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Daily News Roundup: Monday, 15th March 2021

Posted: 15th March 2021

Begbies Traynor Group to acquire David Rubin & Partners

Begbies Traynor Group has raised £22m through an equity fundraising to help pay for its acquisition of London and Guernsey based David Rubin & Partners. The group will pay an initial £12m for David Rubin & Partners, and then over a period of up to five years it will pay additional cash payments of up to £13m, subject to the financial performance of the acquired business. Ric Traynor, executive chairman of Begbies Traynor Group, said: “This acquisition is our largest to date and is expected to be immediately earnings enhancing. It leaves the group well-positioned to increase its market share and continue to grow its business recovery and financial advisory revenues.” Head of business recovery and advisory Mark Fry added: “The acquisition of David Rubin & Partners significantly increases the scale of our business recovery and financial advisory business. Combined with our recent acquisition of CVR, we have also materially increased our scale in the key London market.”


Government under pressure to strike EU deal for the City

The Telegraph’s Lucy Burton reports on bankers’ expectations ahead of an outline memorandum of understanding set to be drawn up between the UK and the EU on financial services at the end of this month. Whatever the outcome, one source said, the risk of fragmentation in the sector is high which is “bad for all users of financial services, not just in the UK.” Although the City has not yet experienced the predicted exodus of banking talent, if there is not some sort of equivalence without the threat of it being removed after only 30 days, bankers earmarked to relocate are unlikely to stay put, one bank executive said.

Klarna could launch more banking products

Klarna founder Sebastian Siemiatkowski has revealed plans to launch more banking products in the UK, after its “buy now, pay later” service attracted nearly 15m British consumers. He told The Times it was “not unlikely” he would apply for a British banking licence and start taking deposits in the UK, adding that traditional banking was ripe for massive disruption. He said: “It’s making too much money. It needs to shrink. It has to become smaller. It is overcharging society. As an entrepreneur it is just a dream to go after this industry.” He said the conventional credit card industry was especially vulnerable, accusing it of “literally taking money from the poor and giving it to the rich.”

Keep BofE out of climate change, says Lord King

Former Governor of the Bank of England Lord Mervyn King has said Rishi Sunak’s new requirement for the Bank to consider the environment in its policy decisions risked undermining the institution’s independence. "I know climate change arouses passions,” he said, “but that is no reason to embroil the Bank of England in what should be the responsibility of Government.” moreover, Lord King added: "Fiddling with the Bank of England's remit while at the same time taking no action on a carbon tax and freezing fuel duty again are gestures, not a coherent policy.”

Outlook exciting, says Anne Boden

The Times interviews Starling founder Anne Boden about how the entrepreneur built her start-up bank into one of Britain’s most promising financial technology businesses. About £1.5bn of Starling’s £2bn of loans are from the bank’s participation in the Government’s pandemic loan schemes, raising questions about whether it faces huge bad debts this year. But Boden says the bank’s technology meant it spotted fraudsters quicker than other banks and she reckons defaults will be at the smaller end of the 30% to 60% prediction she made previously.

More blackmail and fraud over past year

There has been a rise in fraudsters bribing or blackmailing bank staff for customers’ information, according to the Dedicated Card and Payment Crime Unit, which said it had 43 referrals from bank staff who had been approached by criminals last year, up from 23 the year before. Meanwhile, Santander has reported a 47% rise in so-called payment redirection fraud in the past year. Susan Allen, head of retail banking at Santander, said more needs to be done to stop fraud at source so that consumers' money is never put at risk in the first place.

Pandemic or not, banks should be there for their clients

Mark Prentice, the Head of Banking at Hampden & Co., writes in the Scotsman on how the pandemic has highlighted the increasing reluctance of high-street banks to support business owners in times of crisis. As a result, many business owners are understandably seeking an alternative, adds Prentice, but ultimately, “bankers really should be there for their clients – in good times and bad.”

Major banks chastised for not implementing fraud safeguards

TSB, Virgin Money and Metro Bank are among the UK’s top banks criticised for not using confirmation of payee (COP) checks to protect vulnerable customers from fraud. James Daley, of Fairer Finance, said the “time for excuses was running out” for banks that were yet to implement the safeguards.

Interview: Monzo’s TS Anil

The Sunday Times interviews Monzo boss TS Anil, who is still striving to bring Britain’s most popular finance app into profit. One of the chief targets of fresh revenue is unsecured loans which Anil says Monzo’s customers have about £16bn of, just not with Monzo and he want a slice of it.

NatWest closes online lending platform

NatWest is to close its SME lending platform Esme Loans to new borrowing. The bank said businesses that currently have a loan are not affected by the move.


Warburg Pincus acquires stake in Edelman Financial Engines

Warburg Pincus will acquire a minority stake in Edelman Financial Engines, valuing the U.S. investment advisory services provider at $7.3bn.


Goldman Sachs creates Hong Kong SPAC unit

Goldman Sachs has set up a team of Special Purpose Acquisition Company bankers in Hong Kong to focus on a rush of these blank cheque deals emerging in the Asian region. Raghav Maliah, the global vice chairman of Goldman Sachs’ investment banking division, commented: "We are seeing a great deal of capital markets and M&A activity across the region, including increased SPAC involvement both on the IPO and M&A fronts."

UBS increases stake in Chinese JV

UBS Group is moving to increase ownership in its Chinese securities joint venture to 67%, filings on the China Beijing Equity Exchanges showed. Its two local partners put their stakes up for sale.

