK as the home for innovative and growing global businesses”.

Rebel investors reject GAM takeover and call for board shake-up

Investors in Swiss asset manager GAM are opposing a £96m takeover offer for the firm’s investment management business from UK fund manager Liontrust Asset Management, saying it “significantly undervalues the company”.


High street records negative sales for first time in more than two years

Total like-for-like retail sales, combining in-store and online, fell by 1.5% last month, the first fall in sales for more than two years. Online sales fell by 3.3% in May in what was described as one of the worst sets of results on record. In-store sales rose by 1%.


Sunak and Biden agree 'Atlantic Declaration' to boost economic ties

UK Prime Minister Rishi Sunak and US President Joe Biden unveiled the  “Atlantic declaration” on Thursday, an accord designed to strengthen economic ties between the two countries and reduce reliance on China. The declaration, should it be passed by Congress, will allow British electric car firms access to US green tax credits and subsidies. The declaration also includes a commitment to a "new UK-US Data Bridge" which would allow UK firms to transfer data freely to certified US organisations without paying a levy, potentially saving companies £92.4m a year. Additionally, Mr Biden has committed to ask Congress to approve the UK as a “domestic source” under US defence procurement laws and push for mutual recognition of qualifications for engineers and accountants, although this could require state-by-state approval in the US. Mr Biden also supported Mr Sunak's plans to set up an international summit on AI safety which will be hosted in the UK later this year. Speaking at the White House, Mr Sunak said: "The Atlantic Declaration sets a new standard for economic cooperation, propelling our economies into the future so we can protect our people, create jobs and grow our economies together."

Eurozone slips into recession

Growth in the eurozone economy contracted by 0.1% in the first three months of this year, according to official figures from Eurostat. This marks a downward revision from an initial estimate of 0.1% growth. The decline marks the second consecutive quarter of contracting growth, meeting the definition of a technical recession. Headline inflation hit a high of 10.7% last year and although it has fallen in recent months, inflation in goods and food remains uncomfortably high.

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