Britain urged to open up as Macron tempts US banks
The French president is seeking to lure global banks away from the City of London, with the bosses of Goldman Sachs and JP Morgan invited to a “Choose France” event at the end of the month when Emmanuel Macron will make the case for investing in his country. The move comes as US investment bankers lobby the UK Government to lift travel restrictions for workers who have been double vaccinated. John Dickie, chief executive of London First, said: “You cannot be the world’s most successful international financial sector if people cannot get to and from you from international places.”
BBB boss predicts £300m gain for taxpayer from Covid loans
Catherine Lewis La Torre, the head of the British Business Bank has said the taxpayer could make returns of more than £300m on emergency investments in start-ups launched at the beginning of the Covid crisis. The BBB’s Future Fund provided £1.1bn in convertible loans of up to £5m each to 1,140 firms before closing in January. Ms Lewis La Torre said: "You can look at what venture returns have been like in the past in the UK and it's about a 1.3 times multiple. Right now, I'm not seeing anything to suggest that we wouldn't be able to achieve that sort of performance."
Lloyds Banking Group is set to buy its first property
Lloyds Banking Group is set to move into the private rental market by buying its first property. City sources said the bank is close to acquiring a block of flats in Nene Wharf, Peterborough, and could start renting them out as soon as next month. It is the first time a major UK lender has made such a move. Lloyds is expected to manage its new-build property through a subsidiary called Citra Living, which was set up this year, according to filings at Companies House.
Toxic culture could trigger “large scale failures”
Carolyn Rogers, secretary general of the Basel Committee on Banking Supervision, has warned that unless toxic corporate culture is purged there is a significant risk it could lead to “large scale failures”. Ms Rogers said: “This is a topic that bank supervisors and banks themselves actually need to focus on over the next few years. We still see scandals, we still see billions of dollars in fines levied on banks for various, what I would call, cultural failings or misconduct risk.”
NatWest and British Gas staff offered cut-price fertility treatment
NatWest offering its 59,000 staff access to IVF, sperm freezing, treatment with donor eggs and support for same-sex couples who want to start a family, the Mail on Sunday reports. The new trend for firms to offer fertility support to staff is partially a response to rising demand for better workplace perks, the article contends, but critics have warned that firms could inadvertently be encouraging women to delay having children so long that they may find it more difficult to conceive.
TSB bans cryptocurrency amid fraud concerns
TSB is to bar its customers from sending money to cryptocurrency trading sites amid concerns the platforms are riddled with fraudsters. The bank is particularly concerned about Binance and Kraken because it believes weak security check allow scammers to set up e-wallets and steal people’s money.
UK plans rule changes to lure back EU share-trading flows
The UK Treasury is to consult over the summer on reforming share trading rules as part of efforts to bring business back to the UK after Brexit.
Rose: VC groups failing female entrepreneurs
NatWest CEO Alison Rose has said a whole generation of female entrepreneurs are being let down because City investors are failing to stump up the cash to get their firms off the ground. Rose told the Mail on Sunday: “Venture capital is meant to invest in businesses of the future and I know therefore that encouraging the investment community to support the UK's female entrepreneurs and founders will make a real difference. Access to finance is the single biggest opportunity and number one barrier that we need to break down.”
EU clears banks barred from bond deals after ‘declaration on honour’
The EU has reinstated eight banks previously excluded from taking part in bond sales for the bloc’s €800bn recovery fund after tasking measures to improve standards. The banks are Deutsche Bank, Crédit Agricole, JPMorgan, Citigroup, Barclays, UniCredit, Bank of America, and Nomura, according to sources. NatWest and Natixis will continue to be excluded for the time being.
Santander looks to muscle way into European investment banking
Santander looks set to challenge Wall Street giants with a move into investment banking with the move driven by low interest rates and rivals’ shrinking operations.
HSBC takes $3bn hit to exit French retail business
HSBC’s sale of its French retail banking operations to My Money Group, which is backed by private equity group Cerberus, will see the bank book a pre-tax loss of roughly $2.3bn alongside a $700m charge relating to impairment of goodwill.
BBVA offers bitcoin trading service
On 21 June, BBVA is launching a bitcoin trading service for private banking clients in Switzerland with the aim of extending it to other cryptocurrencies.
