Banks set to close more branches
The Mail on Sunday reveals that Lloyds and Barclays are poised to announce a raft of branch closures in the coming days, saying that Lloyds could put between 60 and 100 branches on notice and Barclays is likely to announce the closure of up to 20 branches. The paper cites a banking expert who believes big banks will cut a further 200 branches in the next few months, with another 400 being axed before the end of 2022. More than 100 branch closures have already been announced this year, with HSBC last week revealing that 69 branches – one in seven of its high street outlets – will close between July and October.
Investec lifts profit forecast
Investec’s loan book grew by 9% to £28.8bn last year, with the increase driven by rising corporate lending and residential mortgages in the UK and South Africa. The Anglo-South African bank saw UK customer loans customers rise 16% to £14.3m, while UK deposits increased 12% to more than £18m compared with the year before. The group, which runs the 10th largest bank in the UK, expects adjusted operating profit to come in between £642m and £683m for the year to the end of March. That marks a significant increase on the previous year, when the pandemic hit the lender and profits came in at £377.6m.
Homeowners forking out to quit mortgage deals
Homeowners have raced to switch mortgage deals, paying thousands in exit penalties in the process, as they seek to lock in cheaper deals before the Bank of England rate pushes up costs. The number of borrowers that paid fees to leave deals has jumped by more than a third compared with before the pandemic, according to Yorkshire Building Society. The building society recorded a 34% rise in the number of borrowers that paid an "early repayment charge" in the first two months of 2022, compared with the same period in 2020.
Skipton Building Society profit more than doubles
Profit at Skipton Building Society more than doubled last year thanks to an “incredibly hot” housing market. Britain's fourth largest mutual posted a 129% increase in pre-tax profit to a £272m last year, up from £119m in 2020. The group hailed record mortgage lending, including to first-time buyers, for a total of £5.4bn. The society handed out 30,282 mortgages last year, an increase of almost a quarter on 2020, including nearly 7,900 to first-time buyers, which is an increase of 45%. Skipton said it was buoyed by a rebounding economy and rise in mortgage lending.
Property mogul sues Lloyds over ‘Libor damage’
Property tycoon Ardeshir Naghshineh, founder of investment company Targetfollow, has launched a £1.5bn legal claim against Lloyds Banking Group, claiming Libor manipulation contributed to the partial collapse of his property empire. He claims he would never have taken on loans from HBOS, which Lloyds rescued in 2009, if he had known about “fraudulent manipulation” of the Libor benchmark.
UK financial regulation architects warn against scrapping ‘ringfencing’
Sir Paul Tucker, a former Bank of England deputy governor, has questioned an independent review that suggested replacing rules forcing the separation of big banks' retail and trading divisions.
Listed firms increasingly open to private equity deals
Analysis shows that that the number of UK listed companies taken private increased from five in 2020 to 19 in 2021, with the total value of these companies rising from £4bn to £29.3bn in the past 12 months. Elsewhere, data from ratings agency S&P shows that private equity firms had about $2.3trn committed by investors but not allocated at the end of last year, up from just under $2trn in December 2020.
CVC mulling Amsterdam listing
CVC Capital Partners is looking at listing on Amsterdam’s Euronext, with London set to miss out on a rare private equity listing. CVC has reportedly informed investors of its intentions, although no final decisions have been made. Sources have claimed that the private equity firm has recruited Goldman Sachs, JPMorgan, and Morgan Stanley to work on the IPO.
US banks take $4.6bn revenue hit from equity raising drought
Between them, Morgan Stanley, JPMorgan Chase, Bank of America, Goldman Sachs and Citigroup have generated $645m from equity capital market fees in 2022, compared with $5.3bn in the same period in 2021.
