Banks under fire over shared branch stance
The Mail’s Helen Cahill reports that banks are under fire for “dragging their feet” in negotiations over shared branches while lobbying for a tax cut worth £1.5bn. She cites sources who say banks are debating the location of branches instead of signing an agreement to share the cost. With it reported that Chancellor Rishi Sunak could cut the 8% corporation tax surcharge the sector pays, MP Siobhain McDonagh, who sits on the Commons Treasury Select Committee, said: “When there’s something the banks need, they’ve got their hand out … But they see no reason to consider elderly, or disabled, or vulnerable customers and how they access money.” UK Finance declined to comment on the claims.
Big Tech is main threat to banks
The main threat to the UK ‘s largest banks is not challengers such as Monzo and Atom but Big Tech companies like Amazon and Apple, according to Jill Treanor in the Sunday Times. Fintechs involved in payments have hit sky-high valuations and are now shifting into lending, but as the industry braces for the competition from big tech, some venture capitalists who back fintechs can already see another technology on the horizon, she suggests. Remus Brett, at Local Globe, points to decentralised finance - or “DeFi” – which he says will see the established industry taken out of the picture altogether.
CMA under pressure over open banking inquiry
Simon Foy in the Sunday Telegraph reports on the Competition and Markets Authority’s probe into conflicts of interest at the Open Banking Implementation Entity (OBIE). The unit was set up to promote open banking reforms in the UK and an independent investigation by Mishcon de Reya into bullying at the OBIE has now expanded into a wider investigation about poor governance and cronyism after nearly 50 witnesses came forward to detail allegations of wrongdoing. But the CMA has been sitting on the final report since early August, Foy says, something one former OBIE insider says is making things worse. “It's ultimately bad for the reputation of open banking," they add.
Costa plans to revive the lost art of global merchant banking
Former Lazard chairman Ken Costa wants to lead a renaissance in merchant banking with the recent merger of his Alvarium Investments advisory business with US rival Tiedemann. Mr Costa, who will become chairman of merchant banking at the combined group, said: "It is estimated there will be a $70bn transfer from Boomer to Zoomer in the next 10 years,” adding an ambition to “take the hindsight of a Boomer to the insight of a Zoomer”.
Private equity firm Antin surges after Paris debut
Shares in Antin Infrastructure Partners rose by more than 25% in early morning trading on Friday as investors bet on a spending boom in wealthier nations.
EQT bids for Germany's Zooplus
Swedish private equity firm EQT AB has made an offer to buy Zooplus AG, one of Europe's largest online pet supplies' retailers, for about €3.36bn.
Credit Suisse dumped Evergrande exposure on risk fears
Reports continue to swirl about the exposure of various banks to Evergrande debt. The FT reports that Credit Suisse, once the top international underwriter of Evergrande bonds, sold down its entire exposure late last year because “it didn’t like what it was seeing”. The paper notes that $4.2bn of the bonds Credit Suisse arranged are still outstanding. They were sold to counterparties such as asset managers, hedge funds and the lender’s ultra-wealthy private clients, who could now be wiped out. Meanwhile, Chinese lenders are holding back on providing new credit for other property developers and analysts at JPMorgan warn that, despite HSBC and Standard Chartered saying they have limited their direct exposure to Evergrande, they are likely to face the most immediate second-order impacts a they have the most direct lending exposure among foreign banks to China's property sector.
Banco Inter and StoneCo in merger talks
Banco Inter SA and payments company StoneCo Ltd are in talks to expand a current partnership agreement, possibly into a merger. If the pair did agree on a merger, it would create a financial institutional with a market capitalization of roughly $22bn.
Credit Suisse board backs CEO, says chairman
Credit Suisse's board believe CEO Thomas Gottstein is the right person to strategically realign the bank, the bank's chairman Antonio Horta-Osorio has said. Asked whether he was planning to replace Mr Gottstein as CEO - or take over the operational lead of the bank himself - Mr Horta-Osorio said no, adding that the chief executive “has the full confidence of the board of directors”.
Deutsche Bank hires Citi dealmaker
Deutsche Bank has hired Jorge Barreiro from Citigroup as the managing director for its US healthcare investment banking team.
Credit Suisse fined for firing staff without a consultation
London-based Credit Suisse employees were made redundant in June 2020 without a proper consultation process, an employment tribunal has found. The bank has been fined £20,000 for "significant" breaches of the law.
Developers' profits dwarf fire safety cash
The Sunday Times reports on how ten bosses and owners at Britain's biggest housebuilders have made £708m since the Grenfell Tower fire - £65m more than their companies have set aside to fix cladding. Barratt, Persimmon, Taylor Wimpey, Berkeley, Bellway, Redrow and Vistry have earmarked £643m for fire safety over the past three years, about 4% of their profits over the period and a fraction of the £15bn it will cost to make all flats in the UK safe.
