JPMorgan launching digital retail bank
JPMorgan will tomorrow launch its new digital-only lender Chase in the UK, with the bank to initially offer only current accounts before turning its attention to products like savings and loans in the future. Chase will face substantial competition in the UK’s crowded digital banking market, with Monzo, Starling and Revolut having gained significant market share in recent years as consumers transferred from traditional banks. US rival Goldman Sachs has already entered the UK market with Marcus, which launched three years ago with more of a savings focus. Sanoke Viswanathan, head of Chase, said the bank plans to expand into other countries if successful, starting with continental Europe. It is noted that JPMorgan bolstered its British venture earlier this year by purchasing digital wealth manager Nutmeg for £700m. Mr Viswanathan is interviewed by Emma Dunkley in the Mail on Sunday where he says one of Chase’s points of difference with its rivals will be offering customer service all day and all night, seven days a week.
Co-operative Bank unveils record mortgage rate
Platform, the broker arm of the Co-operative Bank, has unveiled a record-low fixed rate mortgage, announcing a 0.79% two-year fix. The deal has a fee of £1,499 and is available to borrowers with a 40% deposit or equity in their home. A fee-free version is available at 1.19%. Borrowers with a 30% deposit or equity can get a two-year deal at 0.92% with a £1,499 fee, with the fee-free rate at 1.49%. Before Platform announced its rate, the lowest two-year fix was Barclays’ 0.86% deal. This has a £999 fee and is for borrowers with a 40% deposit. Looking at the low rates lenders are offering, Mark Harris from mortgage broker SPF Private Clients said: “It feels as though interest rates will remain low indefinitely”, adding: “The economy is still in a fragile state and recovering from a global pandemic - hiking rates at this stage would only make the situation worse.” Capital Economics said that average mortgage rates as a whole could fall from 1.85% to 1.6% by the end of next year, noting that the average rate from 2017-2019 was about 2.1%.
Tax-free savings accounts face inflation hit
The rise in inflation means cash ISAs are set to lose thousands in real terms over the next five years. With the average interest rate on a cash ISA currently 0.31%, £20,000 in a cash ISA will gain £312 in interest over the next five years whereas it would gain £3,465 if it kept pace with inflation, which has hit 3.2%. Charles Incledon of Bowmore Asset Management, said banks continue to offer rock-bottom interest rates on their cash ISAs as the Bank of England base rate remains at a historic low of 0.1%. He commented: “The interest rates on ISAs are so low that leaving money in one today will just mean watching inflation whittle it away.”
Investec partners with Monese to offer digital accounts
Anglo-South African bank Investec is teaming up with tech start-up Monese to launch a digital current account in Britain. Initially, accounts will be offered to Investec’s existing wealthy customers before the launch of business accounts early next year. Investec is also investing in Monese as part of a new funding round and the bank’s global head of digital and technology will join the Monese board.
Insurance veteran set to be TSB’s next chairman
Nick Prettejohn, a non-executive director of Lloyds Banking Group and chairman of its insurance subsidiary Scottish Widows, is being lined up as TSB's next chairman by its Spanish owner, Sabadell. Mr Prettejohn is a City veteran who has run Prudential's European arm and Lloyd's of London - and chaired Brit Insurance. He also sat on the boards of the Prudential Regulation Authority and Legal & General.
Bostock could be in role beyond end of year
It could take until 2022 to find a replacement for Santander CEO Nathan Bostock, the Mail on Sunday reports, with one headhunter telling the paper a replacement is unlikely to be in place before January meaning Bostock will have to delay his move to head of investment platforms at Banco Santander, the bank's Spanish parent company.
Post Office demands £200m more in new access to cash deal
The Post Office is demanding banks pay an extra £200m for their customers to access cash at its counters in a new three-year deal. High street lenders would pay a total of £800m from 2023 to the end of 2025 under the plans. The Post Office also wants to establish a longer-term deal to provide customers with greater certainty over access to cash.
Labour plans crackdown on private equity tax loophole
Shadow chancellor Rachel Reeves has announced that a Labour government would close the “carried interest loophole” which allows private equity executives to pay a reduced rate of tax on their bonuses. Reeves said the move would raise up to £440m a year.
Goldman arm offers latest route into private equity investing
Goldman Sachs’ Petershill Partners has announced plans for an IPO in London, a move the FT says will offer retail investors “another entry point” into private capital.
Mitsubishi UFJ considers sale of US banking arm
Mitsubishi UFJ, Japan's biggest lender, is reportedly considering selling its US banking arm, MUFG Union Bank. With assets of $132bn, MUFG Union Bank provides corporate, commercial and retail banking as well as wealth management.
Royal Bank of Canada appoints CFO and CLO
Royal Bank of Canada has announced that investor relations head Nadine Ahn will become its new finance chief as of November 1, taking over from Rod Bolger, while General Counsel Maria Douvas will take on the newly created role of chief legal officer, effective immediately.
Airlines hit back at Heathrow’s charge hike plans
Plans by Heathrow airport to almost double passenger charges to make up for its pandemic losses have left airlines fuming while experts warn that the move threatens the post-Covid recovery of the entire aviation industry. Proposals from Heathrow reveal that long-haul charges will rocket from £38.33 per traveller this year to £67.86 in 2022. Head of industry body Iata, Willie Walsh, said: “We’ve heard that inflation is coming back, but that is ridiculous.” A spokesman for Heathrow said: “The proposed changes will stem current losses and ensure we can deliver the level of service and reliability that our passengers and airlines expect.”
