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Daily News Roundup: Monday, 14th September 2020

Posted: 14th September 2020


Mortgage gulf opens up

First-time buyers are seeing a widening gap between the rates on savings and mortgage rates, with a 3.28 percentage point difference between the average easy-access savings rate, which stands at 0.22%, and the average mortgage rate for a first-time buyer with a 10% deposit, which is currently 3.5%. While savings rates have fallen as the Bank of England cut its base rate to a record low of 0.1%, mortgage rates have climbed as economic uncertainty has seen lenders withdraw deals. Moneyfacts’ Rachel Springall said: "Banks and building societies don't need savers' deposits to fund their lending, and are tightening the riskier, low deposit mortgages." Meanwhile, the Sunday Times reports that the UK’s banks “have shut the door” on first-time buyers, with Lloyds, Barclays, Santander, NatWest, HSBC and TSB having all scrapped loans for borrowers with a deposit of 10% or less. The paper says lenders are being “deluged” with mortgage applications from other types of buyers, such as older and wealthier people, as they look to take advantage of the stamp duty holiday. The surge in demand has left borrowers facing a 30-day wait to have mortgage applications approved, a process that would normally take about 10 days. The Financial Conduct Authority is understood to be monitoring the situation.

TSB chief ‘frustrated’ over customer service

TSB boss Debbie Crosbie has warned staff she is “frustrated” about the bank’s customer service, noting in a memo that the bank is “below industry averages” on most measures. She warned that TSB would “struggle” to attract new customers if it did not improve service. Ms Crosbie said customer delivery director Gary Jones will devise a plan of action, saying: “Often this will mean prioritising existing programmes to deliver them more quickly, or it could mean a complete change in approach”.

Expats face having accounts closed due to Brexit

Lloyds Banking Group has written to 13,000 expats who live in Holland, Germany, Ireland, Italy, Portugal and Slovakia to tell them their accounts held in Britain will close from November. British banks will have to set up a separate legal entity in each country after Brexit and not all banks have announced their intentions yet. Barclays is "reviewing the situation" while Santander and NatWest said they had no plans to close the accounts of any customers resident in the EU at present.

RBS altered files ahead of review

Documents suggest that Royal Bank of Scotland employees altered customers’ files ahead of an independent review into mis-selling of interest-rate swaps. By altering information ahead of the review overseen by the Financial Conduct Authority, RBS staff potentially helped the bank to avoid paying millions in compensation. While the alterations appear on files related to a swap sold to a partnership of NHS doctors, a whistleblower has told the Independent other customers’ files may have been tampered with in a similar way.

Coutts lowers costs of wealth management service

Coutts has lowered the cost of its wealth management service by about half. The bank, which is part of NatWest Group, has scrapped its 1% “implementation fee” and reduced its initial advice fee from a flat £3,000 to £2,400. Customers can now pay a one-off £6,000 charge for financial planning, including tax, inheritance and pension advice, down from about £12,000. The move is seen as a bid to challenge leading firms such as St. James’s Place and Chase de Vere.

Warning over BBRS eligibility criteria

The Business Banking Resolution Service, a business redress scheme designed to give SMEs a chance to get an independent view on banking disputes, has been told that it risks being of little relevance to many firms as up to 98% of Britain’s smaller companies could be frozen out unless eligibility criteria are loosened. The resolution service said it disagreed with the circular, which it described as “flawed in its methodology and its conclusions”, insisting that the scheme due to be rolled out in the autumn will be available to “thousands of SMEs to resolve ongoing disputes dating back to December 2001”.

Lloyds to trial office changes

Lloyds Banking Group will next month begin testing changes to the way it uses its offices. Trials set to run until the end of the year will see staff put onto a rota system, getting them to use bookable desks, working from their local branches and only going into the office for team meetings.


Employee pensions could soon be invested in VC

The Government announced on Friday that it was considering lifting the charges cap on the default pension schemes used by millions of auto-enrolled employees to make it easier for their money to be invested in new asset classes. The Times’s Patrick Hosking says the private equity industry will be delighted, but he warns the purported returns of savers putting cash into venture capital have been overstated.


Danske to review excessive collection

Danske Bank has admitted that it had known for years that it was collecting outdated or excessive debt from customers due to IT errors. Denmark's financial watchdog last week launched an inquiry into approximately 106,000 cases stretching back to 2004.

Jane Fraser seeks to tame the Citigroup ‘beast’

The FT considers the chief challenges facing new Citigroup chief Jane Fraser which her predecessor couldn’t solve: poor returns and delivering more shareholder value.


Alex Cruz: BA can survive but only if government works with us

British Airways CEO Alex Cruz has warned of the impact of the coronavirus pandemic. “In March, April and May we flew just 5% of our schedule,” he says. “Six months into the pandemic and we are still flying just 30%.” Mr Cruz has urged the Government to stop “sitting on its hands” and agree on a universal testing process with international partners in order to support a recovery in aviation.

