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Daily News Roundup: Monday, 1st February 2021

Posted: 1st February 2021


1 in 3 branches close in last 6 years

Analysis by consumer group Which? shows that a third of all bank branches have disappeared from Britain's high streets in the last six years. Analysis of Which? data by Ask Traders, a trading community website, shows that seven parliamentary constituencies with only one branch left are home to more than 100,000 people. On future closures, HSBC does not expect to announce any further closures this year beyond the 82 already confirmed, while Nationwide says it will not leave any town or city in which it was based without a branch until at least 2023. Lloyds says it is committed to maintaining Britain's largest network of branches, while TSB has announced plans to close 164 branches this year but said it would keep its remaining 290 open. NatWest, which has closed more branches than any other bank over the past six years, did not rule out further closures, while Santander and Barclays have refused to rule out further closures.

FCA asks banks to reconsider branch closures

The Financial Conduct Authority (FCA) is urging the banks to reconsider branch closure programmes during the latest coronavirus lockdown, with concern that vulnerable customers may not be able to access cash if sites close. The financial watchdog, which in September said it expected banks, building societies and credit unions to keep it informed of any plans for closures or conversions “in good time” before a final decision is made, said some have informed the FCA of plans to go ahead with previously announced branch closures or announced new branch closures during the current lockdown. The FCA said it is “concerned that these activities could have significant consequences for customers.” A UK Finance spokesperson said decisions to close branches “are never taken lightly.”

HSBC hardest hit by switches

Data from the Current Account Switch Service show that Halifax had a net gain of 22,742 customers between July and September and Lloyds gained 8,335, having lost 10,019 and 1,698 accounts respectively in the previous quarter. HSBC was hardest hit in Q3, losing 20,861 customers and gaining 5,998 in the three months. Santander was next, losing 21,047 customers and gaining 11,018. Nationwide Building Society lost 928 customers net in the three months, while Monzo and Starling saw net gains of 9,157 and 12,652 customers respectively. The overall number of account switches in Q3 was 189,273, up 52,698 on Q2.

Demand puts pressure on mortgage lenders

Banks are coming under pressure as demand for home loans surges before the stamp duty holiday ends on March 31 – with the matter worsened by staff shortages amid the pandemic. Broker Accord, which is owned by Yorkshire Building Society, has temporarily withdrawn residential products for borrowers with 20% and 25% deposits because of staff shortages. Figures show that the number of mortgage applications has been increasing, with lenders approving 104,969 loans in November - the highest monthly total since August 2007 and a 7,700 increase on October’s figure.

Bank calls for revamp of lending scheme

Goldman Sachs analysis suggests that take-up of cheap loans provided to lenders under the Bank of England’s (BoE) Term Funding Scheme has been “well below” available levels, hitting just 4%, with it also failing to boost lending to small firms. Warning that higher usage of the Bank’s cheap funding did not lead to increased lending to small firms, Goldman has suggested the BoE could revamp the scheme by increasing its duration or boosting incentives to lend. Goldman also noted signs of “tighter credit availability” for SMEs at the end of 2020.

Borrowing to boom, post-lockdown

A poll from AA Financial Services suggests 21m people are considering taking out a loan this year. The survey saw 44% of respondents say they are planning to borrow money once the coronavirus lockdown ends, with new cars, family holidays and home improvements the most common reasons cited for borrowing cash. James Fairclough, director of AA Financial Services, says the survey results point to optimism among many people, adding: “It certainly seems that lockdown has prompted many people to reassess their financial affairs.” Data from the Office for National Statistics shows the pandemic has seen an increase in people borrowing, with 18% of adults doing so compared to 11% at the end of June last year.

Morgan Stanley scholarship to improve diversity

Morgan Stanley is to offer scholarships to students from ethnic minority or socially disadvantaged backgrounds in a bid to improve diversity in the City. The Morgan Stanley Future Generation Scholarship programme will support up to 25 UK students each year, offering then £10,000 each to go toward university fees and living costs. To be eligible, applicants must be offered internships at Morgan Stanley. The first intake of students will take place in June next year.

