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Daily News Roundup: Monday, 29th November 2021

Posted: 29th November 2021

BTG Advisory

New arbitration scheme for Covid-related rent arrears

BTG Advisory’s Andrew Dalton explains the new arbitration regime designed to resolve conflicts between landlords and tenants in Covid-related commercial rent disputes. The regime will sit within the Commercial Rent (Coronavirus) Bill, which should become law from March 2022, and aims to preserve the tenant business and the jobs that it supports, without undermining the solvency of the landlord. There are several key points to note regarding the regime, Mr Dalton says, namely that it will only apply to rent arrears during which the business or premises were required to cease or restrict trading; that arbitrators are required to take into account business viability and affordability when assessing their determination; and that once the arbitrator has reached a conclusion it cannot be compromised by a CVA or Restructuring Plan for a period of 12 months from the date of the arbitration settlement award.

BANKING

First-time buyer mortgage rates drop to 2019 prices

Mortgage deals for first-time buyers are now cheaper than before the pandemic. Younger buyers with small deposits were largely locked out of the market last year as lenders pushed up prices for riskier borrowers. But lenders are now competing for their business to hit their annual targets. The average two-year fixed-rate mortgage with a 5% deposit is now 3.13%, according to Moneyfacts, down from November last year, when it was 4.74%, and lower than the 3.27% it was in the same month in 2019. It is also the case for longer deals. A five-year fix for first-time buyers with a 5% deposit charges 3.41% on average, lower than the 4.21% in 2019.

BNPL could count against borrowing

Consumer group Which? has warned users of buy now, pay later schemes that four lenders - Barclays, Halifax, Nationwide and TSB – are asking for details of BNPL arrangements alongside other credit commitments such as loans and credit cards when people apply for a mortgage decision in principle online. Lenders may pick up on payments to BNPL providers on bank statements if they are not present on credit reports, Which? pointed out. Experts say repeated use of BNPL or large purchases using the schemes could result in mortgage applications being rejected.

Regnier lined up as new Santander boss

The head of Yorkshire Building Society, Mike Regnier, will replace Nathan Bostock as chief executive of Santander UK, the Mail on Sunday reports. The move will allow Mr Bostock to finally make his move to become head of investment platforms at the Spanish parent bank after the sudden departure of his heir-apparent Tony Prestedge meant his tenure as CEO was extended.

Former AIB bankers lend support to upstart lender

Former AIB bankers Gary Kennedy and John Power are among those supporting Patrick Good as he takes on their old employer in the mortgage market with his fledgling alternative lender, MoCo.

PRIVATE EQUITY

Private equity firms size up BT cable arm

Private equity firms CVC and Apax, along with infrastructure investors Brookfield and Macquarie, are sizing up BT's Openreach division amid speculation that Patrick Drahi’s Altice UK, which took a 12.1% stake in BT in June, could force the board to sell a stake or even the whole of Openreach. Research recently valued Openreach at about £26bn but one senior telecoms source told the Mail on Sunday it could easily be worth more than £40bn.

Nextalia raises €563m in first close of new private equity fund

Italian asset management firm Nextalia has raised more than €500m in the first close of its newly-launched private equity fund. Boss Francesco Canzonieri said the venture was leveraging on a network of "strong relationships across the business community" and "an industrial approach to long-term sustainable value creation."

INTERNATIONAL

Mizuho chair and chief executive to leave after IT problems

Tatsufumi Sakai and Yasuhiro Sato, the CEO and chair of Mizuho, have resigned after the Japanese government intervened following a long series of IT failures at the conglomerate’s banking arm. The finance ministry ordered Mizuho to submit a report by December 17 on measures to prevent a recurrence and improve its audit system.

China banks can expand forex derivatives business

China’s State Administration for Foreign Exchange has said that banks could expand their foreign exchange derivatives business, providing services between yuan and foreign currencies to cooperative banks, including forward settlements and currency swaps.

Draghi urges EU to confront ‘inevitable’ reform of fiscal rules

Mario Draghi and Emmanuel Macron have signed a new co-operation treaty between Italy and France that will see the pair push for reform of budget rules, investment and migration.

