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Daily News Roundup: Monday, 12th July 2021

Posted: 12th July 2021

BANKING

FCA intervenes after Pockit freezes client accounts

The Financial Conduct Authority has been trying to help resolve issues at fintech firm Pockit after complaints that vulnerable people were being cut off from their money for months without explanation. Pockit handles current account services for people “excluded and underserved” by mainstream financial firms but has been freezing funds as it seeks prove accounts are not being used for financial crime. The FCA said it is working with PayrNet, the third-party regulated entity that underpins Pockit’s services, to ensure the problems “are being addressed as quickly as possible”.

Gold clearing banks exempt from Basel III rule, BoE says

The Bank of England's Prudential Regulatory Authority (PRA) said on Friday that banks clearing gold trades in London could apply for an exemption from Basel III rules requiring banks to hold more cash to match their gold exposure. The London Bullion Market Association (LBMA), an industry body, has lobbied against the upcoming rules, saying they are unnecessary and could force some banks - including clearing banks - to stop trading.

BIS advocates for cooperation on digital currencies

The Bank for International Settlements has given its full backing to the development of central bank digital currencies (CBDCs), saying that central banks should work to achieve “interoperability” between their digital currency projects. A report written by the BIS in collaboration with the International Monetary Fund and the World Bank advocates for creating common standards and establishing international payment infrastructures.

Banks could be exposed to £1bn in forex rigging compensation claims

A hearing this week in London will determine whether a class action lawsuit can go ahead against banks whose staff are accused of rigging foreign exchange markets. Two US law firms are vying for the right to seek damages of at least £1bn on behalf of thousands of pension funds, asset managers and corporations.

Thousands of NatWest customers have accounts locked

More than 5,500 NatWest customers have had their accounts locked after what they considered to be normal transactions were flagged as suspicious. The Sunday Times reports on some examples noting that although customers can ask for the decision to be reviewed, it can take up to 60 days to have their funds released.

TSB plans to close its over-the-counter services from 4pm

TSB has announced plans to close its over-the-counter services from 4pm across its branch network. The move is part of a concerted effort by banks to push customers into online banking, the Telegraph reports, with branch networks drastically cut and lenders shifting their model from day-to-day banking towards financial advice.

Danske Bank to close four Northern Ireland branches

Danske Bank has announced that four of its Northern Ireland branches will close on 22 October, reducing the bank's branch network to 32. Danske Bank said it was responding to a rise in the number of people banking online or by phone. There will be no compulsory redundancies as a result of the closures.

PRIVATE EQUITY

MPs demand FCA explains review of LV= buyout

The all-party parliamentary group for mutuals has called on the Financial Conduct Authority (FCA) to explain how it assesses takeovers amid concerns over the acquisition of LV= by Boston-based private equity group Bain Capital. The planned demutualisation requires the approval of the insurer’s 1.25m members as well as the backing of the FCA and the Bank of England’s Prudential Regulation Authority. Gareth Thomas, the MP who chairs the group, has written to FCA boss Nikhil Rathi asking for the “specific benchmarks the FCA will use to make its decision” and whether the regulator will require LV= to disclose how the board could benefit financially from the deal.

Ex-Mossad spy chief to run SoftBank's Israeli funds

Softbank has hired the former head of Israeli spy agency Mossad to run its technology investments in Israel. Yossi Cohen said that "Israel's advanced technology and entrepreneurial culture make it a natural fit for SoftBank's investment vision and I look forward to helping fast-moving companies scale in the region and globally."

SoftBank’s second Vision Fund speeds up pace of investment

Japanese investment group Softbank poured about $13bn into more than 50 companies through its second Vision Fund during the second quarter, a sharp increase on the $2bn invested in Q1.