FCA calls for overhaul of London listing rules
The Financial Conduct Authority (FCA) has called for a post-Brexit shake-up of the UK's listing rules, saying reform is needed to attract more fast-growing businesses. Suggesting that the UK’s listing regime is “stuck in 1984”, the FCA’s director of market oversight, Clare Cole, said it was "designed when we still stored data on a floppy disk". While around £24bn of new capital was raised on the London Stock Exchange in H1 2020, Ms Cole said the process was "disjointed, unclear to users and in some cases perhaps prohibiting high quality issuers listing here". The FCA is set to action rule changes stemming from reviews ordered by Chancellor Rishi Sunak, with the City watchdog looking to introduce some new regulations by the end of this year so that "next year's IPOs can already benefit from the initial round of changes".
FSCS was not part of FCA's levy forecast calculation
The Financial Services Compensation Scheme (FSCS) has revealed that it was not involved in setting the levy targets outlined by the Financial Conduct Authority (FCA). The FCA this week published details of its consumer investments strategy, saying it is targeting a 10% year-on-year reduction in the Life Distribution & Investment Intermediation and Investment Provision funding classes between 2025 and 2030. FSCS chairman Marshall Bailey said it was not “part of the calculation of that forecast”, adding “and probably we don’t want that precision”, but went on to say that the FSCS and FCA remain united in their goals. Mr Bailey said he admires the FCA “for putting that target out there”, adding that the FSCS is “absolutely supportive” of the work going on stakeholder groups to help them achieve those admissions, “but the number itself is directional rather than something that we want to focus on.”
City could see €900bn Brexit hit
Financial services lobby groups have urged European officials to extend the EU’s access to London clearing houses amid warnings of financial instability. The groups wrote to the European Commission warning of “a significant risk of market disruption for EU clearing members and their clients” if the deal is not extended past June 2022. If there is no extension, the City could lose euro-denominated derivatives that currently clear around €900bn a day. Tim Focas, head of capital markets at Aspectus Group, warned that a “bid from Brussels bureaucrats to punish the City for political gain” could lead to “the mayhem of having multiple European clearing centres.” It would, he argues, “only serve to severely restrict market efficiency which as a by-product will hit economic growth and job creation”.
Prudential vows to stay in London as it looks East
Prudential is to raise £2bn on the Hong Kong stock exchange as it continues to shift its focus away from its British base. The insurer intends to use the bulk of the proceeds to pay down debt and give it “financial flexibility in the light of the breadth of opportunities to invest for growth in Asia and Africa”. Mark FitzPatrick, 53, chief financial officer, said the Pru intended to keep a “meaningful presence” in London despite pressure from activist investor Third Point to shut its London office.
Lloyd’s of London delays setting diversity targets for insurance market
Lloyd’s of London has delayed setting ethnic diversity targets because not enough of its participants have provided data on their staff, although the proportion who have has risen to 74% from 43% last year.
AZ lauds cancer blockbuster medicine
A new breast cancer drug from Astra Zeneca could earn the company billions, UBS analysts have said, with the drug firm’s oncology chief David Fredrickson stating that Enhertu is “shattering expectations”.
Property prices hit record high amid soaring demand
Property prices and the demand for homes are at a record high, research from Rightmove has revealed. Industry experts say the average cost of a property nationwide is £338,462 while the demand for homes has more than doubled since before the pandemic. Wales, the East Midlands and the southwest, southeast and east of England are experiencing annual asking price growth of more than 8%.
Shop sales fall for fourth consecutive month
Retail sales in the UK fell for the fourth month in a row in August, figures from the Office for National Statistics (ONS) show. Sales were down 0.9%, with this following a 2.8% fall in July. While food store sales fell by 1.2%, the removal of restrictions on hospitality saw more people eating out. The ONS report shows that the share of online sales increased to 27.7% in August from 27.1% in July. Jonathan Athow, ONS deputy national statistician for economic statistics, said the fall in August's sales was "not nearly as much as in July" and, overall, remained above pre-pandemic levels. Reflecting on the report, Aled Patchett, the head of retail and consumer goods at Lloyds Bank, said: “Pent-up demand and lockdown savings may have sustained growth this summer but this latest set of figures indicates that supply chain issues and weakening consumer demand are beginning to bite.”
M&S makes first venture capital investment in digital push
Marks and Spencer has made a £20m investment into a technology fund managed by True, which operates a private equity network bringing together consumer businesses and technology start-ups.
Sunak set to boost public finances with new fiscal rules
Rishi Sunak is reportedly planning to stop the Government borrowing money to pay for day-to-day spending within the next three years, with the Chancellor looking to improve public finances that have taken a hit amid the pandemic. He is expected to set out new fiscal rules in the autumn Budget as he seeks to get Government borrowing back under control and bring the national debt down by the middle of the decade. This comes as Government borrowing surged during the coronavirus crisis, with public sector borrowing estimated to have been £78bn in the financial year to July - the second-highest number recorded for that period since records began - but £61.6bn less than in the same period the year before. Office for National Statistics data shows that national debt stood at more than £2.2trn at the end of July. This is equivalent to 98.8% of UK GDP, the highest ratio since the 99.5% recorded in March 1962.
Andy Haldane to head UK’s levelling-up task force
Andy Haldane, the former chief economist at the Bank of England, has been appointed by Boris Johnson to head up a new taskforce charged with leading the Government’s levelling up agenda. Haldane will be based in the Cabinet Office, at permanent secretary level, and will report both to the Prime Minister and to Michael Gove, who runs a new Department for Levelling Up, Housing and Communities. Commenting on his appointment, Haldane said: “Levelling up the UK is one of the signature challenges of our time. It has also been a personal passion throughout my professional career.” A white paper on the issue is expected this autumn.