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Daily News Roundup: Monday, 5th October 2020

Posted: 5th October 2020

BANKING

Boris Johnson vows to create 'Generation Buy'

The Prime Minister has vowed to create "Generation Buy" and help young people get on the property ladder with low-deposit mortgages. Boris Johnson said he would "fix" the problem of unaffordable deposits that has caused millions of people to put their dreams of homeownership on hold. Mr Johnson has asked ministers to work up plans for encouraging long-term fixed-rate mortgages with 5% deposits. They are likely to involve reversing regulatory changes made in the wake of the financial crash that have required banks to stress-test applicants. By removing stress tests, banks would be able to offer 95% loans, as was the norm 15 years ago.

NCA: Criminals exploiting loan scheme

The National Crime Agency (NCA) says organised criminals are targeting the Bounce Back Loan Scheme, the Government’s emergency loan scheme for small businesses hit by the coronavirus crisis. The NCA said it has shared "red flag indicators" with banks in an effort to help them tackle fraudulent loan applications. This comes just days after it was revealed that the CEO of the British Business Bank wrote to Business Secretary Alok Sharma ahead of the launch of the initiative, warning that it carried "very significant fraud and credit risks”.

Environment and Brexit drive rise in e-money apps

Possible post-Brexit rule changes for financial services firms and an increased demand for green, paperless banking is behind a massive surge in inquiries for money and challenger bank apps, according to deVere Group. Demand for the firm’s own global money app and card service, Vault, jumped by 67% in the third quarter of the year.

Poorer areas short of cash machines

Analysis shows that poorer and rural areas have half as many free cash machines and bank branches than the national average. Research by the Financial Conduct Authority, Payment Systems Regulator and he University of Bristol suggests that rural communities make up about 12% of the UK population, but have just 5% of free-to-use cash machines and banks and building societies.

Molo raises cash for surge in loans

Molo, an online mortgage lender for landlords, is looking to raise £266m after seeing “exponential” growth in applications due to increased online banking and a reduction in lending by mainstream providers.

55 bank branches close a month

Research by the financial analyst AskTraders shows that if the current rate of high street bank closures continues, there will be none left by April 2032. The analysis shows that the UK has 7,655 bank branches, with an average of 55 having closed every month over the past five years.

PRIVATE EQUITY

Bidders mull Clipper bid

With Cinven and CVC Capital Partners said to be evaluating online fulfilment business Clipper Logistics with a view to making an offer, the Mail on Sunday says a bidder is reportedly considering putting forward an offer that would value the firm in excess of £500m.

INTERNATIONAL

ANZ fined over fees

ANZ has been fined A$10m after wrongly charging 69,000 customers more than A$3m in fees, with the Federal Court ruling that the bank had incorrectly charged non-payment and transaction fees for periodic payments between 2003 and 2015.

US regulators step up battle with spoofing

With JPMorgan Chase handed a $920m fine for market manipulation, the FT says it shows regulators are taking a tougher stance on spoofing, putting it on par with rate-rigging, corruption or money-laundering.

JPMorgan opens UK apprenticeship scheme to aspiring investment bankers

JPMorgan is hiring investment banking apprentices for a four-year on-the-job training programme which includes funding to complete a degree in applied finance at the University of Exeter.

AUTOMOTIVE

Honda announces F1 exit

Honda will part ways with Formula One team Red Bull at the end of 2021, saying it is moving away from internal combustion engines and toward building electric and fuel-cell vehicles. The firm said that it is pursuing “carbon neutrality by 2050” through “future power-unit and energy technologies, including fuel-cell vehicle and battery technologies”.

FINANCIAL SERVICES

McGuinness in Brexit warning for the City

Mairead McGuinness, who is expected to become the EU's financial services commissioner, says Brussels will refuse the UK access to the EU market unless Britain details how it intends to diverge from the bloc's financial rules once the transition period comes to an end. She said the EU is looking for the UK to offer “some idea of their vision for their financial services sector”, saying that while Brussels does not know the UK’s intentions, particularly on financial services, it does “know they plan to diverge." Ms McGuinness said that without “clear answers” from the UK, it will be hard for the EU to grant equivalence, warning that trade in financial services between the City of London and the EU will be “less fluid” post-Brexit, with the UK becoming a third country.