INTERNATIONAL

Credit Suisse moves to better manage risk

Credit Suisse has appointed Amélie Perrier to the newly created role of Head of Counterparty Market Risk. In an internal memo, the bank said Ms Perrier “will partner closely with the Counterparty Credit Risk team within the Investment Bank to further progress how we assess the risk of our counterparties allowing for enhanced credit decision making.” The move comes after the Swiss bank was badly exposed to the collapse of supply chain finance firm Greensill Capital and then Archegos Capital Management.

EU further delays sustainable finance rules

The European Union has deferred the introduction of rules requiring asset managers to show how they take environmental and other issues into account by a further six months to July 2022 to avoid a last minute rush for market participants.

China imposes security checks on tech companies seeking overseas listings

The Cyberspace Administration of China said on Saturday that Chinese companies that have the data of more than 1m users will need to pass a security review before issuing shares on overseas stock exchanges.

Goldman wrangles over whether to pay junior bankers higher salaries

Executives at Goldman Sachs are struggling with whether to hike up base pay for junior bankers, in line with competitors, or stick with the usual policy of dishing out bonuses for top performers.

AVIATION

Brussels targets aviation fuel tax in drive to reduce carbon emissions

The European Commission will set out plans to reform energy taxes this week, likely to include a levy on aviation kerosene for the first time.

FINANCIAL SERVICES

Insurers develop Climate Change Roadmap

Ten insurance and savings firms have joined forces to release an Association of British Insurers initiative called the Climate Change Roadmap, which sets out the role the sector can play in tackling environmental issues. ABI members could invest up to £900bn in UK transition opportunities over 2021 to 2035 to help hit the Government's Net Zero target. The Roadmap would see customers encouraged to accept repaired or recycled items as part of a settlement, rather than offering brand-new items, and replace written-off cars with electric vehicles. The member firms directly involved in developing the roadmap and already fully committed to these targets are: Phoenix, Aviva, M&G, Lloyds Banking Group, Rothesay, PIC, Zurich, Bupa, Direct Line and Royal London.

Post-Brexit financial services sector will thrive on the world stage

Writing in City A.M., Rachel Kent, the Head of Financial Services regulation at Hogan Lovells, says that with hopes of an equivalence deal with the EU on financial services totally dashed, the UK can stride into a new chapter for the sector focusing on “what we do best – innovating in financial markets to make them open, competitive, technologically advanced and green.” Kent continues: “The path to get here has not been easy and the way forward will not be without its challenges. But the determination of the financial services sector, and those leading it, to become more international and more open, will stand us in good stead to have a competitive advantage over our foreign counterparts.”

Cover harder to find as companies try to rebuild

Insurance costs for businesses are soaring with indemnity cover for an engineering business mentioned in the Sunday Times rising five-fold on its 2019 premiums. Roger Barker, at the Institute of Directors, said: “There seems to be a real problem with business insurance at the moment. Premiums [are] rocketing and it’s difficult to get cover across all sorts of insurance. The industry has got a bit of a challenge on its hands now to try and regain confidence.”

High speed traders get Channel cable boost

High-frequency traders in the City will benefit from faster connections to the continent thanks to a new 320-mile undersea internet link between London and Paris. Data centre company Equinix and network provider Crosslake Fibre said the link would start providing services towards the end of the year. The project comes after the EU recently agreed to allow personal data to continue to flow to the UK without restrictions after Brexit.

New rules will see all payout claims fail

The Financial Conduct Authority has been accused by campaigners of making it “virtually impossible” for anyone to qualify for compensation for regulatory failings. The True and Fair Campaign, which was co-founded by wealth manager Gina Miller, said the insistence that people show that the FCA was the “sole or primary cause of loss” to be eligible for compensation “is contrary to law” governing the investigation of complaints against the regulator.

Financial services firms on ESG hiring spree

The Times reports on a study showing how the number of people involved in ESG analysis in financial services firms has grown from 460 to 690 in a year. The paper explains that while some boardroom veterans deride ESG as in the incarnation of the “woke agenda” in the corporate world, Jack Payne, a consultant at New Street, which conducted the research, disagrees. “ESG is now simply considered as good corporate strategy, good business and good economics,” he said.

