European banks lose ground in global rankings
European banks have lost ground to American and Chinese lenders amid the pandemic, with analysis by The Banker naming HSBC as the only European bank to make the global top 10. The bank ranked 8th after recording an 8% rise in Tier 1 capital to £115.4bn. Barclays rose one place to 27th, Lloyds Banking Group remained in 42nd, while NatWest fell two places to 43rd and Standard Chartered dropped five positions to 48th. China's banking sector maintained its dominance in the rankings, with Chinese lenders ICBC, China Construction Bank, Agricultural Bank of China, and Bank of China taking the top four spots. China’s financial sector held on to the top position in the profit rankings, with the US second and Japan third. Joy Macknight, editor of The Banker, commented: "The UK banking industry has faced significant headwinds over the course of the past year, with the impact of the pandemic and Brexit uncertainty weighing profitability down.” She added: “Despite the challenging environment, the UK's banking sector remains the fifth largest in the world”, with this “underpinned by London's position as a leading global financial centre."
Wall Street banks push into UK
Lucy Burton in the Sunday Telegraph says that while the big four British lenders – NatWest, Barclays, HSBC and Lloyds – dominate retail banking in the UK, America’s biggest banks “have decided that they want to win over ordinary households in Britain”. She highlights that JPMorgan plans to launch a new online retail bank in the UK this autumn, while rival Goldman Sachs plans to expand its UK savings arm Marcus later this year. Ms Burton notes that ministers have tried to increase competition in the market with various initiatives over the years, highlighting that Open Banking, launched by the Competition and Markets Authority in 2018, was meant to reduce the advantages of existing lenders by giving challengers access to customer data.
Charity calls for cash access rule
Charity Age UK is calling on the Government to oblige banks to guarantee access to cash for everyone. While the Treasury last year promised new laws to protect access to cash and has moved to ensure people can get cashback in shops without having to buy anything from June 29, Age UK has called for a universal service obligation for banks. Its report says: “Being cut off from cash and banking services is tantamount to being excluded from society”. It also highlights the importance of shops and service providers continuing to take payments “in a way that meets their customers' needs – which in most cases will mean continuing to accept cash.”
Junior banker exodus due to overwork
Junior bankers are quitting in droves as severe workloads since the onset of Covid lead to burnout, new figures reveal. “Banks are haemorrhaging junior bankers, ” said a specialist recruiter, who works with banks on analyst and VP hires. “People are quitting for better banks, they're quitting the City or they're jumping into private equity." Current turnover rates are around 30 percentage points higher at some firms.
Starling boss embracing hybrid working
Anne Boden, CEO and founder of Starling Bank, says she is embracing remote and hybrid working, telling the Mail on Sunday: “I think we've gone through this great realisation that many people are far more effective working from home”. Ms Boden says firms “can tap into more people in more regions with technology if we have a combination of hybrid working.”
Cobham sets sights on UK rival Ultra Electronics
US private-equity firm Advent International is considering a bid for Ultra Electronics just two years after it bought UK aerospace and defence group Cobham in a controversial £4bn deal. Cobham has issued a regulatory announcement regarding plans for a deal with Ultra following media speculation but added there was no certainty an offer will be made or deal struck.
Don’t blame private equity for fund managers missing out
Merryn Somerset Webb in the FT says that UK fund managers shouldn’t gripe about private equity approaches to undervalued British firms – the same firms the fund managers have ignored in their quest for growth opportunities.
UBS to let most staff mix working from home and office permanently
UBS plans to embrace a hybrid working model that will see up to two-thirds of staff mix remote and office-based working on a permanent basis, “where role, tasks and location allow”.
Italian banks should consolidate - Intesa Sanpaolo CEO
Carlo Messina, CEO of Italy’s biggest lender Intesa Sanpaolo, believes the country’s banking sector needs more mergers and takeovers to create at least three major players.
Credit card lenders lure borrowers with new offers and rewards
Figures from analytics group Competiscan show online solicitations for new credit card customers in the US jumped 85% last month compared with the year before, as the nation’s largest issuers hunt for loan growth.
Car production still half pre-Covid level
Data from the Society of Motor Manufacturers and Traders (SMMT) shows car production is down 52.6% on the same month in 2019. Inflationary pressures affecting copper, steel and oil are adding to issues surrounding semiconductor supply, experts have said. The SMMT also revealed that just one in 16 cars made in Britain are purely electric, while hybrids contributed to one in six vehicles made.
