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Daily News Roundup: Monday, 10th May 2021

Posted: 10th May 2021


Treasury considers rules for last banks in town

The Treasury is considering plans that would see banks that are the last in town forced to ensure customers can still access cash even when they close branches. One option would be a requirement for banks to guarantee there is an offering in the form of a pop-up or shared facility. Another could place the onus on the Financial Conduct Authority to bring its conduct rules to bear to ensure banks treat customers fairly. Alternatively, lenders could partner with the OneBanks start-up, which is aiming to roll out across the country serving customers from different banks. Pilot schemes in eight towns were launched last month testing different ways to bring banking to under- served towns. Project overseer Natalie Ceeney said: “These pilots are great examples of what can be done — but they are currently only helping eight communities. In the meantime we are seeing the closure of hundreds of bank branches and ATMs across the UK, while the cash infrastructure gets more fragile.”

Bramson concedes defeat in campaign to oust Staley at Barclays

Edward Bramson has sold his 6% stake in Barclays, bringing to an end a three-year battle to overhaul the British bank. Sherborne Investors, Bramson's New York-based investment vehicle, said it was selling the stake to focus on a new unnamed investment target instead. Bramson had been calling for Barclays to scale back its investment bank and direct more capital into areas such as credit cards and so the decision by Sherborne to sell its stake could be seen as a victory for Jes Staley, the Barclays chief executive, who was firm that the bank needed both investment banking and retail lending. Bramson had also tried to convince other shareholders that Barclays should remove Staley over his links to the convicted sex offender Jeffrey Epstein.

Lloyds Bank nears takeover of Embark

Sky News reports that Lloyds Banking Group is close to finalising a £400m takeover of Embark Group. If completed, the deal will rank among Lloyds' most significant since it had to be bailed out by UK taxpayers with a £20bn capital injection in 2008. Embark has more than £38bn under administration and close to 500,000 customers across the country. It offers a range of retirement and savings products under brands such as The Adviser Centre, Rowanmoor and Vested, as well as that of the parent company. It also provides white-label services for the likes of BestInvest, Charles Stanley, Coutts and Moneyfarm. According to a source close to the talks, the Embark deal would plug a gap in Lloyds' retail investment proposition and open up a more effective IFA distribution channel for Scottish Widows mutual fund products.

Banks to lend £7bn less than predicted as economy rebounds

Figures show UK companies are expected to borrow a net £19bn this year, far less than the £26bn initially forecast by experts in February. Experts suggest the huge rise in borrowing from cash-strapped businesses in 2020 combined with the millions of consumers who were able to repay record levels of personal debt are trends that are likely to prove short-lived as lockdowns come to an end and consumer confidence grows.

Lenders consider self-employed grants a 'red flag'

Mortgage lenders are penalising self-employed people who used government grants, the Telegraph reports, with brokers telling the paper those borrowers who claimed on the scheme "signalled a red flag" to many lenders. If an employee had been furloughed it was likely their application would also not proceed, said Matt Coulson of Heron Financial.

Monzo offers paid leave after pregnancy loss and HSBC goes Zoom-free

As part of a mental health drive by Monzo, the digital bank will offer paid leave for employees who are affected by the loss of a pregnancy - one of the first UK companies to do so. Elsewhere, HSBC is piloting Zoom-free Friday afternoons for some of its staff joining other banks in trying to combat working from home fatigue and burnout during the pandemic.

FIntechs offer the worst value accounts

A review by consumer champion Which? found challenger banks Revolut and Monzo offer the worst value and poorest benefits of packaged accounts. Finishing joint top was Nationwide's FlexPlus and The Co-operative Bank's Everyday Extra while Barclays' Blue Rewards finished in third. Which? Money editor Jenny Ross said: "Packaged accounts can offer great value for money, but only if you make use of the benefits."


Investors keen ahead of Citymapper crowdfunding campaign

The London-based travel app Citymapper has received £35m in expressions of interest ahead of the launch its crowdfunding campaign on Thursday. The company has yet to turn a profit and its decision to turn to crowdfunding comes after the start-up raised just over £10m in 2020. Its investors include Index Ventures and Balderton Capital.