AUTOMOTIVE

More buyers to opt for battery-powered cars for first time

A survey of car buyers by Autovia reveals that more drivers expect to purchase an electric car than a petrol-powered model for the first time, as EVs fall in price, have improved range and align with government climate policies. Some 34% of buyers now expect to choose an electric car for their next purchase, compared with about 25% for petrol and 18% for hybrids. Just one in ten say they will opt for a diesel vehicle.

Terry Leahy joins electric car charging start-up

Sir Terry Leahy, the former CEO of Tesco, has been named a director of electric car charging start-up Myenergi, in which he and tech investor William Currie invested £1.2m in 2018. The move comes ahead of a possible float in 2022.

Octopus signs multi-million pound finance deal with NatWest

Renewable energy supplier Octopus has signed a multi-million pound finance deal with NatWest’s Lombard division, helping it to buy £500m worth of electric cars. Octopus also leases electric cars to firms looking to reduce the carbon footprint of their fleets.

FINANCIAL SERVICES

EU banks demand access to City markets

A collection of the eurozone’s most powerful banking groups have demanded long-term access to London’s derivatives trading market. In a joint letter, finance trade bodies including the European Banking Federation, the European Association of Co-operative Banks, the Global Financial Markets Association, and the International Swaps and Derivatives Association said that the bloc faces a “cliff edge” unless it extends exemptions that allow trades by EU institutions to take place in the UK and other major markets. The letter warned that if temporary arrangements are allowed to expire without being replaced by equivalence decisions in all key jurisdictions, it will result in increased costs and “operational burdens for EU firms while also resulting in trapped assets.” While the European Commission has refused to grant Britain equivalence status for derivatives trading despite the UK’s post-Brexit rules being broadly in line with its own, the trade bodies have urged Brussels to grant derivatives trading permission to the City for at least a further three years.

EU capitals abandon hope of luring jobs away from London

Nicolas Mackel, the CEO of Luxembourg for Finance, has said that Europe’s financial centres have given up hope of triggering an exodus of companies and jobs away from London. He said relocations from the City are “basically over” with London's crown as Europe's financial services capital intact. However, Mr Mackel warned that London will no longer be the “automatic choice” for attracting new business due to Brexit and will face tougher competition from European hubs. Echoing his comments, Miles Celic, the chief executive at TheCityUK, said the “movement of capital and people as a direct consequence of Brexit is largely complete”. Meanwhile, the Lord Mayor of London, Vincent Keaveny has said that Brexit “has been a great incentive for the UK to get back out there in the world.” He said that the UK's departure from the EU should encourage it to “look for the opportunities in the emerging markets of the world and in partnering countries like Australia and like India”.

Visa and Mastercard’s credit duopoly under threat

The Sunday Telegraph considers the pressure Amazon is putting on Visa to reduce its fees by refusing to accept customers’ Visa credit cards from next January, saying the issue is also about a shift from the payments duopoly held by Visa and Mastercard to new forms of credit and money transfer, such as buy now, pay later. The paper notes that Amazon has been working with BNPL company Affirm and retailers can also use software such as that offered by Plaid, which allows merchants to connect directly to bank accounts and which Visa was blocked from buying last year.

Bain Capital mounts defence of LV takeover

US private equity firm Bain Capital has defended its controversial takeover of LV by saying it “will save the business” and preserve the historic brand. Matt Popoli, global head of insurance at Bain, said his firm’s plans for the business would be “better for consumers than allowing some other insurance company to come along and swallow it up, discard the brand and jobs.” 

Crypto exchanges must pay digital services tax, HMRC says

HMRC has told cryptocurrency exchanges that they will not be exempt from the digital services tax, as online financial marketplaces are, arguing that crypto assets “are not financial instruments” and do not qualify as commodities or money. Ian Taylor of Crypto UK, an industry body lobbying HMRC and the Treasury over the issue, said the move was a new blow to cryptocurrency exchanges after the "arduous" licensing regime introduced by the Financial Conduct Authority, and would lead to higher fees for people buying and selling cryptocurrencies.

LEISURE & HOSPITALITY

Deliveroo set to name corporate brokers

Sky News reports that food delivery app Deliveroo is close to finalising the appointments of Goldman and Barclays as joint corporate brokers, with a source saying that while the firm had not yet finalised the appointment Goldman and Barclays were the frontrunners. It is noted that Goldman – along with JP Morgan – had a role in Deliveroo’s London listing in March, a flotation that saw shares crashing by nearly a third at one point on the opening day of trading.

