BANKING
NatWest boss handed bank's first bonus since bailout
Dame Alison Rose, the CEO of NatWest, has been handed a £5.2m payout after pre-tax profits surged by a third to £5.1bn last year. It is the bank’s largest annual profit since the financial crisis and the first time since 2008 that the lenders’ boss has been awarded a bonus. Dame Alison was paid a salary of £2.4m and a bonus of £643,000, with the rest of her remuneration made up of share-based awards under a long-term incentive plan. NatWest set aside nearly £340m last year to cover potential bad loans and warned that a boost from rising interest rates may already have peaked, with its revenue forecast for 2023 falling below analyst estimates. Shares in the bank fell by nearly a tenth in early trading on Friday.
Tesco mulls sale of banking arm
Sky News has learnt that Tesco is to conduct a review of its presence in the UK banking sector. Britain's biggest supermarket chain is lining up Goldman Sachs to advise on the future of Tesco Bank, City insiders have said, speculating that a partial sale or joint venture could also be an option for the retailer. Tesco Bank is estimated to be worth more than £1bn based on its book value.
NatWest Jersey checks under scrutiny
NatWest's Jersey unit is facing an investigation over potential breaches of anti-money laundering rules. The bank said its Royal Bank of Scotland International arm had been referred to the enforcement division of the Jersey Financial Services Commission in January in relation to the "reliance regime" which is a system used by Jersey that allows financial institutions to outsource the job of ID-checking customers to third-party companies.
Zopa urged to target growth
Tim Levene, the chief executive of Augmentum Fintech and a former board member of Zopa, has urged the digital-only lender not to focus on profitability at the expense of growth in its pursuit of an initial public offering. “From my point of view, their focus over the next 12 to 18 months should be carrying on executing the business that they’re building and not worrying too much about the exit,” he added. Zopa believes it will generate an annual profit for the first time this year.
Rutland first English county to be left without a bank
Rutland is to become the first county in England to be without a single bank branch when HSBC shuts the doors of its Oakham branch in June. Cash machine operator Link has recommended that a new banking hub be located in Oakham, paid for by all the big banks. So far, of 38 hubs proposed by Link, only four are open for business. John Howells, Link chief executive, agrees that the Oakham hub must be opened quickly.
“Silver spenders” driving up contactless use
Data from Barclays reveals 91.2% of card transactions were contactless last year, up from 85.6% of eligible card transactions being contactless in 2021. Barclays said the fastest growth in contactless use it has been seeing is among the over-65 age group.
PRIVATE EQUITY
Santander takes interest in abrdn private equity unit
Santander Asset Management is among several suiters eyeing the private equity unit of abrdn, the British fund manager. A deal is expected to be struck between abrdn and a buyer in the next couple of months, a source told Sky News, with the division valued at approximately £250m.
INTERNATIONAL
VTB to launch cross-border transfers service
Russian state-owned lender VTB intends to launch a service for cross-border transfers between Russia and some former Soviet countries in the first quarter of this year. Reuters points out that the Bank of Russia has developed an alternative to SWIFT, the System for Transfer of Financial Messages (SPFS), and simplified the way banks can use its Faster Payments System (FPS) with foreign counterparts for cross-border transfers. VTB’s new service will allow FPS transfers to the CIS group of ex-Soviet countries.
Chinese banker Bao Fan goes missing
Shares in China Renaissance Holdings slumped by as much as 50% in early trading on Friday after it emerged the investment bank’s chairman and CEO Bao Fan was unreachable. His disappearance is the latest in a series of cases of prominent Chinese executives going missing with little explanation amid President Xi Jinping’s sweeping anti-corruption campaign.
Deutsche Bank criticised by regulators over forex mis-selling probe
BaFin and the ECB have told Deutsche Bank its investigation into the mis-selling of risky foreign exchange derivatives in Spain had several shortcomings, hampering efforts by the bank to improve its reputation for compliance.
Commerzbank to rejoin Germany's DAX
Deutsche Boerse announced on Friday that Commerzbank will rejoin the DAX index on February 27th. Germany's second largest lender was removed from the club of blue-chip companies in 2018.
