BANKING
BoE audio leak comes after loss of 20 IT security staff
The Observer reveals that the Bank of England lost at least 20 key staff tasked with maintaining the Bank’s security over the past year while Threadneedle Street’s security department underwent a restructuring. The news comes after the Bank was shown to have suffered a breach which saw the audio feed of Mark Carney’s press conferences fed to some investors early. The Bank launched an internal probe and the Financial Conduct Authority is now investigating. The Sunday Times’ John Collingridge says the audio hacking debacle is “just the latest in a series of slip-ups” under Mr Carney. The Mail on Sunday reports that both HSBC and JP Morgan are understood to have had access to the feed, with a source telling the paper all banks will be looking at whether their traders had access.
ATM demand exceeds request scheme funding
A scheme launched in October which allows consumers to request a cash machine in areas where they are lacking has seen 2,700 applications since its launch - around 40 per day. Banks and building societies in charge of funding the scheme have committed £5m – with this only enough to pay for around 200 machines. Link launched the scheme with £1m provided by lenders including Lloyds, Barclays and Royal Bank of Scotland. While the banks have since added another £4m, this is not enough to cover demand for the machines, which cost between £20,000 and £30,000. Link analysis shows that the number of free-to-use ATMs fell by 932 between September and October, leaving 46,525 compared to 51,877 at the turn of the year. Data from Link also reveals more than 300 rural shopping streets are over half a mile from a cash point.
Tough mortgage rules locking out potential first-time buyers
A new report warns that tough mortgage rules imposed after the financial crisis are preventing many potential first-time buyers getting on the housing ladder - even if they can afford a mortgage. A paper by the Centre for Policy Studies (CPS) think tank points out that a Bank of England "stress test" can "deny people mortgages that they could perfectly well afford". The report states that the PM’s plan to encourage a new generation of long-term, low-deposit mortgages could help up to 1.9m first-time buyers onto the housing ladder, by making the test "irrelevant" in many cases. The CPS adds that by offering first-time buyers long-term fixed-rate mortgages, regulators and lenders would not need to be concerned about borrowers being unable to afford repayments in the event of interest rate rises "because the interest rate will be fixed for the term of the mortgage."
Rate cuts leave savers forced to take higher risks for returns
Despite the Bank of England base rate staying constant, savers have had to put up with over 500 rate cuts over 2019. Baroness Altmann, a former pensions minister, said: “Savers feel forced into taking bigger risks to achieve a higher income, and some have ended up taking on debt because it’s not worth bothering to save anymore. Pensioners in particular have seen their income from savings slashed to the point that they have less money to spend each year in real terms.”
TCV eyes major investment in Revolut
Silicon Valley investor Technology Crossover Ventures (TCV) is reportedly considering a major investment in Revolut. TCV is understood to be looking to contribute a large part of a $500m (£385m) equity fundraising. The digital bank is seeking to raise $1bn of new debt that would sit alongside the equity raise. TCV has previously backed start-ups including Airbnb, Facebook, Netflix and Spotify.
Building society offers new ‘Flexit’ mortgages
Leeds Building Society has launched two "Flexit" mortgages for homeowners who want to fix their interest rates but have the option to leave the deal at any time penalty-free, depending on what happens during the Brexit negotiations.
PRIVATE EQUITY
Government approves Cobham takeover
The Government has approved Advent International's £4bn takeover of defence and aerospace company Cobham. The deal was backed by shareholders but drew criticism from Cobham's founding family, who voiced concerns over national security. Having analysed the deal, Business Secretary Andrea Leadsom says she is satisfied any risks have been mitigated, insisting all elements have been “meticulously thought over". It has since transpired that Advent intends to load Cobham with $1bn of debt. The Mail’s Alex Brummer says Leadsom was naïve to believe assurances from the new owners, adding: “Overseas buyers seeking to swoop on the UK's superior intellectual property, patents and R&D will be licking their lips at the prospect of acquiring assets on the cheap and without effective challenge.”
INTERNATIONAL
Watchdog probes Credit Suisse spy claims
Swiss financial market supervisor FINMA is stepping up an inquiry into staff surveillance at Credit Suisse, with the bank facing claims that its human resources boss was followed by private detectives. This comes just months after claims that wealth manager Iqbal Khan was spied on when he left for UBS. FINMA has appointed an independent investigator to look into the allegations.
Adalberth launches €100m ethical fund
Niklas Adalberth, co-founder of Swedish bank Klarna, has launched a €100m (£85m) fund to boost start-ups tackling issues such as climate change, food waste, poverty and healthcare.