Deutsche investment banking bonuses up 46% as bank returns to profit

Bonuses for Deutsche Bank’s investment bankers rose by 46% in 2020 on the back of pandemic-led trading boom which drove the lender to its first annual profit in six years.

Orcel to receive €7.5m in annual pay

Andrea Orcel, the new CEO of UniCredit, will receive up to €7.5m in annual pay, based on his fixed salary and variable compensation. His annual fixed salary will be €2.5m, according to bank documents.


Virgin Atlantic secures a further £160m

Virgin Atlantic is finalising £160m in fresh support package from shareholders and creditors. Sky News reports that Sir Richard Branson’s Virgin Group will be contributing £100m. Meanwhile, the Sunday Times interviews Virgin Atlantic CEO Shai Weiss who runs over just how horrific the past year has been and predicts that it could take until 2023 or 2024 for the recovery to materialise.

BA to require proof of vaccination

British Airways is to launch a digital global vaccine passport requiring passengers to upload proof of their jab to a BA app on their smartphone to show they are safe to fly. The airline’s vaccine passport will be released in time for the planned resumption of international travel on May 17. For those who have not been vaccinated the BA app will record details of negative COVID-19 test results.


UK taxpayer exposed to Gupta and Greensill via £1bn debt guarantees

The FT reports that BEIS officials are scrambling to determine the extent of taxpayer losses linked to the collapse of Greensill, with £1bn at risk via three Government guarantees. Elsewhere in the paper, Tom Braithwaite says big questions remain over the supervision of commercial lending, who will take the hit and when do we consider an entity like Greensill a systemic risk. It has also emerged that Greensill Capital borrowed almost €100m from its sister bank in Germany in the months leading up to its collapse, with such related-party loans subject to stringent regulatory requirements under German law.

Now let’s hear why FCA failed on Blackmore

Campaigners and MPs are calling for a probe into how the Financial Conduct Authority failed to prevent the collapse of mini-bond firm Blackmore, which cost investors £47m. The Telegraph notes that in contrast with the London Capital & Finance case, which recently made headlines after Dame Elizabeth Gloster found the FCA had repeatedly failed to intervene, in the Blackmore case high-ranking officials at the regulator were made aware of major issues years before the firm's eventual demise.

Stripe valuation soars to $95bn after latest fundraising

Payments provider Stripe is now valued at $95bn after its latest raise of $600m making it the most valuable private company Silicon Valley has produced. Stripe remains private and has not disclosed revenues or profitability.

UK pensions minister urges fund sector to act faster on releasing climate data

Marking the introduction of new climate reporting requirements on trustees, pensions minister Guy Opperman told the asset management industry last week that it needs to improve the climate data it provides.


Virgin Active in restructuring talks

Virgin Active is undergoing a restructuring in the hope the company can avoid administration. Progress has been made with landlords while its banks and shareholders are reportedly supportive. Virgin Active is hoping to complete a rescue deal in late April, but if this fails it would be put into administration and wound down rather than sold as a going concern, putting almost 2,500 jobs at risk.

Carnival chief anticipates at least two more tough years for cruise industry

Arnold Donald, the CEO of Carnival, has said prolonged lockdowns and concerns over coronavirus outbreaks on cruise ships mean the industry is unlikely to return to pre-pandemic levels until at least 2023.


Domestic demand brings cheer to manufacturers

A report from the manufacturers organisation Make UK has revealed that domestic orders have risen in the first quarter of the year, helping to offset the impact of the COVID-19 crisis and Britain's departure from the EU single market. A net balance of 9% of respondents said that they had increased output during the period, up from -5% in the previous quarter. The outlook for the coming months is even brighter, with a positive balance of 15% of respondents expecting output to grow.


Google and Microsoft trade blows over news

Microsoft has angered Google after its president Brad Smith told US lawmakers on Friday that the company backed legislation to make tech platforms pay for news. Mr Smith said Google was squeezing out most of the profit available to news organisations but Google hit back accusing Microsoft of “naked corporate opportunism.”


Hammerson reports record losses after writing down property values

Hammerson has written down the value of its shopping centres by £1.6bn after rental income across its shopping centres and retail parks fell by 41% year to £157.6m, prompted by store closures, tenant restructuring deals and higher provisions for bad debt and tenant incentives. So far Hammerson has collected 76% of 2020 rent due, while the vacancy rate across its portfolio increased from 2.8% to 5.7% over the year The decline in valuations pushed Hammerson’s loan-to-value ratio to 46% and led the landlord to report a £1.7bn loss.


China sales boost Burberry forecast

Burberry has upgraded its full-year profit forecast after a rise in sales since December, driven by China’s rapid recovery from coronavirus. The company said that same-store retail sales were expected to be between 28% and 32% higher than last year in the final quarter.


UK economy suffered 2.9% hit in January

The UK economy shrank 2.9% in January and is likely to shrink 4% in the first quarter of 2021 due to lockdown disruptions. Jonathan Athow, an Office for National Statistics statistician, said: “The economy took a notable hit in January, albeit smaller than some expected, with retail, restaurants, schools and hairdressers all affected by the latest lockdown. Manufacturing also saw its first decline since April with car manufacturing falling significantly. However, increases in health services from both vaccine rollout and increased testing partially offset the declines in other industries.”


Mathias Cormann set to head OECD

Australia's long-time former finance minister, Mathias Cormann, is set to take over as chief of the Organisation for Economic Co-operation and Development (OECD). During his campaign for the OECD job Mr Cormann pledged to deploy "every policy and analytical capability available through the OECD to help economies around the world achieve global net-zero emissions by 2050".

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