Bosses candid about challenges

With Monzo founder Tom Blomfield leaving the firm and citing the pressure he felt under at the bank, Kalyeena Makortoff in the Guardian says he joins “a growing list of high-profile banking bosses opening up about their mental health”. She notes that Lloyds chief, António Horta-Osório, was one of the first to speak publicly over the issue, while Virgin Money boss Jayne-Anne Gadhia has been “candid” about struggles she has faced.

Coutts expands UHNWI division

Coutts has expanded its division that deals with ultra-high net worth individuals – those with assets of at least £22m – rebranding its Coutts Family Office to offer a broader range of services. Clients will be able to use an investment service provided by Flagstone as well as platforms run by Blackrock.


Private equity transactions down in 2020

Analysis shows that private equity firms completed 889 UK transactions in 2020, with these worth a combined £87.2bn. This marks a 26% dip on 2019’s total.

US private equity firm eyes Marston's

American private equity group Platinum Equity has made a non-binding proposal about a possible cash offer for pubs operator Marston’s. Platinum Equity has until February 26 to make a formal offer under Stock Exchange rules.


BaFin bosses forced out over handling of Wirecard scandal

Felix Hufeld, head of Germany’s financial watchdog, has been forced out due to the handling of the accounting scandal at Wirecard, with his deputy Elisabeth Roegele also exiting BaFin.


Lookers shares surge

Shares in car dealership Lookers rose 90% as the firm’s stock was finally readmitted to trading after the Financial Conduct Authority suspended shares in July 2020 following its failure to publish full year results for 2019. While 2019’s results were published in November, the City watchdog waited until Lookers issued its H1 2020 results before readmitting the stock. Lookers has been under pressure following the discovery of a £19m hole in its figures.


Finance firms see jump in whistleblowing

Figures show that the Financial Conduct Authority (FCA) received 347 reports from whistleblowers from finance firms warning that their employer was acting unfairly towards customers in 2019. This is almost five times more than the 73 the City watchdog received in 2017. The number of workers flagging concern over fraud, poor data security and detriment caused to consumers also rose, with between 110 and 160 reports made about each of these issues in 2019. The figures, obtained through the Freedom of Information Act, also show that the FCA took action in just under half of cases in 2019, while in 6% of cases it took no action and the other 45% remained under investigation. Whistleblower charity Protect said around three quarters of financial whistleblowers work at either a bank or insurance firm, adding that finance was one of the industries it received the most complaints about.

MPs concerned over investing apps

MPs have voiced concern over investing apps and whether they should be allowed to operate in the UK without tightened regulation, with Kevin Hollinrake, co-chair of the All Party Parliamentary Group on Fair Business Banking, saying regulators “should be putting them under closer scrutiny”. Apps such as Robinhood, which last year delayed plans to launch in Britain, have been accused of allowing customers to gamble their money on risky, speculative investments. The brokers allow novice investors to put money into high-risk investments, such as cryptocurrencies and options. MP Sammy Wilson fears that many of those who may be attracted to such apps “do not have the financial literacy or the economic security to engage in the risks that it would introduce into their lives”.

Firms may miss out on payouts despite court ruling

The Telegraph’s Michael O'Dwyer reports that a number of businesses will be left without coronavirus-related business interruption payouts despite the Financial Conduct Authority (FCA) securing a legal victory over insurers in a landmark Supreme Court case. While the City watchdog won almost all of the points appealed in a test case taken on behalf of an estimated 370,000 firms that lost business due to the pandemic, the FCA did not appeal to the Supreme Court on all of the issues it lost in the High Court. Due to this, firms with policies not appealed by the regulator will not see payouts unless they launch a successful legal case of their own.

