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Daily News Roundup: Monday, 4th September 2023

Posted: 4th September 2023


WFH clampdown begins in the City

Citi has started monitoring how often its 12,500 staff in Britain work from the office. The bank said it could dock the bonuses of those who fail to turn up at least three days a week. A spokesperson for Citi said: “We have firm expectations for office attendance and know that the majority of our employees are compliant with their requirements. As necessary, we hold colleagues accountable for adhering to their in-office days.” Elsewhere, Lloyds Banking Group will from Monday expect its 40,000 staff to work in offices at least two days a week while HSBC has told workers to be in the office for three days a week from next month. Similar demands are being made at BlackRock and Investec as employers seek a return to pre-pandemic productivity. 

Third of mortgage holders ‘do not think they will pay it off by 65'

A third of mortgage holders in the UK do not believe they will pay off their mortgage by the time they are 65, according to a survey by retirement specialist LV=. HSBC has become the latest lender to increase its maximum mortgage term to 40 years, in response to rising home loan costs. While lengthening the duration of a home loan reduces monthly repayments, it also means paying more interest over time. The average age of a UK first-time buyer is 32, which means many homeowners may not achieve mortgage-free status until their 70s. The research also found that one in 10 retired individuals still had mortgage debt, with an average outstanding balance of £38,000. This could result in less discretionary income for pensioners during retirement.

Tice: Bank forced relative to show will to deposit cash

The leader of Reform UK, Richard Tice, has revealed how a close relative was ordered to produce their mother's will to deposit cash with Aldermore Bank because she is related to him. Mr Tice said: "For a bank to demand to see my mother's will when a close relative tried to set up an account is outrageous. It brings back all the grief. It is insensitive. All PEP laws need to be scrapped. Woke corporate Britain's gone mad." Last April, Mr Tice had applied to Swiss Re for a loan for his business Quidnet REIT but was rejected because he was deemed a reputational risk.

Lloyds in talks with Barclay family over Very Group

Lloyds Banking Group is in talks with the Barclay family and US private equity firm Carlyle over the Very Group, an online retailer and financial services provider. The British lender holds a guarantee in the overseas holding companies controlling the Very Group, that is linked to the distressed debt behind the Telegraph Media Group, which has already been seized by Lloyds. Carlyle holds debt in the loan structure that backs Very.

Banks to close more than 55 branches this month

High-street banks will have closed over 400 bank branches by the end of this year with over 55 branches set to close their doors for good this month. Barclays will shut at least 146 of its bank branches throughout 2023 and 2024 – nearly a third of its entire UK network. The closures were reported after dozens more were announced by several major banks, including NatWest, HSBC, Lloyds Banking Group, Virgin Money and Halifax.


Private funds sue to stop ‘unlawful’ SEC disclosure rules

A coalition of private equity, venture capital, and hedge fund groups sued the Securities and Exchange Commission on Friday to block new regulations that they argue would fundamentally and illegally change the $27tn industry. The new rules require managers of private funds to provide their investors with quarterly financial statements detailing their performance and expenses, and to undergo annual audits. They also put limits on offering some investors better terms than others via secret side deals. “The rules exceed the Commission’s statutory authority, were adopted without compliance with notice-and-comment requirements, and are otherwise arbitrary, capricious, an abuse of discretion and contrary to law,” the lawsuit stated.


Chinese lenders extend billions of dollars to Russian banks after western sanctions

China’s biggest banks increased their combined exposure to Russia from $2.2bn to $9.7bn in the period since Moscow’s invasion of Ukraine, as part of Beijing’s efforts to promote the renminbi as an alternative to the dollar.

Swiss regulator needs more powers to deal with bank crises

A panel of financial experts appointed following the near-collapse of Credit Suisse by the Swiss government have said the country’s market regulator, Finma, is too weak to adequately handle banking crises.


Brexit freedoms used to cut red tape for battery makers

A decision by the Health and Safety Executive to refrain from classifying lithium compounds as “toxic” was welcomed by business leaders on Friday. The move provided certainty and would potentially make British lithium refiners more competitive versus their European rivals, they said. Using Brexit freedoms to cut red tape around battery production will be a boost to Britain’s plans to become a hub for electric car production, asserts the Telegraph’s Matt Oliver.


Direct Line to pay £30m to customers overcharged

Direct Line is set to pay out approximately £30m in compensation to car and home insurance customers after admitting an "error" in implementing new pricing rules set by the Financial Conduct Authority (FCA). The error resulted in some existing customers being charged more for their renewal than new customers. The FCA's new rules prevent existing customers from being offered higher quotes than new customers, effectively ending the "loyalty penalty." Direct Line has not disclosed the number of affected customers or the average payout.