Zoopla buys online mortgage broker

Zoopla's price comparison arm, RVU, has bought Manchester-based online mortgage broker Mojo Mortgages with CEO Tariq Syed declaring that the business wants to own "every part of the process" as competition for customers intensifies.

HEALTHCARE

Philip Morris to acquire British pharma company

Philip Morris International has announced that it will buy Vectura Group in a deal that will value the British pharmaceutical company at £1.05bn. PMI said it plans for Vectura to operate as an independent unit and be at the centre of its inhaled therapeutics business. PMI said it is aiming to generate at least $1bn (£730m) in net revenue from "products beyond tobacco and nicotine" by 2025. But the deal has sparked outrage, with MPs complaining that PMI is attempting to profit from conditions resulting from smoking.

LEISURE & HOSPITALITY

Covid passports could be required for hospitality

The Times reports that coronavirus certificates will be required for customers to enter hospitality venues including bars, restaurants and nightclubs, as part of efforts to tackle a fourth wave of the virus in a move that experts hope will boost jab rates among the young.

MANUFACTURING

Smiths Group faces private equity break-up

British engineering firm Smiths Group has received a £2bn takeover approach for its medical division from US private equity firm TA Associates. Smiths Medical makes ventilators, syringe pumps and tracheostomy tubes for hospitals around the world.

REAL ESTATE

Landlords report shortfalls from retail and leisure tenants

Commercial landlords Land Securities and Derwent London have reported a rise in rent collection for the latest quarter, but revealed heavy shortfalls in collection rates from retail and leisure tenants. Elsewhere, the FT reports on how commercial property investors are shifting out of retail and offices in favour of warehouses, rental flats and student housing and life sciences campuses.

Blockchain start-up hopes to speed up conveyancing

Dan Salmons, the banker who spearheaded contactless payments in the UK, is launching Coadjute a blockchain-based technology platform aiming to halve the time it takes to complete a house purchase. Salmons said: "With so many different parties involved in a property transaction, there's been a desperate need for a way to connect them and speed up the process."

RETAIL

Klarna buys tech start-up Hero

Swedish buy now pay later group Klarna has acquired London-based ecommerce tech start-up Hero in a deal worth a reported £115m. Hero offers virtual shopping services to retailers and will now be introduced to Klarna’s 250,000 retail partners. “Immersive shopping experiences are now expected by consumers when shopping online and forward-thinking brands want to provide consumers with a rich, interactive way to shop for their products,” said Klarna chief executive Sebastian Siemiatkowski.

Amazon appoints Tesco executive to run stores worldwide

Amazon has appointed Tesco executive Tony Hoggett to the role of senior vice president of physical stores. He will be based in Seattle, joining in January 2022, and report to Dave Clark, chief executive of Amazon’s worldwide consumer business.

ECONOMY

UK’s economic recovery slows in May

The UK's economy expanded by 0.8% in May as coronavirus restrictions eased to bring a rebound in the hospitality sector. However, this is a slowdown on the 5% growth seen in April and well short of the 1.7% forecast, the Office for National Statistics said, with the economy still 3.1% below pre-pandemic levels. Manufacturing and construction both dropped with widespread reports of disruption to supply chains, partially offsetting the rise in services output. "Of course, the pace of the recovery was always going to slow as the economy climbed back towards its pre-crisis level. But we hadn't expected it to slow so much so soon," said Paul Dales, an economist with Capital Economics.

Inflation rise expected to exceed 2%

Economists are expecting inflation to have risen 2.2% in June when data on consumer price inflation is released on Wednesday, putting more pressure on the Bank of England to act. However, experts add that with price pressures predicted to weaken as the recovery matures, the BoE is unlikely to tighten policy until 2022.

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