More banks move into crypto

The FT reports on the ongoing moves into crypto by US banks with Citigroup following Goldman Sachs which executed its first cryptocurrency trades and formalised the set-up of its bitcoin desk on Friday. Bank of New York Mellon and State Street have also announced their intention to get involved in the market. Meanwhile, Andrew Bailey, the Governor of the Bank of England has issued a warning to investors in cryptocurrencies. “They have no intrinsic value. That doesn't mean to say people don't put value on them, because they can have extrinsic value. But they have no intrinsic value,” Bailey said.

Credit Agricole's profit jumps 64%

A hike in income from capital market activities and a fall in pandemic-related provisions for bad loans helped Credit Agricole to a 64% jump in first quarter net income.

Macquarie announces plan to exit coal by 2024

Sydney-based investment bank Macquarie said on Friday that it expects to stop financing coal projects by 2024.

Italian banks look to consolidation in the year ahead

Intesa's CEO Carlo Messina said in an interview on CNBC on Friday that Italy's banking sector needs to consolidate and he expected a series of merger and acquisition deals in the next year. His comments follow those of UniCredit CEO Andrea Orcel who said on Thursday the bank could consider M&A to drive growth, adding the phase of "active retrenchment" was over.

Commerzbank union signs off on a job-reduction deal

Commerzbank employee representatives have agreed to a deal that will see the German lender cut 10,000 jobs globally, enabling CEO Manfred Knof's to streamline Germany's second-biggest listed lender.


Fevered bidding for bankrupt Hertz reaches courtroom auction

A consortium led by Centerbridge Partners will go head to head with another group led by Knighthead Capital in a bid for bankrupt car rental group Hertz at an auction today.


IAG racks up €1bn losses in three months

British Airways owner IAG reported a further €1bn of losses in the first three months of the year with debts now totalling €11.5bn. The group said it would fly only one in four of its aircraft during the spring.

Heathrow resumes property hardship scheme

As overseas shareholders grow impatient at the slow progress of the Heathrow’s expansion plans, the airport has begun buying houses close to its proposed third runway again.


Construction orders build at fastest pace since 2014

The easing of lockdown helped Britain’s construction sector to expand at a near record pace last month, an industry survey suggests. IHS Markit’s purchasing managers’ index (PMI) for the sector came in at 61.6 in April, down slightly from 61.7 in March but still considerably above the 50 mark that separates growth from contraction. New orders rose at their fastest pace since September 2014 as the end of lockdown spurred contract awards on previously delayed commercial development projects.

Blackstone targets St Modwen

US investment giant Blackstone had offered to buy St Modwen for 542p per share, valuing the UK housebuilder and logistics company at £1.2bn. The offer price represented a 21% premium on Thursday's closing share price of 448p. Shares in St Modwen rose 20% to 535p when the market opened on Friday.


UK proposes new structure to tackle illiquid fund flaws

The Financial Conduct Authority has announced that it will put forward a new long-term asset fund structure to invest in illiquid assets such as real estate and infrastructure, following recent high-profile suspensions. The regulator said the fund would have longer redemption periods, high levels of disclosure and specific liquidity management requirements. The FCA's CEO Nikhil Rathi said these rules would enable such funds "to secure an appropriate level of consumer protection and to address specific risks related to investments in illiquid assets".

Three-quarters of finance firms report rise in cyber-attacks

Research by the cyber and intelligence arm of BAE Systems has found that 74% of Britain's banks and insurers have experienced a rise in digital crime since the pandemic began. Almost half reported an "upsurge" in financial losses over the past year as a result, costing each organisation £575,915 on average. The report also found that 43% of firms said that employees working from home had "harmed institutional security" as it had made potential holes in their network or infrastructure less visible. Despite the growing problem, BAE Systems Applied Intelligence found that IT security, cyber-crime, fraud or risk department budgets had been cut by 27% over the same period. The cut almost mirrors the 32% rise in criminal activity detected by financial institutions.

