BANKING
Treasury weighs new FCA powers over branch closures
The Sunday Telegraph’s Lucy Burton looks at Treasury plans to protect the public's access to cash, saying that officials may look to act as bank bosses are “tired of bankrolling branches now only used by a minority” and could cut branch numbers. Noting that over 4,000 UK bank branches have shut for good over the past six years, Ms Burton says the Treasury has launched a consultation exploring how to maintain access to cash, with a move to give the Financial Conduct Authority (FCA) extra powers so that it can legally block further closures from the banks it regulates among options being considered. Ms Burton says the proposal has “spooked” bankers who do not feel “rigid legislation” that forces them to sustain a branch network is the way to go. She cites a former senior bank executive who says: “If the FCA blocks closures they are creating an uneven playing field between incumbents and new digital entrants, which is not smart … I suspect incumbents will push back very strongly and seek legal remedies.” Ms Burton notes that while the FCA asked banks to slow closure programmes during the coronavirus crisis, the pandemic forced more people to move to online banking. This shift toward digital banking, she adds, has made it harder to justify keeping branches open.
Banks plan shared branches
Britain's biggest banks are in talks about creating shared branches in regions where services are limited, with sources saying lenders are set to agree a five-year deal to cover the costs of shared sites where customers can pay in or withdraw cash and carry out transactions, no matter who they bank with. The source said the only significant sticking point is how much each bank will pay toward the initiative. The Mail on Sunday says critics have voiced concern that the deal could prompt further closures, saying it could give lenders “the perfect cover to reduce their overall networks”.
Banks’ PPI bill hits £41bn
While the deadline for claims passed in August 2019, delays in processing them meant banks paid out £3.2bn over mis-sold PPI last year. The amount paid in compensation for mis-sold PPI now stands at £41.5bn.
Monzo lender pauses new customer offers amid FCA investigation
Oaknorth, a lender providing savings products to Monzo users, has halted offers for new customers after Monzo revealed it is the subject of a Financial Conduct Authority (FCA) investigation into money laundering checks. Oaknorth has paused offerings via the digital bank while it conducts due diligence amid the City watchdog's investigation. On Monzo’s savings marketplace website, four of its five lending partners are unavailable, with the other lenders reportedly pausing new offerings before the FCA investigation began in May. Oaknorth, which is understood to have paused its lending on Wednesday, said: “It is standard practice for us to conduct risk-based reviews with all partners, including when new information comes to light”. The Telegraph says the lender could restart its offering as soon as next week.
Banks to work with LendInvest
LendInvest has agreed to form a partnership with Barclays and HSBC, with the banks set to provide funding for short-term bridging finance mortgages through the financial technology company’s platform.
TSB offers 0.84% fixed-rate deal
TSB is offering a two-year fixed rate mortgage deal at just 0.84%. The deal is available to those remortgaging with 40% or more equity in their property and comes with a £995 fee. A five-year fix up to 60% LTV with a £995 fee is on offer at 1.19%.
PRIVATE EQUITY
Tax haven concerns over private equity firms
Research by the Labour Party suggests private equity firms' reliance on tax havens could mean millions of pounds are flowing out of the UK, with the top ten largest private equity groups operating in Britain all having links to offshore financial hubs. The analysis shows that firms including Cinven, Permira, Apax and Bridgepoint all use complicated corporate structures that see them having funds or holding companies in locations such as Guernsey and Luxembourg. While the private equity firms say this makes managing the companies they own or fund around the world easier, critics say the structures make it difficult to know how much tax revenue the Treasury is missing out on.
INTERNATIONAL
Credit Suisse bolsters risk oversight
Credit Suisse is bolstering its internal controls by adding two new risk experts to its non-executive board. Chairman Antonio Horta-Osorio has made strengthening risk oversight his main priority. Axel Lehmann, a former UBS executive, is to become chairman of the risk committee, while former ING executive Juan Colombas – who served in risk roles at Lloyds and Santander under Mr Horta-Osório - is also due to join the Credit Suisse board. Mr Horta-Osório said the new additions “will make an invaluable contribution as we shape the bank's strategic realignment and enhance our culture of risk management and personal responsibility and accountability”.
