HSBC will use SVB opportunity for tech push
HSBC will today unveil a plan to rename the British arm of Silicon Valley Bank, which the lender rescued in March, HSBC Innovation Banking and use the takeover as a springboard to expand its reach in the technology and life sciences sectors around the world. Noel Quinn, HSBC chief executive, told the Times that his bank had been trying to expand its reach with tech and life sciences companies before the opportunity to buy SVB UK arose. "It's not a sector we're new to but it's a sector that we wanted to scale up," he said. "What I'm interested in doing is creating a network of SVB-like businesses in some of the key centres."
Cost of household debt to triple this year
Oxford Economics forecasts that interest payments on mortgages, credit cards, car loans and other borrowing will grow to 5% of UK household income by the end of this year. This is up from 1.5% at the end of 2021, and the highest proportion since the end of 2008. The rise is mostly due to the rapid increase in mortgage rates, which the consultancy expects will rise to 5.4% for a two-year fixed across the second half of this year, up from 1.4% in the second half of 2021. According to UKFinance, mortgage repayments as a percentage of income have already risen to 21% on average in the first three months of this year, the highest level since the final three months of 2008.
Rules governing green loans need to be improved
Campaigners are calling for regulations governing “green” financial products to be strengthened after a £430m five-year “green transition loan” to Aberdeen-based engineering company Wood Group was allegedly used to help expand its fossil fuels business by 17%. The loan was facilitated by UK Export Finance with ABN Amro, HSBC, Lloyds Bank and The Royal Bank of Scotland participating. Lucie Pinson, the director of the campaign group Reclaim Finance said: “All of the institutions that were involved in issuing this loan to Wood need to be held accountable for this gross misuse of resources.”
Building societies call for PSA to be raised
Nationwide has joined Skipton, Coventry, Yorkshire and Leeds building societies in calling on the Government to increase the Personal Savings Allowance – the tax-free threshold for savers. Currently, any interest earned on savings over £1,000 – or £500 for those in the higher rate income tax bracket – is subject to tax, but rising interest rates mean many with only modest savings will end up paying the levy. A basic rate taxpayer would only need about £20,000 – or £10,000 for a higher rate payer – to be dragged into paying tax.
Anne Boden stepped down as Starling CEO after investor clash
Starling Bank founder Anne Boden stepped down as chief executive following a row with investors over a more than £1bn fall in the valuation of the digital lender, the FT reports.
UBS finalises $10bn deal with Swiss government over Credit Suisse losses
UBS CEO Sergio Ermotti suggested on Friday that the Swiss bank's takeover of Credit Suisse will close early this week after UBS and the Swiss government announced an agreement to cover up to CHF9bn ($10bn) in losses from its emergency takeover of Credit Suisse. Overall, UBS estimates that it will take a $17bn hit from the takeover of Credit Suisse , resulting from a $13bn hit from fair value adjustments and $4bn in potential litigation and regulatory costs. Meanwhile, Credit Suisse bankers will have a slew of restrictions placed on them by UBS executives from day one of their new relationship, as part of efforts to reduce risk from the transaction.
Standard Chartered facing legal action over fertiliser factory funding
Bereaved relatives of hundreds of American military personnel are suing Standard Chartered Bank in the US alleging the bank ignored warnings from British and US military officials about links between the Taliban and a Pakistani fertiliser company the bank is accused of providing with loans. The Mail on Sunday notes that in 2019, Standard Chartered was fined £1bn in the US for breaking sanctions on Iran.
Former Goldman Sachs banker to head Turkey’s central bank
Former US banker Hafize Gaye Erkan has been appointed as Turkey's central bank chief, replacing Sahap Kavcioglu who will now become head of the Banking Regulation and Supervision Agency. Erkan will be the first woman to head Turkey's central bank. She has held senior roles at Goldman Sachs as well as failed regional US lender First Republic.
Barclays warns former staff in bid to stem investment bank exodus
Barclays is struggling to stem a flow of departures from its investment bank, with HR now warning those who left not to poach their colleagues. Around 30 US bankers have quit this year.
Tesla and GM agree deal on electric car chargers
Tesla have jumped by 7% on Friday after rival General Motors said its electric cars would work using Elon Musk’s Superchargers. It means the three largest electric vehicle makers in the US - GM, Ford and Tesla - have agreed on a standard for car chargers.
Amigo in exclusivity agreement with shareholder and financier
Subprime lender Amigo has agreed to an exclusivity agreement with shareholder and financier Michael Fleming, which could lead to a debt investment. The exclusivity agreement means that Amigo cannot obtain funds from any other source until 6 September. Amigo is currently in an orderly wind down and has acknowledged that there are significant impediments to any new capital being made available to the business. However, it is pursuing discussions with Fleming in line with its duties to consider the interests of all stakeholders.