Resurgent demand drives Inchcape higher
Inchcape shares were up 4% on Friday after the car dealer announced that pent-up demand for new cars after the lockdowns combined with tight supply from manufacturers would lead to higher than expected profits.
Heathrow to take legal action against Government
Heathrow is poised to launch legal action against the Government with its lawyers claiming ministers acted unlawfully by limiting airport business rates relief. They say Heathrow’s annual business rates bill is approximately £120m but the Government limited relief to just £8m and describe the Airport Support Scheme as an abuse of power.
BA revives plans to abandon Gatwick
British Airways has launched a review into concentrating its operations at Heathrow. The plans will be a further blow to Gatwick, which has been hit hardest of any European airport due to coronavirus restrictions.
Profits at Revolut triple to £123m
Revolut’s gross profit grew over 300% in 2020 to £123m, fuelled by people’s appetite for digital financial management growing amid the pandemic. Revolut’s customer balances rose by 96% to £4.6bn by the end of the year – nearly double 2019’s figure of £2.4bn. Q1 revenue surged more than 130% year on year. “In 2020 as we broadened our global footprint, strengthened our capital base, enhanced governance and bolstered executive management. These developments continue to provide a strong platform from which to launch new products,” chairman Martin Gilbert said.
BoE not looking at fairness of LV= deal – Bailey
In a letter to MPs on the all-party group for mutuals, Bank of England Governor Andrew Bailey said 36 meetings has been held with managers of LV= since it began exploring a takeover by the US private equity group Bain Capital. Lawmakers are calling for greater scrutiny of LV=’s plan and Gareth Thomas, Labour chairman of the parliamentary group, expressed shock that officials had not once met with LV= members. But Bailey said the Financial Conduct Authority would be assessing the fairness of the Bain deal for policyholders. The Bank was concerned only about the safety and soundness of any transaction and whether it secured a degree of protection to policyholders, he explained.
True Potential considering Wall Street Spac float
True Potential, the UK wealth management fund, is considering a $2bn Spac listing in the US, snubbing the London Stock Exchange for Wall Street. According to the Evening Standard, bankers at Credit Suisse are working on plans to merge True Potential with a special purpose acquisition company to propel it onto the US stock exchange.
Irish insurers' group faces EU antitrust charges for limiting competition
Insurance Ireland has been charged by EU antitrust regulators with restricting access to a data sharing platform used in the country's motor vehicle insurance market following a two-year investigation. "We have concerns that certain insurers and their agents were put at a competitive disadvantage," European Competition Commissioner Margrethe Vestager said in a statement.
Investec and Irish Life consider joint bid for Davy
Irish Life has held talks with Investec about a joint bid to buy the stockbroker Davy. The acquisition, if successful, would probably lead to Davy being broken up, with Irish Life taking control of its highly profitable wealth management division and Investec acquiring its capital market business.
GSK confident in drug pipeline
GlaxoSmithKline executive Deborah Waterhouse told the Times on Saturday that its prospects were undervalued and that the drugmaker had a healthy pipeline of blockbuster drugs on the way - a dozen new drugs were targeted for launch by 2026. Meanwhile, the FT considers the struggle ahead for GlaxoSmithKline CEO Emma Walmsley to convince activist investors of her strategy for the group ahead of her presentation on Wednesday. The Observer also looks at Walmsley’s plans and cites Barclays analyst Emily Field who said the mood around GSK had been frenetic since the Elliott stake was revealed, with everyone looking for a quick fix, but the company’s turnaround isn’t going to happen overnight.
LEISURE & HOSPITALITY
McDonald’s set to hire 20,000 more UK workers
McDonald’s plans to open up to 150 high street restaurants in the UK and Ireland and hire 20,000 more workers over the next three years, CEO Paul Pomroy has said. The move is seen as a vote of confidence in the British high street amid fears of a long-term slump in city centre footfall after Covid.
Itsu plans expansion following deal with Bridgepoint
Itsu, the east Asian food chain, plans to open 100 new stores after striking an investment deal with private equity firm Bridgepoint, which is thought to have paid around £200m for a 30% stake, potentially valuing the chain at more than £660m overall.