AVIATION
Gatwick in talks with lenders
Gatwick Airport is in talks with banks to avoid defaulting on its loans. The airport said that a collapse in passenger demand and Government restrictions had hit business, driving it to a pre-tax loss of £204m in H1. This marks a 40% dip on the first six months of 2020. Chief executive Stewart Wingate said: “I remain certain that Gatwick will recover and as a business we are financially and operationally well placed for that.”
FINANCIAL SERVICES
Lobby group plots strategy to boost the City
TheCityUK is working on a strategy to help London win more business and overtake New York as a financial centre, with sources saying the lobby group is drawing up recommendations for ministers designed to boost the competitiveness of the City post-Brexit. TheCityUK, which is reportedly consulting with trade bodies including UK Finance, is expected to outline proposals on issues including trade policy, regulation and investment into the UK. This comes after a report by New Financial said the US “is the world's top financial centre by a wide margin”, with this based on factors such as the number of companies being floated there. Analysis shows that firms raised $84bn on US exchanges between the start of 2021 and mid-July, compared with $12.7bn in the UK.
Hedge funds set to seize control of Amigo
Oliver Gill in the Sunday Telegraph says sub-prime lender Amigo “is at risk of being pushed into the clutches of hedge funds”, warning that this could deprive people who were mis-sold high interest loans from securing compensation. Amigo is understood to have just 12 working days to publish its results before a group of bondholders that reportedly includes Apollo Global Management, Polygon Capital and York Capital can take control of the lender. Sources suggest that hedge funds would be paid out almost in full if Amigo is forced into administration with little money left to repay unsecured creditors such as compensation claimants.
Nutmeg withdraws services for US tax residents
Wealth manager Nutmeg has withdrawn its services to US tax residents – a group which includes people who live in the UK but were born in the US and those who have American parents. The firm says it is pulling out from providing Isas, pensions and investment accounts to about 350 people due to “legal and regulatory complexities”. The Foreign Account Tax Compliance Act introduced in 2010 requires institutions to report the financial details of all their American clients or risk large fines. While most wealth managers stopped offering accounts to US citizens living in the UK, Nutmeg continued to service existing accounts but stopped accepting US tax residents as new customers in 2018.
Vanguard calls for fund fee transparency
Sean Hagerty of asset manager Vanguard believes investment funds should publish easy-to-compare fee figures, with the call coming after the Financial Conduct Authority criticised assessment of value reports publish by investment companies.
HEALTHCARE
Pharma firms in legal fight
The latest stage in a legal battle between two of Britain’s leading pharmaceutical firms has seen GlaxoSmithKline launch a counter-claim against rival AstraZeneca in a High Court case centred on cancer drug Zejula. AstraZeneca licenses the underlying technology to GSK and claims it should receive a greater share of its sales. The firm has accused GSK of breaching the terms of its agreement.
LEISURE & HOSPITALITY
Restaurant boss: Demand is there but staff are not
The Times looks at staffing issues in the restaurant sector, with Jonathan Goldstein, chief executive of Prezzo owner Cain International, saying shortages are “just not sustainable over the medium term”. Will Beckett, co-founder of steakhouse chain Hawksmoor, says: “Almost any restaurant you care to name could be open more and could be busier … The demand is there, but you can’t physically get the restaurant open because of staffing issues.” Elsewhere, Julian Metcalfe, the chief executive of Itsu and founder of Pret a Manger, has warned that restaurant prices are set to rise by more than a fifth due to increasing staffing costs. He warned that the pandemic has delivered a “perfect storm” which is set to drive wage increases, with shipping costs now four times higher than before the coronavirus outbreak.
MANUFACTURING
Babcock sells consultancy arm
Defence firm Babcock International has agreed a £293m deal that will see it sell Frazer-Nash Consultancy to American engineering business KBR. Babcock chief executive David Lockwood said: “We are making real progress on our plan to streamline and focus the group on our key markets.”