City seeks greater engagement with Jeremy Hunt

The City of London Corporation local authority is calling on the Chancellor to ramp up engagement with the City. A review led by Lord Mayor Nicholas Lyons and Chris Hayward, of the corporation, with input from Schroders, JP Morgan, and Barclays, wants Jeremy Hunt to meet regularly with the council and for the Government to better co-ordinate its schemes to encourage investment.

Africa the next ‘growth engine’ for Prudential, says new chief

The CEO of Prudential, Anil Wadhwani, has outlined how the insurer intends to drive growth in Africa, telling the FT the continent presents the same long-term growth prospects as its markets in Asia.

St James’s Place business model under scrutiny after fee cut

The FT looks ahead to a change of leadership at St James’s Place as Andrew Croft prepares to depart, just as a revised fee structure threatens margins, unnerving investors.


Amgen resolves US regulator’s challenge to $28bn Horizon deal

Amgen has reached an agreement with the Federal Trade Commission that allows the drugmaker to press ahead with its $28bn acquisition of Horizon Therapeutics.


British factories suffer weakest month since May 2020

British factories suffered their weakest month in August since early in the COVID-19 crisis, with orders shrinking dramatically due to rising interest rates. The S&P Global/CIPS UK manufacturing Purchasing Managers' Index (PMI) dropped for a sixth month in a row, falling to 43.0 from 45.3 in July - the lowest reading in 39 months and well below the 50 level that marks the point between expansion and contraction. Rob Dobson, director at S&P Global Market Intelligence, said output and new orders in the factory sector contracted at rates rarely seen outside of crisis periods. "Purchasing activity, inventory holdings and staffing levels were all cut back in August as manufacturers strived to control costs, protect margins and operate in a much leaner and efficient manner," he said.


UK house prices fall at fastest rate since 2009

House prices fell by 5.3% in the year to August, according to Nationwide, the fastest annual drop in 14 years. The bigger-than-expected drop brings the average house price down £14,600 to £259,153 compared with a year ago. “The softening is not surprising given the extent of the rise in borrowing costs in recent months, which has resulted in activity in the housing market running well below pre-pandemic levels,” said Robert Gardner, the chief economist at Nationwide. The number of completions of house sales was down 20% in the first half of the year compared with 2019, and about 40% down on 2021. There was also a 25% drop in first-time buyers in the first half of 2023 when compared with 2019, Nationwide said, while buyers turned their attention from detached homes to smaller, less expensive properties.


Next increases its stake in Reiss to 72%

Next has increased its stake in Reiss by over 20% in a deal that values the fashion retailer at £376m. Next and the Reiss family have bought out a 34% stake owned by US private equity firm Warburg Pincus for £128m, with Next paying £98m of that. After the deal, Next will control 72% of the retailer, up from 51%, the Reiss family will own 22%, and the company's management team will control 6%.

New Look in talks for £100m debt refinancing

New Look, the high street fashion chain, is close to finalising a £100m debt refinancing deal with Blazehill Capital and Wells Fargo. This debt refinancing will provide New Look with financial breathing space amidst a worsening trading environment for clothing retailers.


UK recovered much faster from pandemic than thought

The UK economy shrank less during the pandemic and bounced back faster than previously thought, revised figures from the Office for National Statistics show. The updated figures add nearly 2% to the size of the economy as of the end of 2021, meaning Britain recovered to its pre-pandemic size almost two years ago. The ONS previously said the economy was still 1.2% smaller than its pre-lockdown size at the time. However, GDP is now believed to have been 0.6% above pre-pandemic in the final three months of 2021. The ONS also said the economy shrank by less than expected in 2020, contracting by 10.4% rather than 11%. In 2021, the stats body now estimates the economy bounced back by 8.7%, rather than an earlier estimate of 7.6% growth.


Government urged to do ‘much more’ to protect cash

Business leaders have warned that the loss of almost 15,000 cash points in the past five years has left access to cash at a critical juncture and are calling on the Government to increase funding for independent cash machines as well as shared banking hubs. In a joint letter to Jeremy Hunt, business groups urged the Chancellor to do more to protect cash. “In recent years, cash has become increasingly important as the cost of living crisis escalates, and it continues to be an essential budgeting tool for millions of people,” they write. “Now is the time for the Government, financial services regulators and industry to come together to establish cash as a payment method of the future, maintain payment choice for businesses and give consumers the diverse payments landscape they require.” The Association of Convenience Stores, the Federation of Small Businesses, the Rural Services Network, Positive Money, the Petrol Retailers Association and NoteMachine, the UK’s second-largest ATM provider were all signatories of the letter.

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