America’s ‘most feared activist’, piles into UK biotech
New York-based hedge fund Starboard Value, run by Jeff Smith, has taken a 2% stake in British biotech company Abcam, which abandoned a London listing to float on the US Nasdaq exchange last year. Activist investor Smith has been dubbed “the most feared man in corporate America” and his intervention comes as Abcam’s founder, Jonathan Milner, agitates to be reinstalled as executive chairman. In a note to investors, Milner says that only through his leadership could the company reverse its “sustained financial underperformance and value destruction”.
Illumina CEO resigns amid pressure from activist investor Carl Icahn
Francis deSouza, the CEO of Illumina, has resigned following a battle with activist investor Carl Icahn over the future of the world’s biggest gene sequencing company. Mr Icahn led a shareholder campaign that focused on Illumina’s “reckless decision” to close its $8bn acquisition of cancer test developer Grail in 2021 against the wishes of EU and US antitrust regulators.
AstraZeneca signs deal with Quell Therapeutics for diabetes treatments
Pharmaceutical company AstraZeneca has signed a deal with UK start-up Quell Therapeutics to develop treatments for Type 1 diabetes and inflammatory bowel disease using genetically engineered 'regulatory T-cells'. AstraZeneca will pay Quell £68m upfront to fund the research, with the start-up eligible for over £1.6bn in development milestone payments and royalties if any drugs are approved for sale.
LEISURE & HOSPITALITY
Travelodge prepped for £1bn sale
American hedge fund GoldenTree is looking to sell Travelodge with sources saying the firm was seeking £1.2bn for the hotel chain.
Airbus and Lockheed compete for £6bn Skynet contract
A £6bn Ministry of Defence satellite contract is up for grabs, the Times reports, with Airbus and Lockheed Martin the main likely contenders. In a project known as Skynet Enduring Capability, three or four geostationary craft, each the size of a bus, will be ordered by the UK Government in one of the most valuable government research, development and manufacturing contracts of recent times.
Wrightbus secures £50m loan
Sustainable bus maker Wrightbus has secured a £50m loan from the UK's Export Finance (UKEF) agency, with Barclays providing the loan. The loan will allow the company to expand its exports to new markets, including Germany and North America, and boost exports to Singapore and Hong Kong.
MEDIA & ENTERTAINMENT
Marshall Wace tycoon considers bid for Spectator
Hedge fund tycoon Sir Paul Marshall is among those eyeing up The Spectator after Lloyds Banking Group put the holding company controlling the magazine, and the Telegraph newspapers, into receivership after it failed to make repayments on debts of up to £1bn. The Daily and Sunday Telegraph titles and The Spectator were bought by Sir Frederick and Sir David Barclay in 2004 but now Howard and Aidan Barclay, the sons of David, have been removed as directors r but are understood to be battling to regain control of the titles. Marshall is a large shareholder in GB News and also founded UnHerd, a news and opinion website.
Timpson family takes £12.8m dividend as business returns
The family-owned Timpson Group paid out a £12.8m dividend last year after a receding pandemic allowed business to boom. Compared to the year prior, the company saw profits double to £36.5m in the year to 1 October 2022, and sales rose to £297.4m, up about 40%. Chairman Sir John Timpson said: “We had a fantastic year last year and it is going just as well this year.”
Frasers Group takes £75m stake in AO World
Frasers Group has taken a £75m stake in AO World. The Sports Direct owner said after markets closed on Friday it had acquired an 18.9% stake in the online white goods retailer. John Roberts, AO’s founder and chief executive, said: “This is great news for AO and a fantastic endorsement for our business.”
BoE unlikely to cut interest rates until 2025
Andrew Goodwin, chief UK economist at Oxford Economics, predicts that the Bank of England will not cut interest rates until 2025, after previously forecasting cuts from May next year. The economic forecasting firm is now predicting that the Bank of England’s base rate will peak at 5% – up from its previous prediction of 4.5%. “The stickiness of core pressures means we see headline inflation remaining above the 2% target until early-2025. And the persistent inflation overshoots of the past couple of years will still be fresh in the memory, not only for policymakers but also financial markets,” Goodwin said. “Against this backdrop, we think the MPC will err on the side of caution, waiting until it has strong evidence that price pressures are back under control before it considers loosening policy.”
Labour will shake off MPC “group-think”
The shadow chancellor Rachel Reeves is understood to be planning changes to the way the Bank of England's Monetary Policy Committee sets interest rates if Labour wins the next election. Although the party would recognise the Bank's independence and keep governor Andrew Bailey in place to work out the rest of his eight year term, Reeves would seek to bring outside voices to the MPC. The Mail’s Alex Brummer explains that the MPC “is seen to be dominated by group-think, with like-minded individuals transferred from the Treasury, lacking diversity of gender, race and economic views.” Reeves is also understood to think the Bank's data-driven and highly statistical approach, which determines rates and quantitative easing, is too formulaic. Writing in the Sunday Telegraph, Liam Halligan agrees the MPC needs more independent voices arguing that “a severe lack of cognitive diversity” has “severely compounded our inflation problem.”