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Daily News Roundup: Monday, 26th July 2021

Posted: 26th July 2021


Santander to link pay to diversity and climate

Santander is to start linking executive pay to diversity from next year. Bruce Carnegie-Brown, Santander’s vice chairman, said the Spanish bank plans to introduce a new “score card” in 2022 that will link senior executives’ pay to diversity targets, along with progress on climate change. Mr Carnegie-Brown said: “If businesses want to be responsible they need to align their financial incentives with their corporate objectives.” The move comes days after an internal report from the Bank of England found that “unconscious bias” and “microaggressions” are holding back ethnic minority staff. Earlier this month the Financial Conduct Authority also said it could force financial services firms to link bosses’ pay to diversity and inclusion targets in a bid to make senior staff directly responsible for inclusion.

Ulster bank to sell €7.6bn of assets to Permanent TSB

NatWest's Ulster Bank is preparing to sell €7.6bn of loans and 25 branches to Irish bank Permanent TSB. Between 400 and 500 Ulster Bank employees will transfer over under the deal while NatWest will secure a 20% stake in PTSB as part payment. “In line with our strategy of a phased withdrawal from the Republic of Ireland, I am pleased that we are today announcing a significant update in the form of this non-binding memorandum of understanding with Permanent TSB,” said NatWest group CEO Alison Rose. “This builds on the recently announced sale of the majority of Ulster Bank's performing commercial banking business to Allied Irish Bank.”

Wave of IPOs indicates healthy public markets

The private equity raid on London-listed companies has somewhat overshadowed a surge in stock market listings in the first seven months of the year, with city dealmakers now in need of a break, the Sunday Telegraph reports. Since the beginning of the year, 54 companies, with a combined market value of £53bn, have floated on the London Stock Exchange, reloading the market at a faster rate than the number of firms being taken private. Carlton Nelson, co-head of corporate broking at Investec, says: “The wave of IPOs shows that public markets are as healthy as they have been for many, many a year.”

Mortgage price war breaks out

A summer mortgage price war has broken out as lenders offer some of the lowest rates ever seen. Nationwide launched a five-year fixed rate mortgage at 0.99% last week - the first time five-year deals have dipped below 1%. There are now 11 banks and building societies offering a total of 33 home loans priced below 1%. Andrew Montlake, of mortgage broker Coreco, said: “For those with a healthy deposit this is probably the most competitive time ever to obtain a mortgage.”

Banks tighten transfer limits amid fraud crackdown

Banks including NatWest, Royal Bank of Scotland and Ulster Bank are capping the amount bank customers can transfer online to £5,000 a day amid a national crackdown on money laundering and fraud. The limit has been reduced from £20,000. Nationwide and Santander have confirmed that they are planning to introduce tighter daily caps. The move comes after the Financial Conduct Authority issued a warning over money laundering controls.

Elliot ramps up stake in Chetwood

New York-based hedge fund Elliott has invested another £20m into British start-up bank Chetwood, taking its stake in the digital lender to £134m. Founded by former HSBC banker Andy Mielczarek, Chetwood provides loans with interest rates that fall as a borrower's credit score improves.

Banks warned over failure to send statements to former customers

The Competition and Markets Authority (CMA) has reprimanded banks including Monzo, Bank of Ireland, NatWest Group and Virgin Money over their failure to send out transaction histories to over 150,000 former account holders. Monzo was the worst offender failing to send over 143,000 former customers bank statements.

Passion Capital reduces stake in Monzo

Passion Capital, Monzo's biggest investor, has reduced its stake in the digital bank from 40% to 23% since it first invested four years ago.

Zopa hires JP Morgan to oversee £100m funding round

Digital bank Zopa has hired JP Morgan to oversee a £100m funding round in a move that puts its on course for a  valuation in excess of £500m, underlining its improved performance in the first year of its bank's operation.


Military chiefs alarmed over raid on Ultra Electronics

A £2.6bn bid for Ultra Electronics by US private equity giant Advent has been attacked by senior military chiefs who say the sale brings potential risks to national security and damage to the UK’s manufacturing base. The former head of the Royal Navy, Admiral Lord West, said: “This shocks me - the Government is essentially giving up on the UK having sovereign capability in areas that are important to the security of the nation.” MPs on the Defence select committee called on ministers to “step in as a matter of urgency”. The FT’s Lex points to Advent’s break up of Cobham and predicts it would do the same to Ultra, adding: “A proportion of defence technology companies should be controlled and owned locally for strategic reasons.”

Carlyle looking to raise up to $27bn

The Carlyle Group is looking to raise as much as $27bn to  invest in growth-focused companies across sectors including technology, healthcare and retail. If the group achieves its target amount, the buyout fund would represent the industry’s biggest ever. Global PE firms raised a total of $514bn in the first half of this year alone – up 70% on the same period in 2020, according to Preqin data.


Danske boosts earnings amid analyst scepticism

Danske Bank reported improved second-quarter earnings on Friday, boosted by a recovery in Nordic economies and higher client activity. Danske reported net profit and loan impairment charges at 2.8bn Danish crowns ($443.1m) and 0.24bn crowns respectively. However, analysts are sceptical about the bank’s projection of a 9-10% return on equity in 2023, with its cost-cutting and growth plans now in doubt.

Credit Suisse settles spying case with ex-wealth chief Iqbal Khan

Credit Suisse has reached a settlement with former star wealth manager Iqbal Khan, who was followed through the streets of Zurich after management ordered private detectives to trail him after he jumped to UBS.

Wall Street doubles down on lending ‘cheap money’ to the rich

JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley lent over $600bn to private clients in Q2, up 17.5% from a year earlier, as wealthy Americans take advantage of cheap money.