Ryanair braced for pay rebellion

Ryanair could this week see a pay rebellion over a €458,000 bonus for chief executive Michael O'Leary, with advisory group ISS saying it is “difficult to justify” the payout when the airline has utilised the furlough scheme and accessed a £600m loan from the Bank of England. Mr O'Leary's total remuneration for the year to March was €3.5m, with his bonus close to 92% of the maximum he could have received.


Fund management 200 years away from gender parity

Citywire analysis suggests that if the current rate at which women are promoted to senior roles continues, female fund managers will not achieve equal status with male colleagues until 2215. Only 1,762 of the 16,018 active fund managers are women, with the proportion now at 11% compared to 10.3% in 2016. Nisha Long, head of cross-border investment research at Citywire and author of the Alpha Female 2020 report, notes that just £2.4trn of the £12trn of assets under management covered by the Citywire database are managed by either individual women, all-women teams or a team of women and men. The report also highlights a higher turnover rate among women, with 42% of female fund managers having moved positions in the last decade, compared with 27% of men. Ms Long said that while firms have hired more women and put incentives in place, “it’s not just about attracting women into this industry, it’s about how to keep them in fund management once they start.”

CGT rethink could drive M&A activity

With Chancellor Rishi Sunak said to be considering an increase in capital gains tax to rebalance the nation’s books following the COVID-19 crisis, the Sunday Telegraph’s Ben Woods says the reported rethink of the levy has “sent a chill through the private sector.” He says wealthy investors are selling down their portfolios, while private equity firms have warned that higher levies on executive payouts could drive dealmakers out of the UK. Mr Woods goes on to suggest tax reforms may deliver a rebound in the merger and acquisition market, noting that activity has “been in the doldrums” since the start of the pandemic, with Office for National Statistics data showing that there were 152 domestic M&A transactions between April and June – a 66% year-on-year decline – while the value of deals dropped to £300m from £2.7bn the year before.

Aviva sells Singapore arm

Aviva has agreed to sell a majority stake in its Singapore arm for £1.6bn to a consortium led by Singapore Life. Analysts suggested that the disposal will fire the starting gun on a wave of sell-offs at the insurer as it seeks to focus its operations on its more profitable regions. CEO Amanda Blanc said: “The sale of Aviva Singapore is a significant first step in our new strategy to bring greater focus to Aviva’s portfolio.” The transaction is subject to regulatory approval and is expected to be completed by January.


End of eviction ban could see hospitality 'bloodbath'

With a Government ban on evictions ending on October 1, retail and hospitality businesses could see a surge in collapses as landlords prepare to call in unpaid rent. Tenants that have been unable to cover rental costs amid the coronavirus pandemic may face legal action to evict them from shops, restaurants, bars and pubs once the ban is lifted. Trade body UK Hospitality has called on the Government to extend rent relief until the end of March 2021, with chief executive Kate Nicholls saying the sector could see a “bloodbath” if landlords take action over unpaid rent. Meanwhile, food firms have written to the Government asking for a targeted extension of the commercial evictions ban, with the bosses of firms including Deliveroo, Itsu and Burger King saying a rent holiday should be extended for restaurants in city centres and for those in areas under lockdown.


BT calls time on Dixons

BT has said that its mobile network EE will not renew its contract with Dixons Carphone and would instead focus on its own online and retail channels. “This has not been an easy decision to take and follows many months of challenging discussions and negotiation,” a spokesman for BT said.


CEBR expects house prices to fall

With Nationwide data showing that average house prices rose 2% to a record £224,123 in August, the Centre for Economics and Business Research (CEBR) says the climb is likely to be an anomaly driven by a temporary stamp duty cut and pent up demand as the market stalled amid the lockdown. The CEBR says its analysis points to prices falling “significantly” toward the end of 2020 and into the first half of 2021. It said that while prices might see a “short spike” as the stamp duty cut draws to an end next March, average house prices are forecast to be 13.8% lower in 2021 than in 2020.

Landlords call for end of eviction ban

Commercial landlords have called on the Government to drop a ban on evictions so they can serve notice on retailers who fail to pay their rent. Vivienne King, chief executive of real estate lobby group Revo, has asked Suella Braverman, the Attorney General, to prevent the freeze on evictions from being extended. Ms King said: “While we recognise the moratoria were imposed as an emergency measure, that emergency must now be treated as having passed with the requirement coming to an end, given that other government support interventions are ending.”


Debenhams owners to sell Danish ‘crown jewel’

According to the Times, the hedge fund owners of Debenhams have launched a separate sale process for Magasin du Nord, the retailer's Danish chain that was once called its “crown jewel”. A sale of the business, which is understood to be at an early stage, could fetch the hedge funds between £150m and £200m.

Games Workshop sales soar

Games Workshop has reported a £48m profit for the last three months as Warhammer fans snapped up £90m-worth of figurines, up on £78m in sales during the same period a year ago.


UK economy grows 6.6% in July as coronavirus restrictions eased

The Office for National Statistics (ONS) reported GDP grew by 6.6% in July as more parts of the economy opened up from the coronavirus lockdown. ONS director of economic statistics Darren Morgan said of July's growth: "While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.”

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