Higher-rate taxpayers more likely to fall into the red
Analysis by Hargreaves Lansdown suggests that higher-rate taxpayers are more likely to become overdrawn than basic-rate taxpayers. A survey of 2,000 people found that while 14% of higher-rate and additional rate taxpayers’ finances go into the red for at least half the month, among basic-rate taxpayers the rate was only 9%. The poll looked at how regularly respondents were either overdrawn or owed more on a credit card than they held in their bank account. The study also found that people aged 18-34 are more than twice as likely to be overdrawn than those aged 55 and over. There was no real gender divide in regard to who was more likely to fall into the red.
TSB starts closing counters at 4pm
TSB has started closing its over-the-counter services at 4pm across its branch network, making the switch having conducted a pilot of the scheme in 14 branches last year. Staff have been told to direct customers to online banking instead of carrying out cash transactions, with TSB having been adding video banking and self-service machines to many branches. The bank is said to be focusing on face-to-face meetings with customers looking for mortgage or insurance products after 4pm.
Banks have grave concerns over consumer protection regulations
Proposals put forward by the Financial Conduct Authority to introduce stronger consumer protection rules have alarmed senior executives at banks and insurance companies. The regulator is under pressure to strengthen regulations following the London Capital & Finance mini bonds fiasco, but experts warn that the FCA’s new consumer duty plans could lead to a deluge of litigation from claims management companies.
Revolut fundraising could bring £28bn valuation
Revolut has approached investors including SoftBank's Vision Fund 2 about a fundraising that could value it at between $30bn and $40bn (£28.9bn). The fintech company is seeking an investment of between $750m (£542m) and $1bn (£723m) and would mean the digital bank is now worth six times more than it was a year ago - after seeing its losses double.
London reclaims top trading status from Amsterdam
Data released by Cboe Global Markets show London has grabbed back its crown as Europe’s top finance hub from Amsterdam with £7.63bn of share deals made daily in the capital in June. This is compared to £7.55bn in the Dutch capital. It was the first time the City had been the most active destination since leaving the single market in January.
Appetite for investment in Ireland has grown
A poll of 100 global private equity outfits on their plans for investment in Ireland found 70% expect to increase investment in the country over the coming year. The survey, conducted by law firm Arthur Cox, also reveals technology, media and telecoms are the hottest sectors, with almost 40% of participants identifying those as their first choice for potential acquisitions.
ECB to crack down on banks taking too much risk
European Central Bank (ECB) supervisor Andrea Enria said it plans to come down on banks that are taking too much risk via financial instruments such as leveraged loans and equity-related derivatives. Mr Enria said that he was worried about “market complacency and excessive risk-taking” by banks and warned: “Where we see shortcomings, we will take supervisory actions”. "In key areas such as leveraged finance ... we plan to deploy the full range of supervisory tools available to us, including minimum capital requirements commensurate with the specific risk profile of individual banks, should this become necessary," he added.
Bank of America recalls vaccinated UK staff to offices
Bank of America is calling staff back to its UK offices in two weeks – but only those who have had at least one vaccine dose. The US bank, which has 6,500 staff in the UK, is inviting some vaccinated employees to return to their desks as of July 19. While a few hundred eligible staff are likely to return at this point, most UK staff are expected to be recalled to offices in September. Morgan Stanley recently barred staff and visitors from entering its New York office unless they had been fully vaccinated, while JPMorgan said in an internal memo that US staff needed to register their vaccine status with the firm and BlackRock said it would only allow fully-vaccinated staff to return to its US offices from July.
Citigroup to raise base pay for junior bankers
Citigroup will lift the base salaries of its junior investment bankers, according to an internal memo that said it would increase base salaries for its programme vice-presidents, associates and analysts in the banking capital markets and advisory unit from July 1. Citigroup will also continue to focus on wellness initiatives in the unit, having previously said that most roles would be designated as "hybrid" post-pandemic, allowing employees to work from home for up to two days a week. That is in contrast to rivals Morgan Stanley, JPMorgan and Goldman Sachs which say they plan to return staff to offices.
