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Daily News Roundup: Monday, 14th June 2021

Posted: 14th June 2021

BANKING

Banks may have to change plans if lockdown lift is delayed

Banks may have to reconsider plans to bring workers back into the office next week, with speculation that the Government is set to delay the end of lockdown measures which were due to be lifted on June 21. Banks including NatWest, Deutsche Bank, BNP Paribas, JPMorgan Chase and Goldman Sachs had told staff to prepare to start commuting again as of next week, while others including HSBC, Barclays, Standard Chartered, Lloyds and UBS have not set hard dates for workers to return to their desks.

Banks boosted by stashed cash

Britain's five biggest banks may see a £5bn windfall that could boost dividend pay-outs later this year, with a source telling the Mail on Sunday that while Barclays, HSBC, NatWest, Lloyds Banking Group and Standard Chartered stashed away cash to cover customer loans that turned sour during the pandemic, far fewer borrowers have defaulted or missed repayments than had been forecast. While Omar Keenan, an analyst at Credit Suisse, said the banks are “currently carrying about £5bn more in provisions than their current economic projections strictly say they need”, an unnamed banking chief executive said: “In terms of late payments and loan defaults, there's been virtually nothing.”

Select Committee urged to press regulators on scam victim support

With Chris Hemsley, managing director of the Payment Services Regulator, and Mark Steward, director of enforcement at the Financial Conduct Authority, set to go before the Treasury Select Committee, the Mail on Sunday’s Jeff Prestridge says he hopes members are “at their inquisitive best” when they quiz the regulators over efforts to ensure scam victims are treated fairly by banks. He says evidence points to banks “currently being let off the hook”, with Which? warning that “victim blaming is endemic”. Mr Prestridge notes that despite a voluntary code to protect customers tricked into transferring money being rolled out two years ago, just 46% of losses are reimbursed.

Bank interns prepare to quarantine

Goldman Sachs and JPMorgan are both preparing to welcome interns to their London offices from June 21, regardless of whether the Government lifts all restrictions. Both are paying hotel bills for those flying in from "red list" countries, enabling them to quarantine ahead of the start date. Meanwhile, Barclays is running its internships virtually and HSBC's programmes will be remote unless government guidance on home working changes. Lloyds, which last year scrapped its summer internship scheme altogether, is restarting its programme but it will be predominantly virtual to begin with. Deutsche Bank plans to have UK interns and graduates in offices depending on which division they're placed in.

Mortgage interest burden lightens in spite of soaring UK house prices

Analysis of Bank of England data shows borrowers spent £31.6bn on mortgage interest in the year to April, the lowest annualised monthly figure in two decades, with average rates hitting 2.07%.

Deal surge sees rates fall

Data from Moneyfacts shows that there are currently 4,243 mortgage deals available — 50% more than the 2,810 this time last year. The current total is the highest since March last year and not far off the 5,222 available pre-pandemic. Carl Shave of Just Mortgage Brokers said: “Mortgages are a lucrative source of income for lenders and so many are now looking for their slice of the pie and making up for lost time”. Supply of loans has seen rates fall, with the average five year-fix at 60% LTV down to 1.81% from 2.02% a year ago, while the average two year-fix is 1.61%, down from 1.73%.

Horta-Osorio knighted

Antonio Horta-Osorio, the former boss of Lloyds Banking Group who steered the business back into private ownership after the financial crisis, has received a knighthood in the Queen’s Birthday Honours list. The banker, who left Lloyds in April to join Credit Suisse as its new chairman, is recognised for his services to the financial sector, as well as his voluntary work for mental healthcare and culture.

INTERNATIONAL

Italian economy to grow around 5%, says central bank

The Italian economy will grow by close to 5% this year, the Bank of Italy has forecast, exceeding the most recent estimate by the Italian government, which forecast growth of 4.5% in April. The Bank of Italy said growth next year would ease to 4.5%, slightly below the government's 4.8% projection. Italy saw the economy contract by 8.9% last year.

Deutsche Bank pressed by ECB to name successor to Achleitner

The European Central Bank has urged Deutsche Bank to find a successor to chair Paul Achleitner and has repeatedly called for a clear succession plan ahead of his May 2022 departure.

Goldman Sachs’ US staff told to disclose vaccination status

Goldman Sachs has told its staff in the US that they must disclose their Covid-19 vaccination status before a planned return to office working. Staff have been told to log their status in the bank’s internal app, Canopy, with the company saying it could be shared with managers and used for planning.

CONSTRUCTION

Sigma agrees to £188m takeover

Developer Sigma has agreed to be bought by a subsidiary of real estate private equity specialist PineBridge Benson Elliott for £188.4m in cash.

FINANCIAL SERVICES

IMF boss: Tax deal must be simple with ‘few deviations’

While Chancellor Rishi Sunak has suggested City of London firms should be exempt from the global tax plan agreed at the G7, International Monetary Fund managing director Kristalina Georgieva has suggested such a move may not be the way to go, saying the global tax plan should strive for “few deviations” from the broad principle. G7 finance ministers have agreed to try and push through a global minimum corporation tax of 15%, while also outlining plans to target large multinationals and make them pay 20% corporation tax based on where their sales are. The Chancellor, who said the deal would get “the largest multinational tech giants to pay their fair share of tax”, has suggested that UK financial services firms should be exempt as the crackdown is aimed at US tech giants like Amazon and Facebook. However, Ms Georgieva says policies should “aim for simplicity”. She noted that developing countries have less capacity to administer tax, warning that anything that is more complicated “would create risks of derailing the purpose of generating more revenues to invest in health, education, infrastructure and the green transition”.