City keeps title as Europe's top financial hub
The City of London has maintained its crown as Europe's dominant financial hub, according to the latest Global Financial Centres Index, which is published by Z/Yen Group. London came second to only New York in the index, well ahead of rival European centres, including Paris, Frankfurt and Amsterdam, which came 10th, 14th and 17th, respectively. The report highlights that the City has successfully navigated its way through the pandemic and Britain's withdrawal from the EU, relative to other financial centres. Michael Mainelli, executive chairman of Z/Yen, said: "We see two patterns in the results - confidence in the recovery of the North American and Western European economies following the shock of 2020; and a levelling off following the rapid rise of Asia/Pacific centres and their economic stability in the COVID-19 pandemic. Competition remains tight."
Investors pile into VCTs to shelter from dividend tax rise
The Telegraph reports on how investors have poured £61m into venture capital trusts over the past four weeks to protect their savings from the Government's £600m tax raid on dividends. This is four times the amount put into VCTs during the same period last year, according to broker Wealth Club.
Broker Peel Hunt raises £112m to capitalise on dealmaking boom
Peel Hunt has raised £112m through an IPO on Aim valuing the small and mid-cap stock specialist at about £280m. The corporate broker is looking to capitalise on the boom in dealmaking and other corporate activity.
LEISURE & HOSPITALITY
Customers may pay extra £2bn for takeaways after tax hike
With VAT for hospitality set to rise to 12.5% next month, the British Takeaway Campaign is warning that consumers could end up paying an extra £2bn for their food. This is before another hike up to 20% in March next year. The industry body has written to the Chancellor asking him to scrap the VAT increase next year and extend business rates relief until 2022.
MEDIA & ENTERTAINMENT
SEC accuses advertising group WPP of bribery offences
The US Securities and Exchange Commission has said that advertising giant WPP has agreed to pay $19m to resolve bribery claims. The regulator found the company breached the US Foreign Corrupt Practices Act between 2013 and 2018 through paying bribes to Indian government officials and participating in other “illicit schemes” in China, Brazil and Peru.
House price rises to ease in coming years
Research by estate agency Hamptons suggests house price growth will slow over the next four years but average prices will still be 13.5% higher by the end of 2024. Aneisha Beveridge, head of research at the firm, believes a second wave of lockdown-fuelled demand will keep price growth above pre-pandemic levels over the next two years but by 2024 the average growth rate will dip to 2.5%. Hamptons believes a new “house price cycle” will start after that, saying that while historically, “the beginning of a new cycle has been synonymous with a sharp price correction”, in this instance “we’re more likely to see a continuation of modest price growth . . . rather than a boom followed by a bust.” The report also suggests UK house prices will be 4.5% higher at the end of 2021 than at the start of the year, with a rise of 3.5% forecast for 2022.
Retail sales slow
The CBI’s monthly distributive trade survey reveals that retail sales rose in the year to September at their weakest pace since March, with growth orders placed with suppliers also slowing. The survey found that the headline sales balance for retailers fell to +11 in September from +60 in August, its lowest level in six months. The poll of 126 companies, including 45 retailers, also found that retail orders grew at a slower pace in the year to September, at 20% compared with 68%, with a slight acceleration expected next month to 24%. Online sales growth slowed and has been below the long-run average for five months, with a similar pace expected in the year to October. The survey also found that stock levels relative to expected sales across the distribution sector hit a survey record low for a sixth month.
Confidence hit by fears for housing market
UK household confidence dipped last month as the housing market lost momentum, according to a report. The Centre for Economics and Business Research and YouGov found that consumer confidence in Britain had fallen by 0.3 points to 112.9 in August, although that was still above the 100 mark that indicates optimism. Concerns about the strength of the housing market affected confidence as homeowners felt that their properties had dropped in value. The sub-index for house prices over the past 30 days dropped by 2.6 points to 125.3. Although the housing market grew at a robust pace, there are signs that demand is cooling as the end of the stamp duty relief approaches.
Household budgets face ‘triple-whammy’
The Resolution Foundation has warned that economic pressures could squeeze household budgets over the next six months, with the think-tank pointing to a “triple-whammy” of inflation, rising energy bills and the health and social care tax. The think-tank said low income families may be left more than £1,000 a year worse off despite an increase in the national living wage from next April. Karl Handscomb, a senior economist at the Resolution Foundation, said upholding the £20 a week Universal Credit bonus would “go a long way towards easing the coming cost-of-living squeeze”.
Seven in 10 workers are back in the office
Research from the Office for National Statistics (ONS) shows 70.1% of UK workers are back in the office as the surge back to pre-pandemic working practices accelerates. The figures come as the Government introduced new legislation giving employees the right to request flexible working from the first day of employment. This, says City investor Andrew Monk, is an error as he believes people are less productive when they work from home.