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Daily News Roundup: Monday, 26th April 2021

Posted: 26th April 2021

BANKING

Barclays poised to announce jump in profits

Analysts are predicting Barclays will announce that its profits rocketed 66% to £1.4bn for the first three months of the year. This is on revenues of £5.7bn, which are down 10%. The Mail on Sunday notes that CEO Jes Staley is under pressure amid an ongoing probe by the Financial Conduct Authority, which is investigating whether he accurately disclosed his ties to Jeffery Epstein. Lloyds Banking Group, HSBC and NatWest are also tipped to report increased profits this week, the Sunday Express adds. Ian Stokes at Link Group told the Times banks should start paying dividends again in Q2. The paper also reports on investor pressure on Barclays to tighten its policies on financing coal and oil sands companies.

StanChart fined in Guernsey over ‘systemic and serious’ compliance failings

Regulators in Guernsey have fined Standard Chartered £140,000 for having “inadequate controls to manage risk” in its trust unit on the island. The Guernsey Financial Services Commission (GFSC) said that, between 2012 and 2016, it found a range of “serious issues” related to the firm’s compliance, financial crime risk assessments, onboarding and due diligence processes.

Banks should have a statutory duty of care towards their customers

The House of Lords Liaison Committee has called on the Government to introduce a new requirement for the Financial Conduct Authority to establish a statutory duty of care that banks and other financial services providers must operate towards their customers. Retail banks operating in the UK should make control options available to their customers, protect access to cash and work to tackle financial exclusion, the committee said.

UK and European banks plan to slash business trips after pandemic

Plans by banks to cut business trips to save cash and cut emissions after the pandemic could prove a blow for airlines and hospitality, the FT reports. Elsewhere, the Telegraph considers the worst-case scenario for railways as major employers including HSBC and JP Morgan change their working models, with forecasts prepared for Network Rail predicting passenger numbers may be no higher than 60% of pre-Covid levels for the next four years.

UK banks warn of slow take-up for state recovery loan scheme

Take-up of the Government’s new Recovery Loan Scheme has been slow, bankers and business leaders have warned, with more stringent checks and higher interest rate charges blamed for the reluctance.

Peel Hunt and Santander in IPOs tie-up

Santander has agreed to underwrite transactions for UK broker Peel Hunt, which is seeking to compete with investment banks for the UK's biggest IPOs and corporate fundraisings.

PRIVATE EQUITY

Bain raises $1bn in first Japan-focused private equity fund

Bain Capital has closed its maiden Japan-focused fund, which will target mid-sized companies, at 110bn yen ($1bn). The Boston-based investment firm will use the fund to target growth and buyout deals in the world's third-largest economy, sources said.

Blackstone targets Israeli tech sector

Blackstone will attempt to seize a slice of Israel's fast-rising science and technology sector with the opening of a new office in Tel Aviv led by Yifat Oron.

INTERNATIONAL

JP Morgan admits misjudging European Super League plan

Faced with a furious backlash for funding the European Super League, JP Morgan has expressed regret about its involvement, saying: "We clearly misjudged how this deal would be viewed in the wider football community and how it might impact them in future. We will learn from this." The US bank had agreed to provide €3.25bn of funding for the ESL, to be paid back over 23 years from broadcast rights income.

AUTOMOTIVE

Ford to shut factory in chip crisis

Ford has joined Jaguar Land Rover in suspending production at UK plants due to the global microchip shortage. The US company will temporarily halt production on May 10 at its Hale wood factory while work at the company's Dagenham site in east London is also being sharply reduced.

Honda vows to end sale of petrol and diesel cars by 2040

Honda has pledged to end the sale of petrol and diesel cars by 2040, capitalising on its existing alliance with General Motors to accelerate its shift to electric and hydrogen technology.

AVIATION

Wizz Air plans cheaper fares

Budget airline group Wizz Air predicts capacity will return to between 60% and 80% of normal levels this summer leading to a sharp fall in the price of fares. The chief executive of Qatar Airways is less optimistic telling the FT that he thinks the worst is not over yet.

FINANCIAL SERVICES

FCA failed to act on dozens of alerts before the collapse of Blackmore Bonds

MPs and investors have demanded an inquiry into the Financial Conduct Authority’s role in the failure of “mini-bond” provider Blackmore after the Government agreed to compensate investors in London Capital & Finance, another mini-bond firm which failed in similar circumstances. The Telegraph reports that although the FCA claimed it did not receive reports on “Blackmore Bond” until February 2020, a FOI request reveals City of London Police passed on reports about suspicious activity at Blackmore and related companies 45 times, with the first sent in November 2018.