Watchdog urged to settle BSPS scandal
James Coney in the Sunday Times looks at the British Steel Pension Scheme (BSPS) scandal, highlighting that it has yet to be settled and urging the Financial Conduct Authority (FCA) to “get on with approving a compensation scheme”. This, he argues, should be funded through a levy on the wider pension industry “which has neatly managed to benefit from this scandal while shirking all responsibility for it.” Mr Coney says steelworkers were not duped by scammers, but misled by fully regulated and approved financial advisers, adding that regulators, government ministers, unions and the pension scheme trustees were supposed to look after their interests “but they were underprepared and overwhelmed.” He goes on to criticise the watchdog further, saying the FCA is “moving at its usual snail’s pace.” Meanwhile, Imogen Tew in the same paper looks at the BSPS scandal, saying that regulators have been “picking up the pieces” in the five years since the scandal erupted, noting that a parliamentary investigation blamed the Pensions Regulator, the FCA, the Pension Protection Fund and the government for failing to ensure steelworkers were adequately informed. She adds that a National Audit Office report last week also highlighted failures of regulators.
NFT fraud increases and is expected to surge further
Research by Pinsent Masons shows that Non-Fungible Token (NFT) fraud is on the up, with 10 cases reported in the UK in 2021 where just two were recorded in 2020. Hinesh Shah, senior associate forensic accountant at the law firm, expects fraud relating to NFTs to surge in the coming months, warning: “Genuine stories about the windfall profits individuals have made on NFT investments make the more outlandish claims made by fraudsters, to lure investors, seem credible.” He added concern that “widespread media coverage of the NFT boom, like the cryptocurrency boom, is attracting consumers who have very little investment experience and therefore aren't taking basic steps such as checking if an NFT is actually an NFT."
FCA urged to delist Russian companies from LSE
City regulators have been criticised for refusing to delist Russian companies from the London Stock Exchange (LSE). While several firms with direct links with sanctioned oligarchs have seen their shares suspended, they remain listed. The Financial Conduct Authority (FCA) decides which companies are on the LSE but has deferred the matter to the Foreign Office, a move financier-turned-campaigner Bill Browder has deemed to be “buck-passing” and “bureaucratic doublespeak.” He argues that “someone needs to take responsibility for this and delist all Russian companies from the London Stock Exchange immediately.” He added that the FCA “should stop deferring to anything and should just get on, pull their finger out and get it done … they should just either get on with it or admit defeat and give the job to somebody else.” The Mail notes that the Foreign Office has not yet instructed the LSE and FCA to delist Russian firms.
LEISURE & HOSPITALITY
Hospitality sector in VAT hike warning
Leaders in the hospitality sector say Government plans to increase VAT from 12.5% to 20% in April will see some businesses “become unviable overnight.” Kate Nicholls, head of industry body Hospitality UK, said the tax hike will worsen the cost-of-living crisis, with London’s hospitality businesses set to be particularly hard hit. She said that for a sector trying to recover from the pandemic amid a “tsunami of inflationary pressures”, the VAT increase comes at the “worst possible time.” Voicing concern that consumer confidence will “crumble” and an upturn in footfall will reverse, Ms Nicholls said this would be "bad news for London and for the national economic recovery as a whole.”
Flutter rethinks bonus plan
Paddy Power and Betfair operator Flutter Entertainment has scrapped plans to boost long-term incentives for executive directors but has hiked basic pay. Although most of Flutter’s largest shareholders backed the planned package of higher pay and incentives, it has been abandoned as Russia’s invasion of Ukraine has hit world stock markets. While the new bonus plan is no longer on the cards, CEO Peter Jackson, who was paid £8.4m including incentives, bonuses and a salary of £923,000 last year, will see a 26% rise in basic pay to almost £1.2m.
UK law firms are beginning to rethink ageism
The FT looks at ageism in law firms, noting that while data shows solicitors over 70 made up just 3% of partners in 2020, “it appears the landscape is starting to change”.
Climbing loan rates could hit property price growth
Alexandra Goss in the Times looks at the property market, highlighting Nationwide data showing that annual house price growth rose to 12.6% last month and the average price has gone above £260,000 for the first time. Propertymark figures show 39% of properties sold for above the asking price in February, while analysis suggests the number of sales agreed in the first two weeks of March was 20% above pre-pandemic levels while the number of properties coming to market was 8% below. However, Capital Economics’ Andrew Wishart expects interest rates to hit 2% next year, warning that the average rate on new mortgages is set to double from a low of 1.5% in November 2021 to almost 3% in 2023. This, he suggests, is likely to cause demand and price growth to “slow to a crawl.” Gráinne Gilmore, head of research at Zoopla, forecasts average price growth of between 2% and 4% by the end of the year, with fewer transactions.