Used car prices go up a gear
Second-hand car prices are rising at “unprecedented” rates as people with pandemic savings splash out. According to Cap HPI, prices rose 2% in April, 6.7% in May and 4.8% in June thus far. The price increases are being exacerbated by the supply of new vehicles being choked due to the global chip shortage.
Virgin Galactic gets go ahead from regulators
Following a successful test flight last month, Richard Branson's Virgin Galactic has received approval from the US aviation safety regulator to fly people to space.
FCA blocks Binance from regulated activities
The Financial Conduct Authority (FCA) has banned Binance, one of the world’s largest Bitcoin exchanges, from operating in Britain, giving it until Wednesday to remove all advertising and financial promotions. The City watchdog told Binance it “must not, without the prior written consent of the FCA, carry out any regulated activities”. This comes just days after the Japanese financial regulator issued a consumer warning against Binance, while US and German regulators have also raised concerns over its activities. The FT says regulators are cracking down on the cryptocurrency industry amid concerns over its potential role in money laundering and fraud, with “often weak” consumer protection also an issue. The Telegraph notes that the FCA’s action “echoes a broader move” in the financial services sector against unregulated cryptocurrency firms, with banks including Barclays, Monzo and Starling last month blocking customers from transferring money to platforms including Binance and SwissBorg, citing “high levels of suspected financial crime with such payment”.
Amigo claws extra three-months from lender
Amigo Holdings has been given an extra three-month lifeline from its bank as the lender fights off insolvency. However, the amount available to Amigo through the facility was slashed to £100m from £250m. Amigo also announced that it has “reviewed options” for its compensation plan with the Financial Conduct Authority.
Visa to buy Tink
Visa has announced plans to buy Swedish open banking fintech Tink for $2.2bn. Tink develops technology that allows third-party applications to connect to customers from different financial institutions. The deal comes after an antitrust lawsuit scuppered Visa's $5.3bn takeover of open banking firm Plaid earlier this year.
Bank of England launches inquest into Euroclear after outage
The Bank of England has taken supervisory action against Euroclear after its CREST financial markets system crashed in September, delaying purchases of government bonds through the BoE’s bond buying programme.
Investors pile $54bn in to ESG bond funds in fiery start to 2021
Over the first five months of 2021, and despite concerns over greenwashing, investors poured $54bn in to bond funds specialising in ESG issues, according to Morningstar.
CD&R improves offer for UDG
Clayton, Dubilier & Rice (CD&R) has sweetened its offer for UDG Healthcare after Allianz Global Investors said that the initial offer was “opportunistic and significantly undervalues UDG and its prospects”. UDG’s board has indicated to CD&R that it would recommend the offer if it is tabled.
LEISURE & HOSPITALITY
Theatre owner warns: West End is on the brink of collapse
Sir Howard Panter, the co-founder of Ambassador Theatre Group, has warned that prospects for the West End are dire and a host of businesses are on the brink of collapse. Sir Howard said it will take years to repair the industry, even if it has not already been damaged beyond salvation.
Private equity rides high on British staycation boom
Investor interest in UK domestic holiday assets is rising fast as international travel restrictions drive up spending on holidays at parks, cottages and caravan sites while the cost of overseas holidays rockets.
Lack of industrial policy hits productivity and growth
The Commons Business, Energy and Industrial Strategy Committee has described the Government’s decision to abolish the Industrial Strategy Council as a “retrograde step” that has reduced independent scrutiny, insight and expertise. The report says a lack of industrial strategy and oversight “risks widening the gap between Government and business at a time when delivering productivity improvements, economic growth and decarbonisation is urgent”. It also warns that scrapping the industrial strategy risks leaving a “fragmented and piecemeal approach to solving sectoral problems and enhancing growth opportunities”.
Punk rebellion: BrewDog’s crowdfunding investors start to lose faith
Small investors are losing faith in craft brewer BrewDog following accusations of a toxic work culture and the promise of guaranteed returns for private equity investor TPG.
MEDIA & ENTERTAINMENT
CMA probes Amazon and Google over fake reviews
The Competition and Markets Authority (CMA) has opened an investigation into the failure of Amazon and Google to tackle a slew of fake product reviews that may have misled millions of people. The CMA said its concerns had been prompted by a year-long initial inquiry, which caused it to launch a formal probe.