FINANCIAL SERVICES
The ingredients needed for London’s success are all there
Jill Treanor and Jamie Nimmo explore the prospects for the City of London in the Sunday Times following the record highs recently seen on the FTSE 100. The blue-chip index reached 8,012.53 at the close on Thursday, the first time in its 30-year history that the index has finished above 8,000. They review undervalued UK shares, the effect of Brexit on the attractiveness of London as a listing venue and the changes that have been made to listing rules so far. There are several reviews into financial services ongoing including consultations by the Treasury and the Financial Conduct Authority. Hussein Kanji, a partner at venture capital firm Hoxton Ventures, says reforms are always welcome, “but the wider question for me is whether the market here has enough investors who are looking for growth-oriented businesses.” However, Charlie Walker, head of equity and fixed income markets at London Stock Exchange Group, is more confident, stating: “We have all the ingredients that are needed. The reform agenda needs to ensure that those gears click together so that we’re able to finance the next generation of world-leading growth companies out of the UK. If we’re able to do that, then I think the future is very bright.”
Hargreaves Lansdown ‘making ten times more from your money’
Hargreaves Lansdown’s revenue from investors who keep their money in cash has soared tenfold in a year. Britain’s largest investment platform made £121.6m from cash held in investment accounts in the last six months of last year - up from £11.3m over that period in 2021. The revenue from cash is more than from any other part of the business, including platform fees, funds and stockbroking services, which generated £117.9m, £27m and £70.2m, respectively.
Higher borrowing costs risk contagion
A report from S&P Global Ratings suggests higher interest rates may put pressure on the highly leveraged shadow banking sector, posing a risk to financial stability. “Shadow banks operating with high leverage, running structural liquidity mismatches, or taking significant asset-quality risk could face financial pressure, particularly if their economies enter recessions,” S&P Global Ratings credit analyst Nicolas Charnay said.
Revolut expected to sign off overdue accounts next week
Revolut expects its auditor to sign off its 2021 financial accounts on Friday after months of delays. The filing of the accounts could help the company progress towards gaining a banking licence.
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MEDIA & ENTERTAINMENT
Meta to launch subscription service for Facebook and Instagram
Meta CEO Mark Zuckerberg has announced a new subscription service for Facebook and Instagram users, who will pay from $11.99 a month to have their accounts labelled as verified. "This new feature is about increasing authenticity and security across our services," Zuckerberg wrote in a statement. The change follows a similar move by Elon Musk at Twitter.
REAL ESTATE
Wealthy homeowners forced to slash asking prices
Owners of properties worth £1m or more are slashing hundreds of thousands of pounds off their asking prices in order to sell their homes. Analysis by Hamptons estate agents found that, in January, 60% were forced to cut their asking prices before they could find a buyer. This is up from 39% in June and is now at its highest level since January 2021. The average across the whole market was 45% last month. Experts say sellers are now coming to terms with the fact that higher mortgage rates and the cost of living crisis have massively reduced how much buyers can spend.
Purplebricks offers itself up for sale
Online estate agent Purplebricks has put itself up for sale after posting higher than expected losses, driven up by costs related to its turnaround plan. Helena Marston, Purplebricks chief executive, said: “We recognise that our upside potential is not currently reflected in our market valuation, which is why the entire board has therefore concluded that a strategic review is now in the best interests of all shareholders.”
RETAIL
UK retail sales rebound unexpectedly in January
UK shop sales volumes unexpectedly rose in January, despite higher living costs putting pressure on households. Figures from the Office for National Statistics (ONS) show the volume of retail sales increased 0.5% between December and January, following a revised 1.2% drop in the previous month. However, overall sales volumes were down 5.1% compared with January last year and remain lower than pre-pandemic levels. James Smith, an economist with ING, said the prospect of house price falls and higher mortgage costs risked adding to the gloom among consumers. "Overall, we're expecting a very mild recession through the first half of this year," he said. Separately, data from the British Retail Consortium suggested consumer spending remained broadly below inflation in January, although spending on holidays and entertainment rose.
SPORT
Qatar's Sheikh Jassim and Ineos make bids for Man Utd
The Qatari Sheikh Jassim bin Hamad Al Thani has confirmed his foundation will bid to buy Manchester United. Sir Jim Ratcliffe, the founder of British chemicals giant Ineos, also officially made a bid before Friday's 22:00 GMT “soft deadline” for proposals.
ECONOMY
UK’s resilient economy points to a mild recession
Key data over the past two weeks indicates a UK recession is likely to be less severe than anticipated, with inflation less persistent than feared, the labour market robust, and sales encouraging.