BANKING
Large lenders push back on data-sharing reforms
Major lenders are unhappy about the burden of open banking rules arguing that the costs are far higher than predicted by the Competition and Markets Authority (CMA) in its original evaluation of the data-sharing policy in 2016. Both Barclays and HSBC have said in response to a new CMA consultation into the future of governance in the industry that the scheme should be adjusted so big banks are not forced to spend heavily at the whim of smaller rivals. Nationwide also encouraged the Government to force smaller banks to contribute towards open banking costs in order to “minimise the issue of free-riding”.
Nationwide sees profits double as lending soars
Nationwide Building Society’s profits almost doubled to £823m in the year to April as lending activity began to bounce back. Profits rose to £790m from £469m for the previous 12 months. Nationwide also cut costs saving £94m while deposits soared from £5.7bn to £10.6bn as Britons saved during lockdown. The UK’s second biggest mortgage lender kept its market share “broadly flat” overall, CEO Joe Garner said, during a year of “distinct phases”, from the outbreak of COVID-19 and freeze in the housing market, to a stabilised state of lockdowns to the “beginnings of recovery” now.
Fewer small firms expected to default on emergency loans
A Barclaycard survey reveals 22% of small firms plan to pay off Government COVID-19 loans within a year. However, the poll indicated as many as 16,000 firms (1%) may default. The National Audit Office estimated last year that between 35 and 60% of borrowers might default on their loans. More than 1.6m small businesses borrowed around £70bn from emergency loan schemes and the first payments are due this month. A separate survey by Liberis shows 46% of small business owners asked family for financial support during the pandemic and more than a third asked parents for help. Some 40% turned to banks, 37% took a second job to keep their companies afloat and a further 28% considered doing so.
NatWest faces criminal charges over money laundering
NatWest is facing “significant reputational damage” over claims it failed to prevent money laundering after the Financial Conduct Authority found the bank had taken deposits totalling £365m - £264m in cash – from a gold dealership called Fowler Oldfield between November 2011 to October 2016. Experts said the FCA was “flexing its muscles” by bringing criminal charges instead of levying NatWest with a fine – signalling a tougher stance by the regulator under its new chief executive Nikhil Rathi, previously chief executive of the London Stock Exchange.
Legislation needed to protect access to cash, Which? says
The Mail on Sunday reports on the Access to Cash Action Group set up by high street banks to discuss ideas about how cash access could be protected. Barclays, HSBC, Lloyds, NatWest, Santander and TSB along with Nationwide Building Society and industry body UK Finance have all signed up to the group and made a series of commitments, but Which? believes without legislation the initiative is doomed to failure. CEO of the consumer group Anabel Hoult says: “There is a risk that without the Government playing its part, the effort of this group will go the same way as other initiatives – insufficient to tackle the creaking cash infrastructure. Legislation is needed for effective action.”
Banks told to publish reimbursement rates
Consumer watchdog Which? is pushing banks for transparency over when customers are reimbursed after falling victim to fraud. Which? wants banks to publish their figures by Friday - the two-year anniversary of a voluntary code of conduct agreed by lenders and designed to stamp out bank transfer scams. Gareth Shaw, head of money at Which?, says: "A total lack of transparency in how firms deal with victims of bank transfer scams has led to many people being treated unfairly and inconsistently. The chances of getting your money back are a lottery."
Close Brothers enjoys profit surge but remains cautious on outlook
Close Brothers said on Friday that it had made more operating profit this year than over the whole of fiscal 2020. Assets under management are up, trading activity has surged and the group's loan book grew by 3.2% in first the quarter to £8.2bn.
UK banks cut rates on multimillion pound mortgages
With competition between lenders intensifying, banks are starting to offer rate cuts on mortgages of between £2m and £10m, with Barclays, NatWest, Santander and HSBC all reducing the cost of such deals.
PRIVATE EQUITY
FirstGroup’s biggest shareholder escalates attack on board
Coast Capital has threatened to take legal action if FirstGroup doesn’t revise the terms of the £3.3bn sale of its US bus business to Swedish private equity group EQT.
INTERNATIONAL
EU regulators eyeing crackdown on foreign banks
According to Reuters, EU regulators are considering tougher scrutiny of foreign bank branches in the bloc whose ranks have been swelled by Brexit to create "negative risks". Since Brexit, there are 14 more branches and a 30% increase in assets, or €120.5bn, compared with totals at the end of 2019. Most of the branches are for banks from China, Britain, Iran, the US and Lebanon. Sources close to the matter said the EU is introducing new rules for non-EU banking groups, requiring them to consolidate their operations under an "intermediate parent undertaking" or IPU.
US banks to face climate risk disclosure under Biden order
An executive order issued by the White house instructs the US Treasury to work with other members of the Financial Stability Oversight Council on how to “reduce risks to financial stability”.
Deutsche Bank sets implicit quota of 50% women for senior hires
Following Deutsche Bank’s pledge to have 30% female executives by 2025, the FT calculates that 50% of vacant senior management positions will have to be filled by women.
AUTOMOTIVE
Second-hand car prices soar
Used car prices have soared according to research by Car Dealer magazine, fuelled by increased demand as travellers avoid public transport and the microchip shortage holds back new car production. Valuation experts called the price jumps “ridiculous and unheard of”.
AVIATION
Virgin Galactic completes flight in step towards space tourism
Virgin Galactic’s VSS Unity spaceship has completed its first successful trip into space, bringing the company closer to its goal of offering commercial space flight in 2022.
EU to target aviation in revamp of fossil-fuel levy
EU finance ministers meeting in Lisbon on Saturday moved closer to agreeing a tax on aviation as part of a revamp of fossil-fuel levies to help meet emissions goals.