FINANCIAL SERVICES
Tulloch’s rejection of break-up plan causes rift at Aviva
The decision by Aviva boss Maurice Tulloch not to pursue a plan to break the insurer in two has caused a rift at the top of the company, the Sunday Telegraph reports. Both non-executive and executive board members supported a proposal to separate the company’s general insurance arm from its life insurance division – a move they hoped would boost Aviva’s flagging share price and repel any attack from activist investors – but Mr Tulloch said the conclusion of his strategic review was “we’re stronger together”. The move reportedly led to the departure of two non-executive directors.
Skeoch warns big funds are ‘not out of the woods yet’
The Sunday Times interviews Standard Life Aberdeen chief executive Keith Skeoch about the current state of the fund management industry. Earlier this month, clients pulled £31m from the Aberdeen UK Property fund after M&G’s suspension of its £2.5bn UK vehicle. “The closer we got to the election, those outflows accelerated,” says Mr Skeoch. He adds: “We now have more political certainty, but the whole industry is not necessarily out of the woods yet.”
ASI to take control of final Woodford fund
The last of Neil Woodford’s three investment vehicles is to be handed to Aberdeen Standard Investments. Fund administrator Link Fund Solutions confirmed to investors that the management of the £267m Income Focus fund will switch from Woodford to ASI on 31 December, although it will remain suspended until February. Aberdeen Standard’s Thomas Moore and Charles Luke will run the fund, which will be rebranded as the ASI Income Focus fund.
Greensill in North West expansion
Fintech firm Greensill, which specialises in providing SMEs with access to working capital finance, is planning to create 227 tech jobs in the North West next year. The company is backed by SoftBank and is valued at about £3.1bn.
MEDIA AND ENTERTAINMENT
Vodafone nears full-fibre deal with Goldman-backed telecoms group
Vodafone is on the verge of revising its deal with Goldman Sachs-backed CityFibre that could free up CityFibre to launch a swathe of investment in full-fibre lines.
REAL ESTATE
Top locations for landlord investment revealed
The most appealing locations for UK landlords to invest in have been revealed by lettings platform Howsy. The list is based on the annual rental return available as a percentage of the property investment cost. Scotland has 18 out of the top 20 areas with the highest annual rent as a proportion of house price. Glasgow tops the table with the annual rent of £10,596 accounting for 7.7% of the average house price. Burnley is the highest outside Scotland and across England at 6.5%.
RETAIL
Debenhams seeks fresh rent cuts
Debenhams is seeking fresh rent cuts just seven months after an earlier restructuring. The retail chain is said to be targeting a further 25% reduction on about 20 stores in exchange for scrapping break clauses in the leases. The move has sparked panic among landlords, who have sounded out rival Mike Ashley about taking on the sites when the break clauses become active. Lenders to Debenhams seized control after it collapsed in April and pushed through restructuring the next month, sanctioning 22 store closures and rent cuts of up to 50% on a further 105. Debenhams had to borrow £50m more in October.
ECONOMY
GDP grows in Q3
GDP grew by 0.4% in the third quarter, according to a revised official estimate. The Office of National Statistics (ONS) said this was higher than the expected 0.3% but “an underlying slowing” of the economy reflected high domestic and global uncertainty. The economy was stagnant in the three months to October. Services output grew 0.2%, but this was offset by 0.7% and 0.3% declines in production and construction output respectively. Export growth reduced the current account deficit to £15.9bn in the third quarter, compared with £24.2bn in Q2. Separate figures from the ONS show Government borrowing continued to rise last month, as public expenditure increased. The budget deficit - the gap between tax revenue and government spending - was £5.6bn in November, marking a £300m increase on the same month a year ago.
Private-sector activity in sharpest fall for ten years
The CBI’s latest growth indicator shows the UK’s private-sector activity has fallen at the fastest pace since 2009. The CBI’s deputy chief economist, Anna Leach, warned: “With the general election having delivered a stable majority, and firms having certainty on the UK’s departure from the EU next month, the government must now work quickly to give a renewed focus to domestic priorities, which will give the economy the boost it is crying out for.”
OTHER
BoE appoints Bailey
Chancellor Sajid Javid has named Financial Conduct Authority (FCA) chief executive Andrew Bailey as the next governor of the Bank of England (BoE). He will take over from Mark Carney on March 16. Mr Javid said Mr Bailey, who spent 30 years at the BoE before his time at the FCA, was the “stand-out candidate in a competitive field.” Mr Bailey, a former BoE deputy governor, said that he was honoured to take the role, “particularly at such a critical time for the nation as we leave the European Union”. Many commentators agree Bailey will prove a “safe pair of hands” at the Bank.
Brexit 50p coins are ordered for January 31st
Coins to commemorate Brexit have been re-ordered after the previous batch had to be destroyed because the UK failed to leave the EU on time. Fifty-pence coins will now be minted with the updated departure date of January 31st.