Food exports to EU cut by half
Food and drink exports to the EU dropped by almost half in the first three months of 2021, according to figures from The Food and Drink Federation, with new trade barriers following Brexit blamed for the slump. “The loss of £2bn of exports to the EU is a disaster for our industry, and is a very clear indication of the scale of losses that UK manufacturers face in the longer-term due to new trade barriers with the EU,” said the federation's head of international trade Dominic Goudie.
Hedge funds going short on British Land
Hedge funds are betting £162m against shares in British Land. Official data shows the value of shares held by short-sellers has risen to the highest for more than two years. The situation was worsened when London hedge fund Marshall Wace increased its short position last week. That coincided with a Government decision to extend a ban on commercial evictions until next March – a blow for landlords but welcome news for tenants. The rise in the level of short positions at British Land – 3.6% of its stock – puts it into the top ten most shorted firms. Its rival Hammerson has long been among the highest with 6.5% of its shares currently in the hands of short-sellers.
House prices hit record high
Property prices have hit a record high for a third consecutive month, according to Rightmove, rising 0.8% on average in June 2021 - taking the typical asking price to £336,073. Meanwhile, prices rose by an average of 14.2% last year in countryside locations compared with less than 7% in urban areas, according to figures analysed by Hamptons.
Morrisons rejects bid from US private equity group
Morrisons said on Saturday evening that it had rejected an unsolicited £8.7bn takeover bid from US private equity group Clayton, Dubilier & Rice (CD&R). The offer was reportedly made on June 14th and rejected by the supermarket chain on June 17th. CD&R was forced to confirm the offer after news of the offer was leaked to the media. The board of Morrisons said that it had “unanimously concluded that the conditional proposal significantly undervalued Morrisons and its future prospects”. Meanwhile, Matthew Lynn suggests in the Sunday Telegraph that supermarket shares are undervalued and CD&R’s bid is unlikely to be the last foray into the sector by private equity.
Retail sales fall in May as Britons spend more on hospitality
Figures from the Office for National Statistics show retail sales fell by 1.4% between April and May as people chose to visit reopened bars and restaurants instead of buying food at supermarkets. Sales fell most significantly at food stores, while sales at non-food shops rose on demand for outdoor furniture. Additionally, the proportion of online sales dipped for the third month in a row as people returned to physical shops.
Rising inflation could bring £700 hit to living standards
The Resolution Foundation estimates that soaring commodity costs could push the Consumer Prices Index above 4% for the first time since 2011, hitting average household income with a £700 blow. The warning comes ahead of a Bank of England meeting this week when the Monetary Policy Committee (MPC) is expected to vote to hold interest rates at a record low of 0.1%, despite protests from the Bank’s chief economist, Andy Haldane. Allan Monks, UK economist at JP Morgan, commented: “We expect the MPC will not be panicked by the May CPI report, but will sound more open minded about inflation risks due to the strong recovery and early signs of greater labour market strength.”
National debt on verge of 100% of GDP
Data from the ONS will on Tuesday show Britain’s national debt has hit 100% of GDP for the first time in 60 years. Public sector net debt has soared to £2.17trn as the Government borrowed record sums to fund its pandemic response. It is currently equal to 98.5% of the economic output.
City’s sterilisation unhealthy for markets
Oliver Shah in the Sunday Times laments the loss of strident voices from the City listing a slew of characters that probably wouldn’t be welcome in today’s “sanitised modern City.” Shah says the willingness of the likes of Richard “Ratty” Ratner, David Cumming or Richard Buxton to speak out didn’t necessarily endear them to their bosses, and their personalities now would be constrained by corporate compliance departments. Shah argues that the loss of voices like these from big institutions “reflects… a growing aversion to any kind of reputational risk” while institutions “will wield less clout on issues such as ESG if they are unable to brandish the stick of an articulate, commercial spokesperson.” On both the sell and the buy side debate is shrinking, Shah continues, and although activists may fill the void to a degree, “a polarised corporate world with ESG types at one end and hedge fund tycoons at the other isn’t healthy.”
New £50 note launches next week
The new £50 note featuring Alan Turing, the mathematician, code-breaker and computer scientist, enters into circulation on June 23 replacing the note featuring steam engine pioneers James Watt and Matthew Boulton, who first appeared on the note in 2011. It will be the final bank note to switch from paper to plastic following the successful introduction of a polymer £5 note in 2016. A £10 note featuring Jane Austen followed in 2017, and £20 polymer note was released last year with painter JMW Turner.