Vauxhall to announce EV plan for Ellesmere Port
The owner of Vauxhall is expected to announce plans to build electric vans at its Ellesmere Port factory in Cheshire. The investment by Stellantis, said to be worth hundreds of millions of pounds, would safeguard about 1,000 jobs at the plant. A press conference has been scheduled for Tuesday.
Wizz Air offers chief Varadi £100m bonus in return for rapid growth
In what would be one of the largest ever payouts by a London-listed company, Wizz Air CEO Jozsef Varadi will secure a £100m bonus if the low-cost airline sees rapid growth.
Raw materials inflation threatens Johnson’s infrastructure boom
Hopes for a boom in construction flowing from the Prime Minister’s pledge to initiate an "infrastructure revolution" could be dampened as building material costs rocket, bringing delays and an increase in contingencies. Tom Hall, chief economist at construction data firm Barbour ABI, said higher costs mean the Government and private firms could face delays, cost-overruns leading to disputes and project de-scoping - when plans are scaled back. Boris Johnson last year promised to "build, build, build" as part of a "New Deal" to upgrade Britain's infrastructure.
The City’s apathy risks post-Brexit success
Writing in the Times, Daniel Pinto, the founder and CEO of Stanhope Capital Group, warns that the City establishment appear opposed to reforms that would make the UK more competitive. He says the “challenges posed by Brexit should not obscure the need for the City to reinvent itself” but several large asset managers are proving risk averse – preferring “professional CEOs to business creators” and seeking “sanitised boards” where chairmen and directors are “disconnected from the businesses they are supposed to support”. This, Pinto says, is a “far cry from the hustle and bustle of fast-growing, disruptive, entrepreneur-led businesses which are taking public markets by storm in other parts of the world.” He concludes that Brexit will not bring about the demise of the City. “But complacency might.”
Hiscox settles pandemic claims case for £18m
Insurer Hiscox has paid out more than £18m to a group of 384 companies over losses suffered as a result of the pandemic, having initially refusal to honour policies. It was among the insurers that had refused to pay out at the start of the pandemic, prompting a Supreme Court test case in January which found that insurers should pay out £1.2bn. Following the case, which had been brought by the Financial Conduct Authority on behalf of policyholders, Hiscox has reached a settlement with the Hiscox Action Group of policyholders. Hiscox said in March that it had reserved £343m for pandemic claims.
Officials look to scrap 10% drop rule
The Government is to consult on scrapping the 10% drop rule which requires financial advisers to notify clients when their investment portfolio has fallen by a tenth or more in a given reporting period. The 10% drop rule was introduced as part of Mifid II but it was put on hold at the start of the pandemic due to increased market volatility. The Treasury has proposed that Mifid II will be amended to allow professional clients and investment firms to agree between them what reporting is appropriate based on their specific circumstances.
Consumers hit by Financial Ombudsman delays
The Sunday Telegraph reports that the Financial Ombudsman Service (FOS) is failing to address thousands of consumer complaints in a timely manner. While the FOS aims to resolve disputes within 90 days, more than two thirds of consumers with complaints in the system have been kept waiting for more than three months. This means 113,000 out of 166,000 complaints have seen delays.
UK pension schemes waste billions on underperforming asset managers, study finds
Data provider ClearGlass says UK pension schemes are wasting money on fees paid to underperforming asset managers and could save £6bn a year by halving fees which average 0.65%.
Wise co-founder Hinrikus to step down as chair within a year
Taavet Hinrikus plans to step down as chair of Wise, the fintech start-up he co-founded, as the company looks to strengthen its governance ahead of listing on the London market.
GSK in $2bn drugs deal
GlaxoSmithKline has agreed a deal worth up to $2.2bn with US firm Alector to develop new potential drugs for Parkinson's and Alzheimer's disease. SK and Alector will collaborate on the medicines belonging to a field of research known as immuno-neurology which aims to harness the body's own immune system to beat neurodegenerative disease.