REAL ESTATE
House prices fall in August
Analysis by Rightmove shows that house prices have fallen for the first time this year, with the UK’s average asking price slipping 0.3% to £337,371 in August. The firm said the decline follows the tapering of the stamp duty holiday and a subsequent fall in demand for bigger homes. Rightmove is predicting an “autumn bounce” in prices. The platform noted that demand is up 56% in August compared to the same period in 2019, while the number of sales agreed is up by 9%.
Help to Buy hits a new high
The number of people buying homes through Help to Buy is at an all-time high, with 55,600 households using the equity loan initiative to snap up a home in 2020/21. This marks an 8% increase on the year before. Analysis shows that 328,506 households have purchased a home using the scheme since it was introduced in 2013. The total value of Help to Buy equity loans has now topped £20bn, with the value of the properties sold under the scheme passing the £90bn mark, the figures showed.
House price growth set to continue
HSBC analysis has highlighted factors that could keep property price growth strong, saying incomes look set to remain robust and pent-up savings will also help drive the market. HSBC also points to the impact of buy-to-let, saying that a resurgence in private tenant demand and lower returns from other assets will see more people look to snap up homes they will rent out.
First-time buyers turn to longer loans as prices surge
More property buyers have taken on longer loans to make rising house prices more affordable - but risk spending more in interest. The number of mortgages sold with 35-year term or longer hit a three-year high in March this year, according to a Freedom of Information request from wealth manager Quilter. The level jumped by almost 75% compared with the same month in 2020. It came as house prices rose at their fastest rate since 2007.
RETAIL
Sales set for a back-to-school boost
Mastercard SpendingPulse, which measures instore and online retail sales across all forms of payment, expects retail sales - excluding petrol - to grow by 12% during the mid-August to mid-September back-to-school period compared to the same period in 2019 – before the pandemic. Year-on-year, sales are expected to climb 6.7% compared with 2020. Clothing sales are set to lead the way, with Mastercard expecting an 18.7% increase on 2020.
CD&R looks to top Fortress’ Morrisons bid
American private equity firm Clayton Dubilier & Rice is reportedly planning to top a rival £6.7bn bid for Morrisons made by a consortium led by Fortress. Clayton Dubilier & Rice started the battle for the supermarket chain in June with a 230p-a-share offer but Fortress has since topped that and gone further by lifting its bid from 252p to 272p amid reports that shareholders felt the initial price was too low. Clayton Dubilier & Rice has until Friday’s bid deadline to make a higher offer or walk away.
Very picks banks for float
Very Group is lining up Barclays, Morgan Stanley and UBS as the global co-ordinators of an initial public offering that is likely to take place next year and could be worth £4bn. The group recently raised a £575m bond to refinance and extend its existing debt.
SPORT
UEFA plans post-pandemic rescue package
Governing body UEFA is finalising plans for a £6bn rescue package to help European football recover from the financial impact of the coronavirus pandemic. The strategy will see a funding facility of £1.7bn to £5.1bn. Under the plans clubs will be able to access funds at lower borrowing rates and restructure existing debt over longer periods of five to seven years.
ECONOMY
Treasury blocking policies that would deliver a greener economy
Experts have warned that the Treasury is blocking green policies that would help the UK meet net zero emissions targets. With the UK scrapping, reducing or delaying a number of policies amid debate over short term costs, Jamie Peters, director of campaigning impact at Friends of the Earth, said a “rapid transition to a zero carbon future would be far less expensive than delaying the green measures we so urgently need, and that will create significant economic opportunities and new jobs.” Kate Blagojevic, head of climate at Greenpeace UK, points to “strong reports” that Rishi Sunak is “intent on blocking climate spending at exactly the moment we need it most”, saying that the Chancellor’s “fingerprints sit heavily on moves to delay or block crucial investment to cut emissions”. Noting several delayed policies that are not under direct Treasury control, the Guardian says the Treasury “holds the purse strings” and can veto other departments’ plans that require government investment. Ed Matthew, campaign director at think-tank E3G, says the Treasury is “at the root” of stalled projects and policies, suggesting it is “completely obsessed with short-term costs”, adding that this is “bonkers.” Chris Venables, head of politics at the Green Alliance think-tank, believes the Treasury has a “huge institutional resistance to medium term economic benefits” that involve short term costs.