Consumer watchdog calls for buy now, pay later regulation

Research by Which? has revealed nearly 200 retailers have illegal returns policies. The consumer watchdog said customers were often being given less time to return items than they are entitled to under law or facing unjustified ‘admin’ fees. The findings come after Which? investigated retailers on a number of widely-used buy now, pay later shopping apps including Klarna, Clearpay or Laybuy.

Crowdfunding sites could collapse if merger is blocked

Seedrs and Crowdcube have warned competition regulators that they face collapse if a £140m merger is blocked. The mooted tie-up of Britain's leading crowdfunding sites has prompted scrutiny from the Competition and Markets Authority, which said the deal meant there was "a realistic prospect of a substantial lessening of competition in the supply of equity crowdfunding platforms to SMEs and investors”.


Kwarteng: audit shake-up a priority

Business Secretary Kwasi Kwarteng says one of his main priorities is shaking up the audit industry. He says the debate around audit reform “goes to the heart of capitalism”, adding: “People have got to see that it’s fair, that there are rules, and people get punished for disobeying them.”


MP urges Sunak to make stamp duty holiday permanent

MP Bob Blackman says the stamp duty holiday rolled out amid the coronavirus crisis “gave the economy a much needed shot in the arm” and argues that there is a “a strong case for giving the economy a booster shot” by making the temporary break on the levy a permanent fixture. Mr Blackman believes a permanent cut to stamp duty would address a “blockage in the system” by making it easier for older people to move into suitable retirement accommodation, freeing up family homes for movers and, in turn, properties for first-time buyers. MPs are set to debate calls for a six-month extension of the tax cut, with Conservative Elliot Colburn, who will lead the debate, saying some lenders have warned that 70% of current deals may fail to meet the current cut-off, after which many would collapse.


Topshop suppliers may get 1%

A report from administrators suggests Sir Philip Green's family is likely to receive £50m from the sale of Topshop - while more than 1,000 suppliers to the fashion chain will get less than 1% of the money owed them. The report into the collapse of Topshop and Topman reveals that the chains owed at least £51m to 1,155 unsecured creditors, which include clothing suppliers and landlords. This figure does not include money owed to HMRC, with final debts for Topshop likely to be "materially higher" once tax and money potentially owed to the group's pension fund are included. Meanwhile, online fashion retailer Boohoo is in talks to acquire Burton, Dorothy Perkins and Wallis, brands also in Sir Philip's Arcadia group.


BSA chair warns BoE over negative rates

The Bank of England (BoE) has been warned that cutting the interest rate below zero would fail to boost the economy because lenders would increase mortgage costs in response. Mike Regnier, chairman of the Building Societies Association and CEO of Yorkshire Building Society, suggested such a move would be counterproductive, warning that negative rates would prompt high street lenders to push up mortgage rates to protect profitability, hurting consumers and the wider economy. Mr Regnier said he fears negative rates “would have the opposite effect from supporting the economy”. He also said that banks would not want to charge consumers negative interest, saying: “I can’t see a scenario where we’d charge our retail savers to leave their deposits with us”, but said banks “would need to protect their net interest margins”, with this likely to mean lending rates would rise.

Bank to report on rate cut feasibility

The Bank of England will this week detail evidence collected from commercial banks about whether negative interest rates are operationally feasible. The Times says that the bank is expected to keep policy unchanged as it makes its latest monetary policy decision on Thursday, holding the base rate at 0.1% and opting not to expand its £895bn asset purchases programme.


Confidence in London business rises

The latest Business Barometer from Lloyds Bank shows that business confidence in London rose five points to 3% during January, marking the first positive reading on the barometer since the coronavirus outbreak. Nationally, overall business confidence dipped in January as the third lockdown came into force, falling by three points to -7%, with economic optimism falling 34 points month-on-month to -10%. Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said that while confidence remains below average, “it is encouraging that business sentiment is still the second highest since the low of May 2020.” He added that the vaccine rollout programme has lifted confidence, “and that will hopefully buoy business optimism in the coming months.”

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