Woodford assets sold on the cheap

Link Fund Solutions says assets of the failed Woodford Equity Income fund were sold at a multimillion-pound discount. Link revealed that it had applied a £174m “liquidity adjustment” to a number of the fund’s holdings in January to “recognise that those assets may be sold at a price which is less than its fair value”. Link, however, denied that it was engaged in a fire sale of the fund’s assets. It said values attributed to the transfer of single assets can be “misleading”.

FCA insurance case goes to Supreme Court

The Financial Conduct Authority’s test case over coronavirus-related insurance claims will head to the Supreme Court after the High Court agreed to a fast-track appeal. The case was brought by the FCA against eight insurers to clarify policy wordings and whether policyholders were due payouts.

Peltz acquires stakes in asset managers

Billionaire investor Nelson Peltz has acquired stakes in asset managers Janus Henderson and Invesco in a bid to shake up the industry. Peltz has bought a 9.9% stake in each firm through his investment company Trian Fund Management.

Italy’s Nexi and Sia set to unveil €15bn merger

Nexi and Sia, the Italian payments providers, are set to finalise a €15bn merger that will create one of Europe’s largest fintech groups, adding pressure on other providers in Europe to consolidate.

LV in exclusive takeover talks with Bain Capital

LV is in talks with Bain Capital over a takeover deal that could value the life insurance group at more than £500m and provide a windfall payout for LV’s members.

Brexit uncertainty causes ‘hiring paralysis’ for London asset managers

Data from the Investment Association show the number of asset management employees in the UK flatlined last year while levels in rival hub Luxembourg increased 5% during the same period.

LEISURE AND HOSPITALITY

Cineworld to shut

Cineworld, Britain’s biggest cinema chain is set to close all its screens, saying a fresh delay to the release of the next James Bond film has deprived the sector of a lifeline. The chain said the industry has become “unviable” and is reportedly drawing up plans to close its 128 UK sites as soon as this week in a move puts up to 5,500 jobs at risk. The closures include Cineworld’s 543 Regal theatres in the US.

MEDIA AND ENTERTAINMENT

Ministers look to press ahead with regional paper rescue

The Sunday Telegraph reports that the Government is exploring a rescue package for local newspapers, with ministers said to be considering options for a fund to support the sector after a £2m pilot ended in June.

PROFESSIONAL SERVICES

Insurance rates double for lawyers as claims rise

The cost of professional indemnity insurance for lawyers is rocketing, the FT reports, with rates for some types of cover more than doubling, just as the pandemic eats into profits and revenues.

REAL ESTATE

IWG agrees rent cuts but faces legal fight

Office provider IWG has persuaded more than half of its UK landlords to accept rent cuts. A source told the Sunday Telegraph the firm had been in negotiations with 40 landlords in regard to 70 of its offices. Of these, around 60% have so far agreed to accept a combination of “relatively small” cuts and variable rents. The paper’s Russell Lynch says some landlords are considering legal action over the plan.

New fund to inject €100m into property tech

The real estate arm of BNP Paribas and US-based venture capital fund Fifth Wall have launched a new fund in the UK which will invest around €100m in property tech start-ups in Britain and Europe. Britain dominates the proptech sector in Europe with $5bn (£4bn) having been invested in the market by the end of June 2019 - five times more than nearest rival Germany, according to a recent study.

RETAIL

Asda snapped up in £6.8bn deal

A consortium of brothers Zuber and Mohsin Issa and private equity firm TDR Capital have won the battle to buy Asda from Walmart, in a deal valuing the supermarket chain at £6.8bn. The Issa brothers own EG Group, which has more than 5,200 petrol stations across the UK and Europe. Walmart said that, under the new owners, Asda will invest £1bn in the supermarket over the next three years. Walmart added that Asda would keep its headquarters in Leeds and its chief executive, Roger Burnley, would remain in place.

ECONOMY

Economy likely to have grown 5% in August

Figures released later this week are expected to show that the economy grew 5% in August. This would mark a decline on the 6.6% month-on-month rise recorded in July and the 8.7% increase seen in June. Economic analyst Howard Archer said that if the forecast of 5% month-on-month in August is correct, “this will cut the decline in economic activity from 11.7% in the year to July to 7.1% in the year to August.” Analysis from research group Consensus Economics shows that the average forecast from analysts for GDP over 2020 has slipped from a fall of 9% three months ago to 9.9% a month ago to 10.1% now. However, growth projections for 2021 have risen from 6.1% to 6.4% to 6.5% now.

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