HSBC shareholders advised to reject Asia spinoff
Shareholder advisory group ISS has said HSBC investors should vote against a resolution by the bank’s biggest shareholder Ping An that would see the spinoff of its Asian business. ISS said the proposal “lacks detailed rationale.” Fellow advisory group Glass Lewis has also advised investors against supporting the proposal, saying Ping An’s call for HSBC to consider strategic options lacks merit. While insurer Ping An has accused HSBC of not giving its strategic ideas sufficient consideration, the bank says it has discussed the plans on numerous occasions and consistently concluded that they would destroy shareholder value and be too costly to implement. Meanwhile, HSBC is braced for a shareholder revolt against chief executive Noel Quinn over the bank's alleged links to human rights abuses in Hong Kong. Shareholder advisory service Pirc has told investors to vote against Mr Quinn's re-election to the board and has also advised investors to oust Dame Carolyn Fairbairn, chair of the pay committee.
Revolut sees $15bn writedown from investor
A 46% writedown by investor Schroders suggests fintech firm Revolut is valued at about $17.7bn. This is far below the $33bn price tag implied by a capital-raising in July 2021. Schroders Capital Global Innovation Trust, a listed investment trust managed by Schroders, has cut its estimate of the value of its Revolut stake from £10.1m to £5.4m. Revolut has faced a number of challenges in recent months, with an application to secure a British banking licence taking longer than expected and its external auditor having raised concerns about the controls and procedures behind about £477m of its annual revenues in the group's 2021 accounts.
Ulster Bank to close Republic of Ireland branches
Ulster Bank shut down its entire branch network in the Republic of Ireland on Friday. In 2021 the bank’s parent company, NatWest, said it would withdraw from the Republic of Ireland. Since then the bank has been selling off its loan book to other banks and financial institutions. The move does not impact the bank’s separate operations in Northern Ireland.
Private equity takes a renewed interest in UK plc
The FT reports that a number of private equity approaches to publicly listed companies signals a resurgence in appetite for dealmaking as the economy stabilises and debt markets improve.
Credit Suisse bondholders sue Swiss regulator over £4bn loss
Credit Suisse investors who had $4bn of bonds wiped out in the forced takeover of the bank by UBS are suing the Swiss Financial Market Supervisory Authority (Finma). Bondholders say they have been “unlawfully deprived of their property rights.” Typically, bondholders rank above shareholders when a company collapses, but the entire value of AT1 bonds worth $17bn were wiped out in the UBS deal, while Credit Suisse shareholders took a significant cut in the value of their shares.
BNY Mellon threatens ‘corrective action’ over WFH
BNY Mellon has told staff they must attend the office for three days each week or face “corrective action.” In an email to staff, Roman Regelman, senior executive vice president at the investment bank, said that while the bank was not “prescribing which days of the week to come into the office … managers may encourage teams to come together on certain days to optimise employee experience.” Some UK staff have consulted conciliation service Acas over the change to flexible working arrangements.
US regulators to tighten rules on non-banks
US Treasury Secretary Janet Yellen has announced that the Financial Stability Oversight Council will adopt a new risk assessment framework towards non-bank financial institutions. "The March banking turmoil demonstrates that more work is needed to strengthen the regulatory and supervisory regimes," she said.
Rakuten Bank shares surge in Japan’s biggest IPO since 2018
Japan's biggest internet lender Rakuten Bank saw its shares rise by 40% on their Tokyo debut on Friday. Rakuten Bank was founded in 2000 and has now been spun out of e-commerce company Rakuten.
Standard Bank reports 38% jump in Q1 earnings
Higher interest rates and growth in transactional volumes drove first quarter attributable earnings at South Africa's Standard Bank Group up by 37.8%, the country’s largest lender has announced.
GAM held takeover talks with Zürcher Kantonalbank
Switzerland’s Zürcher Kantonalbank, a state-owned bank, has held takeover talks with asset manager GAM, which has delayed the release of its annual results as it looks to secure a sale.
ING sues China’s biggest bank over copper trading losses
Industrial and Commercial Bank of China, China’s largest bank, is being sued by Dutch lender ING for losses suffered in several copper deals.
FCA to act over ‘excessive’ insurance hikes
The Financial Conduct Authority (FCA) is to clamp down on excessive insurance rates for people living in blocks of flats, warning that intervention was needed to prevent abuses of brokers’ commissions. The move follows a review after the 2017 Grenfell Tower fire, which led to large increases in building insurance costs. Policies have become far more expensive, particularly for people living in cladded buildings, and increases in brokers’ fees have exceeded the rise in costs over the same period. The average insurance broker commission per policy rose by 46% between 2019 and 2022. The FCA says more than £80m of commission was passed on to property managing agents or freeholders, with this cost ultimately borne by leaseholders. The watchdog says insurers must act in the best interest of leaseholders, adding that brokers should be banned from recommending insurance policies based on how much commission they receive. The regulator also expects brokers to immediately stop passing on part of their commission to the managing agent or freeholder of the building being covered if it did not comply with the watchdog’s fair value rule. Sheldon Mills, the FCA’s executive director of consumers and competition, said: “We are taking action against these practices and we won’t hesitate to take further action if brokers don’t comply with our rules.”
