BoE warns banks against sudden halt to Covid-related lending
Lenders have been urged by the Bank of England to keep credit flowing to businesses once the state-backed COVID-19 loan schemes come to an end, warning that withdrawing funding would prove self-defeating. The Financial Policy Committee (FPC) has warned SMEs will need to finance cash-flow deficits this year and banks must continue to provide support. “It is in banks' own interest to continue to support the economy by lending to viable, productive businesses…” the FPC said. “Banks have high levels of capital. This would allow them to absorb very big losses while continuing to lend.”
UK and EU reach financial regulation deal in breakthrough on co-operation
The United Kingdom and the European Union have reached a deal to create a forum for cooperation on financial services regulation. The memorandum of understanding (MoU) sets the terms of engagement between the two parties but does not yet grant the City of London access to the EU's Single Market. “Formal steps need to be undertaken on both sides before the MoU can be signed but it is expected that this can be done expeditiously,” the UK said in a statement, adding that the MoU created a “framework for voluntary regulatory co-operation in financial services” rather than any binding system.
Frankfurt seeks to capitalise on Brexit
The Sunday Express reports on analysis from Deutsche Bank which claims that Angela Merkel is seeking to capitalise on Brexit as “London's crumbs could become Frankfurt's pie”. According to separate research from New Financial, 40 firms have so far chosen the German city as their new EU hub, primarily large international investment banks, and 3,500 roles have come as a result of the “Brexit effect”. Hubertus Väth, managing director of Frankfurt Main Finance, expects around 5,000 jobs will eventually be created. Frankfurt is also benefiting from an increasing trend of dealmakers moving from London across the EU to be closer to local clients.
Bank of England clamps down on Brexit-driven EU relocations
Lenders are being told to seek approval from the Bank of England before relocating UK jobs or operations to the EU amid concern about excessive requests from the European Central Bank.
Bankers told they’ll lose bonuses if they don’t ditch Libor
Bank of England and Financial Conduct Authority officials said in a joint letter to financial services CEOs that transitioning out of Libor by the end of the year should be considered a requirement for receiving a bonus. "As previously indicated, we are keeping a range of supervisory tools under review for use where we see either insufficient progress, or incidents of poor risk management or governance of transition," the letter said.
Security services venture capital arm boosts investment
National Security Strategic Investment Fund (NSSIF), which invests on behalf of spy agencies as well as the armed forces, has increased the number of funds it backs to seven. The seven venture capital funds will invest more than £10m each on behalf of the security services into start-ups in fields such as quantum computing as well as chip production and encryption. A spokesman for the British Business Bank, which manages NSSIF, said that “we invest alongside leading venture investment funds with strong track records in supporting innovation, with the aim of developing dual-use capabilities or strengthening the UK’s technology ecosystem.”
Japan’s banks face increased climate pressure
Activist investors are targeting Japanese banking giants Mitsubishi UFJ Financial Group and Sumitomo Corp with resolutions concerning their alignment with the Paris climate accords. A similar vote at Mizuho Financial Group’s AGM last year was defeated but with 35% support it showed Japanese attitudes were changing.
Two bids remain for SocGen’s asset management unit
Société Générale is in advanced talks with both France's Amundi and U.S. firm State Street to sell its Lyxor asset management unit. SocGen is attempting to boost profitability after the pandemic pushed it into its first full-year loss for a decade.
US banks: don’t get excited about buybacks just yet
With the Federal Reserve preparing to do away with COVID-19-era restrictions on bank dividends and buybacks, the FT’s Lex says U.S. banks should eschew large buybacks if they want investors’ approval.
Deutsche set to appoint Campelli as investment bank chief
Fabrizio Campelli is set to be appointed chief of Deutsche Bank’s investment bank unit after the lender’s chief executive Christian Sewing bowed to pressure from regulators to drop the role.
EU plots new money market rules after virus-induced ructions
The European Securities and Markets Authority is considering new regulations to improve liquidity of money market funds in times of stress.
NBG agrees to sell insurance subsidiary to CVC
Greek lender National Bank (NBG) has agreed to sell a 90% stake in its insurance unit to private equity group CVC Capital.
Mercedes gets into gear with zero-emission motoring
Mercedes-Benz will next month unveil its new electric flagship car, the EQS, to compete with Porsche’s Taycan and VW’s Audi E-tron, as well as the Tesla Model S.
Pandemic persuades bosses they should fly less
A year of lockdowns and Zoom meetings has convinced UK corporates they can help limit pollution by restricting business travel after restrictions ease. With ever more companies committing to reach net zero emissions many are revising their corporate travel strategies. Business travellers account for 55% to 75% of airlines’ worldwide profits, the Sunday Times notes.
FCA criticised over Amigo rescue plan
The shadow City minister, Pat McFadden, and the head of the Conservative-led Treasury committee, Mel Stride, have questioned the Financial Conduct Authority’s decision to allow sub-prime lender Amigo to push ahead with a rescue plan that will cap compensation payments for nearly 1m customers, while giving executives the chance to earn £7m in long-term bonuses. McFadden said failure to intervene could set a precedent for other high-cost lenders but the FCA insisted the decision to approve the scheme rested with the court and borrowers, rather than the regulator.