Firms eye NN asset management arm

UBS and German asset manager DWS are preparing final bids for the asset management arm of NN Group, with Prudential Financial and US asset manager Nuveen also interested in bidding for NN Investment Partners, with the firms carrying out due diligence ahead of a binding bid deadline of early July. Sources say other bidders including Allianz, Assicurazioni Generali and The Royal London Group have all dropped out. NN is looking to raise between €1.4bn and €1.6bn from the deal.

UK task force urges reforms to boost City and fast-growing sectors

A Government task force on innovation, growth and regulatory reform will recommend changes to rules governing financial services and fast-growing sectors to boost investment and take advantage of post-Brexit freedoms.

LEISURE & HOSPITALITY

Small businesses at risk from double-booking

Small tourism-focused businesses could lose millions as holidaymakers plan to cancel at the last minute if restrictions change and they can travel abroad instead. A Visit Britain survey has found that 8% of people would cancel a UK trip to go abroad this summer, rising to 10% later in the year. Bed and Breakfast Association analysis suggests that if each of the UK’s 35,000 B&Bs had a week’s worth of cancellations over the summer, they could lose £17m in total.

Whitbread faces backlash over executive pay

Whitbread faces an investor backlash after voting service IVIS red-topped its remuneration report ahead of its upcoming AGM. This came after the owner of the Premier Inn hotel chain carried over executive bonuses accrued during the pandemic despite cutting jobs, using Government funds to furlough employees and suspending dividend payments. Whitbread decided that CEO Alison Brittain and senior colleagues had earned part of their annual bonus entitlement for 2020/21, with its remuneration committee deciding to delay the pay-outs by 12 months depending upon its performance.

MANUFACTURING

Factories look to regain lost ground by end of 2022

A survey by trade body Make UK has found that manufacturers are upgrading their growth forecasts, with the sector on track to see output return to pre-pandemic levels by the end of 2022. Factories are expecting an increase in domestic and overseas orders, with this driving up hiring intentions. While the sector saw output slip 10% in 2020, manufacturers are likely to recover much of those losses this year, with the sector set to outpace the growth of the wider economy. The report notes the positive impact of the temporary “super-deduction” which allows companies to cut their tax bill by up to 25p for every £1 they invest.

REAL ESTATE

Demand may keep prices up when stamp duty holiday ends

The Sunday Mirror looks at what the end of the stamp duty holiday could mean for house prices. The tax break designed to support the housing market through the pandemic has seen a surge in deals and rising prices, with Halifax data showing that prices hit a record high last month, averaging £261,743. Reflecting on what may happen to the housing market once the threshold is reduced from £500,000 to £250,000 on July 1 a and £125,000 on October 1 - a Royal Institution of Chartered Surveyors spokesperson said: "Sales expectations on a 12-month horizon are flat, but expectations of further house price inflation appear to have intensified." Halifax managing director Russell Galley said property prices will keep rising if demand stays high and notes a continued shortage of properties for sale. Meanwhile, a poll from mortgage broker First Mortgage shows that 61% of current first time buyers think the value of homes could drop later in the year, leaving them owing their lender more than the property is worth.

Sales at risk as stamp duty holiday deadline nears

A number of property sales are at risk of falling through if they are not completed before the stamp duty holiday deadline of June 30. Analysis by property data firm TwentyCi suggests that four in ten sales agreed before April 1 will not complete by the cut-off, meaning more than 160,000 buyers could miss out on tax savings of up to £15,000. The report from TwentyCi notes that more than 300,000 transactions were likely to have missed the original stamp duty deadline of March 31. However, the Chancellor opted to extend the tax break until the end of this month. Once the June 30 deadline passes, the stamp duty-free threshold on properties up to £500,000 drops to £250,000 until the end of September. Amid concern that deals failing to complete in time for buyers to benefit from the stamp duty holiday could cause property chains to collapse, a study by Rightmove shows that one in four buyers have said they would try to renegotiate the purchase price with the seller if they missed the deadline.

Record number of homes sell over asking price

A third of properties sold for more than their asking price in April, the highest number on record. Research from NAEA Propertymark also found the number of people looking for a house was at the highest level in April since 2004, with an average of 427 buyers registered with every estate agent branch. Mark Hayward, chief policy adviser at NAEA Propertymark, said: "The continued imbalance of supply and demand is a concern and has led to a strong sellers' market."

ECONOMY

Economy grows for third consecutive month

Office for National Statistics (ONS) figures show that GDP rose for the third consecutive month in April, with the economy growing 2.3% as the easing of lockdown measures delivered a rebound in consumer spending. While the increase marks the fastest monthly growth since July 2020, the economy is still 3.7% below a pre-pandemic peak recorded in February 2020. Analysis shows that GDP grew by 1.5% in the three months to April compared with the previous three months. While GDP shrank by 1.5% in Q1, on a monthly basis the economy has been recovering ever since a 2.5% contraction in January, posting growth of 0.7% in February and 2.1% in March. Chancellor Rishi Sunak said that the ONS figures were "a promising sign that our economy is beginning to recover".

OTHER

Company closures spark loan fraud fears

Experts have warned that thousands of pandemic-related loans may have been fraudulently claimed and might never be returned to the taxpayer, with concerns raised after the number of companies being shut down jumped. Figures show that almost 40,000 firms were struck off in the first three months of the year, a rise of 743% on Q1 2020. The increase has driven concern that some businesses deliberately stopped trading so they could be struck off and avoid repaying their loans.

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