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Daily News Roundup: Monday, 23rd August 2021

Posted: 23rd August 2021


Flint leads race to run £22bn UK Infrastructure Bank

Former HSBC chief executive John Flint is in talks with Whitehall officials about becoming the inaugural boss of the Government's new £22bn UK Infrastructure Bank (UKIB). Rishi Sunak, the Chancellor, has charged UKIB with aiding Britain's 2050 net zero carbon emissions target by prioritising investment in projects that tackle climate change. In the March budget, Mr Sunak unveiled £12bn in funding for the new bank and a further £10bn in loan guarantees. The Treasury hopes that will help to attract a total of £40bn of financing for key projects.

A data-blind FCA cannot foresee the next scandal

The Times’ James Coney comments on the Financial Conduct Authority’s oversight of areas such as equity release or payment fraud, complaining that the regulator relies on “carefully selected” data provided by trade bodies. Coney states: “We are in an age of data-informed decision-making, but the FCA is depriving itself, and us, of the opportunity to make better financial choices. Instead of improving consumer confidence it is undermining it.” He adds: “Regulators are routinely criticised for being slow to act on areas of consumer harm, but if they are outsourcing their work to trade bodies they will never be able to see the next problem coming.”

Banks compete to woo first-time buyers

Mortgage lenders are cutting rates and boosting the number of deals for first-time buyers as they compete for customers. Buyers with low deposits have had limited choices when it comes to mortgage deals since the pandemic started. Yet lenders jostling for business have cut rates for those with small deposits in recent weeks, signalling the intensity of the rate war, with low-deposit loans much riskier for lenders. The average rate of a two-year and five-year fixed deal with a 10% deposit dropped by 0.14 and 0.13 percentage points respectively this month, according to Moneyfacts.

FCA probing TSB over loan repayments

The Financial Conduct Authority is investigating TSB over how it treated a group of customers who fell behind on loan repayments between 2013 and 2020. The bank has already set aside £55m to cover compensation payments for interest customers lost out on due to incorrect charges. A spokesman for TSB said: “We are conducting a review of customers who were in arrears to establish whether our treatment fell short of what they should have expected. The review is due to continue until 2022.”

Concerns grow over number of bank branches

Figures provided to MPs show around 200 bank branches in the UK are the last remaining in their community, with Lloyds running more than half of those with 118 of the 203 "last in town" premises. Mel Stride, the Treasury Committee chair, said the branches provide a lifeline to vulnerable customers who need them to access their money. He said: "We are concerned that, should these close, vital access to cash and banking services will be out of reach for many communities."

M&A teams scramble for staff sending wages sky high

The Sunday Times reports on a war for talent in the City amid the huge volume of takeover deals. Accountants, investment banks and financial PR firms are desperate for skilled staff and are having to compete with private equity firms too, triggering the kind of wage rises that experienced bankers thought might never return after the global financial crisis.

OneSavings Bank sees profits more than double

Specialist lender OneSavings Bank posted a 123% rise in pre-tax profits in the year to June 2021 to £221.9m, up from £99.3m in the same period last year.


Hackers steal £73m in cryptocurrency

One of Japan’s leading cryptocurrency exchanges, Liquid Global, has admitted that hackers have stolen £73m in crypto-assets from the company. Liquid Global said its warm wallets were compromised and it was moving assets into the cold wallet while deposits and withdrawals have been suspended.

Saxo Bank profits dip

Profits at Danish investment bank Saxo Bank fell to £59m in the year to June 2021, down from £60.9m in the same period last year, despite attracting record levels of new clients.


Dog funds drop by a third since January

The number of under-performing funds on the Spot The Dog index has dropped by a third according to Bestinvest. Its latest report listed 77 under-performing funds compared to 119 in January and 150 dog funds identified six months previously. HBOS, owned by Lloyds Banking Group, performed the worst with £6.85bn in five funds. The list of the worst performing funds included St. James’s Place, with £3.9bn across four funds and Scottish Widows, with £2.7bn also across four funds. Bestinvest Managing Director Jason Hollands: “The sharp rebound in some of last year’s worst hit sectors – such as energy and financials – has enabled a lot of previous offenders to escape inclusion as more recent, shorter-term performance has been strong, lifting them out of our filters. However, it is also the case that some fund groups are raising their game and have been taking action to address poor performance, including changing managers.”

L&G considers move into China

Legal & General is exploring opportunities in China with CEO Nigel Wilson considering a pension management partnership amid moves by the Communist regime to lure Western money managers to the country. The Sunday Telegraph explains that the substantial pool of savings among China’s emerging middle class means its wealth market is forecast to boom in the coming years and Western firms are being urged to use their expertise to modernise the country’s savings landscape.

Top financial services earners remain in UK

Pointing to data showing that the number of bankers that have moved to the EU because of Brexit is nowhere the figures predicted, the Express notes that a report from the European Banking Authority shows of the nearly 5,000 European bankers on salaries over €1m (£858,000) 71% of them still live in the UK. The report also revealed that just 95 highly paid bankers left Britain ahead of its departure from the EU. The paper goes on to cite Political website Guido Fawkes which commented: ”These highly paid workers in the financial sector pay hundreds of millions in taxes and spend their millions on goods and services that provide thousands more jobs.”

PayPal to let users trade crypto

PayPal is to permit its UK customers to buy and sell Bitcoin and other cryptocurrencies from later this week. The company allowed American users to buy and sell cryptocurrencies last year, and the UK is the first market outside the US where the company has launched the feature. However, customers will not be allowed to spend the coins or transfer them outside PayPal.