Bank of England raises alarm over big exodus from funds
A review conducted by the Bank of England and the Financial Conduct Authority has found that fund managers need to be more realistic about the liquidity of their funds, or how easily the assets can be sold off to free up money for investors. The review was sparked by the collapse of Neil Woodford’s funds. The Banks' financial policy committee has called for a rules shake-up to ensure investors are not trapped in open-ended funds.
FCA in online bid to highlight investment risks
The Financial Conduct Authority (FCA) is funding a series of warning advertisements that will pop up whenever you type "high return investments" or "best stocks to trade" into Google. They will also appear on Instagram, LinkedIn and Twitter. Laith Khalaf from AJ Bell said he thought that the FCA's campaign was a step in the right direction, but wasn't convinced the risk warnings would offset the marketing power of social media posts.
Firms must be held accountable for scams
MPs have warned that global technology firms, such as Google, must be held accountable for hosting pension scam adverts. The Work and Pensions Committee said an “online free-for-all” amid a lack of regulation had allowed scammers to advertise while tech giants “line their pockets”. The committee called on the Government to rethink its decision to exclude financial harms from the Online Safety Bill and use it to legislate against online investment fraud.
FCA gives insurers more time to end auto-renewal price hikes
The Financial Conduct Authority has given insurers more time to implement rule changes to auto-renewal costs after the regulator found they were penalising loyal customers. Insurers were previously required to have the changes in place by the autumn but now it will be the end of the year.
Insurer Aviva sells Polish business to Allianz for €2.5bn
Aviva has sold its Polish business to Allianz for €2.5bn completing the sale of eight non-core businesses by CEO Amanda Blanc as she refocuses the group on its core markets.
Finance firms unaware of remote working cyber risks
Research by Doherty Associates reveals 42% of UK financial services firms admit to having inadequate cyber threat visibility and detection systems for employees working remotely. Many firms are unaware of the volume of cyberattacks and data breaches impacting their workforce, the study found.
LV= faces sale delay
The sale of mutual insurer LV= to US private equity firm Bain Capital is facing delays due to the complexity of the deal, according to boss Mark Hartigan.
Digital GP app mulls NY listing
GP app Babylon Health is working with Citigroup ahead of a mooted $4bn (£2.9bn) listing in the US, a move which represents another blow to London in its efforts to attract more tech companies to list in the City.
Government rejects £170m bailout for Gupta
Ministers are considering how jobs at Sanjeev Gupta’s GFG Alliance can be protected after the Government rejected a plea from the metals businesses for a £170m loan. Financing for the company has dried up since its main source of funding, Greensill Capital, went bust. The FT reports that ministers were anxious about GFG’s opaque structure and wanted to ensure any funding didn’t leave the UK. “Our priority is the UK sites and jobs, not this corporate entity,” said one government figure.
Ineos fails to pay dividend after profits slump
A fall in profits after the oil price crash last year has led Ineos to withhold a dividend for 2020, compared with a €2bn payout in 2019 and €193.8m in 2018. Ineos made sales of €11.3bn and profit before tax of €551.4m during 2020. That compared to €13.7bn of sales and profit before tax of €939m during 2019.
MEDIA & ENTERTAINMENT
ITV sets up media-for-equity fund
ITV is planning to team up with venture capital funds and make investments in up to ten start-ups over the next two years. The broadcaster will provide advertising space in return for equity via its ‘AdVentures Invest’ fund. The move is designed to shore up advertising sales and boost revenue as the broadcaster navigates its migration to streaming.
Fifth of homes for sale now chain-free
More than one in five homes on the market is available chain-free, according to Rightmove. Analysis of its website's data found the percentage of chain-free homes available had jumped from 15% in mid-March 2020 to 21% now. The proportion of chain free homes available had increased across Britain, but especially in London, with a jump from 12% a year ago to 21%. And in the West and East Midlands, almost a quarter of homes are now being advertised as chain-free.
Retail rebounds from January slump
Data from the Office for National Statistics show a bounce back in sales last month following a sharp fall at the beginning of the year. Sales rose by 2.1% in February, up from an 8.2% fall in January, when the country went into its third lockdown.
JPMorgan and Goldman handed mall stakes after American Dream turns sour
Investors including JPMorgan Chase and Goldman Sachs are set to take a stake in U.S. shopping centre operator Mall of America after its owner defaulted on development in New Jersey.
Rate-setters play down inflation worries
Michael Saunders, a policymaker at the Bank of England, has hinted that the UK economy may have more room to bounce back from the pandemic before it starts generating excess inflation. His colleague Silvana Tenreyro acknowledged an improving outlook, but pointed to scenarios that might require more monetary stimulus later this year. The FT reports that policymakers and analysts are revising up their Q1 GDP forecasts as economic data continues to surprise them. Analysts now believe contraction for the quarter will be 1- 2.5% less deep than feared.