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Daily News Roundup: Monday, 11th January 2021

Posted: 11th January 2021

BANKING

Dormant assets scheme to target lost pensions and investments

Following a four-year review of the "dormant assets scheme" the Government has approved plans to raid forgotten pensions, share certificates and unclaimed payouts from life cover, potentially unlocking £800m in long-abandoned personal wealth for state spending. The scheme has already paid out close to £750m to good causes, the Telegraph reports, adding that details of when pensions and the other new assets included in the scheme will be officially classed as dormant is still being worked out. The Economic Secretary John Glen said: “Banks and building societies across Britain are working tirelessly to reunite people with forgotten assets. But on occasions where this isn’t possible, it’s right that these funds are used to tackle some of the most pressing social and environmental challenges.”

Bankers told to record work calls at home

The Financial Conduct Authority has told bankers they must record all communications while working from home, ending the relaxed guidance issued at the beginning of the pandemic. “At the start of the pandemic, if your firm moved to an alternative site or a working from home arrangement, we asked you to consider the broader control environment in view of the new circumstances,” the regulator said in guidance updated on Friday. “Given the extensive duration of these arrangements, we now expect you to record all relevant communications (including voice calls) when working outside the office,” it said.

Expat landlords could be the new mortgage prisoners

TSB no longer allows people to switch to a cheaper deal if they have an overseas address and a buy-to-let mortgage in the UK. The bank said the move, which came into effect on the 1 January, helped it to comply with European rules after Brexit. The change is expected to affect anyone who lists a second home in Europe as a correspondence address on their mortgage account for a property in the UK. It could also catch out anyone who has retired abroad but has kept their old home in the UK to let out. It is understood that the matter has been raised with UK Finance over fears that those affected will become mortgage prisoners, stuck with pricey loans.

Bitcoin bubble warning as cryptocurrency breaches $40,000 mark

With Bitcoin reaching a new record high of over $41,000, Bank of America Securities is warning investors in the digital currency could be in "the mother of all bubbles". On the topic of bitcoin, the Times’ Katherine Denham warns that, with some investors likely to take their profits, banks such as HSBC do not process cryptocurrency payments or allow customers to bank money from digital wallets.

Revolut applies for British banking licence

Revolut has applied to the Bank of England and the Financial Conduct Authority for a banking licence. If granted, it would provide every customer in the UK with £85,000 of cover from the Financial Services Compensation Scheme. Nikolay Storonsky says the licence, “will allow us to compete with large British banks because we will be providing better services at better costs with deposit insurance.”

Standard Chartered signs staffing deal

Standard Chartered has signed an agreement with serviced office network IWG which will allow staff to work away from central offices as part of a move towards permanent flexible working at the bank. The deal allows Standard Chartered’s 95,000 employees access to 3,500 offices around the world for a trial period of 12 months. This will give them the option to work in more convenient locations closer to home while benefiting from office facilities.

Chetwood eyes £100m funding round

Chetwood Financial, the digital bank backed by Elliott Advisors, is working with investment bankers from Rothschild to help it secure a £100m cash injection.

HSBC urged to stop financing coal

ShareAction is co-ordinating a campaign to persuade HSBC to reduce its financing of coal assets. The group aims to table a climate-change resolution ahead of the annual meeting in April.

NS&I rate cut drives savers into investments

Advisers have said that savers who withdrew more than £6.2bn from National Savings & Investments accounts in November are moving their funds into the stock market and building society accounts.

PRIVATE EQUITY

Appian raises $775m for its second private equity mining fund

Appian Capital Advisory has raised $775m for its second mining fund, as it taps into a wave of investor interest in hard assets and efforts to combat climate change.

INTERNATIONAL

OCC says banks can use stablecoins in payments

Banks are allowed to participate in public decentralized networks and use stablecoins in payment settlements, according to new guidance from the Office of the Comptroller of the Currency. A stablecoin is a type of digital currency that aims to maintain a stable value and is backed by an underlying asset or a benchmark, such as the value of a fiat currency, or a basket of assets that could include investment securities and commodities. The federal banking regulator said national banks and federal savings associations may use new technologies, including independent node verification networks, also known as blockchain networks, and related stablecoins, to perform bank-permissible functions.

Deutsche Bank pays nearly $125m to resolve US bribery and fraud claims

Deutsche Bank has reached a settlement with the Department of Justice and the Securities and Exchange Commission over allegations that it breached bribery and fraud laws, agreeing to pay nearly $125m in penalties.

Credit Suisse to post quarterly loss as it adds $850m to litigation reserves

Credit Suisse has set aside a further $850m for legal costs related to US residential mortgage-backed securities, bringing the total to more than $1.1bn and pushing the bank to a fourth-quarter loss.

Commerzbank raises bad loan provisions as lockdown drags on

Germany’s latest Covid lockdown risks further losses for the country’s second largest bank. Commerzbank has raised its provisions for bad loans to €1.7bn from €1.3bn-€1.5bn.

US banks to delist hundreds of HK-listed products under Trump rules

President Donald Trump’s executive order barring investment in companies with alleged links to Beijing has accelerated the delisting by US banks of hundreds of structured products on Hong Kong’s stock exchange.