Watchdog calls for action on EV chargers

The Competition and Markets Authority (CMA) has warned that the phasing out of petrol and diesel cars could be undermined by the limited availability of roadside chargers for electric vehicles (EVs), with a tenfold increase on the current total of 25,000 chargers likely to be needed by 2030.


Covid-hit UK aviation industry held back by Brexit red tape

New regulations resulting from Brexit are compounding problems for the UK’s aviation industry with the requirement to secure permits hitting small carriers and licencing problems leaving British pilots without work. Separately, former secretary of state for transport Lord McLoughlin warns that time is running out for ministers to support the industry with UK aviation trying to survive on just 16% of pre-pandemic bookings - Germany are now at 60% of 2019 levels; France is at 48%.

Rolls-Royce powers down for two weeks

Rolls-Royce's civil aerospace business in Derby has begun a two-week shut down in the hope of saving an estimated £30m in staffing, energy and other costs.

Wizz Air faces investor backlash over £100m bonus plan for boss

A plan to pay Wizz Air chief executive Jozsef Varadi a £100m bonus if he can rapidly grow the low-cost airline’s share price has elicited a red-top alert from the Investment Association.


Materials shortage set to continue for builders

Construction leaders believe the shortage of raw materials could remain an issue into next year as demand for works remains high amid restrictions in supply due to Brexit and disruption in Chinese ports and on the Suez Canal. Brian Berry, chief executive of the Federation of Master Builders, said: “The national building materials shortage is harming Britain’s local builders and their ability to recover from the pandemic.


Beazley hails progress in fighting off ransomware

Beazley, the Lloyd’s of London insurer, has seen its performance boosted after  encouraging its clients to improve the resilience of their technology in the face of a rising number of cyberattacks. Beazley swung to a $167.3m profit for the six months to June 30 from a $13.8m loss a year ago, when the insurer was hit by the pandemic. Premiums rose by 22% to $2bn.

Performance at three out of four M&G funds needs improvement

Almost three-quarters of the funds managed by M&G must improve their performance as high fees eat up returns, the company has concluded. The fund group analysed the performance of 43 funds and found 31, with £23.4bn under management, underperformed compared with their benchmarks.

Fidelity International threatens tough stance on climate and gender

Asset manager Fidelity says it will punish directors at more than 1,000 companies next year if they fail to tackle the issues of climate change and a lack of boardroom gender diversity.

Goldman and DWS prepare bids for NN Investment Partners

Goldman Sachs Asset Management and Germany’s DWS are preparing bids for the investment management arm of Dutch insurer NN Group amidst a slew of mergers and acquisitions in the industry.

Regulator considers compensation for steelworkers’ mis-sold pensions

The Financial Conduct Authority is considering triggering rarely used powers to force financial advisers to pay compensation to thousands of steelworkers who were victims of pension mis-selling.


Axa IM prepares to spend €2bn on life sciences property

Axa IM is preparing to spend almost €2bn on specialist laboratory space and offices in Europe as institutional interest in the life science sector soars.


Cineworld in legal battle over unpaid rents

Cineworld is facing a £1m legal claim from Marina Developments Ltd, the owner of its multiplex in Southampton, over unpaid rents. In March, the cinema chain fell to an annual loss of £2.2bn and said there was “material uncertainty” about its ability to continue as a going concern.

Burger King owner considers sale

Bridgepoint, the private equity owner of Burger King UK, has held early-stage talks with possible advisers about a £500m sale, which could take place next year. Burger King UK operates about 530 sites in the UK, the majority owned by franchisees - although it does also run its own stores.


Delays to Nvidia – Arm deal brings float back to surface

The acquisition of British microprocessor designer Arm by US microchip maker Nvidia remains delayed as Nvidia has yet to submit its paperwork to the European Commission. Holidays in Brussels begin on Monday so any decision by EU regulators is some way off, raising the prospect that Arm could be forced to dust off plans for a float, although CEO Simon Segars denies this.


UK-based law firms report record pandemic earnings

Exceptionally positive results have been reported by UK-based law firms after record levels of global M&A activity in the past six months.


Investors rush to buy cheap BTL property

Landlords are rushing to invest in cheaper buy-to-let properties before stamp duty savings disappear. According to Hamptons, the number of landlords registering to buy was 24% higher in June compared with the same period in 2020. In total, 81% of homes sold to investors in June were under the £250,000 threshold. Investors made up 12% of all buyers nationally in June, up from 10% in May, and the share of landlord buyers rose month-on-month in eight out of 11 regions in Britain.


Apollo to join with rival in bid for Morrisons

The US private equity firm Apollo is close to joining with a consortium led by Fortress in a £6.3bn bid for Morrisons. The move will increase pressure on rival bidder Clayton Dubilier & Rice to walk away or top the existing bid.

Euros help food and drinks sales rebound

There was a rebound in sales for retailers in June as football fans enjoying England’s Euro 2020 run bought more food and drink. Retail sales volumes increased by 0.5% in June, according to the Office for National Statistics (ONS), this after a surprise dip in retail sales the previous month.


Pingdemic and staff shortages weigh on growth

A surge in the number of people self-isolating and a rise in COVID-19 infection rates have led to a slowdown in the UK’s economic recovery, IHS Markit’s closely watched “flash” purchasing managers’ index indicates. The index fell from 62.2 to 57.7 in July, with the pace of growth in the manufacturing and services sectors slowing considerably over the past month. Chris Williamson, chief business economist at IHS Markit, said: “July saw the UK economy’s recent growth spurt stifled by rising infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages. It also cast a darkening shadow over the outlook.”

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