Buying saves £1,400 a year over renting
Buyers save around £1,400 a year compared to renters, Halifax data has shown. Buyers save £115 a month on average on housing costs if they can afford to get on the property ladder. The bank compared the typical monthly rent for a three-bedroom property in Britain with average buying costs, which include mortgage payments, maintenance costs, insurance and income "lost" from funding a deposit instead of saving. Average buy-to-let monthly rents increased by 6% to £874 between December 2020 and December last year, while buying costs rose 2% to £759 a month.
Rising rates could hit first-timers' home hopes
Delaying a house purchase by 12 months could cost purchasers an extra £3,700 as rising interest rates and growing house prices threaten to shut first-time buyers out of the market. Analysts have warned that soaring mortgage bills, rising inflation and the cost of living crisis will hit the finances of potential homeowners, wiping out first-time buyers and risking a housing market downturn. While the Bank of England increased interest rates to 0.75% on Thursday, Capital Economics forecasts that rates will hit 2% in 2023, which will quickly translate into higher mortgage costs. The consultancy said house prices would rise 5% this year and the two scenarios combined would mean someone purchasing an average London home next year with a 40% deposit would pay £310 per month - or £3,720 a year- more than they would have last week.
British Land and Landsec discussing £800m shopping centre swap
Property firms British Land and Landsec are in discussions over a potential £800m asset swap, in an effort to lift their drifting share prices. Such a deal would see Landsec acquire British Land's 50% share of Sheffield's Meadowhall shopping centre in exchange for Landsec's ten retail parks.
IWG to add over 1,000 locations
London-listed office rental company IWG plans to add more than 1,000 new locations globally in 2022, with a focus on suburban areas. The firm said the move comes due to increasing demand for the hybrid work model in a post-pandemic environment.
Talks over £7bn Boots sale to begin this week
Talks between Walgreens and interested parties in Boots are due to begin this week as the high street retailer's owner pushes ahead with a planned £7bn sale, despite volatile market conditions which have seen corporate debt markets seize up. Groups understood to have submitted non-binding bids include US private equity firms Apollo and Sycamore Partners, and TDR Capital and Asda-owners the Issa brothers. Although a consortium of Bain Capital and CVC Capital declined to submit a first-round bid, a source has suggested the consortium's interest could be revived if Walgreens was willing to countenance a lower price.
Goldman advising Chelsea bid consortium
Goldman Sachs is the latest name to be linked to the bidding for Chelsea Football Club, with the investment bank signed up to advise a consortium being led by Todd Boehly, part-owner of the LA Dodgers baseball team. Goldman's involvement was disclosed in an offer sent to Raine, the merchant bank overseeing the club’s sale. Alongside Mr Boehly, the consortium includes Swiss businessman Hansjorg Wyss, property investor Jonathan Goldstein and investment firm Clearlake Capital. Other bidders include a group comprising Chicago Cubs owners the Ricketts family and American hedge fund billionaire Ken Griffin; property entrepreneur Nick Candy; and Sir Martin Broughton, whose bid is being backed by the hedge fund billionaire and sports investor Josh Harris. London-based asset management firm Centricus has teamed up with hedge fund manager Jonathan Lourie of Cheyne Capital and Talis Capital’s Bob Finch to submit a bid.
Pub boss says Bank is stoking inflation
Tim Martin, founder and chairman of Wetherspoons, has accused the Bank of England of stoking inflation, arguing that the Bank's money printing programme has driven up the cost of living. While the Bank has pumped £450bn of new money into the economy through quantitative easing during the pandemic, inflation is at a 30-year high of 5.5% and set to climb further. This, Mr Martin says, is a result of Bank of England action which has led to “significant inflation and higher taxes.”
Inflation is the UK’s biggest financial concern
Research from M&G Wealth shows that inflation is the main financial concern for Britons, in both the long and short term. The poll of 2,000 people saw 25% cite soaring inflation as their biggest financial concern over the coming year, while 22% said rising inflation is their main financial worry over the next five years. Almost a fifth (18%) said they were worried about their investments losing money this year, while 17% are worried about not saving any money at all, with 18% saying their bills are already too high for them to save. It was found that 18% save less than £50 a month, while 8% have no savings at all.