Top US banks set to buy back $10bn of shares in Q1

JPMorgan Chase is expected to lead top US banks on a wave of share buybacks as the loan losses of the pandemic year dissipate and capital markets crank back up.

State Street to insist companies disclose diversity data

State Street Global Advisors is to start voting against directors of big companies that fail to disclose the racial and ethnic make-up of their boards.

AUTOMOTIVE

Apple and Hyundai in talks on battery tie-up

News that Apple is in talks with Hyundai about an electric car and battery tie-up sent the South Korean carmaker’s shares up by a fifth on Friday.

AVIATION

Virgin Atlantic to secure $230m cash injection

Griffin Global Asset Management, a subsidiary of US private equity giant Bain Capital, will provide $230m to Virgin Atlantic in a sale and leaseback deal involving two Boeing 787 Dreamliners. The cash will be used to repay hedge fund Davidson Kempner, which bailed out the airline at the beginning of the pandemic, with $70m left over to prop the company up as it fights to survive another year.

Airbus optimistic on recovery in aircraft demand despite virus surge

Guillaume Faury, the CEO of Airbus, has said he was “cautiously optimistic” about a recovery in aircraft demand this year despite a new wave of national lockdowns.

CONSTRUCTION

Barratt boosted by rush back to housing market

Barratt Developments sold a record 13,588 homes in the six months to December 31, up 14.3% on the figure for the same period a year earlier, the firm has announced. Barratt credited “pent-up demand” from the first lockdown for the swell in sales, alongside the impending end of Help to Buy and the stamp duty holiday - both due to wind up in March. The firm plans to bring back its dividend next month.

FINANCIAL SERVICES

City of London to bring back Swiss stock trading following EU exit

Trading in Swiss shares will return to London in the coming weeks with legislation expected to be launched in parliament soon to reverse a previous EU ban on the practice. Meanwhile, the FT details some of the struggles encountered by the City of London during the first week of Brexit. Overall, optimism reigns despite some services having to shift to EU-based offices. Patrick Jenkins suggests in the same paper that it may not necessarily be the EU that benefits from the City of London’s Brexit losses, but centres such as Chicago or New York.

Superfunds face first test with deals expected this year

Pension superfunds are expected to do their first deals later this year as an expected wave of pandemic-induced insolvencies pushes many businesses to the brink. Two existing superfunds are currently seeking regulatory approval - the Pension SuperFund and Clara – and if they’re given the go-ahead, schemes on the verge of insolvency are likely to be targeted first.

Gilbert to spearhead a new wave of deal-making

Martin Gilbert is joining forces with former Aberdeen Asset Management colleagues and City grandees to invest in AssetCo, a London-listed cash shell. Mr Gilbert is understood to have decided to use it as his corporate vehicle, according to Sky News.

Nest plans bold expansion into private markets

Nest, the UK workplace pension scheme with 10m members, is planning to lift its private market holdings from 9% to 15% over the next 12 months by expanding its equity stakes in infrastructure.

China will vie to become world financial centre, says Ray Dalio

Bridgewater founder Ray Dalio is predicting that Beijing will soon mature its financial system enough to challenge the City of London and New York as the world’s financial centre.

HEALTHCARE

UK approves Moderna vaccine for emergency use

A third Covid vaccine received emergency approval for use in the UK with 17m doses of the jab, made by US firm Moderna, pre-ordered by the UK. However, the UK will not receive any doses until March at the earliest.

REAL ESTATE

UK house price growth slows as end of stamp duty holiday nears

UK house price growth slowed to 0.2% in December, down from 1% the previous month, according to the Halifax. It was the lowest rise since June and less than the 0.5% growth forecast by economists. Halifax said UK house prices ended 2020 on average 6% higher than in 2019, hitting an average of £253,374, but with the stamp duty holiday coming to an end, a third national lockdown and a predicted rise in unemployment, downward pressure on prices remains likely over the course of 2021.

RETAIL

Moonpig set for £1bn London listing

Online greetings card company Moonpig is expected to go ahead with a £1bn listing in London. The firm, which is likely to be marketed as a tech stock, achieved sales of £173m and underlying profits of £44m for the 12 months to April 2020.

SPORT

Saracens scores StoneX backing

Saracens, the Championship rugby club, has secured a multimillion pound long-term naming rights and kit sponsorship deal with StoneX, a global financial services group and owner of the British spread-betting firm City Index. Speaking to Sky News, Philip Smith, StoneX's CEO for the EMEA and Asia regions, said the company was "confident that this close partnership can and will deliver enormous benefits to us, our clients and our corporate branding.”

ECONOMY

UK’s FTSE 100 kicks off 2021 with 6% rally lifted by vaccine hopes

The FTSE 100 enjoyed a 6% gain in the first week of 2021 - its biggest rally since early November raising hopes of a turnaround in fortunes with Brexit over the line and the promise of more stimulus in the US under a Democrat administration.

OTHER

Kwasi Kwarteng replaces Alok Sharma as Business Secretary

Boris Johnson has appointed Kwasi Kwarteng as the new business secretary, replacing Alok Sharma who goes on to become the full-time president of the COP26 United Nations climate summit. Before becoming an MP, Mr Kwarteng worked as an analyst in financial services after studying at Eton and Cambridge.

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