LEISURE & HOSPITALITY
Hospitality bosses warn of staff shortages
Hospitality bosses have warned of a shortfall of almost 200,000 workers, with industry leaders warning that there are not enough young Britons to fill the vacancies. It is estimated that there are around 188,000 job vacancies at hospitality firms – about 9% of the industry – with this coming despite unemployment standing at 1.6m in April and with 2.4m people on furlough at the end of May.
Major works behind schedule and over budget
A report by the Project Management Institute (PMI) has found that just 48% of large engineering projects were completed on time over the past year, while nearly a third failed to meet their original aims and objectives. The study also revealed a reluctance among project leaders to utilise cutting edge technologies to boost completion times, with just one in five projects using artificial intelligence, 13% using 5G and 14% deploying robotics.
MEDIA & ENTERTAINMENT
Facebook hits out at CMA over plans to block takeover deal
Facebook has criticised the Competition and Markets Authority (CMA) over its plans to block a $400m takeover deal for Giphy. While Facebook argues that Giphy has no sales, assets, employees or customers in the UK, the CMA aims to take action against takeovers that harm UK consumers, even those taking place overseas involving non-British companies. In documents sent to the CMA, the US tech giant said the watchdog’s fears about the deal were “speculative, unsubstantiated and unrealistic”, adding that there was a “vanishingly low” chance the deal could harm rivals.
Property funds offer good investment opportunities
Analysts believe that as offices and city centres begin to adapt to new ways of working, funds that have a greater focus on warehouse and logistics space can provide long-term benefits. A net £5.5bn was withdrawn from the largest 16 open-ended property funds between June 2019 and the end of May this year, according to Morningstar. It is also noted that some companies, such as Aegon and Aviva, are planning to shut down their property funds altogether.
Morrisons agrees to £6.3bn takeover
Supermarket chain Morrisons has agreed a £6.3bn to a consortium of investors which include Softbank-backed private equity firm Fortress Investment Group; CPPIB Credit Investments, a subsidiary of the Canada Pension Plan Investment Board; and Koch Real Estate Investments. The buyers will also need to repay or refinance £3.2bn of Morrisons' debt, taking the total value of the deal to £9.5bn. The deal, which must be ratified by shareholders, could still be trumped by a rival bidder, with Clayton, Dubilier & Rice having recently seen a £5.5bn takeover proposal rejected by Morrisons.
Economists: UK recovery may slip behind eurozone
Economists at HSBC believe eurozone countries could emerge from the pandemic in a better state than they went into it, while Britain could face more “scarring” from the crisis. HSBC’s analysis suggests that eurozone economies will end 2022 with GDP around 0.4% below the level pre-pandemic forecasts had suggested while Britain’s economy will be 2.6% below estimates made before the coronavirus outbreak. While the UK is expected to return to its pre-pandemic GDP by the end of 2021 – outpacing much of the continent – factors including Brexit will slow efforts to deliver growth. Meanwhile, eurozone economies will see long-term growth rates boosted by €750bn of investment planned under the EU’s Next Generation fund.
Labour reveals economic vision
Labour has announced a new post-Brexit economic vision for the UK. Shadow Chancellor Rachel Reeves said that Labour would ensure far more public contracts were awarded to British businesses, as opposed to handing them to overseas firms, while there would be an emphasis on securing more high-skilled UK jobs for the future in the green, financial technology, digital media and film sectors, and other industries.
Smaller firms the big investment winner
Analysis by AJ Bell shows that smaller companies in the UK have been the investment winner in the first six months of 2021, with the UK's FTSE Small Cap index climbing 19.4% in the period, outpacing growth in major markets. It was shown that the FTSE 100 posted a total return of 10.9% in the first half of the year, short of the 14% seen in the S&P 500. The report also found that investors in UK smaller company funds saw the best sector returns, with the average fund up 20%.