UK approves Covid antibody treatment

The UK has approved its first monoclonal antibody treatment for Covid. Ronapreve, previously known as REGN-Cov2, has been shown to prevent infection, treat symptoms of serious infection and cut the likelihood of being admitted to hospital. The drug was given to former US President Donald Trump. Health Secretary Sajid Javid said approval of the first treatment designed specifically for COVID-19 in the UK is “fantastic news” and he hopes it can be rolled out for patients on the NHS “as soon as possible”.

AstraZeneca's antibody therapy prevents COVID-19

Trial data from AstraZeneca on Friday raised the prospect of a new treatment to prevent COVID-19 beyond vaccines, giving hope in particular for people who respond poorly to immunisation shots. The British drugmaker said its new antibody therapy reduced the risk of people developing any COVID-19 symptoms by 77% in a late-stage trial.


Pandemic drives revenue down at Jamie Oliver

Turnover at the Jamie Oliver Group fell by 19.7% to £30m last year while pre-tax profits tumbled by 41.2% to £4.9m. The group described the performance as “robust against the backdrop of a global pandemic”.


WPP in talks to buy AI firm

Advertising giant WPP is in talks to buy Satalia, an artificial intelligence firm that helps businesses use machine learning to improve their efficiency. One division uses algorithms to optimise what work employees are given. The deal could value Satalia at about £75m with its founder joining WPP as its head of AI as part of the agreement.


Stamp duty break not behind property boom

The stamp duty holiday is not responsible for the current house prices boom, a new report has argued. The Resolution Foundation says prices will keep rising because of pandemic-related factors like low interest rates and changing home preferences. In fact, the think tank says the tax holiday was "wasteful" and HMRC lost out on about £4.4bn of taxes in England and Northern Ireland as a result. The Treasury said the policy saved jobs by stimulating the housing market. The Resolution Foundation's Housing Outlook report has investigated whether there is a link between the recent house price boom and these tax holidays, including the stamp duty cut for first-time buyers. "It is reasonable to expect at least part of the savings from any transaction tax holiday to be capitalised into house prices," the report's authors Lindsay Judge, Krishan Shah and Felicia Odamtten wrote.

More people reaching retirement age with outstanding mortgage

The number of people reaching retirement age with mortgage debt is on the up, according to Age Partnership. The UK's biggest lending adviser for the over-50s said that 33% of its customers in the first half of 2021 still had a mortgage, up from 28% last year. Equity release loans dominate later-life borrowing with 20,000 taken out in the first half of this year while retirement interest-only (RIO) mortgages are far less popular. Advisers say affordability checks and the risk of repossession if payments are not kept up are the most common reasons why people aren’t choosing them.


Morrisons backs improved £7bn takeover offer

Supermarket giant Morrisons has accepted an improved £7bn takeover bid from US private equity group Clayton, Dubilier & Rice (CD&R). Morrisons had previously recommended investors accept a £6.7bn offer from a consortium led by another US-based investment group, Fortress. Fortress said it was "considering its options", amid signs shareholders think the battle is not over. Morrisons shares opened up on Friday, a signal investors expect another bid. The retailer, which has almost 500 shops and more than 110,000 staff, has been at the centre of a takeover battle for weeks.

Apollo runs the rule over Sainsbury’s

American private equity giant Apollo is said to be exploring a bid for Sainsbury’s as buyout firms circle UK supermarket chains. Banking sources say that private equity firms see scope to improve the efficiency of supermarkets by shrinking the stores and adding automated distribution facilities to handle online orders.


Public borrowing falls below official forecasts

The UK Government borrowed a further £10bn in July, according to the Office for National Statistics - the second highest amount for the month since records began in 1993. However, the figure was below forecasts and half that borrowed in July last year at the height of the Covid crisis, suggesting the economy is recovering quickly from the pandemic. Total public debt now stands at £2.2trn, nearly 99% of GDP, the worst since 1962. Chancellor Rishi Sunak said: “Our recovery from the pandemic is well underway, boosted by the huge amount of support Government has provided. But the last 18 months have had a huge impact on our economy and public finances, and many risks remain.” Alison Ring of the Institute of Chartered Accountants comments: "The Chancellor has some tough decisions to make the public finances more sustainable."

Business confidence in Scotland at highest level since 2014

The latest ICAEW Business Confidence Monitor indicates that optimism north of the border is at its highest level since 2014, boosted by the gradual reopening of the economy. However, despite the rise in confidence levels still lag behind the rest of the UK. The accountancy body’s study also shows businesses plan to increase employee numbers by 3% while wages are expected to increase too.  Domestic sales growth of 6.8% over the next 12 months is anticipated, which would be the fastest rate of growth in Scotland since the monitor began measuring in 2004.


Government urged to change rules on broadcasting investment guidance

Former Conservative minister Lord Lee of Trafford has urged the Government to adjust rules to permit broadcasters to produce educational or informative programmes on stock market investment. Financial Conduct Authority rules and Ofcom regulations mean the BBC and other terrestrial broadcasters are constrained when it comes to providing coverage on investing. Russ Mould, investment director at AJ Bell, the retail stockbroker, said the issue of financial education should be addressed: “In an era when the onus is on consumers to save and invest for their families and later life, financial education in general and guidance on how to navigate the world of investments and financial markets in particular must be priority.”

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