Scottish finance industry weighing “Scexit”

With Citigroup predicting a 35% chance of Scottish independence in the next decade following the Scottish National Party’s fourth victory in the Holyrood elections, the finance industry north of the border is weighing the risks. Credit Suisse’s UK economist Sonali Punhan argues that independence could have “significant consequences for Scotland’s public finances, trade and banking system”. “A rising risk of Scottish independence, and consequent uncertainty over Scotland’s future currency arrangements, will consequently lead to rising financial stress and turbulence within the UK, especially given Scotland’s large financial sector. That may render UK assets less palatable to international investors,” she warned.

Insurers mired in poaching claims

The Sunday Telegraph reports on how insurance tycoon David Howden is facing a High Court battle with American rival Guy Carpenter, owned by Marsh & McLennan, over allegations that his business poached a team of more than 30 top brokers. The paper notes that Guy Carpenter is on the receiving end of a staff poaching case in the US with the reinsurance division of Willis Towers Watson launching legal action in April after more than 20 employees from its Latin American team resigned to join Guy Carpenter.

Numis to hire more investment bankers

Numis has enjoyed a boom in fees after advising on a string of flotations and mergers and is set to hire more investment bankers. Pre-tax profit during the six months to the end of March rose to £39.3m from £7.3m a year earlier, on revenues that increased by almost 83% to a record £115.4m. Numis also announced plans to open a new EU office in Dublin to target clients who have been excluded by Brexit rules.


Activist puts more pressure on GlaxoSmithKline chief

Elliott Management will meet with fellow GlaxoSmithKline investors to discuss its stance on the drugs maker after it emerged last month that the American activist hedge fund had bought a stake in the pharmaceuticals group. The Times reports that there are rumours in the City that the hedge fund will push for a change of strategy at the British company.

EU will not renew AstraZeneca order

The European Commission has revealed that is will not renew its order of AstraZeneca vaccines when it expires in June as the parties remain mired in legal disputes over supply issues and the EU pivots towards the Pfizer jab.


SMEs suffering the brunt of computer chip shortage

The Times reports on how the global shortage of computer chips is hitting the UK’s SMEs hard with companies struggling with steep price rises and difficulties fulfilling orders. Nudge, a health device start-up, says the shortage threatens the firm’s viability with prices for five key elements of its smart wristbands increasing five-fold while lead times have increased to 30 or 40 weeks. The article details similar experiences from two other firms: computer maker Captec and chipmaker EnSilica.

UK freeports blow as exporters face tariffs to 23 countries

Officials have admitted that recent post-Brexit trade agreements with nearly two dozen countries prohibit manufacturers in freeport-type zones from benefiting from the deals.

Offshore wind must be British-made

The Government has told offshore wind farm developers they will be stripped of subsidy contracts if they fail to deliver on their promises to use British manufacturers.

Woodward eyes Meggitt

Aerospace and defence manufacturer Meggitt saw its shares surge nearly 15% after reports that US peer Woodward could be considering a bid for the company.


Video platform Recast raises £6m

Edinburgh-based sports video platform Recast has raised £6m ahead of a planned expansion. The tech start-up’s valuation has now risen to more than £20m.


Booming property market reports record sales

Britain’s booming property market is seeing record sales figures, with an average of 13 buyers for every home that gets listed, according to NAEA Propertymark. Agreed sales last month were up 57% compared with April 2019, and experts said the industry was working around the clock, while buyers were resorting to extreme measures to secure a home.


Third lockdown predicted to hurt less than feared

Economists expect data published on Wednesday by the Office for National Statistics to show that the UK’s third lockdown inflicted far less economic damage than first feared. Forecasters expect a 1.7% drop in GDP in the first quarter, but monthly figures are expected to show an accelerating bounce back with GDP rising 1.3% in March with a further surge in April when non-essential shops and parts of hospitality reopened.

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