Merkel defends Wirecard lobbying on 2019 China visit

Angela Merkel, the German Chancellor, has defended her lobbying for Wirecard during a visit to China in 2019, telling a parliamentary committee on Friday that the payments company received no special treatment and that it was in Germany's interest to promote its businesses. However, she did concede that the collapse of Wirecard exposed serious flaws in German financial regulation.

American Express misses revenue forecasts as spending remains depressed

American Express saw a 9% fall in spending on its credit cards during the first quarter with revenues missing analyst forecasts, driving shares down 4%. The company’s net income increased six-fold, despite a 12% drop in revenue as it released $1.05bn of its credit reserves through its income statement.

Young investors swap stocks for crypto

Research by Charles Schwab indicates that 51% of investors aged 18-37 held cryptocurrencies while a survey by Nationwide found young people with at least £1,000 in savings were more likely to invest in cryptocurrencies. The studies follow a recent warning from the Financial Conduct Authority that inexperienced investors aren't diversifying their portfolios enough to mitigate risks.

Investment trade body seeks abolition of taxes on UK funds

Proposals to make the City more competitive post-Brexit include a call from the Investment Association for the Government to apply a zero rate of value added tax to all UK funds.

New lender on the block

A new lender to mid-sized businesses has launched in the UK. Blazehill Capital offers firms secured lending ranging from £5m to £30m per transaction and is looking to build a £1bn lending book in the next five years.

PROFESSIONAL SERVICES

Talent hunt kicks off as London firms launch hiring sprees

Financial services, legal, PR and construction companies across London are ramping up hiring with recruiters reporting a 349% jump in banking jobs advertised. But tech is driving job creation - in the three months to March, UK tech sector firms hired staff at the fastest pace seen since the second quarter of 2019. Robert Walters’ UK managing director, Chris Poole, said: "March was incredibly busy for us. It almost felt like a line in the sand - it was incredibly busy across all sectors. Technology has been busy all the way through, but there has been a lot of pent-up demand within legal, within accountancy, within financial services. Even manufacturing, procurement, supply chain - it has been across the board.”

REAL ESTATE

BoE assesses cladding risk to financial system

The Prudential Regulation Authority has questioned mortgage-lenders on their exposure to leasehold flats and blocks with fire risks, the Sunday Times reports, with Bank of England analysts allegedly concerned about the Grenfell Tower cladding scandal’s effect on property values.

MPs accuse Treasury of snubbing mortgage prisoners

An estimated 250,000 mortgage prisoners are being snubbed by the Treasury, MPs argue, as calls for a cap on the standard variable rates borrowers are forced to pay grow.

RETAIL

UK retail sales jump

Data from the Office for National Statistics show retail sales in Great Britain rose 5.4% in March compared with the previous month - a much stronger reading than the 1.5% forecast by economists. Sales of clothes was particularly strong rising by more than 17% while the easing of travel restrictions towards the end of the month led to an 11% increase in fuel sales. Paul Dales, the chief UK economist at Capital Economics, said: “March’s strong rise in retail sales showed that the economy made a fair bit of progress even before non-essential retailers reopened in April.”

SPORT

FA appoints Rothschild to review WSL's future

Rothschild has been hired by the Football Association (FA) to advise it on financing options for the Women's Super League (WSL), a move that could trigger a bidding war between private equity investors. Bridgepoint and CVC Capital Partners, have already expressed an interest in buying a stake in the WSL's commercial arm, but insiders say a decision had yet to be made about whether such a stake would be sold.

ECONOMY

UK economy rebounds with demand surging

Private sector activity grew at the fastest rate since November 2013 in April, hitting a reading of 60, according to IHS Markit's purchasing managers' index (PMI). This is up from 56.4 in the previous month and above the 58.2 forecast by economists. Service sector business activity rose from 56.3 to 60.1, while manufacturing output was up from 56.6 to 59.1. Sanjay Raja, UK economist at Deutsche Bank, says he expects a 5% jump in GDP in a “roaring” second quarter compared to the previous three months.

Covid response pushes UK borrowing to highest since second world war

Figures from the ONS show UK government borrowing hit £303.1bn in the year ending in March, a jump of £246.1bn on the previous year when the figure was only £57.1bn. The coronavirus pandemic has driven the UK’s total accumulated public debt to £2.14trn, or 97.7% of GDP, the highest level since the early 1960s. As a percentage of national output, borrowing in the year between April 2020 and March 2021 stood at 14.5% – the highest since the financial year ending in March 1946.

OTHER

Lloyd's of London in fossil fuel protest

Climate activists dumped fake coal outside Lloyd's of London's headquarters on Friday in a protest against the industry's backing for major fossil fuel mining projects.

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