Amazon buys WhatsApp rival Wickr
Amazon has acquired WhatsApp rival Wickr, a US secure communications service founded in 2011 and considered a popular alternative to Facebook’s messaging apps. Wickr also offers encrypted workplace messaging as a rival to Slack. Amazon Web Services did not disclose the price it was paying for the business.
First time buyer costs up 67% in five decades
Research from the Resolution Foundation shows that first-time-buyers in London have to pay two and a half times as much for their first home as they did in the mid 1970s. The cost of purchasing a first home with a mortgage in the capital now exceeds £500,000 whereas in 1974 it was £212,000. Across the UK, the average cost of getting on to the property ladder has increased 67% in the same period, rising from £154,000 to £254,000. The report also shows that first-time buyers now require a deposit of £33,000, with this tripling in real terms from £11,000 in 2000.
Summer sales set to hit £100bn
Analysts are predicting that Britain's property buying bonanza will top a record-breaking £100bn this summer, with buyers expected to snap up 420,000 homes during this month, July and August - spending a record £107bn. That would make it the highest grossing quarter in UK residential market history.
Steepest rent shortfall in a year piles more pain on UK’s high street landlords
Commercial property owners collected just 18% of the rent they were owed on Friday, when rent was due for the three months to the end of September. It marks the lowest collection rate recorded in a year.
Offshore fears over Morrisons buyout
Experts have suggested that a takeover of Morrisons could see the supermarket chain move offshore for tax reasons. With private equity firm Clayton, Dubilier & Rice (CD&R) potentially set to make a fresh bid after an initial £5.5bn offer was rejected last week, some analysts say that a deal could see Morrisons' tax base shifted out of the UK. It is noted that under CD&R's ownership, British retailer B&M was moved offshore.
Outlook brightens for retailers
The CBI’s Distributive Trades Survey shows that retail sales jumped above seasonal norms in June with volumes expected to remain good for the time of year next month. Growth in online sales fell back in the year to June, however, to the slowest pace since April 2020. Ben Jones, principal economist at the CBI, said: “After a generally gloomy 2021 so far, the sun finally shone for retailers in June, with seasonal sales volumes the strongest since November 2016.” However, he continued, “the sector remains a long way from a full recovery. The return of demand is patchy, with inner-city footfall still well down.”
Haldane: UK economy back to pre-Covid levels
The Bank of England's outgoing chief economist Andy Haldane has told a Money Week podcast that the UK economy has already fully recovered from the Covid crisis after a “very punchy” fightback from the worst recession in 300 years. Official figures put the economy still 3.7% below February last year during April but Mr Haldane said he thinks in May we'll see a further significant leg up, due to the loosening of restrictions. "That will mean as of now I reckon we've pretty much made up all of the GDP lost ground from last year, and we're back roughly to around pre-Covid levels on the back of what is a really very punchy recovery.” However, Haldane also warns of building price pressures which could lead to a “nasty surprise” if the Bank opts for a sharper-than-expected rise in the base rate.
Workplace pensions could help boost the economy
The Mail on Sunday’s Emma Dunkley reports that Treasury officials have held talks over channelling a portion of workplace pension schemes into a fund to support fast-growing businesses, transport projects, real estate and carbon-friendly investments. The Long Term Asset Fund announced by Chancellor Rishi Sunak in November will pump money into parts of the economy and long-term projects that are usually inaccessible to pension savers. Ms Dunkley says pension fund bosses “have begun to signal their support for the plan”, saying they believe it will give savers another source of income beyond relying on traditional stocks and bonds. However, she notes that critics have warned that pension savers may be pushed into investments that are hard to sell or illiquid.
Consumer confidence remains steady
GfK's consumer confidence index remained steady in June at -9 amid warnings the threat of inflation could quickly weaken stability. Confidence in personal finances was up though, rising one point for the year ahead while the major purchase index improved for the third month in a row. GfK client strategy director Joe Staton said: “The upwards trajectory for the index since the dark days at the start of the pandemic is currently still on track. However, forecasts for rising retail price inflation could weaken consumer confidence quickly and that may account for the six-point dip in June in our measure for the wider economy in the coming year.”
Financial fraud soars in the pandemic
Jeff Prestridge in the Mail on Sunday says the pandemic has enabled financial fraudsters “to breed like never before”, with data compiled by the National Fraud Intelligence Bureau showing that nearly half a million people have lost a total of £2.6bn over the past 13 months as a result of fraud or cyber-crime. According to consumer organisation Which?, individuals are losing £700,000 every day to fraudsters as a result of being coaxed into transferring money from their bank accounts.