Butlin's up for sale following Blackstone deal

Butlins owner Bourne Leisure has appointed Rothschild to find buyers for the holiday park chain. The move comes less than year after private equity firm Blackstone took a majority stake in the company, valuing Bourne Leisure at an estimated £3bn. A source close to Blackstone said: "We want to focus our attention and the management's attention on Haven and Warner [Leisure Hotels]."

MANUFACTURING

‘Perfect storm’ leaves manufacturers facing ‘tipping point’

Britain’s manufacturers are facing a “perfect storm” of rapidly rising costs and towering debts that many fear could push them over the brink, according to a new survey from trade body Made UK. Made UK has urged ministers to introduce payment holidays on loans, warning that thousands of firms faced a “tipping point” that could make their business models unviable. The poll of more than 200 company finance directors found that 48% have had trouble fulfilling orders as the supply chain crisis intensifies, while 65% said a lack of cash had hampered their growth plans. Amid challenging trading conditions and increased levels of risk, 38% said they had used, or intended to use, restructuring, turnaround or insolvency professionals.

Britishvolt hoping to bolster UK’s EV battery presence

The UK is hoping to improve its presence in the electric car battery market with the start-up Britishvolt submitting plans for a £2.6bn Gigafactory in Northumberland. The company said it will produce 300,000 lithium-ion battery packs each year and is reportedly in talks with some of the world’s largest car manufacturers.

Raspberry Pi plans London listing

Raspberry Pi has hired bankers from Stifel and Liberum to advise on a London listing, which would value the personal computer maker at "a premium" of the £370m valuation it attracted after securing a £33m investment in September.

MEDIA & ENTERTAINMENT

Murdoch’s merger of the Times and Sunday Times edges closer

The Culture Secretary has said she is minded to remove the legal restrictions preventing a merger of the Times and the Sunday Times, arguing they were "no longer appropriate or necessary for the purpose they were intended to achieve". The comments from Nadine Dorries come after Ofcom said there was a "strong commercial rationale" behind News UK's appeal to remove them and that scrapping the undertakings would not have a "material impact on plurality". A separate report from the Competition and Markets Authority concluded that maintaining the legal hurdles would have a "significant" impact on News UK’s ability to cut costs because they prevented the company from creating a "fully unified structure" across the two newspapers.

REAL ESTATE

Hammerson to sell shopping centre

Hammerson is close to finalising a sale of the Silverburn shopping centre near Glasgow. It is understood that Hammerson is in advanced talks with private equity firm Henderson Park, which is said to be seeking full ownership of the centre. Silverburn is held in a 50:50 joint venture between Hammerson and Canadian pension group CPP, while Henderson Park is said to be partnering with European real estate investor Eurofund in the bid. The deal is expected to value Silverburn at between £130m and £140m. Meanwhile, fellow property group Landsec is understood to be in exclusive talks to acquire a 25% stake in the Bluewater shopping centre in Kent, which would add to its existing 30% holding. 

ECONOMY

BoE warns interest rates could rise

Huw Pill, the Bank of England's recently installed chief economist, has signalled that he is ready to press ahead with the first rate rise since the pandemic struck. In the clearest sign that borrowing costs will rise as soon as next month, he told a CBI conference that the "ground has now been prepared for policy action". Pill said the economy has continued to recover from its Covid-inspired slump, while supply chains and the labour market are still suffering from constraints. He said: "Given where we stand in terms of data and analysis, I view the likely direction of travel for monetary policy as pretty clear." However, Pill added that the economic outlook remained uncertain and that there was no guarantee rates would rise.

OTHER

Business investment to hit pre-pandemic levels in 2023

Business investment will not return to pre-pandemic levels until early 2023, economists have warned. With firms looking to focus on paying down pandemic-related debt, experts at Pantheon Macroeconomics believe they are likely to behave cautiously, despite having the funds to rapidly increase investment. Office for National Statistics data shows that business investment fell 0.2% in Q3 and remains 11.4% lower than at the end of 2019. Pantheon expects investment to rise 10% in 2022 and 4% the year after, meaning it will return to pre-pandemic levels in Q1 2023.

Half of this year’s big IPOs are under water

Dealogic analysis shows that 49% of companies that raised over $1bn via IPOs this year are trading below their listing price, up from 33% of large listings in 2019 and 27% last year.

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