Car finance concern
Consumers have been warned over the “plague” of claims management firms targeting people who may have been mis-sold a car finance deal. Data from the Financial Ombudsman Service (FOS) shows there were 11,452 complaints about motor finance deals between in the twelve months to March 31, up from 6,128 in the previous financial year. The proportion of claims relating to commission, fees and charges on these products increased from 1,472 in 2021/22 to 5,658 in 2022/23. The FOS says about 90% of the complaints covering 2022/23 have been brought by third-party representatives – claims management firms and law firms. Consumer rights expert Martyn James says the behaviour of claims management firms in this area is similar to that seen in the payment protection insurance (PPI) mis-selling scandal, saying: “The latest ombudsman data seems to be driven by the plague of claims management companies who previously dominated the PPI market.” The recent rise in complaints follows a ban on motor finance “discretionary commission” that came into force in January 2021 after the Financial Conduct Authority ruled that its widespread use “creates an incentive for brokers to act against customers’ interests.”
LEISURE & HOSPITALITY
Pub and restaurant sales rise for sixth consecutive month
In March, Britain's major pub and restaurant groups reported a sixth consecutive month of like-for-like sales growth, with a 1.4% increase in takings compared to the same month last year, according to the Coffer CGA Business Tracker. The resilience of these larger companies contrasts with the difficulties faced by individual publicans and restaurant owners, who are struggling to survive. In London, like-for-like sales rose by 3.1% for outlets within the M25, with trading improving by 1.2% outside the M25. In March, pubs and restaurants outperformed bars, which experienced a third consecutive month of negative figures, with like-for-like sales down by 13%.
Procter & Gamble counters ‘greedflation’ claims after margins rise
Shares in Procter & Gamble rose on Friday after the consumer goods giant revealed improved profit margins despite a fall in sales, leading to accusations that consumers were being unfairly squeezed by price hikes.
First-timers opting for longer loans
First-time buyers and home movers are increasingly opting for mortgages lasting up to 40 years, according to UK Finance. This comes as buyers seek lower monthly payments as the cost of living increases and property prices remain high. The number of first-time buyers taking out a mortgage of more than 35 years doubled in 2022 to 17%, while 38% chose terms of 30 to 35 years. Two-thirds of mortgages now have a maximum term of 40 years, up from around 50% four years ago. The number of home movers taking out terms of more than 35 years doubled to 8% in 2022, while for 30- to 35-year terms, the figure increased from 21% to 26%.
ONS: March sales fell by 0.9%
Figures from the Office for National Statistics (ONS) reveal that UK retail sales volumes fell by 0.9% between February and March, with shops blaming wet weather for fewer shoppers. The decline, which followed increases of 1.1% in February and 0.9% in January, was more than the 0.5% drop expected by economists. “Retail fell sharply in March as poor weather impacted on sales across almost all sectors,” said Darren Morgan, a director of economic statistics at the ONS. “In the latest month, department stores, clothing shops and garden centres experienced heavy declines as significant rainfall dampened enthusiasm for shopping.”
UK borrowing tipped to hit £23bn
A consensus forecast from City analysts suggests Government borrowing will have climbed to nearly £23bn in March. Office for National Statistics data due this week is expected to show the gap between what the Government generates through taxes and what it spends on public services widened from the £16.7bn recorded in February, with the increase attributed largely to the cost of support measures capping energy bills at £2,500. Analysts at consultancy Oxford Economics said borrowing has consistently come in below Office for Budget Responsibility (OBR) expectations over of the past six months, “reflecting a combination of resilient tax receipts and lower-than-expected costs of subsiding energy bills.” The report added: “The OBR’s full-year fiscal forecast is £152.4bn so, absent revisions and factoring in differences in the treatment of student loans, borrowing would need to have come in below £28.8bn in March to undershoot this forecast.”
UK economy shows signs of recovery
The latest flash PMI survey from S&P Global and the Chartered Institute of Procurement and Supply shows an uptick in activity in April, with consumers shrugging off inflationary pressures to spend more on travel, leisure and entertainment. The PMI rose from 52.2 in March to 53.9 in April, the highest level for 12 months, but robust levels of service sector activity were offset by a sharp fall in manufacturing output. Manufacturers said that their customers were looking to cut down their stock levels, leading to a decline in demand.
UK inflation exceeds EU average
Analysis shows that inflation in the UK currently exceeds the average seen across European Union countries. According to Statista’s harmonised index of consumer prices, average inflation across the bloc hit 10% in February, while in the UK the rate was just higher at 10.1% in March, having fallen from 10.4% in February. However, the data shows that some EU nations recorded far higher rates, with inflation in Hungary coming in at 26.2% and 21.4% in Latvia. Czechia, Estonia, Lithuania, Poland, Slovakia, Bulgaria, Romania, Croatia, Austria and Italy all saw inflation exceed the UK’s rate in February. At the opposite end of the scale, Luxembourg saw the lowest inflation rate at 5.8%, followed by Spain (5.9%) and Malta (6.8%).
Profit warnings rise in first quarter
Analysis shows that UK-listed companies issued 75 profit warnings in Q1, with this up from 72 in Q1 2022 and the highest first-quarter total since the start of the pandemic in 2020, when a record 305 were issued. The report cited “persistent economic uncertainty” as a key factor behind the rise in profit warnings.