CONSTRUCTION
Builders hits by materials shortage
Shortages of materials has pushed inflation in the construction industry to its highest level since records began 25 years ago. Brian Berry, chief executive at the Federation of Master Builders, warned that the price increases risked hampering the sector’s post-pandemic recovery.
Travis Perkins offloads plumbing and heating business
Builders’ merchant Travis Perkins has sold its plumbing and heating business to private equity firm HIG Capital for £325m.
BlackRock bets on UK retirement housing
Blackrock is paying £100m for a 75% stake in a joint venture with Audley Group, a retirement village developer, in the latest sign that institutional investors’ search for stable income.
FINANCIAL SERVICES
Deals on the agenda for Investec
Investec is considering acquisitions in wealth management as it pushes ahead with plans to expand its private banking business in Britain. The development comes after Investec spun off Ninety One, its asset management business, in March last year, and has exited businesses including Click & Invest in the UK. It is also winding down its Australian operation. Investec reported on Friday that the 2021 financial year was a tale of two halves, with a strong earnings recovery in the second half following a difficult and volatile market and economic conditions attributable primarily to COVID-19.
FCA slammed over doorstep loan crackdown
The CEO of sub-prime lender Morses says Provident Financial’s withdrawal from doorstep lending after 140 years in business means many poor people will be forced to turn to loan sharks. Paul Smith says the crackdown on the sector by the Financial Conduct Authority (FCA) could prove to be the “biggest disaster they've ever presided over.”
Brexit can boost London as financial centre, says Klarna boss
Sebastian Siemiatkowski, the CEO of Swedish “buy now, pay later” company Klarna, believes the City can use Brexit to rewrite regulations to its advantage and attract more fintechs and banks.
Scottish Widows calls for pensions performance fees to be scrapped
Fund managers should be banned from charging performance fees to retirement savers, Scottish Widows has said, arguing that there is no evidence such fees improve customer outcomes.
Insurers examine cutting premiums for greener motoring customers
Insurers are looking at how to reward customers who reduce their carbon footprint as the industry comes under growing pressure to use its underwriting policies to tackle global warming.
HEALTHCARE
Alliance upsets UDG takeover
The proposed £2.6bn takeover of UDG Healthcare by private equity firm Clayton, Dubilier & Rice has been derailed after Allianz Global Investors, which has an 8.6% stake in UDG, said it "firmly believes that the offer is opportunistic and significantly undervalues UDG and its prospects and is not in the best interests of shareholders".
LEISURE & HOSPITALITY
McDonald’s distribution hubs blocked by protestors
Much of McDonald’s’ UK food chain was cut off by environmental and animal rights campaigners on Saturday as protesters blocked distribution centres and demanded the fast food chain pledge to become fully plant-based by 2025. Animal Rebellion says McDonald’s beef burgers are a huge source of greenhouse gas emissions and the company must “take responsibility for their role in the climate emergency.”
Pubs facing staff shortage crisis
British pubs and restaurants are facing a potential staffing crunch as they look to serve more customers over the summer. Pub bosses told Reuters that they are now seeing the impact of a post-Brexit exodus of European workers, with finding kitchen staff a particular concern.
Home working puts Wasabi's future in doubt
Japanese food chain Wasabi has been warned by auditors of "significant uncertainty" over demand for the restaurant's food particularly in urban areas where many of its customers are office workers grabbing lunch.
MEDIA & ENTERTAINMENT
BT calls for net neutrality shake-up to combat streaming surge
Britain’s ambition to go carbon-neutral could be jeopardised by soaring demand for streaming services such as Netflix, Amazon and YouTube, BT has claimed. The broadband provider said in a filing with Ofcom that the consumption of video streaming creates huge spikes in demand and new efficiency rules for digital media providers should be introduced.
REAL ESTATE
Lloyds launch 100% loans for first-time buyers
First-time buyers will be offered 100% mortgages by the UK's biggest lender. Lloyds Bank's Lend a Hand mortgage allows first-time buyers in England and Wales to buy a home costing up to £500,000 without a deposit. However, buyers will need a family member with substantial savings to stump up 10% of the property price as security in order to access the product. Meanwhile, Nationwide is now offering the cheapest mortgage rate on the market for borrowers with a 5% deposit. Nationwide's two-year 3.49% fixed rate for first-time buyers and home movers has a £1,499 fee or there is a fee-free version at 3.84%. The best-buy rate for both remortgagors and homebuyers is 0.99% on a two-year deal. Financial data firm Moneyfacts says there have not been cheaper five-year fixed-rate mortgages on offer for at least 14 years.
RETAIL
Retail sales leap 9.2% in April
Figures from the Office for National Statistics (ONS) show retail sales jumped 9.2% in April with sales of clothing soaring by nearly 70% compared with March. Sales overall were more than 10% higher than pre-pandemic levels, although online sales dipped. Capital Economics chief UK economist Paul Dales said the April data "showed that households were particularly keen to update their wardrobes".
ECONOMY
UK enjoying an unprecedented growth spurt
The IHS Markit/CIPS flash composite Purchasing Managers' Index (PMI) for May has come in at 62.0, up from 60.7 in April - anything above the 50 mark indicates expansion. The figure was the highest since the survey began in January 1998 and reflected "strong contributions" from both the manufacturing and services sectors. "The UK is enjoying an unprecedented growth spurt as the economy reopens," said Chris Williamson, chief business economist at IHS Markit. “Factory orders are surging at a record pace as global demand for goods continues to revive, and the service sector is reporting near-record growth as the opening up of the economy allows more businesses to trade." However, the survey also found that cost pressures were at a 13-year high, hinting strongly that consumer price inflation has much further to rise after lifting to 1.5% in April.