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Daily News Roundup: Monday, 18th September 2023

Posted: 18th September 2023


Cheapest mortgage rates fall below 5%

The cheapest mortgage rates in the UK have fallen below 5% for the first time since July, signalling a positive outlook for the economy. Yorkshire Building Society introduced a 4.99% five-year fix, while Coventry Building Society cut its cheapest five-year deal to 5%. Other major lenders, including Barclays, Halifax, and Nationwide Building Society, have also reduced their mortgage rates, bringing hope to the 1.6m homeowners whose existing deals are ending next year, as well as for the property market. The average of the cheapest two-year fixes has dropped from 6.25% to 5.9%, while the average of the cheapest five-year deals has fallen from 5.73% to 5.36%. Fixed mortgage rates have been steadily declining since mid-July, driven by hopes of falling inflation rates and the expectation that the Bank of England will not raise the base rate significantly. Experts predict that the Bank will make one more rate rise, increasing the rate from 5.25% to 5.5%, and will not raise it again.


SoftBank seeks OpenAI tie-up as Son plans deal spree after Arm IPO

SoftBank is poised to make substantial investments in artificial intelligence after the listing of Arm boosted the Japanese company’s war chest, with OpenAI and its rivals said to be potential targets.

Private equity M&A set to whittle sector down to 100 ‘next-generation’ firms

The number of private market fund managers will shrink to as few as 100 over the next decade, Partners Group boss David Layton predicts, as smaller firms struggle with fundraising challenges and increasing regulatory costs.


Credit Suisse bond investors plot lawsuit against Switzerland

Lawyers at Quinn Emanuel are laying the groundwork for international bond holders to sue Switzerland in the US for expropriation over the losses they suffered after the state-orchestrated rescue of Credit Suisse. The London law firm is already suing Switzerland's financial regulator, FINMA, over its decision to wipe out $17bn of Credit Suisse bonds when the bank was taken over by UBS six months ago.

Bank of Montreal to wind down retail auto finance business

Bank of Montreal is winding down its retail auto finance business, resulting in an unspecified number of job losses. The move comes after the bank's bad debt provisions in retail trade surged, indicating growing stress among consumers from rising borrowing costs. "By winding down the indirect retail auto finance business, we have the ability to focus our resources on areas where we believe our competitive positioning is strongest," BMO said in a statement.


Volkswagen weighs up ending Polo production in Europe

Production of Volkswagen’s second best-selling model, the Polo, could be terminated before the end of the decade as emissions regulations start to push up the cost of producing petrol-engine cars.  


UK finance and tech firms fight working from home

Financial services and technology companies are encouraging staff back to the office as face-to-face collaboration returns to favour, the Observer reports. “There is an underlying trend towards a greater number of your working days being in the office rather than remotely…across insurance, asset management, banking, the US and the UK,” said Bruce Carnegie-Brown, the chair of Lloyd’s of London. Perks such as free parking, food and drink, have helped attract staff back to the office as corporates emphasise the business need of working together. Hybrid working is widely seen as here to stay, however, with only certain roles required to be in the office five days a week, Carnegie-Brown added.

JPMorgan chase bets against CAB Payments

One of the banks that floated CAB Payments on the stock market this summer is now betting against shares of the cross-border transfer business. JPMorgan Chase's asset management arm has taken a 0.5% net short position in CAB shares, worth about £3m. CAB Payments, which focuses on business-to-business cross-border payments and foreign exchange transactions, had its IPO sponsored by JPMorgan and Barclays. The listing has been disappointing for investors, with shares falling 24% since the IPO. JPMorgan declined to comment on the short position.


Manufacturers in UK prepare for potential recession, orders slowing

Britain's manufacturers are preparing for a potential recession as they see a sharp slowdown in activity, according to the Make UK manufacturing outlook survey. Recruitment plans have ceased and orders are slowing both domestically and internationally. Make UK has revised its manufacturing growth forecast for this year, expecting output to fall, and forecasts no growth at all for next year. The survey also found that many companies believe that policy incentives in other countries are making UK investments harder to justify, and a lack of policy consistency in the UK is damaging the business environment. Make UK is calling for a review of the apprenticeship levy and other measures to support manufacturers. Verity Davidge, policy director at Make UK, said that manufacturers are preparing for an anaemic year ahead.

Imagination files to go public in New York

The British microchip company Imagination Technologies has chosen to list in New York rather than London in another blow to the City. The company has made preparations for a Wall Street IPO six years after it was taken off the London Stock Exchange and sold to Canyon Bridge, a US-based fund backed by Chinese state-linked investors. The number of companies listed on the London Stock Exchange has fallen by 60% since the late 1990s with the decline sparking alarm in Downing Street. The Treasury has been seeking ways to revive activity and encourage listings but deeper investment pools and less stringent governance rules mean the US remains a more attractive destination.


British Land to sell Meadowhall in £750m deal

Property giant British Land is preparing to sell Meadowhall in Sheffield for £750m, in what could be one of the largest shopping centre deals of the past decade. Meadowhall, which is 50-50 owned by British Land and Norway's sovereign wealth fund Norges, has seen its value roughly halve since 2012. Despite the challenges faced by the retail sector, the shopping centre is 98% occupied and counts Marks & Spencer and Primark among its tenants. A buyer would inherit £450m of debt secured against the centre.


Endless explores sale of online bathrooms retailer

The investment firm Endless, which owns businesses such as American Golf and Hovis, is working on the potential sale of online bathrooms retailer Victoria Plum. Talks with several bidders are at an advanced stage, and a deal is expected to be signed soon. Endless acquired Victoria Plum in 2019 and has recently injected £3m of working capital into the company to support the sale process. 

Frasers in talks to sell Missguided to Shein

Frasers Group is in talks with the Singapore-headquartered Shein to sell Missguided, the online clothing label Mike Ashley’s business bought out of insolvency 18 months ago. One source told Sky News that the deal was likely to encompass Missguided's brand and other intellectual property, with its head office retained by Mr Ashley's company.


Satisfaction with Bank of England at new low

Public satisfaction with the Bank of England's efforts to control inflation has reached a record low, according to the institution's own survey. Two in every five people expressed dissatisfaction with the Bank's job in setting interest rates to control inflation, the highest proportion since the survey began in 1999. The share of people who are satisfied fell to 19%, the lowest on record. The net balance of satisfaction stands at minus 21%, the worst performance in the survey's history. The Bank's Monetary Policy Committee is set to announce its next interest rates decision on Thursday. Markets expect a quarter-point hike to 5.5%, the 15th rate increase in a row, but a pause cannot be ruled out.

Oil price rises towards $100 a barrel

Oil prices have surged nearly 30% since June after Russian and Saudi Arabian production cuts and rising demand from China. They are now on course to hit $100 a barrel for the first time this year. The price rises are impacting fuel costs in the UK, with figures from the RAC showing the average price of unleaded fuel was £1.52 a litre on Friday, up from £1.43 in June.

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